Mass General Brigham Reports Second Quarter 2021 Financial Results
Over the course of the past year, Mass General Brigham has been executing its strategy to build the integrated academic health system of the future, transforming care, improving outcomes and expanding its impact in communities locally, nationally and globally. The system’s strategy is focused on building more affordable models of care for our patients closer to home, while at the same time accelerating innovation through research and education to make breakthroughs more widespread and more accessible for patients.
“Over the course of the past year, we have mobilized every resource available to combat COVID-19, and our experience during the pandemic has greatly accelerated our journey to become a more unified system and better meet the needs of our patients,” said Anne Klibanski, MD, President and CEO, Mass General Brigham. “Lessons learned from throughout the past year will help us build more patient-centric approaches to care and allow for us to have a bigger impact on patients’ lives locally, nationally and throughout the world.”
Through March 31, 2021, Mass General Brigham has administered more than 1.1 million COVID tests and treated nearly 19,000 COVID-19 positive inpatients, including a first surge that peaked in April 2020 with 925 COVID-19 inpatients and a second surge that exceeded 400 COVID-19 inpatients in January 2021. To date, the system has administered more than 400,000 vaccine doses. Since the start of the pandemic, Mass General Brigham researchers have worked around the clock to develop and assess new approaches to combat COVID-19 and bring much needed hope to patients everywhere. Mass General Brigham clinicians and scientists have helped launch over 500 new studies and more than 120 clinical trials aimed at finding new tests, treatments and prevention for COVID-19. In addition, our COVID-19 research efforts encompass more than 400 awards.
Mass General Brigham reported operating income of $250 million in the second quarter of fiscal year 2021, which ended on March 31, 2021. This includes $232 million of permanent grants from the Provider Relief Fund of the Coronavirus Aid Relief and Economic Security (CARES) Act. Through March 31, 2021, the system recognized $778 million Provider Relief Funds, including $546 million received in fiscal year 2020 which were used to prevent, prepare for and respond to cases of COVID-19, maintain health care capacity and partially offset lost revenues attributable to COVID-19. The Provider Relief Funds received in fiscal year 2020 reduced the system’s operating loss from $897 million to $351 million; had the system received all Provider Relief Funds during fiscal year 2020, the reported loss would have been $119 million.
Excluding the CARES Act funds recorded in the 2021 second quarter, the system generated operating income of $18 million (0.5% operating margin), including income of $21 million from health care provider activity (0.6% operating margin) and a loss of $3 million from insurance activity (-1.2% operating margin). Higher patient acuity and the ability to continue performing elective procedures during the second COVID-19 surge contributed to revenue growth, but expenses were elevated due to increases in wages and costs for clinical supplies. In the comparable 2020 quarter, which was impacted by preparations to care for COVID patients and state mandates to cease performing elective procedures, the system reported a loss from operations of $178 million (-5.2% operating margin), including operating losses of $166 million from provider activity (-5.1% operating margin) and $12 million from insurance activity (-5.7% operating margin).
Working together as a system, processes were developed to ensure a safe approach to managing COVID capacity at each entity. This allows each hospital to maintain balance, so all parts of the system can accommodate patients who require hospitalization, and ensures that patients are in the right place at the right time with the right team, with optimal access to our highest quality care. This innovation, dubbed ‘Level-loading’ enabled the system to navigate the second COVID-19 surge more efficiently.
“We have an obligation to our patients to work even harder to deliver the value that they seek, while continuing to aggressively manage the cost of care,” said Niyum Gandhi, Chief Financial Officer and Treasurer at Mass General Brigham. “We are committed to a long-term strategy that offers our patients greater value, a better patient experience and the same world class care they have come to expect.”
The recent launch of a virtual primary care practice is another example of steps underway to transform care and improve patient outcomes through new and innovative ways. This collaboration between AllWays Health Partners and Newton-Wellesley Hospital, which was initially designed for patients enrolled in the Allies HMO (an integrated, new health insurance product developed as part of the system’s value-based care model) and was recently expanded to the entire AllWays provider network, enables patients to see their primary care physician virtually within one business day upon request, schedule visits online and set up in-person office visits, if necessary.
An overall gain of $956 million was reported in the 2021 second quarter, including a non-operating gain of $706 million. Non-operating activity includes gains and losses on investments and interest rate swaps, which can vary significantly year to year due to volatility in the financial markets, and philanthropic activity. In the 2020 second quarter, an overall loss of $1.6 billion was reported, including a non-operating loss of $1.4 billion.
Year-to-Date Consolidated Results
Income from operations of $380 million was reported for the six months ended March 31, 2021. This includes $232 million CARES Act funds and $30 million Affordable Care Act risk corridor program subsidies for insurance coverage provided in 2014-2016. Excluding these funds, operating income was $118 million (1.6% operating margin), including income from provider activity of $135 million (1.9% operating margin) and a loss from insurance activity of $17 million (-3.7% operating margin). In the comparable 2020 period, the system reported a loss from operations of $133 million (-1.9% operating margin), including losses of $110 million (-1.6% operating margin) from provider activity and $23 million (-5.3% operating margin) from insurance activity.
For the six months ended March 31, 2021, the system absorbed $915 million in Medicare, Medicaid, and Health Safety Net shortfalls due to government reimbursements that failed to pay the full cost of providing care to Medicare, low-income, and uninsured patients, an increase of $132 million (17%) compared to the shortfall absorbed in the comparable 2020 period.
An overall gain of $2.0 billion was reported for the six months ended March 31, 2021, including a nonoperating gain of $1.6 billion. In the comparable 2020 six-month period we reported an overall loss of $1.0 billion, including a nonoperating loss of $903 million.
Mass General Brigham:
Rich Copp [email protected]
This press release contains certain “forward-looking statements” concerning financial and operating plans and results which involve known and unknown risks and uncertainties. In particular, statements preceded or followed by, or that include the words, “projects,” “believes,” “expects,” “estimates,” “anticipates,” “plans,” “intends,” “scheduled,” or similar expressions are forward-looking statements. Various factors could cause Mass General Brigham’ actual results to differ materially including, but not limited to the impact of the COVID-19 pandemic, federal and state regulation of healthcare providers, changes in reimbursement policies of state and federal government and managed care organizations, competition in the healthcare industry in our market, general economic and capital market conditions, and changes in our labor and supply costs and in our ability to retain personnel. For more information on these and other risk factors, please refer to our most recent bond official statement or annual disclosure statement filed on the Electronic Municipal Market Access (EMMA) website maintained by the Municipal Securities Rulemaking Board. We undertake no responsibility to update any such forward-looking statements except as expressly required by law.
About Mass General Brigham
Mass General Brigham is an integrated academic healthcare system, uniting great minds in medicine to make life-changing impact for patients in our communities and people around the world. Mass General Brigham connects a full continuum of care across a system of academic medical centers, community and specialty hospitals, a health insurance plan, physician networks, community health centers, home care, and long-term care services. Mass General Brigham is a non-profit organization that is committed to patient care, research, teaching, and service to the community. In addition, Mass General Brigham is one of the nation’s leading biomedical research organizations and a principal teaching affiliate of Harvard Medical School. For more information, please visit massgeneralbrigham.org.