UPMC's operating income down 35% in first 9 months of fiscal year

UPMC saw revenues increase in the first nine months of fiscal year 2017, but the Pittsburgh-based health system ended the period with lower operating income than in the first nine months of fiscal year 2016. 

UPMC recorded operating income of $178 million on revenues of $10.6 billion in the first nine months of fiscal year 2017, compared to operating income of $272 million on revenues of $9.5 billion in the same period last year.

"Prior-year operating income benefitted from $46 million of interest and favorable adjustment of reserves related to the Highmark Oncology arbitration ruling," said UPMC. The decrease in operating income was also driven by expense inflation, changes in payer mix and increased physician investment, according to UPMC.

UPMC's operating margin shrunk from 2.8 percent in the first nine months of fiscal year 2016 to 1.7 percent in the same period of fiscal year 2017. 

After factoring in gains on investments, UPMC ended the first nine months of fiscal year 2017 with net income of $871 million. The system incurred a $305 million loss on its investments in first nine months of fiscal year 2016, which resulted in a net loss of $36 million for the period.

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