Pittsburgh's largest health system did not suffer greatly from its rancorous split last December from Highmark, the region's dominant health insurer.
UPMC reported almost no change to patient revenue during the quarter that ended March 31 compared with the first three months of the prior year. The split from Highmark had a “very minimal” impact on demand for UPMC hospitals and doctors, said UPMC spokeswoman Susan Manko. Patient revenue totaled $1.47 billion last quarter compared with $1.48 billion a year ago.
UPMC terminated its contract with insurer Highmark at the end of 2014 in an ongoing public brawl that erupted with Highmark's decision to acquire UPMC rival West Penn Allegheny Health System. Highmark did so in late 2013 and invested millions in an effort to build a viable competitor to UPMC. Executives at UPMC, which also owns a health plan, said the deal ended any chance of a contract with Highmark.
The divorce has been messy. State regulators negotiated consent decrees provided some continued access to UPMC for certain patients with Highmark health plans, but the terms have spawned additional disputes. “The consent decrees usher in a new era of robust competition in the western Pennsylvania provider and health insurance markets,” UPMC said in its financial statements.
Meanwhile, UPMC revenue from insurance enrollment increased 16% to $1.38 billion during the quarter, the third of its fiscal year, compared with the same period a year ago. UPMC health insurance enrollment at the end of March totaled 2.6 million members, reflecting a 13% increase since the end of March 2014 and 9% since the end of December.
However, UPMC's operating surplus eroded for the quarter to $20.2 million, down 68% from the same period a year ago.
For the nine months that ended in March, however, UPMC reported operating surplus of $197 million on revenue of $8.8 billion, a margin roughly the same as the year-ago period.
UPMC did report a drop in hospital admissions for the nine-months, but the decline was concentrated between July and December, Manko said. Harsh winter weather contributed to less medical care at the end of 2014, she said.
The drop in admissions was countered by rate increases for UPMC hospitals and doctors and efforts to squeeze UPMC operating costs.
UPMC reduced the number of hospital beds in operation by roughly 350, or 7%, between July 2014 and March 13.
UPMC also said it restated its 2014 financial statements after discovering the understated pension obligations at Altoona Regional Health System, which UPMC acquired in 2013.
