State report finds most Massachusetts hospitals are profitable

DATE : August 01, 2018

Despite hospital advocates on Beacon Hill clamoring for higher reimbursements, a new report put out by the state finds that financially, Massachusetts hospitals on the whole are faring surprisingly well.

According to a report published Wednesday by the Center for Health Information and Analysis, or CHIA, 21 out of 29 health systems in the state reported positive total margins — including not only revenue from hospital operations, but from investments — in 2017.

Those health systems include 62 acute care hospitals, of which 49 reported a surplus last year.

Those figures are largely on par with a year ago, when 22 health systems were profitable. Within those health systems, 47 hospitals were profitable.

Because the total margin includes income from investment activity, it is influenced by the performance of the stock market, which can cloud a hospital’s actual operations. The report also measured operating margins as a percentage of revenue, and found that acute care hospitals fared worse than last year, with a statewide median operating margin of 1.6 percent last year. That's down by 1.2 percentage points from 2016.

But overall, the report, which is issued annually by the state, found that hospitals largely have healthy bottom lines. As a percentage of revenue, the statewide median margin for acute hospitals ticked up 0.1 percentage point to 3.2 percent from 2016 to 2017.

According to the report, the most profitable health system in the state was Trinity Health, the national, nonprofit parent company of Springfield-based Mercy Medical Center, which reported a $1.3 billion profit in 2017.

Officials from CHIA noted that Trinity’s profitability was aided by health systems out of state. The Catholic health system includes 94 hospitals in 22 states.

The most profitable in-state health system was Partners HealthCare, which reported $659.1 million in total margin in 2017.

The least profitable health system in the state was national for-profit system Tenet Healthcare (NYSE: THC), which reported a $320 million net loss. The Dallas-based company includes 68 hospitals in 47 states.

The report comes as community health systems have been lobbying for more money from the state, arguing that they are being squeezed by larger health systems. Larger health systems have protested any possible caps on growth as a threat to their research and national prominence.

Lawmakers failed to reach an agreement by the end of the legislative session Tuesday on a health care bill that would have given more money to community hospitals by either raising reimbursements or funneling money to them from large hospitals, insurers and urgent care centers.


 - Jessica Bartlett, Reporter, Boston Business Journal, August 1, 2018