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UPMC Reports Record Fiscal Year 2007 Results, Reinvests to Sustain World-Class Patient Care


With growing patient volumes, increased membership in Insurance Services and strong investment returns, the University of Pittsburgh Medical Center (UPMC) today reported record revenues and excess margin for the fiscal year ended June 30, 2007. The nationally acclaimed health system posted total revenues of $6.8 billion for the year, up 13 percent. Excess margin, representing both operating results and investment gains, rose 18 percent to $618 million for the year, according to the unaudited financial report.

The operating margin was $220 million, a healthy 3.5 percent of operating revenues. Margin decreased by $101 million from the prior year because of investments in physician recruitment, electronic health record technology and new and expanded facilities.

“We are pleased with our financial performance for fiscal year 2007, which allows us to continue making the investments necessary for future growth and sustained excellence,” said Chief Financial Officer Robert DeMichiei. “Our excess margin is being reinvested in ways that will strengthen UPMC and the communities we serve through new and enhanced clinical programs for our patients, world-class facilities, such as the new Children’s Hospital under construction in Lawrenceville, and increased academic support for the University of Pittsburgh.”

During the fiscal year, UPMC added more than 170 physicians to those directly employed by the system, bringing the total to about 2,300. Overall employment at UPMC grew by 2,000 people to more than 45,000 as the health system expanded its clinical programs and commercial and international ventures, such as a new cancer center that opened in May in Dublin, Ireland.

UPMC’s clinical excellence—as recognized by UPMC’s 13th place ranking in the latest U.S. News & World Report list of “America’s Best Hospitals”—continued to attract growing numbers of patients. Medical-surgical admissions rose 2.6 percent for the year compared with the prior period, while outpatient activity increased 11 percent.

Membership in UPMC’s health insurance companies increased to 1.16 million for the year, a gain of more than 276,000 members. The increase is largely the result of a large Medicaid behavioral health contract, strong Medicare growth and implementation of a disability product.

A key contributor to UPMC’s financial performance was the 19.5 percent return on its investment portfolio. As a result, net investing activity rose to $403 million from $206 million in the prior year. “Our diversified portfolio mirrored the stock market in producing stellar gains for the year,” noted Mr. DeMichiei. “However, we don’t count on such gains every year, given the volatility of the stock market—as recent trends have reminded all investors. Our goal is to produce superior investment results over the long term.”

UPMC continued to strengthen its balance sheet, a critical factor in the health system’s ability to finance future investments. Unrestricted cash over long term debt, one measure of financial health, grew by $465 million to $703 million at fiscal year end. “This measure is in line with other AA-rated medical systems,” said Mr. DeMichiei. “This financial cushion is particularly important as we face heavy capital investments in the future, potentially including renovations to Mercy Hospital.”

Capital spending in the last fiscal year totaled $458 million. This included ongoing construction costs of $185 million for the new Children’s Hospital and $105 million on UPMC’s information technology systems to enhance patient care and safety.

The University of Pittsburgh Medical Center is the largest integrated health care enterprise in Pennsylvania and one of the leading nonprofit health systems in the country. It has appeared eight times on the prestigious U.S. News & World Report Honor Roll of “America’s Best Hospitals,” most recently earning 13th position in 2007. Widely recognized for its innovations in patient care, research, technology and health care management, UPMC has transformed the economic landscape in western Pennsylvania. The region’s largest employer, with 45,000 employees and nearly $7 billion in revenue, UPMC comprises 19 tertiary, specialty and community hospitals, 400 outpatient sites and doctors’ offices, retirement and long-term care facilities, an insurance plan with more than 1 million members, and commercial and international ventures. About 5,000 physicians are affiliated with UPMC, including more than 2,300 employed physicians. For more information, visit


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