UPMC reports $14B in revenue; operating margin narrows to 1.7%

UPMC saw revenues increase by more than $1 billion in fiscal year 2017, but the Pittsburgh-based system reported a year-over-year decrease of 22.5 percent in operating income.

UPMC recorded revenues of $14.3 billion in the fiscal year that ended June 30, compared to revenues of $12.8 billion in fiscal year 2016.

The system said medical-surgical admissions and observations cases increased 9 percent in fiscal year 2017 compared to the prior year. Enrollment in UPMC's health plan grew by nearly 150,000 — to 3.2 million members — in fiscal year 2017 compared to the prior year.

But UPMC recorded a 12.5 percent year-over-year increase in expenses. Once that was taken into account, the health system recorded operating income of $240 million in fiscal year 2017, down 22.5 percent from operating income of $310 million in fiscal year 2016.

"Prior-year operating income benefited from $46 million of interest and favorable adjustment of reserves related to the settlement of the Highmark oncology dispute," said UPMC. The system also attributed the decrease in operating income to "expense inflation, payer mix and increased physician investment."

UPMC reported an operating margin of 1.7 percent for fiscal year 2017, compared to an operating margin of 2.4 percent in the prior year.

The system ended fiscal year 2017 with a net income of $990.5 million, compared to a net income of $134.4 million in fiscal year 2016. The system said net income in fiscal year 2017 was "driven by strong operating and investing results, and augmented by the affiliation with UPMC Susquehanna, reflecting Susquehanna's strong financial position being consolidated into UPMC operations."


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