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Highmark Health delivered its strongest financial performance in 2017, confirming that our transformation strategy is working and that consumers are benefitting from increased access to high-quality, community-based, affordable health care. Highmark Health reported an excess of revenue over expenses of $1.1 billion, an improvement of $1.0 billion over prior year, as well as an operating gain of $616 million. Pre-tax results of $1.1 billion were driven by continued strengthened performance in the Health Plans' commercial and government segments, Allegheny Health Network's operational progress and growth, and the gain associated with sale of a portion of the vision business.

Total revenues of $18.3 billion remained consistent with the prior year due to an anticipated decline in Health Plan revenues associated with more sustainable product offerings, which was offset by growth at both Allegheny Health Network and HM Health Solutions. Highmark Health's balance sheet strengthened considerably, with net assets of $6.5 billion, an increase of 25 percent over the prior year. The organization grew its cash and investments to $7.9 billion as of December 31, 2017, which enables us to invest in high-value, community-based care.

Highmark Health Plans

The Health Plan reported an operating gain of $750 million for the period ending December 31, 2017, an improvement of $508 million over the prior year. These gains were the result of significant progress in the government business, which delivered a $411 million improvement over the prior year as well as an increase in commercial business results of nearly $100 million, to $317 million.

This strong performance is attributed to continued actions taken in our ACA business — which produced income for the first time in 2017 — along with continued focus on reducing administrative costs and the successful implementation of our value-based customer initiatives.

Health plan membership remains steady, with 94 percent member retention in our commercial business, totaling 4.6 million members in our core markets of Pennsylvania, West Virginia, and Delaware. In western Pennsylvania, our commercial market client retention rate was 96 percent.

Highmark remains the largest commercial health plan in Pennsylvania, with core medical health plan membership for residents and businesses of 3.9 million. In our core health insurance plans in the 29-county western Pennsylvania market, we have 2.3 million members and 5.4 million customer relationships through our health insurance, dental and vision programs, and stop-loss coverage. In western Pennsylvania, Highmark retained commercial market share of 48 percent, as confirmed by 2017 data from Decision Resources Group. Highmark's current enrollment for individuals who have purchased plans on the federal exchange and directly through Highmark totals approximately 91,600 members.

Highmark also remains the largest Medicare Advantage (MA) plan in our service area in Pennsylvania for traditional MA products, with a market share of 35 percent in western Pennsylvania for traditional MA plans and a 4.0 STAR Rating.

Allegheny Health Network

Allegheny Health Network delivered its strongest operating performance since its inception, reporting revenues of $3.1 billion, growth of $217 million or nearly 8 percent over prior year, and an operating gain of $31 million, an improvement of $64 million year over year. The system has improved earnings by nearly $200 million since its formation while revenues have grown nearly 40 percent, and EBITDA has now reached $221 million. This progress was driven by a number of key factors, including stable hospital volumes and high patient acuity, greater operational efficiencies and more effective business and clinical processes such as revenue cycle operations, better care coordination through Epic, and higher quality revenues.

Physician office visits increased by more than 4 percent, and ambulatory surgery center volume increased by 10 percent while hospital inpatient and outpatient volumes remained flat. Allegheny Health Network continues to grow volumes organically, rather than through acquisition, in a market that overall continues to see volume declines.

Key investments in Allegheny Health Network in 2017 totaled more than $218 million.

Highmark Health Diversified Businesses

Highmark Health's Diversified Businesses collectively delivered operating earnings of $103 million. United Concordia, our dental business, capitalized on the growth it experienced during the past two years and continued investment in new technologies, realizing higher network revenues and continued strong commercial margins that delivered $114 million in operating income, a $70 million improvement over the prior year. These gains were aided by the implementation of the $2.9 billion TRICARE Dental Program contract.

Partially offsetting the gain in the dental business, Highmark Health's stop loss business, HM Insurance Group, reported an operating loss of $30 million, a decline from the prior year, as the stop loss and managed care reinsurance industries continue to face headwinds. The company continues to work to mitigate these losses through disciplined pricing actions and enhanced care initiatives.

HM Health Solutions

In 2017, HM Health Solutions initiated the onboarding of five new health plan partners on to its Enterprise Health Solution platform, and completed the development of the platform to expand its services to include Medicaid Health Plans. The first Medicaid members transitioned onto the platform in January 2018, with an additional 300,000 members expected through January 2019. These new customers increased the number of members on the platform to nearly 10 million, representing 20 percent growth since its inception in 2014. With the introduction of the Medicaid line of business in 2017, the Enterprise Health Solution now supports every health care line of business.