UPMC's net income hits $1.3B in 2017
- UPMC touted strong performance on both its clinical and insurance sides last year, posting operating revenue of $16 billion, up from $13.4 billion in 2016.
- Net income grew to $1.3 billion, fueled by strong operating and investing results and integration of UPMC Pinnacle into UPMC operations, according to a year-end financial report. Harrisburg-based PinnacleHealth was UPMC’s largest-ever acquisition and the first to involve an entire health system.
- Operating income increased to $245 million from $215 million the prior year. The health system’s operating margin inched up from 0.5% in 2016 to 0.6% at the end of 2017.
During the year, UPMC’s medical/surgical admissions and observations increased 15% versus the previous year. Outpatient revenue per workday was up 28%, while physician service revenue grew 11%.
On the insurance side, UPMC’s Insurance Services Division grew 8% to 3.4 million members. Insurance revenues for 2017 increased to $7.7 billion, with operating income of $39 million, as higher underwriting income from subscriber increases more than offset higher administrative costs associated with growth, the health system said.
“UPMC’s financial strength supports our preferred provider status in this region and enables us to continue investing back into the organization to meet the increasing demand for UPMC’s advanced care,” Robert DeMichiei, executive vice president and chief financial officer, said in a statement.
As Pennsylvania’s largest nongovernmental employer, UPMC has built a reputation for innovation.
The health system’s venture arm, UPMC Enterprises, has invested in and created strategic alliances with startups such as behavioral health platform Lantern, with an eye on growing the organization’s brand in the future.
Recently, UPMC Enterprises refocused its endeavors into four key components: translational science, consumer, improving outcomes and infrastructure.
“We’re continuing to push on our original strategy that is able to leverage the living lab at UPMC” to advance healthcare goals, Dr. Rasu Shrestha, chief innovation officer at UPMC and EVP at UPMC Enterprises, told Healthcare Dive recently.
The system is also pumping money into capital projects. Last fall, UPMC said it will invest $2 billion for a new UPMC Heart and Transplant Hospital, UPMC Hillman Cancer Center and UPMC Vision and Rehabilitation Hospital on the campuses of its Mercy, Presbyterian and Shadyside hospitals.