Pittsburgh-based UPMC benefited in the first six months of its fiscal year from increased enrollment in its health plan as well as higher patient volumes. But expenses bogged down its operating income.
UPMC, which ended the first half of its fiscal year on Dec. 31, reported an 8.9% increase in operating revenue during the six-month period compared to last year. The system reported $6.8 billion in the period compared with $6.3 billion in the prior-year period.
Hospital admissions and observation cases accounted for the revenue jump, which saw an 8% increase during the period compared to the prior year.
At the same time, enrollment in UPMC's insurance services grew by nearly 200,000 members for a total of 3 million members overall. The growth added $299 million in revenue for the period. Expenses from insurance claims rose by 12.2% compared to the prior period from $1.86 billion to $2.08 billion.
“More and more businesses are offering alternative, affordable plans that allow their employees unfettered access to UPMC hospitals and physicians,” said Robert DeMichiei, UPMC executive vice president and chief financial officer.
UPMC's growth gives it an advantage over local rival Highmark Health. The two systems have been in a battle for several years over rates, networks and turf, which prompted policymakers to step in and hammer out an agreement.
Still, UPMC's operating income dropped 47% in the period compared to the prior year from $201 million to $106 million.
UPMC said the decline was “driven by expense inflation, payer mix and increased physician investment.”
Employee expenses rose by 10% from $2.24 billion to $2.49 billion.
UPMC's operating margin fell to 1.6% from 2.2% in the prior year.