- Pittsburgh-based UPMC's finances are benefiting from its truce last year with area rival Highmark, ending an extended contract dispute during which Blue Cross Blue Shield system Highmark's members were out-of-network with UPMC.
- Highmark members receiving inpatient and outpatient care at UPMC's facilities increased by 30% and 26% in 2019, respectively, according to UPMC's financial results released Friday.
- However, Highmark only accounts for 6% of UPMC's patient services revenue, the majority of which is made up by Medicare. Also in the year, UPMC physician revenue was up 7% and outpatient revenue was up 6% overall. Hospital admissions and observation cases decreased by 1.3% to 360,300 visits.
Following four and a half months of legal battles, UPMC and Highmark signed a 10-year contract in June allowing access to UPMC facilities for Medicare Advantage and commercial patients covered by Highmark. The two integrated health systems came to an agreement after Pennsylvania Attorney General Josh Shapiro sued UPMC over allegedly violating the state's unfair trade practices and public charities law, and following a subsequent countersuit from UPMC.
"Highmark subscribers clearly value and want access to UPMC's doctors and services. And now that Highmark members have that assured access, the volume of Highmark members seeking care at UPMC is growing significantly across UPMC's inpatient and outpatient facilities," Leslie Davis, COO of UPMC Health Services Division, said in a statement.
For the year, UPMC saw income of $420 million, a significant jump up from 2018, where the system saw a net loss of $290 million.
The nonprofit integrated system with 40 hospitals and 700 doctors' offices and outpatient facilities is also the biggest payer in western Pennsylvania. It ended the year with about 3.6 million members covered by its insurance — 8% growth from 2018. UPMC controls 60% of the inpatient market in Allegheny County, 43% in western Pennsylvania and 26% in central Pennsylvania.
Inpatient volume was slightly lower in the year, but that didn't seem to drag down topline growth. The system saw revenue from operations of $20.6 billion in 2019, up almost 10% from 2018.
UPMC reported health services operating revenues of $12.4 billion and insurance services revenue of $10.5 billion, up almost 5% and 17% year over year, respectively. Its payer arm grew by roughly 180,000 members over the year, though profit brought in from UPMC's insurance business was down slightly from 2018 due to startup losses on a new managed care contract with CHC Southeast Zone, increased medical claims expenses and higher value-based payments, the company said.
The not-for-profit system said it spent $1.2 billion in community benefit in 2019, and shelled out another $971 million in capital expenditures and business investments. UPMC spent much of 2019 onboarding Western Maryland Health System, which became UPMC Western Maryland earlier this month and extends the system's reach into Allegheny County in the state. UPMC plans to invest $90 million over five years to build out and support the new buy.
Also late last year, the global nonprofit announced its snap-up of a 39-bed hospital in Ireland and broke ground for its first of five planned hospitals in China in Chengdu, one of the country's biggest cities.