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Mass. hospital profits rose last year, report says

Overall profitability at Massachusetts hospitals improved last year, but 11 of the 64 still lost money, according to a state report that showed stronger performances at academic medical centers and financial distress at some community hospitals.

The 2013 fiscal year report released Wednesday by the Center for Health Information and Analysis, said the total margin of Massachusetts hospitals — the percentage of revenues exceeding expenses — climbed to 4.1 percent in the period ending last Sept. 30, from 3.8 percent a year earlier.

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At the state’s six academic medical centers, the margin increased to 4.6 percent from 3.6 percent.

But at 23 community hospitals that serve a disproportionate share of patients covered by Medicaid and Medicare — the government health insurance programs for low-income and older residents — the margin fell to 3.6 percent from 5.6 percent.

“It’s clear this was a good year for hospitals, but there was a lot of variation,” said Áron Boros, the center’s executive director. “When you look at the hospitals that have negative margins, they are the hospitals that have had strains over the years.”

The state’s most profitable hospital was Boston Children’s Hospital, which earned $157.7 million, followed by Massachusetts General Hospital in Boston, which earned $149.2 million, according to the center’s report. The largest loss, $20.3 million, was posted by North Shore Medical Center in Salem.

Mass. General and North Shore Medical are both owned by Boston-based Partners HealthCare System, the state’s largest hospital and physicians network.

Of the state’s 11 unprofitable hospitals, only Cambridge Health Alliance, which lost $6.3 million, is a standalone institution. The rest were affiliated with larger systems — Partners, Steward Health Care System, and Baystate Health — that were profitable as a whole.

The report understates the financial pressures on hospitals, said Tim Gens, executive vice president of the Massachusetts Hospital Association. He cited government reimbursement cuts, a decrease in inpatient volume, and a state push to reduce medical expenses.

“Margins are just one measure,” Gens said. He said that North Adams Regional Hospital, which closed in March, made money in fiscal year 2013. “What the margins don’t tell you is the age of the facilities, their debt service, their access to capital, their cash on hand — all these are examples of the measures you have to pay attention to if you manage hospitals.”

Five profitable hospitals registered non-operating gains, from investments and other activities, that offset operating losses. They were Dana-Farber Cancer Institute in Boston, Massachusetts Eye and Ear Infirmary in Boston, Partners-owned Nantucket Cottage Hospital, Steward-owned Norwood Hospital, and UMass Memorial Medical Center in Worcester.

The report showed stark differences in the financial performance of many hospitals, ranging from a 14 percent profit margin at Worcester’s Saint Vincent Hospital to a nearly 23 percent loss at Steward-owned Quincy Medical Center.

Figures for 50 hospitals, those on the standard fiscal year, covered the 12 months ending Sept. 30. But for some hospitals with different fiscal years, the data covered shorter periods. For Steward, which uses a calendar year, the data covered nine months. For Cambridge Health Alliance, three months of data were included.

While the Steward hospitals as a whole earned $5.6 million during that period, four of the 10 — Quincy Medical, Carney Hospital in Dorchester, Merrimack Valley in Haverhill, and Morton Hospital in Taunton — posted losses. Two Partners hospitals lost money — North Shore and Faulkner Hospital in Jamaica Plain — but Partners overall earned $292.5 million.

In addition to Boston Children’s and Mass. General, the biggest money makers were Partners-owned Brigham and Women’s Hospital in Boston, with $139 million; Baystate Medical Center in Springfield, which earned $104.6 million; and, Beth Israel Deaconess Medical Center in Boston, with a profit of $100.1 million.

Robert Weisman can be reached at robert.weisman@globe.com. Follow him on Twitter @GlobeRobW.
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