Boston-based nonprofit health system Mass General Brigham posted rising revenue and a positive operating margin in the third quarter as it maintained its focus on cutting operating costs and improving capacity management after posting more than $2 billion in losses last year.
The health system was required to file a performance improvement plan with the Massachusetts Health Policy Commission last year after the agency reviewed the company’s spending between 2014 and 2019 and determined that it was out of line with expectations.
MGB posted negative operating margins in both the first and second quarters of 2023, chalking the losses up to “a severe capacity crisis, elevated cost inflation and significant workforce vacancies.”
But in the third quarter of its fiscal year ended June 30, Mass General Brigham reported income from operations of $69 million, with a net gain of $437.5 million, compared with a nearly $949 million loss in the same quarter last year.
Revenue rose 15% to $4.9 billion.
Operating expenses totaled $4.8 billion, an increase of 10% year over year. Rising expenses were driven by increases in medical claims, related to a rise in its health plan membership, wages and costs of supplies, the system said.
Although MGB is moving toward financial recovery, the system also needs “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,” CFO Niyum Gandhi said in a release.
MGB invested in initiatives to utilize capacity more efficiently in the quarter, including optimizing real-time bed management, integrating clinical service lines and creating a system-wide approach to inpatient behavioral health bed-finding and placement.
The efforts, according to the health system, resulted in a 2% decline in the average acute care length of stay and contributed to growth in discharges.
Leadership called out recruitment, training and retention as an area of focus in the third quarter. MGB announced it recently received a nearly $6 million grant from the Department of Labor for its nursing school to train nurse educators.
In July, MGB filed its most recent progress report with the Massachusetts Health Policy Commission detailing efforts to hit its target of reducing spending by $127.8 million this year and $176.3 million by March 2024.
As of March, MGB was on track to meet expense reduction goals in all categories except for Home Hospital and MRI/CT Utilization.
