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Highmark Health President and CEO David Holmberg
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Acquisitions drive 22% revenue boost at Highmark Health

Pam Panchak/Post-Gazette

Acquisitions drive 22% revenue boost at Highmark Health

Highmark Health reported $22 billion in consolidated revenue for 2021, a 22% increase from $18 billion in 2020, which was driven by the acquisition of two health insurance plans.

At the same time, margins at four key Highmark subsidiaries slipped during the year as the company invested in operations, including opening a 160-bed hospital in Pine in September. Highmark’s Allegheny Health Network provided mixed results with an operating loss of $86 million in 2021, but a $60 million improvement from 2020’s loss as emergency room visits, ambulatory surgical cases and other metrics of fiscal health rose.

Operating revenue at AHN’s 14 hospitals and related medical facilities was $4 billion in 2021, up $375 million from 2020.

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The revenue increase for the corporate parent of hospital and health insurance operations represented an operating margin of $301 million and excess revenue after expenses of $440 million, the company said Tuesday. The corporate parent margin was down nearly 40% from $490 million in 2020.

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Highmark Health President and CEO David Holmberg attributed the margin declines to higher labor costs and increased investments in technology and medical facilities in the western and central parts of the state, which would eventually better serve patients and members.

“We’re really building our capabilities for where we want to go,” he said.

The biggest margin decrease among Highmark’s key subsidiaries was technology services outfit HM Health Solutions, with $7 million in operating revenue in 2021, down 50% from $14 million in 2020; followed by United Concordia Dental, $159 million in 2021, down 37% from $254 million in 2020; Highmark Health Plans, $300 million in 2021, down 25% from $400 million in 2020; and HM Insurance Group, Highmark’s stop-loss insurance company, $90 million, down 11% from $101 million in 2020.

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Last year, Highmark acquired two nonprofit Blue Cross Blue Shield plans, which were rebranded as Highmark Blue Cross Blue Shield of Western New York and Highmark Blue Shield of Northeastern New York, expanding Highmark’s footprint into 21 counties in New York State. Also last year, Highmark acquired the 50% share of Gateway Health Plan Inc., a Downtown-based Medicare and Medicaid insurer, that it did not already own.

After the acquisition, Gateway was rebranded Highmark Wholecare, which has 365,000 members.

Core health plan and Blue Card membership rose slightly during the year to about 6.8 million members, with commercial retention rates of 98%, according to the company. Highmark, which employs 37,000 people, insures some 6.8 million members in Pennsylvania, West Virginia, Delaware and New York, according to the company.

Kris B. Mamula: kmamula@post-gazette.com or 412-263-1699.

First Published: March 22, 2022, 2:30 p.m.
Updated: March 22, 2022, 3:33 p.m.

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Highmark Health President and CEO David Holmberg  (Pam Panchak/Post-Gazette)
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