Mass General Brigham Reports First Quarter Fiscal Year 2024 Financial Results

Mass General Brigham, a not-for-profit, integrated health care system, today reported its financial results for the first quarter of fiscal year 2024, which ended on December 31, 2023. Excluding onetime revenues totaling $114 million relating to prior year health care provider activity, the system generated an operating loss of $32 million (-0.6% operating margin), including a loss from provider activity of $32 million (-0.7% operating margin) and income from insurance activity of $0.4 million (0.1% operating margin). Inclusive of onetime revenue, the system reported income from operations of $82 million.

In the first quarter of fiscal year 2023, the system generated a loss from operations of $53 million (-1.2% operating margin), including losses from provider activity of $46 million (-1.1% operating margin) and a loss from insurance activity of $7 million (-3.1% operating margin). This excludes $52 million in health care provider revenue related to prior year activity. Inclusive of onetime revenue, the system reported a loss from operations of $1 million.

“Despite ongoing capacity challenges, Mass General Brigham continues to invest in our four-part mission of delivering the best patient care, driving world-changing research, educating the next generation of health care professionals, and investing in the health of our communities. Ongoing clinical integration efforts coupled with investments in our people are driving our financial recovery, but we still have much more work to do,” said Anne Klibanski, MD, President and CEO of Mass General Brigham. “Throughout the coming year, we will continue to focus on initiatives that improve our financial stability, strengthen our workforce pipeline, and improve outcomes for patients, while simultaneously ensuring responsible resource stewardship. Together, these efforts will enable us to continue to invest in our mission for years to come.”

The system reported total operating revenue of $5.0 billion in the 2024 first quarter. This includes $114 million from governmental sources relating to prior year activity, of which $98 million remedies underpayments for 340B-acquired pharmaceuticals in 2018-2022 and $16 million mitigates losses incurred during the COVID-19 pandemic. Excluding this nonrecurring revenue, total operating revenue increased $502 million (11%) over the comparable 2023 first quarter. Patient care revenue grew to $3.3 billion, an increase of $155 million (5%). Ongoing efforts to coordinate systemwide capacity management resulted in a decline in the average acute care length of stay to 6.0 days (-3%) and contributed to growth in discharges (3%). Robust outpatient activity also contributed to revenue growth.

The system also generated $481 million in health plan premium revenue (109% increase, reflecting the addition of approximately 150,000 MassHealth members under a new Accountable Care Organization), $703 million in research and academic revenue (10% increase) and $441 million in other revenue (7% increase).

Operating expenses totaled $4.9 billion, an increase of $481 million (11%) over the 2023 first quarter, reflecting increases in medical claims ($151 million or 89%, related to the increase in Health Plan membership), wages ($132 million or 7%, including market adjustments for certain employees and ongoing use of temporary staffing), costs and use of clinical ($28 million or 12%) and pharmaceutical ($82 million or 23%) supplies, and depreciation and interest ($5 million, 2%).

“Our financial results for the first quarter of fiscal year 2024 demonstrate that the steps we are taking are having a positive impact,” said Niyum Gandhi, Chief Financial Officer and Treasurer at Mass General Brigham. “These results also reflect elevated labor and supplies costs, highlighting the importance of our efforts to reduce our long-term expense growth trend while generating sustainable revenue sources through initiatives like the growth of Mass General Brigham Health Plan and developing new collaborations to fuel AI development at MGB and beyond that will help position us for long term financial sustainability.”

In the 2024 first quarter, the system absorbed $550 million in Medicare, Medicaid, and Health Safety Net shortfalls due to certain government reimbursements that do not cover the full cost of providing care to Medicare, low-income, and uninsured patients. In the first quarter of 2023, the system absorbed a shortfall of $575 million.

The system reported an overall gain of $579 million in the 2024 first quarter, including a nonoperating gain of $497 million. Nonoperating activity includes gains and losses on investments and interest rate swaps, which can vary significantly across reporting periods due to volatility in the financial markets, and philanthropic activity. In the 2023 first quarter, the system reported an overall gain of $480 million, including a nonoperating gain of $481 million.

Making an impact for our patients and beyond

Mass General Brigham continues to strategically invest in its future through initiatives that improve patient outcomes, grow research and breakthrough innovations, make care more affordable, and improve the health of the communities it serves. In particular, the system is focused on combatting the ongoing capacity crisis through continued clinical integration efforts, including the appointment of O’Neil Britton, MD to the new role of Chief Integration Officer, where he will lead the clinical integration of services, such as the development of service lines that bring together multiple departments and disciplines to coordinate and simplify care.

By working as a single, integrated system of care, Mass General Brigham can more effectively leverage capacity across its hospitals to meet health care needs across Massachusetts and southern New Hampshire. Recently, Massachusetts General Hospital announced a proposal to amend its previously approved Determination of Need application with the Department of Public Health to achieve a net increase of 94 licensed inpatient beds on its existing campus, a proposal that would provide additional capacity for the entire system.

The system is also taking several other steps to drive its four-part mission forward:

• Building the workforce pipeline of tomorrow: A new collaboration powered by a $37.8 million grant from Bloomberg Philanthropies will help Mass General Brigham work with Boston Public Schools to double the size of the Edward M. Kennedy Academy for Health Careers to provide new work-based learning opportunities for Boston students. Mass General Brigham will work with BPS to design additional health care career pathways that position students for success, particularly in high-demand fields within the Mass General Brigham system, to help meet future workforce needs.

• Working together to manage capacity as a single system of care: Mass General Brigham’s Patient Transfer and Access Center launched this past fall, bringing together bed placement experts from both its academic medical centers, Massachusetts General Hospital and Brigham and Women’s Hospital, to work together at its Assembly Row headquarters. The Center coordinates care for patients being transferred into or within the system, connecting a patient with the right bed across the system’s academic medical centers, specialty hospitals, and community hospitals. This allows the system to move lower acuity patients to more appropriate, less expensive settings across the system. Since the launch of the Center, there has been a tenfold decrease in the number of redundant transfer requests, in which multiple Mass General Brigham hospitals processed the same transfer request.

• Collaborating with industry to drive application of artificial intelligence (AI) in health care: Building on its history of bringing innovative health care solutions to market, Mass General Brigham recently launched a new AI business office to support the development of AI-enabled software as medical device products from concept, to prototype, to validation, to clinical adoption. Among the first collaborations that the office will pursue is a strategic relationship with Annalise.ai to implement the company’s comprehensive radiology AI product, called Annalise Triage, across the Mass General Brigham system.

• Investing in community partners to improve community health: As part of its single, integrated community health strategy and its United Against Racism commitment, Mass General Brigham continues to partner with neighborhood-based organizations to tackle long-standing health disparities in underserved communities. For example, the system recently committed $4.8 million to support six substance use disorder (SUD) programs in the greater Boston area in partnership with the Massachusetts League of Community Health Centers These grants are part of a broader $15 million initiative between Mass General Brigham and Mass League focused on three areas: expanding equitable and low barrier care for substance use disorder, growing and diversifying the mental health workforce, and providing seed funding for the health equity research and policy institute that will be a vehicle to research and evaluate these and other program implementations to demonstrate what has measurable impact.