Case study: U of Pittburgh's profits fall dramatically

If you want an example of why even the strongest non-profits are facing downgrades from entities like Standard & Poor's (see related story), just take a look at the finances of the University of Pittsburgh Medical Center, a billion-dollar battleship that has traditionally proven adept at keeping its finances strong. UPMC has just posted a $5 million profit for fiscal 2008, nothing to sneeze at unless you note that this is down from a record $612 million for the previous year. This came despite the fact that operating revenue for its core businesses rose 12 percent to a record $7.02 billion, up from $6.28 billion in fiscal 2007.

Part of the reason the medical center's profits fell so drastically was a big nosedive in its investments, which returned negative $128 million for fiscal '08. That's down from a $403 million gain for fiscal 2007. However, its income from its hospitals, doctors and insurance plans didn't do as well as last year, either. Operating income dropped 16 percent to $184 million, down from $220 million for fiscal '07. UPMC execs said its operational results were dinged by the cost of major capital improvements, higher investments in overseas health care facilities, lower federal reimbursement and an $11 million donation to a scholarship program for children in Pittsburgh public schools.

To learn more about UPMC's results:
- read this Pittsburgh Post-Gazette piece

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