Shortly after disclosing a wave of ongoing layoffs, nonprofit Mass General Brigham has reported a $53.8 million operating loss (-1% operating margin) but a $281.7 million net gain for the quarter ended Dec. 31.
Despite an 11% increase in total operating revenues largely driven by patient care, it’s a downturn over the same quarter the year before when the system logged a $32 million operating loss (-0.7% operating margin, excluding $114 million of certain prior year revenue) and $579.4 million excess of revenues over expenses.
Across the full 2024 fiscal year ended Sept. 30, MGB had reported a $72 million operating loss (-0.4% operating margin, again excluding prior year revenue).
The system’s numbers were quietly released Friday as required by the Municipal Securities Rulemaking Board but without the usual news release that accompanied prior disclosures. A spokesperson for MGB declined to provide further commentary on the latest financial statement and how it relates to the layoffs.
Word of those came just days before, with the system pointing to a $250 million two-year budget gap as the reason for its decision.
MGB declined to put a number on how many of its nonclinical employees would be affected, though a report citing an internal employee email and statements from executives characterized the cuts as affecting “hundreds of employees.” The layoffs are reportedly being conducted in two waves, one of which kicked off last week and the other set to occur in March.
MGB management, in Friday’s filing, said its “strategic reorganization of management and administrative positions” is expected to save the system more than $200 million per year.
Management went on to write that the reorganization would “improve efficiency” by “reduc[ing] bureaucracy, enhanc[ing] communication and foster[ing] a more agile environment.”
The cuts would also “empower” front-line staff, who management said “will have more direct access to leadership, promoting transparency, accountability, and better understanding of team challenges.”
Beyond the layoffs, Friday’s filing outlined $5.44 billion in total operating revenues and $5.49 billion in total operating expenses, both a roughly 11% year-over-year increase.
The former includes an 8% rise in patient care revenues, driven by a 2% rise in discharges and “continued growth in outpatient activity;” as well as a 13% rise in premium revenue from MGB’s health plan and a 6% increase in research and academic revenue.
As for expenses, wages rose 9%, pharmaceutical spending by 28%, other clinical supplies by 15% and health plan medical claims by 18% (with a medical loss ratio rising from 92.8% to 93.8%).
The system also outlined $165 million of community health, research and education investments as well as a $243 million shortfall in Medicaid and Health Safety Net shortfalls it absorbed “due to certain government reimbursements that do not cover the full cost of providing care to low-income and uninsured patients.”
MGB’s nonoperating gain of $336 million brought the quarter’s bottom line to $282 million. It had tallied $497.7 million and $579.4 million for those two lines a year before, thanks in large part to over $500 million more of investment income.
Echoing comments from its last financial statement, MGB’s management pointed to “an unrelenting capacity crisis” affecting Massachusetts that’s driving longer-than-necessary stays and curtailing revenue growth.
It also said “several years of elevated cost increases relative to modest annual increases in reimbursement rates in a capacity-constrained environment has resulted in persistent financial impact."
MGB—which is also going through a reorganization to marry the clinical teams at its flagship hospitals—said it is addressing its financial situation through a systemwide resource stewardship effort, which has found wins by consolidating answering services and restructuring supplier relations among other efforts. It also listed new pathways from hospital beds to post-acute care settings and AI clinical and administrative support among its ongoing strategic initiatives.