Highmark Health's insurance arm and diversified business portfolio more than offset an $136 million operating loss reported by its provider network in 2020, illustrating the varied impact the COVID-19 pandemic has had on different segments of the healthcare industry.
In 2020, Highmark's Allegheny Health Network reported an $180 million decline in earnings from 2019, with the decline in elective surgeries, government shutdowns and other pandemic-related expenses cutting into the not-for-profit provider's bottom line. Meanwhile, deferred patient care resulted in an $180 million year-over-year increase in earnings at its diversified business segment, with combined profits across its dental and stop loss business reaching $370 million. The company's Highmark Health Plan insurance business also reported an operating gain of about $400 million for fiscal 2020. Membership at the insurer remained steady at approximately 5.6 million enrollees.
During a press call on Monday, Highmark CEO David Holmberg said he expected revenues to rebound for Allegheny Health Network in 2022, since "in-patient volumes have returned to nearly pre-COVID levels in recent weeks" and vaccinations have ramped up.
The company has delivered more than 196,000 coronavirus vaccines since December 2020. Across its 13-hospital network, Holmberg said vaccine acceptance among staff has reached about 65%.
"Some people that already had [COVID-19] are not in a rush" to receive the vaccine, Holmberg said.
The insurer's virtual business proved popular during the pandemic, Holmberg said, and represents a growth opportunity for after the pandemic. In 2020, Highmark Health Plan members accessed 3.4 million virtual visits, a 5,000% increase from the year before. The company also expanded its partnership with Mercy Virtual in 2020 to add 64 tele-ICU beds. In the future, Highmark aims to add more virtual beds with additional hospitals.
The company is also leaning on tech to develop an updated consumer experience strategy it calls "Living Health," an initiative that aims to deliver online patient scheduling, care management and digital tools to engage patients and spot health conditions before they appear.
As part of the project, Highmark inked a six-year contract with Google Cloud in December, and in March also partnered with Verily, a life science affiliate of Alphabet.
The company expects to unveil its first digital tools related to this project at the end of the year. In the meantime, Holmberg said telehealth is here to stay.
"It's a highly valuable tool to maximize each patient's individual time, as well as creates an extended reach for clinicians to get patients who aren't mobile or need some flexibility in scheduling," Holmberg said. "It is going to take some work. We've gotta make sure to ingrain in into our culture, but it's ultimately a very powerful tool to take cost out of the healthcare system."
At the end of 2020, Highmark Health reported operating income of $490 million on revenues of $18 billion, compared to $241 million in operating income on revenues of $18 billion in 2019. The company's net operating income was $450 million in 2020, excluding a one-time, more than $500 million bump it received from a risk-corridor settlement from the ACA.