Partners posts $108M operating loss as insurance division struggles

Partners HealthCare saw revenue increase 7 percent year over year to $12.5 billion in fiscal year 2016, but the Boston-based system ended FY 2016 with an operating loss, according to recently released bondholder documents.

Partners reported an operating loss of $108 million in FY 2016 — the biggest operating loss in the system's history, according to the Boston Globe. The loss is a dramatic drop from the operating surplus of $106 million the system recorded in FY 2015. 

The largest portion of the system's losses — $104 million — came from Neighborhood Health Plan, Partners' insurance subsidiary that provides coverage to more than 430,000 commercial and Medicaid members.

Partners acquired NHP four years ago, and the health plan is now the largest Medicaid insurer in Massachusetts. Over the past three years, NHP has recorded $322 million in losses, and Partners is exploring ways to help its insurance business regain financial footing. For instance, in October, NHP closed enrollment to new Medicaid members to give it time to renegotiate the rates it pays some hospitals.

In FY 2016, Partners also took an $8 million hit from spending on strike preparations earlier this summer at Brigham and Women's Hospital in Boston. Nurses planned to stage a one-day strike beginning June 27. The week before the planned strike, the hospital dialed down operations, transferred hundreds of patients and canceled procedures and appointments, causing the hospital to lose another $16 million in revenue. However, the strike was averted when the Massachusetts Nurses Association, which represents 3,300 nurses at Brigham, and hospital officials reached a three-year agreement.

Partners' operating income was also dragged down in FY 2016 by the continuing costs of implementing a new $1.2 billion Epic EHR system.

Partners ended FY 2016 with a net loss of $249 million, compared to a net loss of nearly $92 million the year prior.

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