More acutely ill patients and higher research revenue in the final months of 2020 helped Mass General Brigham nearly triple its operating income year-over-year.
The Boston-based system has struggled throughout the COVID-19 pandemic, but the quarter ended Dec. 31, 2020—the first quarter of its fiscal 2021—signaled it may be turning a corner. Mass General Brigham generated $130 million in operating income on $3.8 billion in revenue in the quarter, a 3.4% operating margin. That's compared with a slimmer 1.3% margin in the prior-year period, when it generated just $45 million in operating income on $3.6 billion in revenue.
Most recently, the not-for-profit system, formerly known as Partners HealthCare, weathered a $351 million loss on operations in its fiscal 2020, which ended Sept. 30, 2020, a -2.5% margin. The biggest contributor, the system said, was the cancellation of non-essential procedures early on in the pandemic.
"In recent weeks, we have witnessed many of the leading indicators head in the right direction, and we hope we are seeing the beginning of the end," Peter Markell, Mass General Brigham's chief financial officer, said in a statement.
Mass General Brigham's improved operating performance at the tail end of 2020 occurred entirely in its provider division, which generated $114 million in operating income, up from $55 million in the prior-year period.
The system attributed its higher patient revenue to more acutely ill COVID patients, who tend to have longer lengths of stay. That's despite a nearly 7% year-over-year decline in discharges and lower outpatient volumes. Research revenue grew 6% in the quarter to $551 million. The system also got a $28 million boost from intellectual property monetization.
The system's insurance division lost $14 million on operations in the quarter, or a -6.2% margin. That's excluding a $30 million Affordable Care Act risk corridor settlement. The insurance division also lost money in the prior-year period, posting a -4.9% margin. Despite a 5% year-over-year uptick in premium revenue, medical claims costs grew 9% as patients returned for services, particularly outpatient and pharmaceutical.
While total plan membership increased 5%, that growth was higher in Medicaid managed care, which grew by 17%. California's Kaiser Permanente late last week reported a slimmer operating margin, in part because the pandemic's job losses had pushed more members onto government-sponsored plans.
Since the pandemic began, Mass General Brigham said it has encountered or tested more than 60,000 COVID patients, of which more than 16,000 were treated in its hospitals. Over the past month, the system has administered COVID vaccines to tens of thousands of healthcare workers and this week began vaccinating patients in accordance with state guidelines.
Mass General Brigham CEO Dr. Anne Klibanski said in a statement the vaccinations offer hope there is a path forward to control the pandemic.