UPMC posts 22.5% drop in operating income for FY 2017
- University of Pittsburgh Medical Center reported a 22.5% year-over-year decline in operating income for its fiscal year 2017, despite a more than $1 billion bump in revenues to $14.4 billion, Becker’s Hospital CFO reports.
- UPMC attributed the revenue spurt to higher enrollments in its insurance business, UPMC Health Plan, as well as growth in medical-surgical admissions and observations. Some of that was fueled by recent acquisitions, the Pittsburgh Post-Gazette notes.
- Net income totaled $991 million while community benefits — just reported for FY 2016 — reached $912 million. Among those contributions were $288 million to care for vulnerable residents in UPMC communities and $217 million for health and wellness and community education programs.
Net income was “driven by strong operating and investing results, and augmented by the affiliation of UPMC Susquehanna, reflecting Susquehanna’s strong financial position being consolidated into UPMC operations,” the health system said. The encouraging revenue could be a sign UPMC's investments and expansions will pay off.
In June, UPMC Susquehanna agreed to buy two Pennsylvania hospitals from Quorum Health — 70-bed Sunbury Community Hospital and 47-bed Lock Haven Hospital. The deal is expected to close by the end of this month.
UPMC added the Susquehanna system in October 2016 and has been expanding its footprint in central Pennsylvania. It currently owns about 41% of the med-surg market in western part of the state, including 58% in Allegheny County.
In July, the system bought four central Pennsylvania hospitals from Community Health Systems, a Tennessee-based hospital chain. And last month, it finalized an agreement to acquire Harrisburg-based PinnacleHealth, paving the way head-to-head competition with the University of Pennsylvania Health System, which owns Lancaster General Health.
During FY 2017, UPMC spent $589 on capital and business investments to aimed at improving facilities, technology, education and operational strategies around patient care, the system said. UPMC admissions and observations increased 9%, while its insurance enrollments reached 3.2 million.
- Becker's Hospital CFO Report UPMC reports $14B in revenue; operating margin narrows to 1.7%
- Pittsburgh Post-Gazette Acquisitions bolster UPMC revenue to $14.35 billion