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Pennsylvania Players: Highmark and UPMC Continue to Battle

Analysis  |  By Jack O'Brien  
   March 26, 2018

Two health systems show no signs of easing up their competitive relationship after Highmark Health’s recent earnings report.

Last week’s earnings report from integrated provider and payer network Highmark Health will likely have an impact on the balance of power with University of Pittsburgh Medical Center (UPMC) as the two Pennsylvania health systems fight for control of regional markets.

For years, Highmark and UPMC have been locked in a competitive dynamic to win customers, crucial geographic markets, and even courtroom decisions.

The 2017 earnings report was seen as a positive for Highmark as it continues to challenge the UPMC system for footing in the Keystone State, bolstered by an excess of revenue over expenses of $1.1 billion and a year-over-year operating gain increase of $554 million.

UPMC’s 2017 earnings report indicated the system achieved a net income of $1.3 billion and gained $245 million from investing and financing activities.

Additionally, Highmark recorded its first profits from insurance exchanges established by the Affordable Care Act while its Allegheny Health Network (AHN) recorded a $31 million gain in operating revenue in 2017 after posting a $33 million loss in 2016.

Evan Camden, an associate analyst for Decision Resources Group, told HealthLeaders Media the recent earnings indicate Highmark is hitting its stride, showing profitability, and offering counterpunches to UPMC’s recent strategic moves. Camden also said the activity is part of a growing trend by both systems to establish regional, and eventually, statewide dominance.

“A lot of times people hone in on one area like Harrisburg, Scranton, or Pittsburgh,” Camden said. “I see in each market what they’re doing, and I see that they have their hand in the cookie jar statewide. You have to think of this not as a Harrisburg dynamic or a Pittsburgh dynamic; it’s a Pennsylvania dynamic that is going on between [Highmark and UPMC].”

Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.

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