Health plan plunges Partners into $108 million operating loss

Partners HealthCare System, the parent of Massachusetts General Hospital, is the latest not-for-profit hospital system to lose $100 million-plus on its health plan.

Partners’ health plan, Neighborhood Health, accounted for $104 million in operating losses, nearly all of system’s total in its fiscal 2016, ended Sept. 30. The total $108 million operat- ing loss was on revenue of $12.5 billion, compared with an operating gain of $106.5 million in fiscal 2015 on revenue of $11.7 billion.

Partners’ plan, which largely concentrates on Medicaid, racked up losses of more than $300 million over the past three years, said system Chief Financial Officer Peter Markell in a news release. Partners acquired the plan in 2012.

Premium revenue grew $475 million, or 23%, to $2.5 billion, predominantly because of huge Medicaid growth. Markell said commercial membership grew as well. The plan has about 454,000 members.

The Boston-based system has brought in new management to right the ship rather than exit the business, Markell was quoted as saying in a Boston Globe article.

Excluding special items, Partners’ operating margin was 0.2% in 2016 compared with 1.3% in 2015 as Medicare, Medicaid and safety net reimbursement failed to keep pace with costs, Markell said.

Partners absorbed other costs as well. For example, a nurses’ strike at Brigham and Women’s Hospital was averted but preparations still cost the system $24 million, the company said. It also was hit by a $26 million cost for exiting leases as it consolidated space.