Mass General Brigham suffers $2.3 billion in financial losses – Healthcare Finance News

Mass General Brigham’s Assembly Row headquarters
Photo: Courtesy Mass General Brigham
Mass General Brigham has reported a loss of $2.3 billion for the year due to challenges faced by all health systems over staffing expenses, inflation, a decline in discharges and other financial pressures.
The loss includes a nonoperating loss of $1.8 billion, reflecting heightened unfavorable volatility in the financial markets, the integrated Boston health system said.
The loss from operations is $432 million, a -2.6% operating margin for the fiscal year ending September 30. 
Provider activity resulted in a loss of $395 million, a -2.5% operating margin, reflecting the impact of the Omicron surge during the March quarter along with unprecedented inflationary pressures and staffing shortages which limited inpatient and outpatient capacity. 
Clinical labor staffing vacancies suppressed bed capacity across the healthcare continuum, making it significantly more difficult to find post-acute placements. This contributed to an average acute care length of stay in excess of six days in 2022, approximately 15% longer than the average length of stay before the COVID-19 pandemic and resulted in increased overall resource use per patient. The capacity crisis is not unique to academic medical centers, and all hospitals in the Mass General Brigham system have been at, or above, 100% operational occupancy, on average.
Higher inpatient acuity coupled with longer lengths of stay at Mass General Brigham’s academic and community hospitals resulted in a decline in discharges (-2%) and curtailed patient care revenue growth ($437 million, or 4%) to $11.9 billion. 
The health system said its financial performance continues to be impacted by external pressures that have intensified over the past year, including inflation, significant workforce shortages and a worsening capacity crisis.
Many healthcare systems and hospitals nationwide are experiencing the worst year financially since the start of the COVID-19 pandemic, Mass General Brigham said. While the impacts of inflation and labor shortages are widespread, healthcare providers face unique challenges with little flexibility to quickly adjust to rising costs. 
In 2021, the system reported operating income of $442 million. This included $232 million of permanent grants from the Provider Relief Fund of the Coronavirus Aid Relief and Economic Security (CARES) Act and $30 million in Affordable Care Act risk corridor program subsidies for insurance coverage provided in 2014-2016. 
In 2022, the system absorbed $2.3 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 $307 million (15%) compared to the shortfall absorbed in 2021, the health system said.
Mass General Brigham’s action plan for a long-term sustainable future includes advancing integration initiatives to improve care and deliver a unified experience for patients. This involves prioritizing the efficient flow of patients through the acute hospital and to post-acute care settings, including expanding home-based care and telehealth services to shift care beyond traditional hospital settings.
To address the labor shortage, Mass General Brigham is supporting programs to decrease the financial strain caused by reliance on temporary staffing, including the training of candidates to enter high-demand clinical roles and the building of employment pipelines for new mental health workers.
It is also looking at reducing expenses by eliminating vacant administrative positions. 
In addition, local leaders across the system will be revisiting fiscal year 2023 budget plans and projects to reduce non-labor expenses where possible.
The system generated total operating revenue of $16.7 billion this year, it said. 
Insurance activity resulted in a loss of $37 million, including a $21 million premium deficiency reserve for anticipated losses in fiscal 2023 related to the successful launch of Mass General Brigham Health Plan’s Medicare Advantage program. Excluding the reserve, insurance activity generated a loss of $16 million (a -1.7% operating margin).
CFO and Treasurer Niyum Gandhi said Mass General Brigham is transitioning its care model to one based on value rather than volume, facilitated by the launch of a zero premium Medicare Advantage plan and moving approximately 140,000 Medicaid members into a full risk program.
Despite ongoing financial challenges, Mass General Brigham said it remains committed to improving value, outcomes and quality for patients, making significant progress throughout 2022 toward its vision of building the integrated academic health system of the future with patients at the center.
Mass General Brigham is integrating service lines and clinical services as part of its comprehensive strategy to collaborate as one integrated academic health care system, enabling both exceptional care and a unified experience for patients. 
Progress made as part of this multiyear initiative includes integrating cardiac surgery, cardiology, pathology, radiology, emergency medicine and anesthesiology. 
For radiology, Mass General Brigham now has a fully integrated digital imaging viewing system across all entities. Mass General Brigham is also monitoring patient care resources, such as CT scanners and operating rooms, through its proprietary Enterprise Asset Management platform, which will be used systemwide by early 2023.
In addition, Mass General Brigham is expanding access to telehealth by integrating virtual and in-person care, including improving equity through access to medical interpreters during all virtual care encounters. Mass General Brigham has also implemented a remote healthcare program aimed at managing patients’ blood pressure and cholesterol levels.
Mass General Brigham operates one of the largest hospital system-based research enterprises in the country and currently has 2,700 ongoing clinical trials.
In recognition of its scientists’ expertise in infectious disease, Mass General Brigham was selected to participate in a collaborative nationwide study to understand prolonged symptoms of COVID-19 and how to recover from them. 
Massachusetts General Hospital and Brigham and Women’s Hospital are part of a national trial to evaluate the effectiveness of a treatment for Mpox and, separately, were approved for more than $50 million in funding awards by the Patient-Centered Outcomes Research Institute for studies on treating two important mental health conditions – acute suicidal depressed state and bipolar depression.  
Mass General Brigham is home to more than 400 leading gene and cell therapy researchers from five nationally ranked academic medical centers. 
“Healthcare is facing an unrelenting economic crisis that is impacting patients’ ability to access care,” said Dr. Anne Klibanski, president and CEO of Mass General Brigham. “It is our responsibility at Mass General Brigham to continue to provide high-quality care while being good fiscal stewards on behalf of the 1.7 million patients whom we care for. While what we are experiencing today is unprecedented, it’s important to remember that we have overcome challenges before during our long history. The stress placed on our workforce and our system over the past several years has been enormous, and the employees at Mass General Brigham continue to show strength and resiliency.” 
Twitter: @SusanJMorse
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