Report: Mass. physician organizations lose money as hospitals see profits

DATE: August 31, 2017

Though most Massachusetts hospitals may have reported positive margins in fiscal 2016, 37 of the state's 43 physician organizations — which employ the doctors and are run by physicians rather than hospital administrators — reported net losses.

According to data released Thursday by the state’s Center for Health Information and Analysis, 47 of the state’s 63 acute care hospitals reported positive total margins during fiscal 2016. Margins combine operational income with non-operational activities, such as investment income.

The median total margin for acute care hospitals was 3.1 percent, 0.7 percentage points lower than the median for fiscal 2015.

Yet 37 of the state's 43 physician organizations — which employ the doctors and are run by physicians rather than hospital administrators — reported net losses. The median total margin for physician organizations was minus 16.1 percent.

The losses ranged from a $223,000 loss for Newton Wellesley Physician Hospital Group to a $64 million loss for Southcoast Physician’s Group. (Click on the attached graph for results of individual organizations).

The report didn't say why physician groups were suffering such losses, but suggests they could be an effective place for health systems to focus as they strive for a stronger bottom line. While physician groups operate separately from the hospital in which many of them work, the groups still fall under the umbrella of the parent health system.

The report found that the largest physician organizations that had the highest total revenue reported the largest profits, namely Children's Hospital physician group and Massachusetts General Hospital physician group.

The state said the variation in margin wasn’t correlated to whether the physician group was affiliated with a multi-hospital health system, or solely affiliated with a single entity.

Jessica Bartlett covers health care, including hospitals, health IT, health policy and insurance, as well as the beer and marijuana industries.

Reprinted courtesy of the Boston Business Journal