UPMC revenue grows to record level despite Highmark breakup

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Pittsburgh-based UPMC reported operating revenue of more than $12 billion for the first time in the fiscal year that ended June 30, up 5.3 percent from revenue of $11.4 billion in FY 2014.

The boost in revenue was largely due to growth in the system's health plan membership and revenue attributable to UPMC's insurance services increasing $632 million from the year prior.

The system reported operating income of $338 million for the most-recent fiscal year, up $148 million from last year.

UPMC posted its strong financials despite its split from Highmark Health, which operates health insurer Highmark and Allegheny Health Network in Pittsburgh.

In 2011, Highmark announced it would acquire bankrupt West Penn Allegheny Health System — one of UPMC's largest competitors — in an attempt to maintain the viability of a lower-cost competitor to UPMC.

After Highmark announced the acquisition, UPMC said it would not renew its contract with the insurer, saying the contract would benefit a direct rival. The contract between the two organizations was set to expire at the end of 2014.

In June 2014, after much negotiation between the parties, Pennsylvania Governor Tom Corbett announced UPMC and Highmark had entered into a five-year transition agreement. However, since the agreement was announced, there has been a string of controversy surrounding the contract.

Commenting on UPMC's latest financial results, UPMC CFO Robert DeMichiei said, "This market has never been better," according to a TribLive report. "Although we've seen a decrease in Highmark business as we expected, we've seen more than an adequate uptick in the UPMC health plan business and the national insurance business and also the Medicare and exchange business."

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