PITTSBURGH (August 13, 2020) — Highmark Health today announced financial results for the first six months of 2020, reporting an excess of revenue over expenses of $511 million and an operating gain of $590 million.
These results are due to the solid performance of most business units, notably Highmark health plan's strong commercial business results, driven by continued focus on value creation initiatives; stable results in the Diversified Business due to continued strong performance in the dental business, as well as sustained positive margins at HM Insurance Group. These positive results were offset by the anticipated negative impact of deferred patient care at Allegheny Health Network, as the COVID-19 pandemic required rescheduling routine procedures.
Total consolidated revenues were $9 billion for the first six months of the year. Highmark Health maintained a strong balance sheet with $10 billion in cash and investments and net assets of more than $8.2 billion as of June 30, 2020.
“In the midst of all this uncertainty and unrest, we have continued to make good progress on our strategic initiatives. Thanks to our efforts to date in 2020, we believe that we are very well-positioned for the long term, and have now charted a course for the balance of the year, and well into the future,” said David Holmberg, president and chief executive officer of Highmark Health. “As we move forward, and set our sights on the next five years of our transformation journey, our focus will be on operating as a blended health organization. We are not focused on just fixing today's system; we are on a bold mission to create a whole new system one that delivers a remarkable health experience, freeing people to be their best.”
“These consistent earnings through the COVID-19 pandemic reinforce that our blended health approach is working and positions us to develop and deliver the value, capabilities and on-demand services our customers need and expect,” added Saurabh Tripathi, chief financial officer and treasurer of Highmark Health. “In the first half of 2020, Highmark Health delivered strong results driven by positive operational performance primarily in our insurance businesses despite market pressures and low AHN patient volumes due to the COVID-19 pandemic. This financial performance allows us to continue to reinvest in the communities we serve through reductions in insurance premium levels, strategic partnerships and the expansion of Allegheny Health Network. Our financial position, coupled with these investments in communities we serve and unwavering commitment to our exceptional clinicians, positions us well to continue taking care of our patients and members through this current COVID-19 crisis.”
The Highmark Health Plan reported an operating gain of $609 million for the period ended June 30, primarily driven by effective performance in the commercial and government business and a continued focus on clinical transformation activities.
These efforts resulted in savings for Highmark members through smaller premium increases or even decreases for health plan products and have led to a more stabilized risk pool and appropriate pricing.
As a result, the commercial business experienced high retention rates as customers in all regions continue to choose the exceptional value of Highmark coverage despite pressures related to the pandemic and recession. Core health plan membership remains steady with approximately 5.6 million Highmark members through June 30, with July 2020 commercial retention rates across the Western Pennsylvania region at 98 percent.
Highmark's diversified businesses reported combined earnings of $229 million through June 30, an improvement of $149 million over prior year due to solid performances in dental and stop loss segments. This performance is largely driven by deferred patient care during the first half of the year as a result of the COVID-19 pandemic.
United Concordia Dental and our blue branded dental business continue to perform well in both government and partner business, delivering an operating gain of $193 million. Highmark Health's stop loss business, HM Insurance Group (HMIG), reported an operating gain of $32 million.
Following 11 consecutive quarters of positive earnings, Allegheny Health Network delivered an operating loss of $116 million through June 30, a decrease of $136 million compared to the same period last year, due to sharp volume declines associated with the COVID-19 pandemic.
For the six-month period ended June 30, patient volumes decreased year over year in a number of key categories, including a 13 percent decrease in discharges and observations, an 11 percent decrease emergency department visits, a 12 percent decrease in outpatient registrations, a 17 percent decrease in hospital surgical cases, and a 28 percent decrease in ambulatory surgery center cases. During this same period births increased three percent year-over-year.
AHN has returned to a more normalized clinical and surgical schedule, with substantial volume increases in July 2020.
HM Health Solutions, our information technology services company, experienced an operating loss of approximately $9 million driven by strategically planned technology investments to their platform, which serves more than 10 million lives across the country.
Highmark Health, a Pittsburgh, PA-based enterprise that employs more than 35,000 people who serve millions of Americans across the country, is the parent company of Highmark Inc., a hospital system, and other businesses. Highmark Inc. and its subsidiaries and affiliates provide health insurance to more than 5.6 million members in Pennsylvania, West Virginia, and Delaware as well as dental insurance, and related health products through a national network of diversified businesses. Highmark Health’s other subsidiaries include an integrated delivery network comprised of eight hospitals, more than 2,500 affiliated physicians, ambulatory surgery centers, an employed physician organization, home and community-based health services, a research institute, a group purchasing organization, and health and wellness pavilions in western Pennsylvania; and an information technology business focused on meeting the information technology platform and other business needs of the Highmark Health enterprise as well as unaffiliated health insurance plans by providing proven business processes, expert knowledge, and integrated cloud-based platforms. To learn more, visit www.highmarkhealth.org.