The University of Pennsylvania Medical Center (UPMC) continues to flip last year’s losses, reporting this week a $348.6 million operating income (2.1% operating margin) for the six months ended June 30 thanks to increased volumes and a tighter underwriting margin.
The integrated nonprofit had posted a $313.3 million operating loss (-2.2%) during the same period a year prior. Both half-year periods included tens of millions in restructuring costs—$30 million in 2025 and $87.8 million in 2024—under an effort the system had launched last year.
For its second quarter alone, UPMC notched a $111.2 million operating gain compared to the prior year’s $210.3 million operating loss, both inclusive of restructuring costs. Total operating revenue during the first half of 2025 came to $16.5 billion.
The healthcare delivery arm of the system has driven the bulk of its year-to-date gains.
Total operating revenues within the division rose about 10.5% year over year to just over $9.3 billion. This was boosted by a 7% rise in inpatient activity (measured by hospital medical-surgical admissions observation visits), a 7% rise in physician activity (measured by physician service revenue per weekday) and a surgery demand boosted 15% jump in outpatient activity (measured by average revenue per workday).
Six-month health services expenses rose 7.1% from the prior year. Notably, UPMC’s salaries, professional fees and benefits line was held to a 4.8% rise, likely reflecting workforce reductions that accompanied the restructuring. UPMC also reduced its overall average length of stay, from 7.1 days to 6.2 days, which could offset some of the increased spending to care for increased patient volumes.
The insurance services division, which has recently been hammered by heightened medical expense spending, has also returned to the black. Total operating revenues grew a staggering 17.8%, to $9.3 billion, which outpaced a 13.4% rise in total operating expenses.
Management attributed the flip to higher rates and revenues for its Medicaid, Community HealthChoices (a state Medicaid managed care plan), Community Care and Medicare products. Though membership as of June 30 only slightly increased compared to a year prior. UPMC’s trailing 12-month medical expense ratio of 91% was a solid increase over June 2024’s 90.5%.
UPMC ultimately logged a $476.2 million excess of revenues over expenses year to date, which included a $397.5 million gain from its investments, and 83 days of cash on hand as of June 30.
UPMC runs more than 40 hospitals and 800 clinical sites and is among the country’s largest nonprofit health systems by operating revenue. It reported $29.9 billion total operating revenue across the entirety of 2024 but a $211 million operating loss that worsened to $339 million with its restructuring costs.
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