The University of Pittsburgh Medical Center (UPMC) posted a $605 million profit for the first half of the year, a massive $433 million increase compared to the same period in 2020.
The nonprofit system generated $12.1 billion in operating revenue for the first half compared with $11.1 billion in 2020 during the onset of the COVID-19 pandemic. But while patient service revenue increased in the first half as volumes rebounded, the system’s insurance business declined by $146 million in the first half compared to the same period in 2020 due to higher claims and expenses.
UPMC saw a major rebound in its net patient service revenue for the first half, generating $6.3 billion compared to $5.3 billion in 2020.
The 40-hospital system’s medical and surgical admissions increased 8% compared to the prior year, and hospital outpatient revenue per workday increased by 21%.
Overall, UPMC had an operating margin of 5% compared with 1.5% in the first half of 2020.
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The system has also weathered higher expenses due to the pandemic, such as for staff and supplies. However, UPMC generated $1 billion excess revenues over expenses.
UPMC also posted $374 million in capital expenditures for the half and operating earnings before interest, taxes, depreciation and amortization of $949 million, nearly double the $515 million for the first half of 2020.
But while patient service revenue has rebounded significantly, the system’s insurance business declined from the highs of 2020.
UPMC’s operating income for the first half from insurance services declined by $146 million compared to the income it generated in 2020’s first half.
“The decrease in operating income is due largely to an increase in medical claims expense in 2021,” UPMC’s earnings report said. “The prior year volumes and related medical claims expense were significantly impacted by the government restricts as a result of the COVID-19 pandemic.”
Last year, UPMC had relied on major gains from its insurance business to help offset patient service revenue shortfalls due to the pandemic. The system earned $1 billion in earnings in 2020 thanks in large part to a $405 million boost in profits for the insurance division, which grew by 4 million members.
UPMC is the latest health system to report robust profits in the second half of the year as volumes started to rebound with the spread of vaccinations.
Nonprofit system Banner Health posted a $179 million operating income for the first half as elective procedure volumes returned to pre-pandemic levels.