Partners HealthCare's Operating Income Drops After Switching IT System

In the second quarter of its 2012 fiscal year, ended March 31, 2012, Boston-based Partners HealthCare (pdf) reported income from operations of $5 million — a significant decline from the $71 million of operational income it reported in the same quarter in 2011.

The lower operational income figure comes on the heels of a one-time, non-cash charge of $110 million related to Partners' decision to switch to a new integrated clinical and financial system. Earlier this month, Partners and health information technology company Epic agreed to a 10-year capital investment to switch over to a larger, more expensive, "more coordinated" clinical information system.

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Overall, Partners reported overall net income of $132 million in the second quarter, a 20 percent decrease from the $166 million in the comparable 2011 quarter. The health system's profit was salvaged from $127 million in non-operating income, which included gains on investments, interest rate swaps and philanthropic contributions.

Total operating revenue increased 8 percent to $2.2 billion in the 2012 second quarter. On the year, Partners — which includes Massachusetts General Hospital and Brigham and Women's Hospital — reported net income of $260 million, down from last year's six-month total of $334 million.

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