Though Mass General Brigham (MGB)’s operations were on the rise during its fiscal third quarter, the integrated nonprofit system said it still has work to do surrounding capacity management, workforce investment and other ongoing cost-management initiatives.
For the three months ended June 30, MGB reported $69.4 million in operating income (1.4% operating margin) and a net gain of $437.5 million bolstered by $347.3 million in investment income.
Fiscal year to date, the organization now sits at a $61.9 million operating gain (0.4% operating income)—or a $5 million operating loss (0.0% operating margin when excluding federal COVID relief and prior-year provider revenue)—and a $1.3 billion net gain.
The performance is an improvement over the equivalent period last year, which the system noted “was severely impacted by a widespread labor shortage and historic cost inflation.” At the time, MGB had reported a $120.2 million operating loss (-2.8% operating margin) and a $949 million net loss thanks to major losses from its investments.
“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,” MGB Chief Financial Officer and Treasurer Niyum Gandhi said in a release. “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.”
Total operating revenues for the latest quarter grew 15% year over year to $4.9 billion, made up in part by a 7% increase in patient care revenue and a massive 116% year-over-year increase in premium revenue that reflected the addition of about 164,000 state Medicaid program members under a new accountable care organization managed by Mass General Brigham Health Plan.
Operating expenses also rose 10% year over year to $4.8 billion. MGB attributed these to a 107% increase in medical claims stemming from increased health plan membership, a 6% increase in wages and temporary staffing spending, a 15% increase in clinical supply spend and a 39% increase in pharmaceutical supply spend.
The quarterly numbers suggest that, although some of last year’s inflation and labor headwinds remain, the system's Q3 results show that the organization is “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,” Anne Klibanski, M.D., president and CEO of MGB, said in a release.
Chief among these ongoing initiatives highlighted by executives in the release and filings is work to improve capacity at MGB.
Already, capacity management efforts helped MGH cut average acute length of stay by 1.8%, to 5.9 days, and bump discharges up 3.9% during the most recent quarter, the organization said. But within “the coming months,” the system plans to launch an integrated capacity command center able to better coordinate patient transfers between facilities, as well as real-time bed management and the recently launched virtual urgent care program for at-home services.
MGB also said it has developed a new system-wide bed-finding and placement process for its inpatient behavioral health patients that “is reducing extended emergency department stays, speeding up access to vital inpatient care, and getting patients in beds best suited to address their needs.”
Investments toward recruiting, training and retaining clinical staff aim to reduce labor costs, the system said, while early AI initiatives—including a pilot measuring the accuracy of patient message responses drafted by generative AI and reviewed by human clinicians—aim to drive efficiency and reduce burnout across the workforce.
MGB’s strategic initiatives “will include building a culture and mindset around smart resource utilization, so we can identify efficiencies across the organization on an ongoing basis,” Gandhi added. "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.”
The run-up to summer has so far proven to be a period of financial recovery for major health systems, largely thanks to volume-driven revenue growth. For-profits like HCA Healthcare and Universal Health Services’ stronger numbers have led to upward adjustments in full-year projections while nonprofits like Kaiser Permanente and Sutter Health both looked to have put 2022’s losses in the rearview.