Dive Brief:
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UPMC produced strong Q1 fiscal 2018 numbers that included $3.9 billion in operating revenue, which was a nearly 15% increase from a year ago.
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The health system’s net income skyrocketed by 255% to $901 million compared to last fiscal year’s first quarter. Operating margins dropped from 1.8% last year to 1.6% in the first quarter, which was connected to declining margins in UPMC’s health services division from 1% last year to 0.4% in the first quarter, reported Becker’s Hospital Review.
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Also, on Friday, UPMC announced it will invest $2 billion for a new UPMC Heart and Transplant Hospital, UPMC Hillman Cancer Hospital and UPMC Vision and Rehabilitation Hospital on the campuses of UPMC’s Mercy, Presbyterian and Shadyside hospitals. The Vision and Rehabilitation Hospital is slated to open in 2020. The UPMC Hillman Cancer Center is expected to open in 2022. There was no date given for the Heart and Transplant Hospital's expected opening.
Dive Insight:
UPMC credited its overall strong operating and investing results, with help from its affiliation with UPMC Pinnacle for its positive quarter. The health system bought PinnacleHealth, a Harrisburg-based system, in its largest-ever purchase and its first to involve an entire health system.
That purchase is helping UPMC expand its market share. UPMC doesn't have that problem in western Pennsylvania. It currently owns about 41% of the med-surg market in the western part of the state, including 58% in Allegheny County.
UPMC’s operating income, which the system reinvests in programs that support patient care, was $62 million in the first quarter. UPMC also spent $168 million in the quarter on capital expenditures and business investments that improved facilities, equipment, technology, education and operational strategies “to enhance patient care.”
The integrated system’s Insurance Services Division grew to more than 3.2 million members by the end of the quarter, which was a 7% increase.
UPMC’s first-quarter earnings report comes two months after the health system announced its operating income dropped 22.5% year-over-year for fiscal year 2017. UPMC did enjoy a $1 billion increase in revenues to $14.4 billion in the previous fiscal year.