- Insurance membership growth, rebounding patient utilization and strong investment gains drove Pittsburgh-based UPMC to net income of $1.2 billion in the first nine months of 2021.
- That's compared to $263 million in net income for the nonprofit during the same time last year.
- Though patients returning to medical care delayed earlier in the pandemic helped its provider division, UPMC's health plan margin shrank due to higher medical claims in the period, the system's management said.
UPMC, which has more than 40 hospitals and 800 doctor's office and outpatient sites, reported operating revenue of $18.3 billion in the first nine months of the year, up from $16.9 billion during the same time last year. Management attributed that bump to membership growth in its insurance business, along with an increase in patient utilization.
Its health plan — the largest medical insurer in western Pennsylvania — saw its Medicaid enrollment grow almost 10% year over year, even as commercial enrollment dropped 4%. UPMC's Medicare membership grew 2.5%.
Enrollment in Medicaid has spiked during the pandemic as more Americans turned to the safety net insurance amid economic uncertainty and widespread job losses. In a boon for the program's rolls, the federal government paused state redeterminations during COVID-19, allowing a greater number of Medicaid beneficiaries to stay on the program — now the largest single source of coverage in the U.S.
Large, for-profit payers have reported similar jumps in their Medicaid rolls. Centene, the biggest U.S. Medicaid insurer by membership, notched a 12% increase in Medicaid membership as of the quarter ended Sept. 30, while the second-largest, Anthem, reported 21% Medicaid growth. Meanwhile, UnitedHealth Group, Molina and CVS-owned Aetna (also all active in the safety-net insurance program) reported year-over-year Medicaid membership jumps of 17%, 11% and 4%, respectively, in the third quarter.
UPMC's total health plan membership was up 4% year over year, currently standing just shy of 4.1 million overall.
However, the division's operating income fell year over year and its operating margin shrunk to just 1.6%, as patients seeking out delayed care resulted in rising medical claims, management said in its financial results.
The increase in medical claims expense hiked UPMC's medical loss ratio to 86.5% as of Sept. 30. That's compared to an MLR of 85.9% in June, 83.7% in March and 84% in December.
However, UPMC's stronger hospital performance spurred healthier financials in the first nine months of 2021 as compared to 2020.
Outpatient revenue increased 17%, while physician services revenue grew 12%. Admissions and observations jumped 5% compared to same time last year, management said, noting inpatient volumes have generally rebounded to near pre-COVID-19 levels, while emergency room visits were up 9%.
However, like many of its peers, UPMC reported significantly higher expenses in the period, though expense growth didn't outpace that of revenues. UPMC's expenses increased about $1 billion year over year to $17.5 billion, as the system shelled out more on salaries and benefits, claims expenses and supplies.
COVID-19 pressures weighed heavily on the nonprofit sector in the quarter ended Sept. 30, as spending drove down operating incomes for systems like Cleveland Clinic, Providence Health, CommonSpirit and Kaiser Permanente.
However, UPMC recorded $798 million in operating income in the first nine months of 2021, more than double the $397 million notched during the same period in 2020. And the system also recognized $557 million in investment gains and other nonoperating income, compared to a nonoperating loss of $178 million during the same time last year.