Partners’ second quarter earnings fall on one-time charge

Taking a nearly $110 million write-off on an electronic health record system it will scrap, Partners HealthCare System Inc. reported Thursday that its second quarter operating income dropped to $5.3 million from $71.2 million in the same quarter last year.

Partners, the state’s largest hospital and physicians network, partly offset the decline through an increase in investment income. But its net income fell to $132.2 million for the three months ending March 31, down 20.4 percent from $166.4 million a year earlier.

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Executives attributed the falloff to the one-time charge taken after a decision to switch to a new integrated clinical and financial data system for the nine Partners hospitals, including Massachusetts General and Brigham and Women’s, as well as the practices of affiliated doctors. Partners officials are negotiating for the purchase of a system developed by Wisconsin-based Epic Systems Corp.

“The game’s going to be won in the future off the flow of information,” said Partners chief financial officer and treasurer Peter K. Markell. “So information has to show up wherever the patient goes.”

Markell said Partners officials believe the new information system, which is expected to cost between $600 million to $700 million, will lead to more coordinated patient care and have a life cycle of at least 10 years.

It replaces a patchwork of older systems developed in-house at Partners hospitals, some dating back to before the health care system was formed in 1994 through the merger of Harvard-affiliated Massachusetts General and Brigham and Women’s hospitals.

Under the new system, information for a patient referred from a primary care doctor to a specialist for surgery and later discharged for home care would all be available on a single electronic record that can be accessed in real time.

Before the write-off on the old systems, Boston-based Partners posted operating income of $115 million for the January to March period. Patient service revenue increased 9 percent to $1.7 billion, as its hospitals largely avoided the decline in medical use seen at other hospitals, while overall operating revenue climbed 8 percent to $2.2 billion in the quarter.

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