UPMC accelerates post-COVID rebound with $574M earnings in Q1 2021

The University of Pittsburgh Medical Center (UPMC) posted $574 million in revenues after expenses for the fiscal quarter ending on March 31, 2021—a major turnaround from the $653 million it lost during the same time last year when COVID-19 battered the integrated nonprofit system and others.

UPMC’s first-quarter performance also represents more than half of the $1 billion in full-year revenues after expenses it reported for 2020.

Operating revenues for the quarter came in a hair over $6 billion, compared to the $5.5 billion recorded the year prior.

UPMC also reported a year-over-year bump in total operating expenses, from $549 million to $573 million. These increases were split among the system’s supply and service purchases, insurance claim expenses and, primarily, its salary and bonus payouts.

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UPMC’s business is comprised of care delivery, insurance services and other commercial innovation investments, the last of which gained $326 million for the organization during the quarter. UPMC’s provider system is comprised of more than 40 hospitals and 700 clinical locations in and around Pennsylvania.

The nonprofit said that it is sitting on a total of $10.5 billion in cash and investments and has 147 days of cash on hand.

It also reported the recognition of $108 million in federal COVID-19 support funding as operating revenue during the quarter. UPMC said it has received an aggregate of roughly $618 million in CARES Act funding across 90 individual facilities as of the quarter’s end.

The Pennsylvania organization said that its volumes “have largely rebounded to near pre-COVID-19 levels” but that it is still feeling the pandemic’s impact on some of its operations. The system’s hospital medical-surgical admissions and observation cases have declined 4% compared to the same period, for example.

At the same time, UPMC reported that its hospital outpatient revenue per workday rose 8% year over year while physician service revenue per weekday increased 4%. Enrollment in its insurance plans was also up 7% year over year.

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As nonprofit systems around the country recover from COVID-19 disruptions, recent financials from nonprofit systems have ranged from tempered losses to comfortable rebounds.

UPMC now joins Mayo Clinic, CommonSpirit Health and Advocate Aurora Health on the stronger side of that spectrum. Each of those systems reported hundreds of millions in gains for 2021’s opening quarter in spite of rising costs and pockmarked utilization trends.

Others like Providence Health, Atrium Health, Sutter Health and most recently Ascension said they ate losses of tens or hundreds of millions during the quarter. Each pointed fingers at diminished volumes and increased operating expenses.

Industry-wide data published this week by Kaufman Hall offered muted hope for systems still clawing their way back from 2020’s damage.

The group’s April findings suggest that hospitals’ volumes and margins will continue to stay well above the low points of the pandemic. However, month-over-month increases appear to be unlikely as lingering post-COVID-19 uncertainties are leading to unsteady results, the group said.