Mass General Brigham Reports First Quarter 2023 Financial Results

BOSTON, Massachusetts, Feb. 11 (TNSjou) -- Mass General Brigham issued the following news release:

Mass General Brigham, a not-for-profit, integrated health care system, reported a loss from operations of $1 million for the first quarter of Fiscal Year 2023 (FY23), which ended on December 31, 2022. This includes $52 million in healthcare provider revenue related to prior year activity, of which the largest component was a $22 million permanent grant from the American Rescue Plan Act of 2021 (ARPA), the federal government's economic stimulus bill intended to partially offset lost revenues and accelerate recovery from the COVID-19 pandemic.

Excluding the revenue attributable to prior year activity, the system reported an operating loss of $53 million (-1.2% operating margin), including losses from provider activity of $46 million (-1.1% operating margin) and a loss from insurance activity of $7 million (-3.1% operating margin).

Mass General Brigham's financial performance continues to be impacted by external pressures, including a severe capacity crisis, elevated cost inflation and significant workforce vacancies. Notwithstanding those intense pressures, the system remains focused on executing plans to ensure its long-term sustainable future, including advancing integration initiatives to improve patient care and identify efficiencies, addressing the labor shortage by building workforce pipelines, and reducing expenses.

"We continue to navigate the ongoing challenges that have been exacerbated by the COVID-19 pandemic, including the capacity and staffing crises," said Anne Klibanski, MD, President and CEO, Mass General Brigham. "Despite these unrelenting pressures, Mass General Brigham remains on course in its multi-year journey to build the integrated academic health system of the future, leading change to improve patient access and experience, and ensuring that we can continue to deliver the highest-quality patient care, invest in research and teaching, and serve our community."

The system generated total operating revenue of $4.5 billion in the first quarter of fiscal year 2023. Patient care revenue grew to $3.2 billion, an increase of $176 million (6%) over the 2022 first quarter. Favorable third-party settlements of $30 million and $4 million were recorded in the 2023 and 2022 quarters, respectively. The underlying revenue growth (5%) reflects increases in patient acuity and overall utilization of services at Mass General Brigham's academic and community sites. This was facilitated by ongoing systemwide efforts to coordinate capacity management, resulting in a modest increase in system-wide discharges (1%) despite the average acute care length of stay remaining above 6 days through the first quarter of FY2023.

The system also generated $231 million in premium revenue (4% increase), $637 million in research revenue (10% increase) and $433 million in other revenue (32% increase, including $22 million ARPA funds). Operating expenses totaled $4.5 billion, an increase of $356 million (9%) over the 2022 first quarter and remain elevated due to increases in wages (9%, including increased use and cost of temporary staffing), and costs and use of clinical (15%) and pharmaceutical (24%) supplies.

"We are continuing to staff as many beds as possible to help meet patient need, which does require the ongoing use of contract labor," said Niyum Gandhi, Chief Financial Officer and Treasurer at Mass General Brigham. "The associated costs may temper operating margins over the short term but, over time, we anticipate reaping benefits from clinical integration and resource stewardship initiatives. Through provider-payer integration with Mass General Brigham Health Plan, we are also advancing key initiatives to improve health equity, outcomes, and affordability, including through Medicare Advantage and the state's approval of an integrated Mass General Brigham Accountable Care Organization to support our Medicaid population."

For the three months ended December 31, 2022, the system absorbed $574 million in Medicare, Medicaid, and Health Safety Net shortfalls due to certain government reimbursements that do not cover the full cost of providing care to Medicare, low-income, and uninsured patients, an increase of $79 million (16%) compared to the shortfall absorbed in the comparable prior year period.

In the first quarter of fiscal year 2022, the system reported income from operations of $10 million (0.2% operating margin). This includes income from provider activity of $16 million (0.4% operating margin) and a loss from insurance activity of $6 million (-2.5% operating margin).

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Streamlining operations at community hospitals

As part of ongoing efforts to further integrate our academic health system and better serve patients, Mass General Brigham is evolving the organization and management structure of its community hospitals and physicians to be unified under a new leadership structure. This will provide more coordinated, accessible care for patients, enable sharing of best practices in quality and safety, and streamline hospital operations across the division. Recent challenges, including the COVID-19 pandemic and the ongoing capacity crisis, have underscored the need for close strategic coordination among hospitals to more effectively serve our communities, and these changes will support Mass General Brigham in providing the very best in patient care.

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Growing Home Hospital capacity

With the goal of improving patient outcomes, increasing access, and lowering costs, Mass General Brigham is continuing to expand its Home Hospital program, allowing patients with chronic illness to safely receive hospital-level care in their homes. Research shows that home-based care can provide more patient-centered and satisfying care, lower complication rates, reduce Emergency Department utilization, and lead to improved patient outcomes for patients who can safely be transitioned out of a hospital setting. Mass General Brigham delivered nearly 5,000 Home Hospital patient days in 2022.

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National leader in research and innovation

Mass General Brigham continues to be a national leader in driving research to find new treatments and cures. Several recent high-profile research studies have been published by Mass General Brigham researchers. Myocarditis, a condition in which the heart muscle becomes inflamed, is an exceedingly rare complication that can occur after mRNA COVID vaccination. In a new study by researchers from Brigham and Women's Hospital and Massachusetts General Hospital, a team extensively investigated the immune response of 16 adolescents and young adults who developed myocarditis after receipt of the COVID mRNA vaccine. Among adolescents and young adults who developed this rare complication, researchers found no differences in antibody production, auto-antibodies, T cell profiles, or prior viral exposures, but detected elevated levels of spike protein. Findings point to potential treatment to prevent or reverse post-vaccine myocarditis.

In another COVID related study, Mass General Brigham researchers leveraged observational data from nearly 45,000 patients to show that even in highly vaccinated populations, treatment with the antiviral drug nirmatrelvir plus ritonavir (Paxlovid) reduced hospitalization and death by nearly half. The results, now published in Annals of Internal Medicine, suggest that Paxlovid can offer a substantial benefit even to vaccinated patients diagnosed with COVID-19 in the outpatient setting, and can contribute to ongoing efforts to reduce COVID-19 hospitalizations.

Another new study, published in The New England Journal of Medicine, underscores the continued importance of patient safety measures more than 30 years after the landmark Harvard Medical Practice Study (HMPS). Since the publication of the HMPS results, measuring the longitudinal impact of safety strategies has been challenging. The new team, led by Mass General Brigham investigators, looked at 11 regional hospitals to provide an estimate of adverse events in the inpatient environment. Their finding shed light on the progress of two decades of work focused on improving patient safety and highlighting the need for continued improvement.

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Making clinical care more equitable

Two years ago, Mass General Brigham's United Against Racism initiative was born out of the civil unrest and protests against racist violence that began in Minneapolis and spread globally. Like so many across the world, we were outraged and driven to take decisive action to do our part in helping to eradicate racial inequities. United Against Racism was the first time that Mass General Brigham, together as a system, formalized a higher level of leadership and accountability in addressing and dismantling racism.

For UAR's two-year anniversary, Mass General Brigham highlighted the vast number of projects and initiatives happening across the system, including how the system is combatting racial inequities in our clinical settings.

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Strengthening diversity and inclusion in the health care workforce

To strengthen and support these initiatives and other diversity, equity, and inclusion programs, Anna Brown has been named Senior Vice President and Chief Diversity, Equity, and Inclusion (DE&I) Officer for Mass General Brigham. In this role, Brown, who has over 20 years of experience as a DE&I professional, will work collaboratively with senior leadership and all members of the organization to provide vision and drive systemwide DE&I and United Against Racism strategies and goals.

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Furthering provider-payer integration to improve outcomes and reduce costs

Mass General Brigham Health Plan executed on a series of initiatives that advance the vision and strategy of Mass General Brigham to improve access, outcomes, and affordability through provider-payer integration. Specific initiatives include introducing a Medicare Advantage product into the market, receiving approval from the state to support the Mass General Brigham Accountable Care Organization, and launching a robust mental health solution with Lyra Health that offers more access, options, and customized navigation. Supported by a new, unified brand identity, these initiatives are transforming the member experience while addressing health disparities and social determinants of health.

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Nonoperating activity

The system reported an overall gain of $480 million for the three months ended December 31, 2022, including a nonoperating gain of $481 million. Nonoperating 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 comparable prior year period, the system reported an overall gain of $105 million, including a nonoperating gain of $95 million.

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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's 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.

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JOURNAL: Annals of Internal Medicine https://www.acpjournals.org/doi/10.7326/M22-2141

JOURNAL: The New England Journal of Medicine http://www.nejm.org/doi/full/10.1056/NEJMsa2206117

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Original text here: https://www.massgeneralbrigham.org/en/about/newsroom/press-releases/mgb-q1-2023-financial-results