Health insurance headwinds resulted in a $69 million net loss for Highmark Health in the first nine months of the year.
On Monday, the Pittsburgh-based parent company of Highmark Health Plans and Allegheny Health Network reported financial results through September.
Highmark Health Plans took a $211 million operating loss, offsetting $79 million in operating income from Allegheny Health Network and $29 million in operating income from the company’s diversified businesses, which include United Concordia Dental and stop-loss insurer HM Insurance Group.
In a press release, Highmark Health attributed the challenges its insurance arm faces to higher-than-expected utilization of medical services. These trends are expected to continue across the industry into next year, the company noted in its financial results.
Just as high use of health care services hurt Highmark Health’s insurance arm, it buoyed Allegheny Health Network. Since the start of the year, the hospital system has seen increases of 4% in inpatient discharges and observations, 6% in outpatient registrations, 7% in physician visits and 5% in emergency room visits.
The results for Highmark Health come as it expands its reach as both an insurer and provider.
In October, Allegheny Health Network announced it’s acquiring two-hospital Heritage Valley Health System. And last week, Highmark Health Plans said it’s affiliating with Blue Cross and Blue Shield of Kansas City, Missouri’s largest nonprofit health insurer.
Both deals are expected to take effect next year after regulatory approvals.
“Though we expect these challenges to persist, Highmark Health continues to invest in the future, as we seek to achieve greater economies of scale through increased operational efficiency and market share, allowing us to leverage our combined resources and expertise to further enhance the high-value services and care we provide,” said Carl Daley, chief financial officer and treasurer of Highmark Health.
The overall organization had nearly $25 billion in revenue through September. Its total cash and investments remained at around $12 billion.