Mass General Brigham Reports 3Q 2021 Financial Results

BOSTON, Massachusetts, Aug. 7 -- Mass General Brigham issued the following news release:

Mass General Brigham continues to execute on its strategy to build the integrated academic health system of the future, transforming care, improving outcomes and expanding its impact in communities locally, nationally and globally. The system's strategy is focused on building more affordable models of care for our patients closer to home, while at the same time accelerating innovation through research and education to make breakthroughs more widespread and more accessible for patients.

"Over the past year, we have continued to focus on improving patient access and creating a more seamless patient centered experience across our system," said Anne Klibanski, MD, President and CEO, Mass General Brigham. "Our newly established radiology service offers all our patients the same high-quality imaging and the same access to world-class experts closer to home, and the launch of our new sports medicine initiative brings our renowned expert clinicians together in a comprehensive and broadly accessible sports program. These are just two examples of how we are delivering the highest value, best care to our patients across the Mass General Brigham system."

Mass General Brigham reported operating income of $128 million (3.1% operating margin) in the third quarter of fiscal year 2021, which ended on June 30, 2021. This includes income of $135 million from health care provider activity (3.5% operating margin) and a loss of $7 million from insurance activity (-2.9% operating margin). Increases in patient activity - including system-wide discharges of nearly 45,400 which is comparable to the June 2019 quarter and represents the recovery of patient activity to pre-pandemic levels - contributed to revenue growth, but expenses remain elevated due to increases in wages, health benefits and costs and use of clinical supplies.

In the comparable 2020 quarter, which was severely impacted by state mandates to cease performing elective procedures due to the first wave of the COVID-19 pandemic, the system reported a loss from operations of $373 million (-12.0% operating margin). During that quarter, the system received $334 million of permanent grants from the Provider Relief Fund of the Coronavirus Aid Relief and Economic Security (CARES) Act, which were used to prevent, prepare for and respond to cases of COVID-19, maintain health care capacity and partially offset lost revenues attributable to COVID-19. Excluding the CARES Act funds recorded in the 2020 third quarter, the system generated an operating loss of $707 million (-25.3% operating margin), including losses of $705 million from health care provider activity (-26.8% operating margin) and $2 million from insurance activity (-1.2% operating margin).

"Over the course of the past year, the hard work of every team member across our system has helped instill confidence in our patients that it is safe to come back and receive the care that may have been put off," said Niyum Gandhi, Chief Financial Officer and Treasurer at Mass General Brigham. "We are seeing volume return to pre-pandemic levels, which is a big step forward as we prepare to deal with a new set of headwinds, including rising labor and benefits costs."

Advances in Sports Medicine

Mass General Brigham earlier this month announced a new integrated Sports Medicine program that will redefine the sports medicine experience for patients, ensuring seamless, multidisciplinary care from diagnosis through rehabilitation. The program brings together more than 200 specialized physicians and surgeons, and thousands of health care professionals from across the Mass General Brigham system, giving patients access to world-class treatment no matter where they are. Through the new Mass General Brigham sports medicine program, patients can access world-renowned knee, shoulder, hip, hand and arm, and foot and ankle specialists from across the system through one centralized point of contact. The program includes Primary Care, Sports Surgery, Physical Therapy, Physiatry and Athletic Training, as well as specialized programs, including Concussion Care, Regenerative Care, Performance Optimization, Nutrition, Sports Psychology and Women's Sports Medicine.

Streamlining Care in Radiology

As a major advance toward our goal of providing seamless integrated care for our Mass General Brigham patients, and building on great collaborative work by our Mass General Brigham radiology leaders, Mass General Brigham is creating an enterprise radiology service. This collaboration among radiology departments across the system will launch in mid-September, implementing a new clinical operations structure designed to meet the needs of our patients and our system. The Mass General Brigham enterprise radiology service aligns with our system strategy to create a truly integrated health care system with the patient at the center.

Clinical integration ensures that patients will be able to access the care they need through a standardized patient experience at any Mass General Brigham location. Aligning administrative operations of radiology departments across the system will reduce variation and ensure the best possible outcomes for our patients. Through these efforts, we will optimize patient experience, image acquisition and expert interpretation to deliver outstanding care to patients across our entire system.

Commitment to Community

In May, Mass General Brigham launched a mobile vaccination initiative to bring vaccines to communities deeply impacted by COVID-19. Since launch nearly 2,500 vaccine doses have been administered to the hardest hit communities.

Mass General Brigham is utilizing community health vans--which are also used for COVID-19 testing and community outreach--to reach communities with lower vaccination rates. These mobile pop-ups will help mitigate barriers to getting vaccinated like limited access to medical providers or vaccine clinics, securing transportation, mobility issues, and work and family care schedules.

"As vaccine rates start to slow, we're seeing pockets of people who have either had a hard time accessing the vaccine, or are still not confident that they want to be vaccinated," says Tom Sequist, MD, MPH Sequist, Chief Patient Experience and Equity Officer at Mass General Brigham. "It's more critical than ever to not lose momentum in getting vulnerable populations vaccinated. We have to meet people where they are--whether that's increasing access to the vaccine or understanding why someone may have questions or concerns in a compassionate and culturally competent way."

Non-operating Results

An overall gain of $870 million was reported in the 2021 third quarter, including a non-operating gain of $742 million. Non-operating activity includes gains and losses on investments and interest rate swaps, which can vary significantly year to year due to volatility in the financial markets, and philanthropic activity. In the 2020 third quarter, an overall gain of $338 million was reported, including a non-operating gain of $711 million.

Year-to-Date Consolidated Results

The system reported income from operations of $508 million for the nine months ended June 30, 2021. This includes $232 million CARES Act funds to reimburse the system for COVID-19 pandemic activity that occurred in 2020 as well as $30 million Affordable Care Act risk corridor program subsidies for insurance coverage provided in 2014-2016. Excluding these funds, operating income was $246 million (2.1% operating margin), including income from provider activity of $270 million (2.4% operating margin) and a loss from insurance activity of $24 million (-3.4% operating margin).

In the comparable 2020 period, the system reported a loss from operations of $506 million. This includes $334 million CARES Act funds. Excluding these funds, the operating loss was $840 million (-8.6% operating margin), including losses of $815 million (-8.7% operating margin) from provider activity and $25 million (-3.9% operating margin) from insurance activity. Through June 30, 2021, the system has recognized $778 million Provider Relief Funds, including $546 million received in fiscal year 2020 which reduced the system's operating loss from $897 million to $351 million. Had the system received all Provider Relief Funds during fiscal year 2020, the reported loss would have been $119 million.

For the nine months ended June 30, 2021, the system absorbed $1.4 billion in Medicare, Medicaid, and Health Safety Net shortfalls due to government reimbursements that paid less than the full cost of providing care to Medicare, low-

income, and uninsured patients, an increase of $66 million (5%) compared to the shortfall absorbed in the comparable 2020 period.

An overall gain of $2.9 billion was reported for the nine months ended June 30, 2021, including a nonoperating gain of $2.4 billion. In the comparable 2020 nine-month period the system reported an overall loss of $698 million, including a nonoperating loss of $192 million.

Forward-Looking Statements

This press release contains certain "forward-looking statements" concerning financial and operating plans and results which involve known and unknown risks and uncertainties. In particular, statements preceded or followed by, or that include the words, "projects," "believes," "expects," "estimates," "anticipates," "plans," "intends," "scheduled," or similar expressions are forward-looking statements. Various factors could cause Mass General Brigham' actual results to differ materially including, but not limited to the impact of the COVID-19 pandemic, federal and state regulation of healthcare providers, changes in reimbursement policies of state and federal government and managed care organizations, competition in the healthcare industry in our market, general economic and capital market conditions, and changes in our labor and supply costs and in our ability to retain personnel. For more information on these and other risk factors, please refer to our most recent bond official statement or annual disclosure statement filed on the Electronic Municipal Market Access (EMMA) website maintained by the Municipal Securities Rulemaking Board. We undertake no responsibility to update any such forward-looking statements except as expressly required by law.