Hospital nets $2.5m profit from operations

Tufts-New England Medical Center posted a $2.5 million operating profit in its fiscal first quarter, reflecting what executives called improved performance at a hospital that is trying to overcome serious financial and operating difficulties.

The quarterly performance comes on top of a small operating profit in the fourth quarter of the last fiscal year as well.

For all of fiscal 2004, which ended Sept. 30, Tufts-NEMC said it had an operating loss of $24.7 million, a narrower loss than the $29 million of a year earlier. The hospital released both its first quarter 2005 results and fiscal 2004 results yesterday.

"Last year we were just beginning to show results of the infrastructure changes we put in place," said chief executive Ellen Zane. "But this year, they're really starting to take hold."

NEMC, which in 2003 dissolved its merger with Lifespan, a Rhode Island hospital and doctor network, has struggled financially as it tries to regain its independence.

Operating revenue in 2004 fell 3.7 percent to $477 million from $495.5 million the year before.

Zane, who was hired in December 2003 to turn around the ailing Tufts Medical School teaching hospital, said she and her staff also have improved payments from insurers and reduced how long patients stay in the hospital to an average 5.7 days from 6.7 days. This allows the hospital to operate more efficiently because most insurers pay a set dollar amount for patients with particular illnesses, regardless of how long they're in the hospital. If Tufts-NEMC can treat patients more quickly, it can admit more patients.

Last summer, Zane also initiated discussions between Tufts-NEMC's historic Floating Hospital for Children, which has been losing money and patients, and Children's Hospital that could lead to a partnership or merger. Children's Hospital is financially strong and so overflowing with patients that it turns some away.

Zane said yesterday that negotiations are going well, but that the hospitals are still a couple of months away from reaching an agreement to combine services. They already have decided on an interim partnership between their critical care and neurology departments.

Boston Medical Center and Caritas Christi Health Care, the large Catholic hospital network, plan to report their recent financial results this month or in March. The city's Harvard Medical School teaching hospitals generally had profitable years in the most recent fiscal year. Children's Hospital, Massachusetts General Hospital, and Brigham and Women's Hospital reported profits, while Beth Israel Deaconess Medical Center posted its first annual operating profit since its 1996 merger, $37 million for last fiscal year.

Tufts-NEMC's operating profit in the most recent quarter, which ended Dec. 31, 2004, compares with a $9.5 million loss for the same period last year.

In the fourth quarter of fiscal 2004, the hospital posted an operating profit of $600,000, compared with a year-earlier loss of $1.6 million.

Liz Kowalczyk can be reached at kowalczyk@globe.com.