Membership in UPMC's health insurance division grew 8% in the past year, according to financial documents released Friday, giving UPMC a bigger foothold as it tries to operate peacefully with its rival Highmark Health.
UPMC and Highmark, both not-for-profit organizations that sit as corporate giants in Pittsburgh, have been operating under a “continuity of care” consent decree since this past January. The two hospital and health insurance systems have been fighting for the past several years over rates, networks and turf in the area, which prompted policymakers to step in and hammer out an agreement.
Several UPMC hospitals remain out-of-network for Highmark members, including the large UPMC Shadyside facility as well as Magee-Womens Hospital. UPMC's audited financial statements for the year ended June 30 show employers and people have flocked to the system to have all UPMC hospitals and doctors as in-network providers.
As of July 1, UPMC had nearly 3 million insured members. Commercial membership grew more than 11% to 628,000 people. UPMC also added members in its Medicare, Medicaid and behavioral health plans.
The amount of patient revenue that came from Highmark members, meanwhile, fell sharply. Roughly 18% of UPMC's patient revenue came from Highmark members in fiscal 2016 compared with 26% in 2015.
UPMC's after-tax operating surplus last year dropped 27% to $287.8 million, the documents show. In 2015, UPMC benefited from a one-time jolt of profit, worth $233 million, that came from its investment in Evolent Health. UPMC co-founded Evolent, which went public last year and helps other providers set up their own health plans and create value-based payment contracts.
Those types of investments, as well as questions over charity care and executive compensation, have led some to believe UPMC should lose its tax-exempt status. The city of Pittsburgh actually challenged UPMC's tax-exempt status before dropping the legal battle in 2014.
UPMC's total revenue rose 5.8% to $12.8 billion. A majority of UPMC's revenue now comes from its insurance plans instead of the provider side. UPMC closed the year with a 2.2% operating margin versus a 3.3% margin in 2015.