UPMC Health System, Pittsburgh, faced the reality of the dismal investment market and took a $161.5 million charge against its investments in the third quarter ended March 31. The charge reduces the 17-hospital system's total margin by 4%. With the charge, UPMC is running a $123.5 million deficit on $3.1 billion in revenue for the year so far, said David Farner, UPMC's associate executive president. Rating agency Standard & Poor's said the system's A rating would not be affected by the charge, which represents a noncash loss with no impact on operations. Farner said the decision to take the charge was triggered by a 20% decline in UPMC's investment portfolio over a six- to nine-month period. "We're just taking a conservative financial accounting approach," he said. In January, S&P and Fitch Ratings downgraded UPMC's debt rating to A from A+ with a stable outlook. Both agencies noted at the time that UPMC would turn a corner in 2003 with a positive operating margin, but balance sheet strength had not kept pace with the system's phenomenal growth. -- by Cinda Becker
UPMC takes $161.5 million charge for market losses
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