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February 12, 2016 12:00 AM

Partners HealthCare ends first quarter with reduced margin

Melanie Evans
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    Partners HealthCare, Boston, reported a small loss on its health plan during the first quarter of the fiscal year. Overall, the system had a positive operating margin, but that margin fell sharply from a year ago as labor and other costs grew faster than revenue.

    The system's health plan, which Partners acquired in 2012, ended the first quarter with an operating loss of $12 million. That was reduced on the books to a $1 million expense thanks to $11 million Partners saved for that possibility. The loss compared with an operating loss of $20 million for the health plan during the same quarter last year. The quarter ended Dec. 31.

    Revenue increased for the system despite unexpectedly soft demand from patients. Patients who did seek care were more complex and acutely ill. The system's expenses grew more quickly than revenue.

    “Overall financial performance was consistent with expectations, but we face continued pressure as revenue growth generated from patient care activities is outpaced by medical expenses, including the rising costs of pharmaceuticals and information technology,” said Peter Marshall, Partner's chief financial officer, in a news release announcing the results. Partners said the introduction of a new electronic health record system reduced its operating income by $14 million for the quarter.

    Revenue increased 6.3% to $3.02 billion with a 2.2% increase in revenue from patients and a 29% increase in premium revenue.

    Expenses increased 8.7% to $3.01 billion, with labor costs increasing 4.2% and supply costs up 7.9%. Medical claims and related expenses grew 33%.

    That left Partners with an operating surplus for the quarter of $12.8 million, or a margin of about 0.4%. For the first quarter a year ago, Partners reported an operating surplus of $74.1 million, for a margin of 2.6%.

    Partners' losses on investments and interest rate swaps left the system with a net loss for the quarter of $37.5 million compared with net income during the first quarter a year ago of $40.6 million.

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        • Midwest
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        • Diversity in Healthcare
          • - Luminaries
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          • - Top 25 Women Leaders
          • - Women to Watch
      • Conferences
        • Digital Health Transformation Summit
        • ESG: The Implementation Imperative Summit
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        • Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
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        • Health Care Hall of Fame Gala
        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
      • Virtual Briefings
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        • - Value Based Care
        • - Hospital at Home
        • - Workplace of the Future
        • - Digital Health
        • - Future of Staffing
        • - Hospital of the Future (Fall)
      • Webinars
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      • Podcast - Beyond the Byline
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      • Video Series - The Check Up
      • Sponsored Video Series - One on One
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