UPMC recorded a $338.9 million operating loss (-1.1 operating margin) in 2024 and an operating loss of $198.3 million (-0.7% margin) in 2023.
UPMC said in the report that its insurance division’s losses were driven by increased medical use and rising pharmacy costs, which include expenses for GLP-1 drugs. Fitch noted in its March 6 report that UPMC’s provider side showed “meaningful operational improvement” but these improvements were “not sufficient to offset the significant challenges faced by the insurance division.”
Fitch said UPMC’s management aims to return the system to profitability in 2025 by leveraging improved Medicaid rates, which were finalized in November and went into effect Jan. 1. The system will also continue implementing efficiency and margin initiatives.
The ratings agency said that while higher rates will likely drive improvements for the insurance division, it believes UPMC still faces challenges in 2025 that could slow progress. These include transitioning to a single EHR (Epic), federal policy uncertainties and persistent sector headwinds.
The affirmation of the “A” rating was based on the system’s leading market share position in its core Western Pennsylvania market and its “significant level of revenue diversity” across several markets.
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