PITTSBURGH (March 22, 2021) — Highmark Health today announced financial results for year-end 2020, reporting $18 billion in consolidated revenue, an operating gain of $490 million, and excess revenue over expenses of $450 million, excluding a one-time gain.
These results are due to the solid performance of most business units, notably Highmark Health Plan's strong commercial and government business results, driven by continued focus on value creation initiatives; strong results in the Diversified Businesses due to continued positive performance in the dental business and sustained positive margins at HM Insurance Group. These positive results were offset by the negative impact on patient volumes at Allegheny Health Network, due to COVID-19 pandemic related government shut-downs, and other containment measures, as well as consumer reluctance to seek care.
Highmark Health maintained a strong balance sheet with about $11 billion in cash and investments and net assets of about $9 billion as of December 31, 2020.
"While COVID-19 has been everybody's number one priority, and will remain so, strong organizations must also constantly look forward and build for the future," said David Holmberg, president and chief executive officer of Highmark Health. "Our transformation strategy — Living Health — combines two fundamental concepts: payers and providers — along with other strategic partners and collaborators — united to better serve our customers and clinicians. We recognize that we need to re-engage people in their health, eliminate the barriers and cost that get in the way, and leverage technology as a key enabler. Living Health represents our shared purpose and commitment to actively making things better instead of being resigned to how things are."
"These consistently strong earnings through the COVID-19 pandemic reinforce that our blended health approach is working and enabled us to reinvest more than $750 million in the communities we serve through premium credits, provider and local community support, dental safety initiatives, and expanding access to care," added Saurabh Tripathi, chief financial officer and treasurer of Highmark Health. "In 2020, Highmark Health delivered strong results driven by positive operational performance primarily in our insurance businesses despite low Allegheny Health Network patient volumes due to the pandemic. Our financial position, coupled with these investments in communities we serve and unwavering commitment of our exceptional clinicians, positions us well to continue taking care of our patients and members through the current pandemic and beyond."
The Highmark Health Plan reported an operating gain of about $400 million for the 2020 fiscal year excluding a one-time gain, primarily driven by strong 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 year over year premium increases, or even premium decreases, for health plan products.
As a result, the commercial business experienced strong 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 year-end, with total commercial retention rates at 93 percent.
Highmark's diversified businesses reported combined earnings of approximately $370 million through December 31, an improvement of more than $180 million from prior year due to solid performance in dental and stop loss segments. This performance is largely driven by deferred patient care as a result of the COVID-19 pandemic.
United Concordia Dental and our blue branded dental business continued to perform well, delivering an operating gain of $254 million. Highmark Health's stop loss business, HM Insurance Group (HMIG), reported an operating gain of $101 million.
HM Health Solutions, our information technology services company whose platform serves more than 10 million lives across the country, reported an operating gain of approximately $14 million driven by internal transformation initiatives.
Following three years of continued growth, Allegheny Health Network delivered an operating loss of $136 million through December 31, a decrease of $180 million compared to 2019 performance, due to volume declines associated with the COVID-19 pandemic and pandemic-related expenses.
For 2020, patient volumes decreased year over year in several key categories, including a 9 percent decrease in inpatient discharges and observations, a 2 percent decrease in outpatient registrations, and a 7 percent decrease in physician visits. AHN patient volume continues to recover and rebound to pre-COVID levels.
In summary, Highmark Health continued to deliver its financial commitments in 2020 despite the impact of COVID-19 on AHN volumes and reinvested more than $750M across the region to benefit patients, members, and the community.
1Excess Revenue Over Expenses = $1.0B including a one-time gain
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 6 million members in Pennsylvania, West Virginia, Delaware and western New York, as well as dental insurance, and related health products through a national network of diversified businesses. Allegheny Health Network is an integrated delivery network comprised of thirteen 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. HM Health Solutions is 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.