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University of Pittsburgh Medical Center Posts Record Profits

Posted on: Saturday, 13 August 2005, 00:00 CDT

Aug. 13--Profits hit a record high last year as the University of Pittsburgh Medical Center exceeded $5 billion in revenue for the first time, according to financial results released yesterday.

The operating margin -- the amount it makes on each dollar of revenue generated from patient services and other activities -- grew to 5.5 percent, or $274 million, according to the health system's unaudited figures, with revenue growing by more than $500 million during the fiscal year that ended in June.

Profits were up by 29 percent compared with fiscal 2004, when UPMC posted an operating profit of $213 million on revenue of nearly $4.5 billion, while revenue reached $5.01 billion.

Most of the profit increase came from UPMC's provider services division, which last year included 19 hospitals and more than 1,950 employed physicians with associated practices.The division posted an operating profit of $209 million on revenue of just over $4 billion.

"On the revenue side, we had very strong volumes, and we benefitted from increased market share," said Rob DeMichiei, chief financial officer for UPMC.

The health system was able to keep costs in check, too, due in part to continued integration of operations, he said.

Profits at UPMC's insurance subsidiary slipped a bit from $37 million during fiscal 2004 to $33 million last year, with officials attributing the decline to shrinking margins for its Medicaid business.

The health system's diversified services division -- which includes nursing homes, rehabilitation services and UPMC's hospital in Palermo, Italy -- posted a profit of $32 million, up from $25 million during fiscal 2004.

During the fourth quarter of the fiscal year, the division sold UPMC Rehabilitation Hospital for about $9.5 million, realizing a $1 million gain on the sale.

UPMC's market share increased to 47.6 percent of all hospital discharges in Allegheny County and 26 percent for the entire 29-county Western Pennsylvania region.

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Source: Pittsburgh Post-Gazette

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