Partners trims its quarterly losses
With $151m deficit, hospital operator delaying projects
Partners HealthCare narrowed its loss in the second quarter, but still reported a $151 million deficit through the first half of its 2009 fiscal year, largely because of investment declines.
The slumping investments, which are used to support expansion, have forced the state's largest healthcare system to scale back on a five-year building program across Eastern Massachusetts.
For the three months ending March 31, Partners yesterday posted net income of $34 million, an increase from $27 million during the same period last year. But because it lost $185 million in its first quarter, ending Dec. 31, Partners still faces a midyear deficit of $151 million. It generated $109 million in income for the comparable six-month period last fiscal year.
This year's financial reversal has shrunk Partners' total unrestricted net assets - a common measure of the company's value - by $466 million to about $4.1 billion over the past six months.
"There are a lot of pressures, but we're working our way through them," Peter K. Markell, vice president of finance, said. "On income from operations, we're doing reasonably well. The real question is whether our investments will stabilize and come back."
As a nonprofit institution, the Partners system, which includes Massachusetts General Hospital and Brigham and Women's Hospital in Boston, files quarterly financial reports to the bondholders that finance its capital projects. It has annual revenues of $7 billion and about 44,000 employees.
Partners previously said it had trimmed its five-year capital expansion program from $4.5 billion to $3.2 billion. Markell said the hospital group is evaluating the program each quarter.
For now, Partners is maintaining its current hospitals and completing projects already started, such as the $686 million "Building for the Third Century" expansion at Mass. General and ambulatory care centers in Danvers and Foxborough.
"New major projects we're looking at carefully, and most of them are being put on hold," Markell said.
The group's investment portfolio contains a mix of stocks, fixed-income investments, and alternative assets such as venture capital and private equity stakes.
It also includes interest rate swaps - a financial instrument meant to help it manage future interest expenses by hedging against fluctuation in the interest rates of the bonds it issues.
Like other big investors, Partners, which provides roughly 22 percent of the medical care in Eastern Massachusetts, has been hurt by the broad downturn in the financial markets over the past six months.
Robert Weisman can be reached at weisman@globe.com. 
