Operating revenues at Boston-based Partners HealthCare increased 7% from the previous year to $12.5 billion, but $12.6 billion in operating expenses canceled out those gains, according to the health system's financial statements.
The operating loss is the largest posted in the system's 22-years of history, which has struggled financially since it acquired Neighborhood Health Plan in 2012, a Medicaid managed care subsidiary that had a $89-million operating loss two years ago.
- A nursing strike and implementation of a new EHR system also contributed to poor financial performance at Partners in fiscal year 2016, according to the Boston Herald.
Over the past several years, several largest health systems have gone in on health plans and those investments are not paying off. Partners reversed track from fiscal year 2015, when it brought in $106.46 million in profits on operating revenues to lose money in 2016 on its health plan.
Several years ago, Partners acquired Neighborhood Health as part of a strategy to gain a foothold in the insurance industry and reach more patients, the Boston Globe reported. Partners isn’t the only large health system to make a misplaced bet on a health plan in the past few years.
Catholic Health Initiatives (CHI), an Englewood, Colorado-based health system, went in on Qualchoice Health, which sells Medicare Advantage and employer-sponsored plans, back when the ACA when into effect. CHI, like Partners, has produced uninspiring financial reports since then.
It seems that several years ago, as the ACA was going into effect, several large health systems bought into health plans with the assumption it would help their bottom line. Now, these same systems are posting huge losses and attributing poor financial performance to those health plans. While consolidation seems to be a trend to keep an eye on in the near future, health systems may be backing off for now when it comes to acquiring health plans.