The University of Pittsburgh Medical Center marked another set of chart-topping milestones yesterday with the news of a record $618 million profit during fiscal 2007, up 18 percent, and an all-time high of $6.8 billion in revenue.

The results for the year ending June 30 once again impressed industry analysts who follow the region's largest employer and dominant health care provider.

"Their numbers are really good," said Beth Wexler, a vice president and senior credit officer with New York ratings agency Moody's Investors Service. UPMC's performance "is the realization of a strategy put in place a decade ago," now becoming "well heeled."

This, after all, is the fifth straight year of robust profit increases for Oakland-based UPMC -- in fiscal 2002, its "excess margin" was $23 million, before climbing to $61 million in 2003, $248 million in 2004, $291 million in 2005 and $525 million in 2006. During that same period, revenues doubled from $3.36 billion to the $6.8 billion reported yesterday.

More remarkable is that three and a half decades ago, UPMC was merely a loose federation of six hospitals with 500 employees and annual revenue of $10 million. Now the 19-hospital system employs 45,000, making it the largest employer in southwestern Pennsylvania by a wide margin -- it added another 2,000 people in fiscal 2007, including 170 physicians. Its market share in Allegheny County is 47.9 percent, up from 46.7 percent in 2006, and it will surely exceed 50 percent if UPMC receives approval for its proposed acquisition of Mercy Hospital of Pittsburgh.

UPMC's dramatic run-up in profits since 2002, said FitchRatings analyst John Wells, can be attributed to a "combination of management practices, cost controls and improvement in revenues through managed care re-negotiation" -- the last item referring to a 10-year contract UPMC signed in 2002 with insurer Highmark providing the hospital system with favorable reimbursement rates. "No question" the Highmark agreement boosted UPMC's profits, said Mr. Wells, who is based in New York. The arrangement was a reflection of "UPMC's improved position in the market" and UPMC's ability to apply "leverage" in its talks with the region's largest insurer.

Another key to UPMC's record-shattering numbers is the recent gain in its $3 billion-plus cash-and-investment portfolio. In fiscal 2007, its equity and fixed-income holdings improved by $403 million -- $50 million of that due to an accounting change made in December 2006 that tallies unrealized as well as realized gains. That increase follows a $206 million investment gain in fiscal 2006.

"We are happy with it," said UPMC treasurer Talbot Heppenstall, who oversees the portfolio.

Given the recent market volatility, though, the same expectation of outsized growth is "not in our budget for 2008," he added.

Operating revenues -- money derived from UPMC's hospitals, its health insurance arm and other holdings -- also continue to rise, up $578 million, or 10 percent, in fiscal 2007 due mainly to higher Medicare insurance memberships. The profit margin from those core activities fell from 5.6 to 3.5 percent -- the first such drop in 10 years, according to FitchRatings -- but that is not a point of concern for analysts or hospital officials, who attributed the drop to UPMC's physician hiring, implementation of electronic health records, increased financial support to the University of Pittsburgh and depreciation expense from investments in infrastructure.

During fiscal 2007, UPMC spent $458 million on various projects designed to improve the health system, from $185 million on a new Children's Hospital in Lawrenceville to $105 million on new systemwide technology. UPMC officials expect to spend another $242 million on Children's during the 2008 fiscal year.

UPMC's ability to churn out consistent profits -- which confuses some members of the public considering that UPMC is a nonprofit -- not only provides the system with financial stability (it has a "AA" rating from all three major rating agencies) but also allows it to reinvest in new projects that benefit the community at large, argues UPMC Chief Financial Officer Robert DeMichiei.

"I found a new word for it," he said. "I call it remainder."

UPMC, he said, works hard to keep its expenses down and volumes up, and "we need that $600 million in remainder" to maintain UPMC's capital spending on buildings, equipment and information technology -- the "lifeblood of a hospital."

UPMC will need even more if the Federal Trade Commission approves its proposed purchase of the Mercy Hospital, which UPMC has pledged to improve. Hospital officials expect to hear from the FTC "pretty soon," said Sandra Danoff, chief communications officer for UPMC and also a senior associate to UPMC President Jeffrey Romoff.

At the same time, UPMC is beginning to think about how it might improve its Oakland campus, especially its flagship Presbyterian Hospital and the current Children's facility, which will empty out in 2009. That, of course, would require more money.

"We are looking at it," said Mr. DeMichiei, and "starting the planning phase."

Presbyterian "is going to be a major issue since it is our flagship hospital," Ms. Danoff said.

Going forward, the only forces that could slow UPMC down are changes to Medicare reimbursement policies, cuts in medical research or a slowdown in the Pittsburgh economy, said Ms. Wexler, the senior credit officer with Moody's, in New York. "I think their challenges are the industry's challenges," she added. "They have done a really nice job at mitigating internal volatility."