- In the first half of this year, The University of Pittsburgh Medical Center reported operating revenue of $11.1 billion, a more than 9% increase compared to the first half of last year, per the system’s newly released financial results. Operating income dipped from $79 million to $59 million because of rising expenses and flattened volume amid the ongoing coronavirus pandemic.
- Investment losses of $423 million from a flagging market pushed the Pittsburgh-based nonprofit into the red: UPMC reported a loss of $165 million in the first half of 2020, down from a profit of $372 million same time last year.
- However, UPMC’s results in the second quarter alone were much more promising. Operating revenue jumped almost 9.5% year over year, and despite a more than 8% increase in expenses, operating income almost tripled, from $34.2 million to $99.8 million. Overall profit, including investments, was $487.8 million, almost six times higher than the second quarter of 2019.
With hospital operators releasing results from the first two quarters of the year, the industry is getting a longitudinal picture of the pandemic’s negative effects on providers. UPMC, like many other large nonprofits, seems to be weathering the pandemic better than smaller outfits with shallower pockets, buoyed by diversified revenue streams, a strong balance sheet and millions in federal relief funds.
UPMC saw reduced volumes in the second quarter, but they began returning back to near-normal toward the end of June, the operator reported.
For the six months ended June 30, UPMC’s hospital medical-surgical admissions and observation cases dropped 13% compared to the same time last year. Patient days fell almost 9%. Hospital outpatient revenue per workday decreased 4% and physician service revenue per weekday fell 14%.
However, in a bright spot for the integrated system, membership enrollment in its insurance business grew 9% versus June last year, to nearly 3.9 million members. UPMC’s insurance services were profitable in the first half of the year, bringing in $275 million in operating income for the health system, even as its clinical operations lost the company $216 million, mostly due to lower patient volumes as a result of the pandemic.
Comparatively, in the first half of 2019, UPMC’s insurance business brought in just $81 million in operating income, and health services lost $2 million.
To date, UPMC has received $400 million in grants from the Coronavirus Aid, Relief and Security Act. Of that pot, $257 million was recognized as operating revenue in the second quarter. The integrated nonprofit system also received $800 million in advanced Medicare payments, which do have to be paid back to the federal government. Hospital associations have lobbied heavily against repaying the loans, citing the pandemic’s continued presence in the U.S.
Due to the ongoing uncertainty, UPMC temporarily issued $2.17 billion of debt, to increase working capital. In the second quarter the system also issued tax-exempt bonds, leaving it was nearly $7 billion in debt outstanding. UPMC, one of the biggest nonprofit operators in the U.S. with more than 40 hospitals and 700 clinical sites across Pennsylvania, New York and Ohio, has 131 days of cash on hand.
All major for-profit hospital chains reported increased profits in the second quarter, but nonprofits’ results have been more varied. Mayo Clinic was still in the black, though profit was slightly down on a year-over-year basis. Advocate Aurora saw its profit increase slightly, while Kaiser more than doubled its net income in the quarter. Some other systems reported massive losses stemming from dampened revenue and investment downturns, including Sutter Health, Providence Health and Banner Health.