Mass General Brigham, the state’s largest health care system, remained on solid financial ground in 2024, a news release Wednesday showed, running counter to a drumbeat of concern that the state’s hospitals are all in financial jeopardy.
In all, the MGB system found itself $2 billion richer in the year ending in September, almost doubling the $1.2 billion net margin the system reported the year prior.
Nearly all of the profit came from the system’s investment portfolio, gains that largely exist on paper, whereas its core operations operated at nearly break-even. From just its core operations, the health system reported a $46 million operating margin.
“They are clearly in good financial condition,” said David E. Williams, president of the Health Business Group, a consulting firm. “They have doubled their total gain even if the hospitals aren’t making more money themselves. They continue to do well.”
The system’s financial success was not without its headwinds. Like many hospitals throughout the state, challenges discharging patients has meant that hospitals have experienced backups in care. While the hospital only saw 1 percent more patients than it did in 2019, those patients stayed almost a day longer on average in hospital beds.
Inflation added some other pressures on labor and supply costs.
The health system also said $118 million of its operating margin came from one-time sources of past revenue, a problematic trend for its long-term outlook. However the health system would not answer questions on what that revenue included.
“Operating for several years in a capacity-constrained and cost-inflationary environment has contributed to a very challenging situation for our and many other health systems,” said Niyum Gandhi, chief financial officer Mass General Brigham. “Our response has included an intense focus on cost management while pursuing new sources of revenue, but ongoing headwinds continue to temper the pace of our progress.”
In a statement, Gandhi also contested the idea that MGB’s bottom-line number fully encompassed the financial challenges the hospital system was facing, saying its investment gains did not reflect the financial wealth of the organization.
“While long-term investment returns can and do help fund renovations of ailing infrastructure, they cannot reliably be used to pay our exceptional staff, buy medical supplies, or pay down our debt,” he said.
Despite those challenges, Mass General Brigham reported gains. Operating revenue grew 9 percent over the prior year to $20.6 billion. Premium revenue from the system’s insurance business skyrocketed 43 percent to $2.2 billion, thanks to changes in the state’s Medicaid program that led to more enrolled members.
The health system did see higher costs from employee wages, pharmaceuticals, and other clinical supplies, but its net margin was its best since 2021, when it received large influxes of state and federal cash in response to the COVID pandemic.
The results lay in contrast to continued statements from the broader hospital market, which has seen a slate of closures and bankruptcies led primarily by the Steward Health Care crisis.
Strong margins for Mass General Brigham might still mean trouble looms for smaller hospitals in the state. Williams pointed out that while MGB had a large investment portfolio to support it in times of more modest operations from its core business, smaller hospitals don’t have that luxury.
Jessica Bartlett can be reached at jessica.bartlett@globe.com. Follow her @ByJessBartlett.