Mass General Brigham’s operating income slipped to $47 million for the quarter ended June 30 despite a 7% year-over-year increase in total operating revenue, the major nonprofit system reported last week.
The fiscal third-quarter numbers, which reflect a 0.9% operating margin, follow the prior year’s $69 million operating income and 1.4% operating margin.
When including nonoperating items such as investment income, Mass General Brigham logged a net income of $277.5 million, also down from the third quarter of 2023.
The Massachusetts system is showing a slight year-over-year improvement across the first months of its 2024 fiscal year, having turned the prior year’s $5 million loss into a $41 million operating income (0.3% operating margin, not inclusive of $118 million of onetime revenue tied to prior year healthcare provider activity).
Excess of revenues over expenses for the nine months of the fiscal year was $1.66 billion, up from 2023’s $1.28 billion.
MGB’s leadership is also pointing toward progress on broader strategic goals and cost efficiency.
“Despite pressures that continue to confront Mass General Brigham and other health systems … our ongoing work to ensure financial stability and access to high-quality affordable care will enable our long-term efforts to build a more impactful, patient-focused and equitable health system with the highest quality research-infused care that improves outcomes and experiences for all we serve,” President and CEO Anne Klibanski, M.D., said in a statement.
Per filings and a press release outlining the quarter’s performance, those broader efforts include millions in housing and behavioral health investments, a new “system-wide cancer strategy” for the upcoming departure of longtime partner Dana-Farber Cancer Institute and a previously announced unification of Massachusetts General Hospital and Brigham and Women’s Hospital’s clinical departments. Klibanski also pointed to investments in clinical care and educating “the next generation of healthcare professionals.”
Within its operations, MGB grew its third-quarter total operating revenue by $326 million to $5.2 billion, with about half of that gain coming from higher patient care revenues. Here, the system highlighted “ongoing efforts to coordinate systemwide capacity management” that trimmed average inpatient stay length by 0.3% and contributed to a 3% rise in discharges.
MGB also reported a 9% rise in health plan premium revenue, though its fully insured membership declined 3% to about 239,000 members due to MassHealth’s (the state Medicare program’s) resumed eligibility determination. MGB also noted a 4% increase in research and academic revenue and a 21% rise in “other operating revenue.”
Cutting into the quarter’s revenue gains was a $348 million rise in operating expenses year over year, which was comprised of a 5% increase in wages and benefits, 9% rise in medical claims, 20% jump in pharmaceutical supplies and 7% rise in other clinical supplies.
“We are making progress in our work to reduce our expense growth trend, to ensure our organization is well-positioned to deliver on our mission for years to come,” Niyum Gandhi, chief financial officer and treasurer at MGB, said in a statement. “Our ongoing work to promote responsible resource stewardship and diversify our revenue sources will enable continued investment in our mission-driven work to improve patient outcomes and support the health of our communities.”