University of Pennsylvania Health System reports $58 million in operating profits this quarter

The University of Pennsylvania Health System disclosed a $58 million operating profit for the quarter concluding on Sept. 30.

UPHS, which owns six acute-care hospitals, reported a revenue of $2.6 billion, signaling a growth of 7.2%. Inpatient admissions increased by 2%, while outpatient visits showed a 4% rise. The operating profit for this quarter was up from the previous $50 million reported made in the corresponding period last year.

Despite improvements compared to recent performance, the chief financial officer of UPHS, Keith Kasper, said that they are not yet at their desired financial position. 

"We're ahead of budget, but obviously a little bit short of where we've been historically," Kasper told The Philadelphia Inquirer.

Financial records show that the operating margin for UPHS in the initial quarter stood at 2.3%, which was a slight improvement from the previous year's 2.1% but notably lower than the 6% average operating profit margin maintained by UPHS in the three years before the onset of the pandemic.

Patient volumes remain favorable, although there is a decrease in the number of individuals visiting the emergency department without subsequent hospital admission, particularly at Lancaster General Hospital, Kasper said. 

Kasper attributed this trend partly to the recent opening of a new hospital by Penn State Health in Lancaster County in October 2022 and partly to a reduced impact of COVID-19 compared to the preceding year, although their respective effects are unclear.

Kasper added that cancer services have shown robust growth, with Lancaster showing notable performance. 

"We're servicing that community, but we're having a pretty large draw. The range of patients coming to see us in Lancaster is up to 80 miles," Kasper said.

Despite positive indicators, UPHS continues to deal with high overtime and temporary staff costs, which are gradually decreasing. Turnover rates have returned to pre-COVID-19 levels, especially for registered nurses, but the process of transitioning from hiring to independent patient care takes three to six months.

While UPHS increased employee compensation during the pandemic to attract and retain staff, Kasper stated that these adjustments are embedded within the financials and that employee management poses an ongoing challenge.