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By Dave Muoio
Rising expenses outpaced modest revenue gains across UPMC’s health services and insurance services divisions alike during the COVID-heavy first quarter of 2022, the integrated academic system reported in its latest financial and operating report.
Total operating revenues across both businesses during the most recent quarter were US$6.1 billion, just US$80 million above the same period in 2021.
Expenses, on the other hand, grew from US$5.7 billion in Q1 2020 to more than US$6 billion in Q1 2021.
The result was an operating income of US$50 million (0.8% margin), down year over year from US$288 million (4.8% margin). UPMC had recognized US$32 million and US$108 million in federal relief funding during those respective quarters.
Not included there is the US$242 million in losses racked up from UPMC’s investing and financing activities, representing another turnaround for the organization from Q1 2021’s US$326 million investing gain.
Reduced volumes and pricey labour were the story within UPMC’s health services division. Inpatient activity decreased 8 per cent year over year while overall average length of stay increased from 7.4 days to eight days—both due to rising COVID-19 cases across UPMC’s markets.
Health services also saw its salaries, professional fees and benefits expenses grow US$173 million year over year as supplies expenses increased by US$54 million.
Within insurances services, UPMC saw a roughly 50,000-person decline in membership from December “primarily due to planned membership changes within third-party administration,” although its current total still represents a 1 per cent increase over the first quarter of 2021’s total.
The division’s medical expense ratio continued the upward climb seen across 2021 as utilization increased. As of March 31, 2022, UPMC had a trailing 12-month ratio of 87.6 per cent—up from the 83.7 per cent seen at the end of 2021’s first quarter as well as the 87 per cent of Dec. 31, 2021.
UPMC said it had roughly US$757 million in cash and cash equivalents on hand as of the end of the quarter.
The organization also touted a handful of ongoing or recently completed projects, such as March’s reopening of a renovated clinic in Pittsburgh, the opening of a outpatient care center in Sewickley, Pennsylvania and the continued construction of UPMC Mercy Pavilion for patients needing physical rehabilitation or eye care.
Across 2021, UPMC logged total operating revenues of US$24.4 billion and US$23.5 billion in total operating expenses for an operating income of US$843 million. Strong investments drove the 40-hospital integrated academic system to a net profit of US$1.5 billion, up from the prior year’s US$1.1 billion.
UPMC is one among several large nonprofits hit hard by January’s omicron surge. Advocate Aurora, Mayo Clinic, Providence, Cleveland Clinic and others recently reported hundreds of millions in losses for the opening quarter of 2022.
