Highmark Health reports financial strength for 2013

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Jun 02, 2014, 09:00 ET

PITTSBURGH, June 2, 2014 /PRNewswire/ -- Highmark Health today announced a strong financial foundation and sound operational and financial performance for 2013, citing more than $7 billion in cash and investments and a surplus of nearly $6 billion as of December 31, 2013. Today's news is the first financial report for the diversified health and wellness enterprise, which launched a year ago and now ranks as the nation's third-largest integrated health care delivery and financing network.

"Highmark Health has a strong financial foundation to invest in the future and work on behalf of our members and the community to develop innovative health care products and services, manage costs, improve quality and create an outstanding customer experience," said Karen Hanlon, Highmark Health senior vice president of finance.

The enterprise reported at an overall operating loss for 2013 of $186 million, driven by a goodwill impairment charge of $311 million.

Highmark Health serves as the parent company of Highmark Inc., which provides health insurance, dental insurance, vision care, stop loss insurance and other related health products and services; and Allegheny Health Network, which includes eight hospitals, physician organizations, a group purchasing organization and ambulatory surgery centers.

"Highmark Inc. is well capitalized and experienced operational performance very similar to the prior year with total revenues of $14.9 billion," said Hanlon. "The numbers appear to show a drop in net income, but that is because of the assets we acquired from our affiliation from the Delaware health plan in 2012. Overall, 2013 showed sound financial performance."

Highmark Inc.'s health plans continued to be market leaders in 2013 throughout Pennsylvania, Delaware and West Virginia, serving 5.3 million people. Operating margin as a percentage of health plan revenue was 1.5%. The health plans spent 90 cents of every premium dollar for the care of members. Despite the contract dispute with UPMC, Highmark Inc. retained 95 percent of its customers in Western Pennsylvania at year-end 2013.

Highmark Inc.'s diversified businesses in dental insurance, vision care and supplemental health products, including stop loss, had a strong year and contributed more than half of the company's 2013 operating margin. Combined, the three diversified businesses had net income of $168.5 million. The Highmark Inc.'s vision companies contributed $52.9 million, while the United Concordia Companies dental business contributed $68.7 million, and the HM insurance group, which provides supplemental health products, provided $46.9 million.

Highmark Inc. and its affiliated companies paid $197 million in non-payroll federal, state and local taxes in 2013, including $4 million in property taxes in Pennsylvania. In a commitment to serve the communities where it operates, Highmark Health's health plans and diversified businesses provided $164 million in contributions to create stronger, healthier communities.

At year-end 2013, Allegheny Health Network incurred a net loss of $107 million. In addition, it recorded a one-time, non-cash goodwill impairment of $311 million that is not reflective of the status of the projected turnaround of the West Penn Allegheny Health System.

"Allegheny Health Network has made progress in strengthening its financial position," said Hanlon. "The results do not include a full year for each of the hospital affiliations from 2013, but rather a partial year based on the effective date of each affiliation as we move to align the organization on a calendar year."

Significant investments at Allegheny Health Network were made in 2013 to improve the quality and cost of care. Capital expenditures of more than $120 million were made over various projects, including funding the recently opened surgery center in Monroeville, Pa., the construction of the 174,000 square-foot health and wellness pavilion in Wexford, Pa., and expansion across the hospital system in key clinical areas, including oncology, cardiovascular care and women's health.

SOURCE Highmark Health