Health plan plunges Part­ners into $108 mil­lion op­er­at­ing loss

Modern Healthcare - - REGIONAL NEWS - —Dave Barkholz

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.

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