Partners HealthCare boasted a strong start to 2019, with operating income up nearly 89% thanks to strong performance in its provider segment.
The Boston-based integrated health system drew $131.2 million in operating income during the second quarter of its fiscal 2019, which ended March 31, compared with $69.5 million in the prior-year period. The jump was entirely in the health system's provider segment, and offset slightly by a $5 million operating loss in its insurance division. Partners' operating margin went from 2.1% in the second quarter of 2018 to 3.9% in the recently-ended quarter.
Partners' total operating revenue increased 4% year-over-year, from nearly $3.3 billion in the second quarter of 2018 to $3.4 billion in the second quarter of 2019. Expenses rose 2% during that time to almost $3.3 billion. Revenue includes the acquisition of Mass Eye & Ear in April 2018.
Peter Markell, Partners' chief financial officer, explained in a statement that the system is continuously improving its efforts to treat less complex cases in community settings so that Mass General and Brigham and Women's can focus on treating the sickest patients.
"Simply put, it is better for the patient, it is a more efficient way to deliver care, and it has helped strengthen our operating results these past few quarters," he said.
Partners announced in February its Chief Academic Officer, Dr. Anne Klibanski, would take over as interim CEO following the retirement of Dr. David Torchiana, who has served in the role since March 2015. Markell noted in his statement that the transition has gone "extremely well."
Partners is still gunning to buy Care New England Health System based in Providence, R.I in a pending deal originally announced in April 2017. Partners spokesman Rich Copp said the transaction is still undergoing regulatory review in Rhode Island.
The beginning of 2019 ushered in remarkably strong investment returns for the not-for-profit health system. Partners drew $622.8 million in net income in the second quarter of its fiscal 2019, which ended March 31, a nearly 300% spike from the prior-year period, in which it was $157.9 million. The gain was primarily due to favorable investment income.
By contrast, Partners reported $443 million in investment losses in calendar 2018 as it fell victim to the same late-year market downturn that drove losses for many major health systems. Twelve of the country's largest not-for-profit systems, including Partners, ended the year with $3.7 billion in collective investment losses.
Partners drew $1.9 billion in net cash from operating activities in the six months ended March 31, up considerably from just $325.3 million in the prior-year period.
Partners' inpatient discharges were flat year-over-year in the second quarter of 2019, and patient days inched up 3% in that time. Births declined 2%.
Ambulatory visits, however, jumped nearly 15% year-over-year, and emergency room visits increased 3%. Outpatient surgeries grew 34.4%. Those gains were muted on a same-facility basis: with ambulatory visits increasing just 0.9%, emergency room visits dropping nearly 2% and outpatient surgeries inching up 0.4%.
