Dive Brief:
- Boston-based nonprofit system Mass General Brigham reported an overall gain of $579 million in its first fiscal quarter of 2024 ended Dec. 31, up from a gain of $480 million in the same period last year.
- The majority of its income, $497 million, came from non-operating activity, including investments, according to the system.
- Though Mass General Brigham increased patient revenue by 5% during the quarter, operating expenses continued to pressure the nonprofit health system, rising 11% year over year to total $4.9 billion. Increases in medical claims, related to a rise in its health plan membership, as well as wages and costs of supplies drove expense growth, the system said.
Dive Insight:
Mass General Brigham reported operating income of $82 million, inclusive of one-time provider acuity revenue of $114 million from last year. Excluding the same one-time revenue from 2023, Mass General Brigham reported an operating loss of $32 million in the quarter.
The nonprofit’s results are an improvement from last year, when it posted a $53 million operating loss.
Revenue growth was primarily driven by growth in patient care and premium revenue. The system logged $481 million in premium revenue — a 109% increase year over year — after Mass General Brigham added 150,000 members into a new Accountable Care Organization.
However, operating expenses also rose. Medical claims rose 89% compared with the same period last year and pharmaceutical supply costs also increased by 23%.
Mass General Brigham has been attempting to rein in costs since 2022. The health system was required to file a performance improvement plan with the Massachusetts Health Policy Commission in 2022 after the agency determined the system’s spending between 2014 and 2019 was out of line with expectations.
The health system said in its most recent progress report that it was on track to reach most of its expense reduction goals, and cut spending by $176.3 million during its reporting period from October 2022 to March 2024.
In a discussion of the system’s quarterly financial results, CFO Niyum Gandhi said the provider’s cost cutting efforts were “having a positive impact.” However, the CFO noted that continued elevated labor and supply costs demonstrated the importance of growing other sources of “sustainable revenue,” such as the Mass General Brigham Health Plan.
The health system reduced its technology workforce at the end of last year to cut costs. The nonprofit offered workers voluntary separation agreements in November and then laid off less than 20 employees in December.
The earnings report also referenced Mass General Brigham’s ongoing capacity challenges.
In January, Mass General Hospital reported it was “currently struggling daily with unprecedented overcrowding” that impacted “every corner of the hospital.”
The crisis was so severe that the Massachusetts Department of Public Health (DPH) urged health systems on Jan. 9 to use expedited discharge planning, citing significant capacity issues, according to Mass General Brigham.
To address the capacity challenges, Mass General Brigham has appointed O’Neil Britton as chief integration officer. Britton is tasked with coordinating care and integrating services across departments, according to the earnings report. Massachusetts General Hospital also has filed an application with the DPH to expand its footprint by 94 licensed inpatient beds, according to the report.
