Partners HealthCare's operating income dropped nearly 61% in the first quarter of its fiscal 2020 year-over-year as the system struggles with declining income from both its provider and insurance segments.
The Boston-based health system drew $45.5 million in operating income on $3.6 billion in revenue in the first quarter of 2020, which ended Dec. 31, 2019. That's compared with $114 million in operating income on $3.4 billion in revenue in the prior-year period.
The operating decline was driven by a 53% year-over-year decline on the provider side, and a more than doubled operating loss on the insurance side. Not-for-profit Partners said higher acuity and utilization of certain services on the provider side was offset by a shift toward a higher government payer mix and ballooning supply and labor expenses. On the insurance side, increased premium revenue was more than offset by higher claims costs, resulting in a $10 million operating loss.
Peter Markell, Partners' chief financial officer, said in the statement the system is working to manage resources and optimize revenue while investing in new digital tools and more convenient outpatient locations.
"When taking into account these major new investments in patient care, as well as higher benefits costs, our hospitals and physician practices continue to generate financial results that are in-line with expectations, all while delivering world class patient care," he said.
Fortunately for Partners, the system pulled in a hefty non-operating gain in the form of investment income, academic and research gifts and pension income. Partners generated $546.5 million in excess revenue over expenses in the first quarter of 2020, compared with a deficit of $462.8 million in the prior-year period.
Partners generated 93% less net cash from operating activities in the first quarter of 2020: $106.5 million compared with $1.4 billion in the prior-year period.
On the volumes front, Partners saw 2.4% higher discharges in the recently-ended quarter, which rounded out around 43,400. Average length of stay was down 1.7% year-over-year. On the outpatient side, ambulatory visits grew 2.5% year-over-year to 497,000, while emergency room visits were mostly flat at 0.2%. Major imaging was up 9.4% year-over-year, and lab services grew 6.1% in that time.
Partners' CEO, Dr. Anne Klibanski, told Modern Healthcare last month that the health system will make announcements in the coming months around center of excellence partnerships to attract patients from across the country and globe. That strategy coincides with Partners' recently announced rebranding, including changing its name to Mass General Brigham.