Supplies, labor affect Highmark’s Q1 results

Stung by higher labor and medical supply costs at its 14hospital medical system, Highmark Health on Tuesday reported a net income loss of $150 million on revenue of $6.4 billion for the three months ending March 31.

The loss included a decline in equity of more than $200 million for the quarter, according to the health insurance and health system giant.

“Like other not- for- profit health care providers across the country, AHN is facing ongoing cost pressures related to staffing, inflation, supply chain and continuing COVID-19-related impacts, which we are proactively addressing through our operational and enterprise strategies,” Chief Financial Officer James Rohrbaugh said in a prepared statement.

As part of its strategy, the hospital system was “making significant financial investments in wages, benefits and incentives.”

AHN’s operating loss widened to $105.5 million from a loss of $23.3 million for the same quarter in 2021 while its deficit of revenue over expenses increased to $133 million from $14 million for the same quarter in 2021. The hospital system’s net margin fell to negative 13.3% from negative 1.4% a year ago.

Operating revenue at AHN rose 2.2% to $997.9 million for the most recent quarter from $976 million in 2021, while patient volume — combined observation cases and patient discharges — fell 2.1% or 595 cases for the three months ending March 31 when compared to a year ago.

The financial picture for Highmark Health overall was brighter than its AHN subsidiary, with $12 billion in cash and investments and net assets of nearly $10 billion as of March 31.

Highmark Health Plans, the company’s health insurance side of the business, reported an operating gain of more than $150 million for the period, mostly driven by strong performance in the commercial and government business and favorable claims development. Highmark’s diversified businesses reported combined earnings of more than $50 million for the quarter.

Subsidiaries United Concordia Dental had an operating gain of $35 million and Highmark Health’s stop-loss business, HM Insurance Group, reported an operating gain of $18 million.