Brigham strike, Epic implementation drag Partners' earnings

Partners HealthCare saw revenue increase 7 percent year over year to nearly $3.2 billion in the second quarter of 2016, but the Boston-based system ended the quarter with an operating loss, according to the Boston Globe.

Partners reported an operating loss of $33 million in the second quarter of 2016, a dramatic drop from the operating gain of nearly $30 million the system recorded in the same period of 2015.

The system 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. 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.

The week before the planned the 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.

"No one likes to be out of $24 million, but frankly, at the end of the day, it was the cost of doing business," Peter K. Markelly, CFO of Partners, told the Boston Globe. "Hopefully, we don't have to do it again when this contract expires."

Partners also incurred higher-than-usual real estate expenses in the second quarter, as the system consolidates leases for its new administrative offices in Somerville, Mass.

For the nine months ended June 30, Partners reported operating income of $1.1 million, down 98.7 percent from operating income of $86.3 million in the same period of 2015.

Partners' year-to-date operating income was dragged down by the cost of implementing an Epic EHR system. Training staff to use the new EHR system and decreased productivity during the transition cost Partners $27 million in the nine months ended June 30, according to the Boston Business Journal.

More articles on healthcare finance:

How CHS, Tenet, UHS, LifePoint and HCA fared in Q2
Kaiser sees operating income dip 35.4% in Q2

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