Mass General Brigham Reports Third Quarter 2023 Financial Results

BOSTON, Massachusetts, Aug. 12 (TNSres) -- Mass General Brigham issued the following news release:

* * *

Modest improvement comes with health system's continued focus on addressing capacity challenges

* * *

Mass General Brigham reported income from operations of $69 million (1.4% operating margin) for the third quarter of fiscal year 2023, which ended on June 30, 2023. This includes income from provider activity of $68 million (1.5% operating margin) and insurance activity of $1 million (0.2% operating margin). The system's operating loss for the nine months ending June 30, 2023 was $5 million (0.0% operating margin, excluding revenue recorded in the first quarter of FY23 related to prior year activity).

In the third quarter of fiscal year 2022, which was severely impacted by a widespread labor shortage and historic cost inflation, the health system reported a loss from operations of $120 million (-2.8% operating margin). Provider activity resulted in a loss of $121 million (-3.0% operating margin) and insurance activity generated income of $1 million (0.3% operating margin).

The labor and supply cost pressures that began to intensify last spring have moderated but continue to impact operating performance. Mass General Brigham has responded with initiatives to utilize systemwide capacity more efficiently, such as real-time bed management, continued integration of clinical service lines and the creation of a new, systemwide approach to inpatient behavioral health bed-finding and placement that is reducing extended emergency department stays and speeding up access to inpatient care.

"Across the country, healthcare has experienced foundational change and enormous financial pressures over the past several years, and while Mass General Brigham has not been immune to those challenges, we have worked hard to position our system for long-term financial stability so we can continue to fund our mission. We continue to face headwinds but are making progress in large part due to the steps we have taken to improve access and meet the capacity crisis by ensuring we care for patients at the right place, with the right services, and for the appropriate amount of time," said Anne Klibanski, MD, President and CEO of Mass General Brigham. "In the coming months, as we continue to navigate persistent challenges, we will sustain our focus on advancing our integration, investing in our workforce through new and expanded training and recruitment initiatives, strengthening our world-renowned research enterprise, and lowering costs without impact to patient care."

The system generated total operating revenue of $4.9 billion in the third quarter of fiscal year 2023, an increase of $637 million (15%) over the 2022 third quarter. Patient care revenue grew to $3.2 billion, an increase of $206 million (7%). Ongoing efforts to coordinate systemwide capacity management resulted in a slight decline in the average acute care length of stay (-2% to 5.9 days) and contributed to growth in discharges (4%). Robust outpatient activity also contributed to revenue growth. The system also generated $514 million in premium revenue (116% increase, reflecting the addition of approximately 164,000 MassHealth members under a new Accountable Care Organization), $705 million in research revenue (10% increase) and $431 million in other revenue (27% increase, driven by outpatient pharmacy).

Operating expenses totaled $4.8 billion, an increase of $447 million (10%) over the 2022 third quarter, reflecting increases in medical claims ($185 million or 107%, related to the increase in Health Plan membership), wages ($110 million or 6%, including ongoing use of temporary staffing), and costs and use of clinical ($32 million or 14%) and pharmaceutical ($114 million or 39%) supplies.

Collaborating on integrated care for MassHealth patients

As of April 1, Mass General Brigham Health Plan is managing the health system's Accountable Care Organization (ACO) through the state's MassHealth program. This enhanced provider-payer collaboration provides an opportunity to develop integrated models of care that improve health outcomes, expand access, and deliver exceptional experiences for the 164,000 members of the ACO. It also supports the system's mission to provide equitable access to healthcare and coverage for underserved populations and enables it to do so in a more financially sustainable manner.

"Healthcare organizations across the country, including Mass General Brigham, are making modest progress toward financial recovery, but we still have much more work to do. Our recent performance improvement reflects systemwide initiatives to address capacity constraints but we also need to moderate our expense growth trend through productivity enhancement and resource stewardship to meet our annual budget targets and position Mass General Brigham for long-term financial stability," said Niyum Gandhi, Chief Financial Officer and Treasurer at Mass General Brigham. "That work will include building a culture and mindset around smart resource utilization, so we can identify efficiencies across the organization on an ongoing basis. We will also continue to focus on integration between our community hospital providers and our Health Plan, which is developing programs to improve access and health equity for underserved populations, and continue to deliver high-quality, coordinated care."

Making an impact for our patients and beyond

Mass General Brigham continues to strategically invest in its future to grow research and breakthrough innovations. Additionally, the system is improving access for patients, making care more affordable and closer to home and advancing equity in clinical outcomes.

* Improving capacity: Mass General Brigham's continued integration of clinical services is helping the system respond to a relentless capacity crisis by measuring and optimizing hospital assets and bed capacity. This work will continue in the coming months with the launch of an integrated capacity command center that will coordinate care for patients being transferred to or within the system, to connect a patient with the right bed across the system's academic medical centers, specialty hospitals, and community hospitals. The system is also responding to the capacity crisis through innovative programs like Virtual Urgent Care, which enables patients to receive one-on-one treatment from medical providers without leaving the home.

* Responding to the behavioral health crisis: Mass General Brigham has developed a new, integrated approach to inpatient behavioral health, with a single point of entry, which is reducing extended emergency department stays, speeding up access to vital inpatient care, and getting patients in beds best suited to address their needs.

* Investing in workforce: To respond to continued workforce challenges, Mass General Brigham is utilizing multiple strategies to recruit, train and retain healthcare professionals across the system. The MGH Institute for Health Professionals recently secured a nearly $6 million grant for its School of Nursing to train nurse educators. Mass General Brigham and UMass Boston also recently announced $20 million new investment to enhance the college's Clinical Leadership Collaborative for Diversity in Nursing program, with a focus on recruiting and retaining nursing students from underrepresented communities as they start their rotations at Mass General Brigham clinical sites.

* Addressing burnout through technology: Mass General Brigham is exploring ways to use generative artificial intelligence (AI) to save time and minimize administrative burden that contributes to care team burnout. This includes a pilot program that will measure the accuracy of AI-drafted responses to patient messages, which are then reviewed and edited by human clinicians.

* Focus on quality: Mass General Brigham recently launched For Every Patient, a unified, data-driven systemwide quality strategy that seeks to deliver the best possible care for every patient who needs us, every time they need us, from the common to the complex, from the hospital to the home. The initiative will pursue improvements to make care more effective, safe, equitable, and personalized for every patient.

* Innovative, life-saving breakthroughs: Mass General Brigham's world-class research enterprise continues to develop groundbreaking new treatments to save patient lives. This work was highlighted in June at the 2023 World Medical Innovation Forum. At the Forum's annual First Look session, 16 Mass General Brigham investigators presented their discoveries and insights aimed at disrupting the fields of central nervous system/brain health, oncology, and inflammation & immunology.

These milestones come as Mass General Brigham hospitals were once again named among the top hospitals in the nation by U.S. News & World Report. Five hospitals were nationally recognized, with Massachusetts General Hospital (MGH) and Brigham and Women's Hospital (BWH) once again earning spots on the U.S. News "Best Hospitals" honor roll. McLean Hospital was named #1 in the nation for psychiatry, with MGH named #2. For the second year, BWH ranked #1 in the nation in Obstetrics & Gynecology. Spaulding Rehabilitation Hospital earned the #2 spot for rehabilitation and Mass Eye and Ear ranked #4 for ophthalmology and #7 for otolaryngology (ear, nose, and throat).

Nonoperating activity

The system reported an overall gain of $437 million for the quarter ended June 30, 2023, including a nonoperating gain of $368 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 loss of $949 million, including a nonoperating loss of $829 million.

Year-to-Date Financial Results

The system reported income from operations of $62 million for the nine months ended June 30, 2023. This includes 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, and $45 million in healthcare provider revenue related to prior year activity. Excluding these funds, the system reported an operating loss of $5 million (0.0% operating margin), including income from provider activity of $2 million (0.0% operating margin) and a loss from insurance activity of $7 million (-0.7% operating margin).

In the comparable prior year period, the system reported a loss from operations of $303 million (-2.4% operating margin), including losses of $288 million (-2.4% operating margin) from provider activity and $15 million (-2.0% operating margin) from insurance activity. Operating performance in fiscal year 2022 was impacted by the Omicron surge, particularly during the March quarter, along with material increases in the cost of supplies and labor, which limited systemwide inpatient capacity.

For the nine months ended June 30, 2023, the system absorbed $1.8 billion 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 $162 million (10%) compared to the shortfall absorbed in the comparable prior year period.

The system reported an overall gain of $1.3 billion for the nine months ended June 30, 2023, including a nonoperating gain of $1.2 billion. In the comparable 2022 period the system reported an overall loss of $1.7 billion, including a nonoperating loss of $1.4 billion.

* * *

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