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Partners HealthCare plans new outpatient clinics

The headquarters of Partners HealthCare in Somerville’s Assembly Row.
The headquarters of Partners HealthCare in Somerville’s Assembly Row. (David L. Ryan/Globe Staff/File)

Partners HealthCare, the state’s largest network of doctors and hospitals, plans to expand its reach across Eastern Massachusetts by opening several new outpatient clinics over the next five years.

Partners officials did not reveal how many new locations they plan to open, but they said the company would target busy suburban areas near major highway interchanges for the new clinics. The sites will range in size and scope and could include an orthopedic surgery center.

The plans were disclosed to the Globe as Partners announced Friday that the company earned $310 million on operations in the fiscal year that ended Sept. 30 and saw revenue dip slightly to $13.3 billion.

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In dollars, this was Partners’ most profitable year. But officials were quick to note that the company’s operating margin was a modest 2.3 percent and cast the results as unremarkable.

Now looming is a big new competitor to Partners. Beth Israel Deaconess Medical Center and Lahey Health received final approval from state and federal regulators last week to complete a merger. Their new health system, Beth Israel Lahey Health, will have market share nearly equal to Partners.

Partners chief financial officer Peter K. Markell said the merger didn’t trigger Partners’ plans to open new clinics. “I think we would have done it anyways — but it doesn’t hurt,” he said in an interview.

The company already has large outpatient centers in Waltham, Danvers, and Foxborough that offer specialty care and day surgeries; hundreds of smaller physician offices; and nearly a dozen walk-in clinics. Partners and other hospital systems often charge facility fees at their outpatient locations.

“People like to talk about how big we are, but if you look at us geographically, we’re not well-rounded,” Markell said.

“We’re going to put a lot more focus on ambulatory growth,” he added. “That’s where we think the marketplace is going.”

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Boston-based Partners is the parent of Massachusetts General, Brigham and Women’s, and several other hospitals. Its network includes about 6,000 doctors. It also owns a health insurer.

“Partners is expanding in the most lucrative lines of business that they can — putting outpatient facilities in high-income suburbs,” said David E. Williams, president of the Boston consulting firm Health Business Group. “This is a very good way to make money. Previously, Partners might have faced more scrutiny for making these kinds of expansions, but now with BI-Lahey, they won’t get as much pushback as they might have gotten before.”

Over the past several years, as medical care and technology have advanced, hospitals across the country have moved more services to outpatient settings while reserving hospital beds for the sickest patients. In Massachusetts last year, spending on hospital outpatient services grew 4.8 percent, much faster than the growth of inpatient spending, according to state data.

Beth Israel Lahey Health officials are also developing a plan to expand outpatient care, but they said they’re still working on the details.

We are eager to build on our already strong ambulatory foundation across Eastern Massachusetts, with the goal of expanding access to a range of outpatient services close to where our patients live and work,” spokeswoman Jennifer Kritz said in an e-mail.

Beth Israel and Lahey have not yet released their financial results for fiscal 2018, but Lahey officials expect to record an operating loss.

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Partners’ earnings this year are an improvement over fiscal 2017, when the nonprofit health system reported a gain from operations of $53 million, on revenue of about $13.4 billion.

In 2016, Partners recorded the greatest operating loss in its history, $108 million, because of its struggling insurance business, Neighborhood Health Plan.

Finances at Neighborhood have since stabilized. As part of a statewide reorganization of the Medicaid program — which provides health coverage for low-income individuals — Neighborhood shed the bulk of its Medicaid members and focused primarily on selling coverage to employers.

The insurer is changing its name in January to AllWays Health Partners.

Partners officials also attributed their better financial results this year to a major cost-cutting effort launched in 2017, which has saved $228 million so far, including in areas such as the purchasing of medical supplies.


Priyanka Dayal McCluskey can be reached at priyanka.mccluskey@globe.com. Follow her on Twitter @priyanka_dayal.