Highmark says seniors who left over UPMC feud ‘returning home,’ reports $18B in 2019 revenue

Nearly 8 out of 10 seniors who left their Highmark insurance plans last year because they feared losing access to UPMC hospitals and doctors have since switched back, Highmark Health CFO Saurabh Tripathi said.

“A majority of our customers came back to us; we are seeing really good growth in our senior populations,” Tripathi said by phone Tuesday afternoon.

A 10-year contract inked last summer between Highmark and UPMC — rival Downtown Pittsburgh-based nonprofit health giants that each control both insurance and provider arms — ensured affordable access for most Highmark-insured patients. The nine months leading up to it involved a chaotic flurry of plan-switching among confused seniors and cancer patients amid legal battles led by state Attorney General Josh Shapiro.

The agreement eased concerns over a controversial prepay rule for hundreds of thousands of Western Pennsylvanians.

“We have seen customers returning back home,” Tripathi said. “We have seen good growth in senior (membership), and good growth in commercial.”

The system touts a 98% to 100% retention rate in plans among its 5.6 million core insurance members nationwide, including 3.5 million in Western Pennsylvania, as contributing to an increasingly strong financial position.

Last year marked its third straight year in the black. Net assets have increased by nearly $1 billion from a year ago, up to $7.6 billion.

Highmark Health took in about $18 billion in revenue in 2019 — nearly $800 million less than the previous year, figures disclosed by Highmark officials show. Its 2019 operating gain totaled $241 million — down from $526 million in 2018 and $616 million in 2017.

Much of the drop can be attributed to the “strategic decision” to sell off Highmark’s eye care business, Visionworks, which had been bringing in about $1.1 billion in total revenue, Tripathi said.

Upticks in insurance plan enrollment in Western Pennsylvania, Delaware and nationwide helped offset the loss of about 62,000 members that Highmark stopped serving when it pulled out of West Virginia’s Medicaid market in mid-2019.

“We are the most dominant insurer in three states,” including Pennsylvania, West Virginia and Delaware, Tripathi said.

Allegheny Health Network made gains across several areas.

In 2019, AHN reported about 124,000 total discharges and observations, up nearly 3% from 2018.

Oncology cases climbed by nearly 9%.

Births climbed by 5%, with more than 8,000 babies delivered by AHN physicians last year, the system’s most ever.

Physician visits increased by more than 10%, ambulatory surgery center volume grew by 9% and surgical cases increased by 1%.

AHN reported total operating revenues of $3.6 billion, a year-over-year increase of almost $300 million, or nearly 9%, and a 4-year increase of 35%.

For the year, AHN also reported net income of $98 million, up from $3 million in 2018. That improvement is largely attributable to the network’s strong investment performance in 2019.

“AHN continues to strengthen and expand — both in terms of its volume as well as the breadth and depth of its services,” Tripathi said. “Its balance sheet has never been stronger.”

AHN has more than 200 construction projects underway, including neighborhood hospitals and renovations and upgrades to existing facilities, and a roughly $300 million commitment to expanding cancer care.

In 2019, AHN opened a new nursing school near Allegheny Valley Hospital in Harrison, expanded a neonatal intensive care unit at West Penn Hospital and opened a new cancer center at Forbes Hospital and an oncology clinic in Robinson, in addition to expansions in Butler and Beaver counties and New York.

The nonprofit health system — which must pump profits back into operations and services benefiting the public good — contributed $27.8 million in corporate and foundation giving in 2019 and $178.68 million in charity and uncompensated care.