The Allegheny Health Network Seneca Valley Outpatient Center is at 232 Wise Road, Jackson Township. Submitted photo

Financial statements issued earlier this month indicate two Pittsburgh hospitals sustained operating losses last year similar to the losses sustained by Independence Health System over the same period.

For the 2023 fiscal year, Allegheny Health Network sustained a loss of $172.75 million, a slight decrease over the $180.8 million loss it suffered in 2022. Meanwhile, UPMC reported an operating loss of $198 million, more than reversing the $162 million profit it collected during the 2022 fiscal year.

Comparatively, Butler Health System, now part of Independence Health System, recorded an operating loss of $36.7 million in 2023. The other half of the recently merged health system, Excela Health, reported an operating losses totaling $35.88 million, according to its four quarterly reports over 2023, indicating a total operating loss of $72.58 million for Independence Health System over that span.

Both Butler Health and Excela Health keep two sets of numbers — one for the “Obligated Group” and another for the “Consolidated Group.” The numbers listed above relate to the consolidated group, which includes all entities of the two hospitals, and obligated revenue figures for 2022 is largely attributable to the addition of Clarion Hospital to the Butler Health System portfolio in February 2023.

The numbers for AHN tell a similar story to the one at Butler Health System, where the health systems are reporting stabilized losses in recent months.

Meanwhile, the pivot from profit to a loss between 2022 and 2023 for UPMC comes amid a gain in revenue from $25.5 million to $27.7 million and an increase in inpatient activity from 1,871,617 patient days to 1,873,630.

Despite those increases, UPMC’s expenses rose from $25.37 million in 2022 to $27.9 million in 2023.

A sign for the AHN Cancer Institute on Hollywood Drive in Butler. Butler Eagle file photo

Similarly to how the financial statements indicate Allegheny Health Network sustained less of a loss in 2023 than in 2022, the most recent financial disclosure shows the hospital system sustained a less significant loss in the final quarter of the past year, compared to the year before, too.

The system reported an operating loss of $28.56 million for the fourth quarter of 2023. While this is still a loss, it does mark an improvement over the $64.58 million loss that AHN suffered over the same three-month period in 2022.

In the filing, AHN stated that the improvement in numbers “was driven by higher volumes across the organization, higher pharmacy revenue, value-based reimbursement incentives and third-party payor settlements.”

Public relations director Bill Toland stressed that the health system was just one component of parent company Highmark Health, which reported an operating gain of $338 million in 2023.

“Because it is integrated into a successful, financially stable organization, AHN is able to plan, invest and transform for the long term, and we are somewhat insulated from the quarter-to-quarter focus that other health systems may have,” Toland said.

The value of AHN’s assets rose to $4.48 million by December 2023, an increase over its $4.38 million value 12 months earlier. Meanwhile, the group’s liabilities decreased slightly from $2.37 million in 2022 to $2.35 million in 2023.

However, due to the continued losses, AHN’s days worth of “cash on hand” dropped from 70 to 54.

“AHN’s losses continue to be driven in large part by inflationary cost pressures, as well as higher labor costs, partly attributable to the ongoing national shortage of nurses,” Toland said.

Per the group’s website, Allegheny Health Network has 28 facilities in Butler County, including 10 in Butler itself, four in Harmony, and six in Cranberry Township.

UPMC Passavant in Cranberry is located at 1 St. Francis Way, in Cranberry Township. Zach Petroff/Butler Eagle photo taken 03/21/2024

In its financial statement, UPMC blamed its reported loss on ” … increased costs in the labor and supply markets, increases to medical claims expense as a result of higher utilization, pharmaceutical expenses across various insurance products, and certain legal settlements.”

Figures for the most recent quarter were not immediately available.

Although revenue for UPMC rose from $25.5 million in 2022 to $27.7 million in 2023, there were a number of key factors that drove expenses even higher and offset the increase in revenue. These included salaries, which rose from $9.075 million to $9.66 million, as well as expenses related to insurance claims, which rose from $8.91 million to $10.12 million.

Despite the red ink, UPMC’s financial disclosure promised that it would not impact the hospital system’s standard of care.

“While facing evolving global health care challenges, UPMC continues to remain true to its mission and commitment to provide the best care and services in the right settings for our patients, members and communities today and for years to come,” UPMC wrote in its financial disclosure.

UPMC’s assets rose from $21.33 million in 2022 to $22.65 million in 2023, while its liabilities rose from $11.42 million to $12.66 million.

The credit rating agency Fitch Ratings kept its bond rating for UPMC at “A,” but they revised the rating outlook from “positive” to “stable” based on UPMC’s shaky financial results from the 2023 fiscal year.

Among UPMC’s Butler County locations is UPMC Passavant – Cranberry, a 33-bed hospital, emergency heliport, medical offices and more.

A representative from UPMC was not available for comment.