Pittsburgh-based UPMC saw hospital demand and patient revenue slide in the first six months of its fiscal year. But insurance revenue soared, which helped buoy the system's operating margin.
UPMC, which ended the first half of its fiscal year on Dec. 13, reported a 3% drop in the number of patients admitted to the hospital or held for observation during the six months, compared with the same six months in the prior year. Patients stayed slightly longer after admission during the period, yet overall hospital occupancy declined slightly.
Revenue from patients declined 3.7% for the six months, but total operating revenue increased 6.2%, largely because of a 17% increase in insurance revenue.
The system reported rapid enrollment growth in traditional health and behavioral-health plans for the six months, which totaled roughly 1,992,900 million members at the end of last year, an increase of 22% from the prior year.
UPMC Medicaid enrollment soared by 37% during the period. Medicare and commercial insurance growth increased 17% and 13%, respectively. Behavioral-health insurance enrollment increased 23%.
UPMC officials said continued growth in 2016 has put UPMC's insurance arm ahead of rival Highmark, by shares of the western Pennsylvania market. A Highmark spokesman said the company does not comment on competitors' enrollment numbers. Highmark will release figures next week for its Medicare and commercial enrollment.
UPMC holds 36% of the market for health insurance and behavioral-health insurance in 2016, up from 30% two years ago, UPMC said. That's compared with 27% for Highmark in 2016.
Meanwhile, during the first six months of the year, UPMC saw its share of the hospital market dip slightly to 59% in Allegheny County and 40% in western Pennsylvania. That's compared with 60% and 41%, respectively, for the same period a year ago. The figures are limited to medical and surgical admissions.
UPMC's operating margin for the six months was 3.2%, compared with 3.3% the prior year, before income tax and interest expenses.
The system reported a net loss of $95.1 million, compared with net income of $140.6 million the prior year, as investment returns dragged down results.
“UPMC made no material changes to its asset allocation policies during the quarter, and continues to have a long-term perspective with regard to its investment activities,” the system's financial statement said.