Highmark Health lays out its plan after UPMC deal
With a 10- year agreement with UPMC now in hand, Highmark next year will be offering both “broad- based” commercial insurance plans with access to UPMC doctors and hospitals, as well as more economical, narrow network plans such as the popular Community Blue offerings, Highmark Health officials said Thursday.
The plans, said Highmark insurance head Tom Doran, will be customized for each of 1,400 different groups and employers. Rates will vary depending on which benefits are included.
Beyond that, officials indicated they are not expecting a major impact from the new pact with crosstown rival UPMC — on patient volume at Highmark’s own Allegheny Health Network or for Highmark Health’s strategy going forward.
“We are staying the course,” said President and CEO David Holmberg, who did allow that the health care operation will be making additional major announcements in coming weeks and months that he declined to detail.
Highmark Health has 200 active construction projects, including the AHN Cancer Institute Academic Center being built at the Allegheny General Hospital campus on the North Side.
Mr. Holmberg struck an upbeat tone during a 30- minute telephone media briefing on his organization’s midyear financial performance Thursday, describing the Pittsburgh- based system as
“maintaining steady, managed growth and continued financial strength and stability.”
While profitable, Highmark Health did see a drop in net income from a year ago, recording a $ 410 million operating gain for the first six months of 2019 compared with $ 502 million the year before.
A systemwide net profit of $ 629 million was bolstered by a $ 208 million “unrealized gain” attributed to a reporting change related to its equity investment portfolio. Without that gain, Highmark Health’s midyear bottom line of $ 421 million was down from $ 551 million for the same period in 2018.
Those operating and overall revenue declines were planned, Mr. Holmberg said, as part of Highmark’s ongoing investments in technology and analytics.
Highmark subsidiaries generally performed well, with the Allegheny Health Network extending its streak of positive operating margins to nine consecutive quarters. Its $ 19 million in operating revenue, however, was down from the $ 24 million reported a year ago.
The combined commercial and government health insurance plans brought in $ 420 million, down from $ 443 million for the first half of 2018. Health plan membership stands at 4.4 million with a greater than 95% regional retention rate in its commercial plans, the company said.
That’s a key statistic because in addition to UPMC Health Plan, Highmark has gained new competitors in the market in recent years, including Aetna, Cigna and United Healthcare.
Highmark Health’s diversified business arm — which includes the United Concordia Dental program, the HM Insurance Group stop- loss business and Visionworks — generated $ 80 million in revenue, $ 2 million less than a year ago. Highmark is in the process of selling the eye care company to Californiabased VSP Global.
HM Health Solutions, which offers information technology services and supports 13 Blue Cross Blue Shield plans nationwide, had an operating loss of $ 4 million. Officials said that was related to investments made “to enhance our data analytics and internal corporate capabilities.”