Despite hauling in higher operational revenues, UPMC saw a $35 million year-over-year decline in operating income for the fiscal year ended Dec. 31, 2021.
In financial documents published Monday, the integrated academic system reported $24.4 billion in operating revenues during 2021, up from the $23.1 billion posted the year prior. Operating income landed at $843 million (3.5% operating margin before income tax and interest expense), down from 2020’s $878 million (3.8% operating margin).
Contributions to the year’s operating income came primarily from the organization’s health services group, which notched higher volumes and revenues across inpatient, outpatient and physician services compared to the previous year.
Total operating revenues and expenses for this group were $14.3 billion and $13.7 billion, resulting in an operating income of $658 million (4.6% operating margin). These numbers were up across the board from 2020, which had $13.5 billion in operating revenues, $13 billion in expenses and $456 million operating income (3.4% operating margin).
Driving the increases were a 3% year-over-year increase in hospital medical-surgical admissions and observation cases, a 13% increase in hospital outpatient revenue per workday and an 11% increase in physician service revenue per weekday, according to the filing.
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Salaries, professional fees and benefits, on the other hand, jumped $432 million from the prior year while supplies, purchased services and other general expenses grew by $243 million.
UPMC’s insurance services group came in with a more modest operating income of $185 million (1.4% operating margin), comprised of nearly $13 billion in total operating revenues and $12.8 billion in expenses.
The unit boasted a 3% increase in enrollment to roughly 4.1 million members as of Dec. 31 but was weighed down by the increased medical claims associated with the year’s increased utilization, the system reported. These totaled more than $11.3 billion across the year with a trailing 12-month medical expense ratio of 86.9%, according to the filing.
UPMC—which has 40 hospitals, 800 clinical locations, a 92,000-person workforce and a new president and CEO as of August—highlighted $350 million in targeted investments “to bolster protective equipment and provide pay protection and enhanced benefits for our employees.”
The organization also reported providing over 785,000 COVID-19 vaccine doses and monoclonal antibody treatments to nearly 23,000 patients as of February 2022. It recognized $264 million in federal pandemic relief funding as “other” operating revenue during 2021.
All told, UPMC logged almost $1.5 billion excess of revenues over expenses attributable to controlling interest, thanks in part to $810 million gained from its investing and financing. The nonprofit had $10.7 billion in total cash and investments as well as 148 days of cash on hand as of year-end.