- UPMC’s operating revenues grew 12 percent during the first three quarters of the fiscal year, increasing by $570 million to $5.2 billion compared to the same period year ago.
- Robust operating income for the first nine months totaled $152 million.
- Cash flow income, defined as operating earnings before interest, depreciation and amortization (EBIDA), was solid at $396 million in the nine-month period.
- Combined, these strong results allow UPMC to continue investing in the future of the health enterprise, its facilities and the Pittsburgh region as well as in strategic business initiatives to generate future revenue and jobs growth.
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PITTSBURGH, Pa., May 7, 2008 – UPMC announced today that operating revenues for the first nine months of fiscal year 2008 grew by more than 12 percent to $5.2 billion, primarily driven by growth in hospital admissions, outpatient services, insurance services membership and the integration of Mercy Hospital in January.
Operating earnings before interest, depreciation and amortization (EBIDA), a key measure of financial performance and the ability to generate resources, was solid at $396 million in the nine-month period ending March 31, 2008. Operating income was $152 million, down 18 percent compared to the same period year ago. The change is the result of higher depreciation expenses related to major capital investments, expenditures for various growth initiatives, UPMC’s commitment to the Pittsburgh Promise scholarship fund and lower federal reimbursement.
“UPMC’s strong operating results allow us to fulfill our core mission of providing outstanding patient care while shaping tomorrow’s health system,” said Robert A. DeMichiei, senior vice president and chief financial officer. “We are able to continue investing in the future of UPMC and western Pennsylvania – in a new, state-of-the-art Children’s Hospital, a major patient tower at UPMC Passavant and for other capital improvements, to honor our commitments to the Pittsburgh community, maintain our significant investment in physician recruitment, and for a number of international and commercial business initiatives that promise to create incremental revenue and jobs.”
UPMC’s growth can be attributed to its continued ability to attract increasing numbers of patients, both in its hospitals and at outpatient locations, and the impact of the merger with Mercy. Enrollment in UPMC’s insurance services grew 12 percent to more than 1.25 million members. Total admissions at UPMC’s 20 hospitals were up 6 percent to 134,583; medical-surgical admissions were up 6.1 percent; outpatient activity rose 9 percent; and physician service revenue increased 14 percent for the first three quarters compared to the same period year ago.
“We are pleased with the strength and continued growth of UPMC’s core operations,” said Elizabeth B. Concordia, executive vice president, UPMC and president, Hospital and Community Services Division. “Even in a challenging health care environment, UPMC has achieved solid financial and operating performance. Integration activities underway at Mercy are resulting in operational efficiencies as well as an expansion of patient care services.”
UPMC invested $438 million in capital expenditures during the latest nine months, up 26 percent from $348 million in the prior period. Capital spending for the full fiscal year is projected to exceed $590 million. Major projects include the construction of the new Children’s Hospital in Lawrenceville, the re-engineering of information technology infrastructure and investments in various patient care software applications. In December 2007, UPMC pledged an initial $10 million to the Pittsburgh Promise to help Pittsburgh Public School graduates with post-secondary education, along with an additional $90 million challenge grant intended to spur matching contributions from others in the community.
Lower returns in the financial markets compared to last year and an accounting change in the prior fiscal year led to a reduction in UPMC’s investment income from $279 million in the first nine months of 2007 to a loss of $151 million in the most recent nine-month period. The latest results reflect a 0.5 percent loss on UPMC’s investment portfolio compared to a 12.9 percent gain for the same period a year ago.
“Significant fluctuations in reported quarterly investment results can be attributed to ‘mark-to-market’ accounting practices,” said C. Talbot Heppenstall, Jr., senior vice president and treasurer. “UPMC’s investment returns continue to mirror the performance of the financial markets. Our investment portfolio has a long-term perspective and has generated an annualized gain of 11.5 percent over the five-year period ending March 31, 2008.”
Net income, which includes both investment and operating income, declined from $459 million for the first nine months of fiscal year 2007 to a loss of $7 million for the first nine months of fiscal year 2008.
UPMC is an integrated global health enterprise headquartered in Pittsburgh, Pennsylvania, and one of the leading nonprofit health systems in the United States. As western Pennsylvania’s largest employer, with 48,000 employees and nearly $7 billion in revenue, UPMC is a leader in the transformation of the economy of the region into one based on medicine, research, and technology. By integrating 20 hospitals, 400 doctors’ offices and outpatient sites, long-term care facilities, and a major insurance plan, UPMC has advanced the quality and efficiency of health care and developed internationally renowned programs in transplantation, cancer, neurosurgery, psychiatry, orthopaedics, and sports medicine, among others. UPMC is commercializing its medical and technological expertise by nurturing new companies, developing strategic business relationships with some of the world’s leading multinational corporations, and expanding into international markets, including Italy, Ireland, the United Kingdom, and Qatar. For more information about UPMC, visit our website at www.upmc.com.