In The Lead: Top 50 / Pittsburgh region's top healthcare organizations by revenue
Health care groups grow revenues through mergers
May 15, 2014 12:19 AM
Operating room supervisor Susan Godwin adjusts equipment in St. Clair Hospital, in Mt. Lebanon.
By Steve Twedt / Pittsburgh Post-Gazette
The annual list of top health care organizations is about to undergo a makeover.
While Pittsburgh insurance giant Highmark again has the top revenue mark this year at $15 billion for 2013, change is afoot among those behind it.
UPMC, with the region's second highest revenue at $10.2 billion, acquired Altoona Hospital last summer, a move that should boost future revenues. Coupled with previous purchases of Hamot Medical Center in Erie and the construction of UPMC East in Monroeville, it continues to show revenue growth year over year even as many other health systems around the state struggle.
West Penn Allegheny Health System, third highest in revenue at $1.49 billion, and Jefferson Hospital (seventh, with $258.7 million in revenue) are now part of Highmark's Allegheny Health Network and will be grouped under that one heading from now on.
"We'll see more consolidation in the future, not less," said Stephen Foreman, associate professor of economics and health administration at Robert Morris University. "That's been my assessment all along for 15 years and I've seen no abatement in that trend."
The list still features some notable independent hospital systems: St. Clair in Mt. Lebanon ($269 million), Butler ($256 million) and Monongahela Valley ($146.3 million), as well as Pittsburgh Mercy Health System ($89.96 million).
Pittsburgh Mercy has been without a hospital since 2008 when the Sisters of Mercy sold the Uptown facility to UPMC, but it continues to offer behavioral health programs as well as programs providing care for abused children and the homeless.
Many of the top organizations saw either a drop or flattening of revenues in 2013 as the health care sector adjusted to the changing environment of reduced reimbursements and Congress-mandated cuts.
UPMC and Butler Health were an exceptions, with UPMC's revenues increasing from $9.64 billion to $10.2 billion year-over-year and Butler growing from $254.4 million to $263.1 million.
The biggest percentage gainer, though, was The Institute for Transfusion Medicine, or ITxM, which is the parent of the Central Blood Bank. Although business actually was not good, said CFO Mark Giaquinto, the Green Tree firm saw its revenue grow to $205.7 million in 2013 from $166.2 million the previous year after it acquired the Hemophilia Center of Western Pennsylvania and Virginia Blood Services.
Consolidation may be the key to everyone's success at growing revenue in coming years, said Mr. Foreman.
"Once the market evolves into large players, you will need to be the same size in order to participate in that market.
"Would we be better off with smaller entities? Probably. Can we do that? Probably not."
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