Becker's Hospital Review

U PMC has positioned itself not only as a hospital system, but an in- tegrated health system with a sharp business acumen, competitive modus operandi and an explicit eagerness to diversify its revenue. Here are 10 things to know about Pittsburgh-based UPMC. 1. UPMC calls itself a "$10 billion integrated global health enterprise" that is closely affiliated with the University of Pittsburgh. It is the largest non- governmental employer in its state, with more than 62,000 employees. The organization is nonprofit, but that status has been a point of disagreement the past year, as point No. 7 explains. 2. UPMC operates 22 hospitals (academic, community and specialty), 400 outpatient sites of care, and "an array" of rehabilitation, retirement and long- term care facilities. The system launched its Insurances Services Division in 1997, and the arm has since grown to cover nearly 2.3 million members. The system also employs roughly 3,500 physicians. 3. The system is on a multiyear journey to have a "significant portion," or at least 25 percent, of its revenue come from alternative sources — defined as ventures that don't fall within primary sources of revenue, which are patient care and health plans. Last fall, Charles Bogosta, executive vice president at UPMC and president of its International and Commercial Services Division, said alternative ventures have yet to make a noticeable dent in the system's $10 billion annual revenue. 4. UPMC's International and Commercial Services Division launches part- nerships and international ventures, from a research center in Kazakhstan to a transplant center in Singapore. Under this division, UPMC formally launched advisory services in May 2013. The system will provide consulting services of sorts to healthcare providers in the U.S. and abroad. 5. UPMC has also struck commercial contracts with some big names. The system is in a joint development agreement with Cerner to create new health IT technologies and solutions, as well as an eight-year, $317 million agree- ment with IBM to transform the system's IT infrastructure. It partnered with General Electric to develop a new digital pathology company in Pittsburgh called Omnyx. 5. Most recently, UPMC posted an operating income of $112 million for the first six months of its 2014 fiscal year, a 32 percent increase from the first six months of FY 2013. Total profit grew by 83 percent to $451 million due to gains on investments, and its operating EBIDA stood at $337 million — up from $293 million in the first six months of FY 2013. UPMC ended FY 2013 with a 60 percent decrease to its operating income to $140.3 million, even though its patient volumes and operating revenue had increased. UPMC CFO Robert DeMichiei said despite the lower operating profit and operating EBIDA, which was down to $556 million, the health system was still on sound financial ground in its day-to-day operations. It ended the year with 131 days cash on hand. 6. Jeffrey Romoff is the president and CEO of UPMC. He has held the presi- dent title since 1992, and the president and CEO title since 2006. Charles Bogosta is president of UPMC's International and Commercial Services Di- vision, and also president of UPMC Cancer Centers. Mr. DeMichiei is the system's CFO and Daniel Drawbaugh is the system's CIO. 7. In March 2013, the city of Pittsburgh launched a formal challenge to UPMC's exemption from city payroll taxes. The city based its lawsuit on the allegation that UPMC fails at least three of the state's five requirements for "purely public charities." In an interesting move, UPMC countered by claiming it has zero employees. Rather, attorneys representing the system say UPMC's subsidiaries file separate forms for wage taxes — meaning employ- ees work for UPMC's legal subsidiaries rather than the parent company. If this is proven to be the case, then the city would need to challenge the tax- exempt status of each of the 44 subsidiaries. 8. The rivalry between UPMC and Pittsburgh-based payer Highmark is a pal- pable one. Highmark-UPMC's contract expires at the end of the year, mean- ing more than 1 million Highmark members will no longer have in-network access to UPMC providers — a concern given UPMC's position as the domi- nant player in the regional market. The contract dispute between the two grew to such proportions that that the government intervened. Pennsylvania law- makers recently drafted legislation that would force the two to work together. Under the legislation, integrated delivery systems would be required to accept patients covered by "any willing insurer." As of March, a UPMC spokesperson called the mirror Senate and House bills "non-starters," according to a Pitts- burgh Business Times report. 9. UPMC's Center for Health Security conducts independent research and makes nonpartisan policy recommendations to lawmakers, government of- ficials and other decisionmakers who head response plans for catastrophic events, bioterrorism, pandemic and epidemic illnesses. For instance, back in 2002, Center Director Thomas Inglesby, MD, testified before the U.S. Sen- ate on public health preparedness for terrorism involving weapons of mass destruction. 10. It was recently reported that UPMC and the Department of Veterans Af- fairs are planning a regional health information exchange called ClinicalCon- nect in western Pennsylvania. Through the HIE, all participating providers would be able to exchange patient information with the VA. n 10 Things to Know About UPMC By Molly Gamble 69 Getting to Know Healthcare's Biggest Players

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