Mass General Brigham is the latest health system to have its financial performance take a hit from inflation and workforce issues.
As a result, it is looking to cut expenses.
On Friday, the Boston-based nonprofit system reported a $2.3 billion loss for its 2022 fiscal year ended Sept. 30, compared with a $3.2 billion gain a year ago. Much of the loss–$1.8 billion–was tied to investments and financial market volatility.
It posted an operating loss of $432 million, compared with $442 million in operating income last year, which included federal COVID-19 relief funding and Affordable Care Act program subsidies.
Total annual operating revenue rose 4.5% to $16.7 billion. Average acute-care lengths of stay increased by 15% compared to pre-pandemic numbers.
Operating expenses rose about 10%, to $17.1 billion, driven by a 9% increase in wages, a 13% jump in employee benefits expenses and a 13% increase in spending for clinical supplies.
To reduce expenses, Mass General Brigham said it is looking to cut costs in areas that will not affect patient care, including eliminating vacant administrative positions. It also said it will look at 2023 budget plans and projects across the system to reduce non-labor expenses and identify cost savings. A spokesperson did not immediately return a request for information about the number of positions that will be cut or cost savings goals.
“While what we are experiencing today is unprecedented, it’s important to remember that we have overcome challenges before during our long history,” Dr. Anne Klibanski, president and CEO, said in a news release.
Mass General Brigham said it absorbed $2.3 billion in shortfalls related to Medicare, Medicaid and Health Safety Net because of a lack of government reimbursements–a 15% increase from 2021.
In September, the Massachusetts Health Policy Commission approved Mass General Brigham’s 18-month performance improvement plan to curb spending, with an annual savings target set at $127.8 million. The plan was implemented Oct. 1.
Healthcare systems across the industry have struggled to stay in the black this year.
In November, Ohio’s Cleveland Clinic reported net losses exceeding $1.5 billion in the first three quarters of 2022. Providence, based in Renton, Washington, recorded a $1.1 billion operating loss in the same period. Chicago-based CommonSpirit Health posted a net loss of $397 million in the first quarter of its fiscal year 2023. And St. Louis-based Ascension reported an $811.83 million net loss in its first quarter.