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The operating profit of Penn Medicine for the 2023 fiscal year marks an increase in revenues compared to 2022. Credit: Mehak Dhaliwal

Penn Medicine reported an operating profit of $160 million so far in fiscal year 2023, an increase from last year.

Penn Med, which operates six hospitals and ten multispecialty centers, saw an excess of revenues over operating expenses for the nine-month reporting period ending March 31, according to its financial summary released in May. While this year marks an increase in revenues compared to 2022, the health system’s profits remain lower than pre-pandemic levels.

Within the past five years, Penn Med experienced its lowest operating profit in 2022 at $137 million. In 2017, 2018, and 2019, the health system saw operating profit margins of 5.7%, 5.8%, and 5.6% respectively, The Philadelphia Inquirer reported. That number dropped to 2% in 2022 and slightly increased to 2.2% for the first three quarters of fiscal year 2023. 

In 2020, Penn Med faced a $317 million projected revenue loss due to the suspension of nonurgent care and greater costs for COVID-19 patient care. While numbers remain below their pre-pandemic levels, the 2023 report suggests a gradual recovery from losses associated with COVID-19.

In the past year, hospitals in the Philadelphia area have struggled to overcome rising labor costs and decreased patient volume. Six health systems lost money in the last three months of 2022, including the Temple University Health System with a $59.8 million operating loss, according to the Inquirer. Penn Med was one of the few systems that remained profitable.

Penn Med eliminated several administrative positions in March 2023 as part of ongoing reorganization efforts. The full plan would reduce “administrative overhead” by $40 million annually, according to an internal memo from University of Pennsylvania Health System CEO Kevin Mahoney. 

Following the announcement, Mahoney told The Daily Pennsylvanian that the reorganization would consolidate Penn Med’s operations and eliminate duplicative systems in the face of macroeconomic pressure on the healthcare industry. 

“We need to go through and trim the overall expenses of running the health system,” Mahoney said.