Quarterly results up at Partners
CFO says revenue also up but voices concerns on costs
Partners HealthCare, the largest hospital network in Massachusetts, said yesterday it had dramatically boosted its operating margin while increasing its bottom line by 21 percent in the last quarter.
Partners, parent to Massachusetts General Hospital and Brigham and Women's Hospital, said it had net income of $69 million in its third fiscal quarter ended June 30, compared with $57 million in the same period last year. For the first nine months of its fiscal year, the not-for-profit network reported net income of $232 million, compared with $192 million in the year-ago period.
''We're doing pretty well," said Peter Markell, Partners' chief financial officer. ''However, we're really worried about trying to control costs in the future, and we're still concerned about government-reimbursed programs that are reimbursing below costs and forcing us to pass those costs to commercial payers and private payers."
Revenues rose $117 million, or 9 percent, to $1.4 billion for the quarter, compared with the same quarter a year ago. Markell said revenues increased in part because of higher ''intensity" of cases, a measure of the complexity and severity of inpatient treatment.
''There's been good growth in outpatient volume," Markell said. ''While there's only been minor growth in inpatient cases, the complexity has increased, so we're getting more revenue for it."
Meantime, costs continued to escalate. Employee compensation and benefits grew by 10 percent, to $714 million for the quarter. The expense was driven primarily by wage increases for nurses, Partners said.
The third fiscal quarter is historically strong for Partners, Markell said. While operating margins -- a measure of profitability derived by dividing operating income by total operating revenue -- reached 3.9 percent for the quarter, he expects them to average about 3 percent for the year. As long as operating margins stay between 3 and 5 percent, he said, Partners should be in a strong position to make debt payments and invest in new medical equipment.
Medicaid, the government health insurance program for low-income people, and the Massachusetts Uncompensated Care Pool did not pay Partners enough to cover services provided to the uninsured. For the first nine months of its fiscal year, those losses totaled $167 million.
In previous financial reports, Partners broke out the performance of individual hospitals. A spokeswoman said it will no longer make that information available because it wants to be perceived as a cohesive organization, not a collection of separate institutions.
Jeffrey Krasner can be reached at krasner@globe.com. 
