UPMC's operating margin slips on lower patient volume: 8 things to know

UPMC's operating income was down 22 percent in the three months that ended Sept. 30, compared to the same period of last year, as the Pittsburgh-based health giant saw patient volumes decline.

Here are eight things to know about UPMC's most-recent financial and operational results.

1. UPMC reported revenues of $3.1 billion, up 5.5 percent from the same period of last year. The growth was attributable to increases in the system's net patient service revenue and insurance enrollment revenue.

2. A greater percentage of the system's patient service revenue came from government payers in the most-recent quarter compared to last year. UPMC's payer mix was 44 percent Medicare and 17 percent Medicaid in the period ended Sept. 30, up from 43 percent and 15 percent, respectively.

3. UPMC and Pittsburgh-based Highmark have been involved in a bitter Medicare Advantage dispute this year, and UPMC CFO Robert DeMichiei said UPMC is "moving away from a reliance on Highmark commercial activity," in a meeting with reporters Wednesday afternoon, according to a Pittsburgh Business Times report. Only 11 percent of UPMC's patient service revenues were attributable to Highmark commercial activity in the most-recent quarter, down from 17 percent in the same period of last year.

4. The system posted operating income of $72 million, down 22 percent from the same period a year ago, which was partially attributable to lower patient volumes.

5. For the three months that ended Sept. 30, UPMC saw total medical-surgical admissions and observation cases decrease 3 percent compared to the year prior.

6. UPMC posted an operating margin of 2.3 percent for the three-month period ended Sept. 30, down from 3.2 percent in the same quarter of last year.

7. The system ended the quarter with a net loss of $222 million, compared to a net surplus of $49 million in the same period a year ago. UPMC Mr. DeMichiei attributed the decline mostly to investment losses. "In day-to-day business operations, [we experienced] solid results," he said. "The investing results are driven by the markets."

8. The system recorded a $291 million loss on its investments for the quarter. That's a significant change from the $42 million loss UPMC reported in the same period a year ago.

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