BOSTON — While the problems at Steward Health Care absorbed the spotlight over the past nine months, many other hospitals across Massachusetts continued to struggle financially in what an industry group called a “deeply troubling” trend.
New financial data released by a state agency found that more than half of acute care hospitals in Massachusetts experienced negative operating margins through a significant portion of the fiscal year ending June 30.
Only 25 out of 58 hospitals reported positive operating margins during that span, and the statewide median operating margin fell to 1.1 points to -0.9%, the Center for Health Information and Analysis said in a new report.
Even if you remove the bankrupt Steward hospitals – which after the data period ended either closed or were acquired by new owners – from that count, more than four out of 10 remaining hospitals were still in the red.
“Once again, CHIA’s quarterly report is deeply troubling evidence of Massachusetts hospitals’ financial challenges. With more than half of our hospitals operating in the negative and two-thirds of our hospital health systems consistently losing money on their operations, there is a very real threat to the sustainability of care that patients deserve,” said Daniel McHale, a senior vice president for health care finance and policy at the Mass. Health and Hospital Association.
“It is critical to recognize the immense – and growing – cost pressures hospitals are incurring to keep services accessible for everyone who needs them.”
The report comes as Massachusetts families and employers for years continue to struggle with the burden of rising health care costs. The average annual family premium grew from $16,400 in 2012 to $23,100 in 2021, and regulators have been warning in recent months that cost trends are headed in the wrong direction. Total health care spending in Massachusetts rose to $67.9 billion in 2021, or about $9,715 per person, according to CHIA.
Industry leaders view operating margins as the best measure of hospital financial health because total margin also includes other factors like investment income, contributions and asset sales that do not directly impact day-to-day care.
It’s not the first time that the median operating margin has landed in the red. CHIA also reported statewide median operating margins below 0 percent through the same period of time in 2020 and 2022.
The report covered three quarters of data for many hospitals, most of whom typically begin their fiscal years on Oct. 1, and two quarters of data for Steward and Tenet hospitals, who count fiscal years differently.
At the time captured in the latest report, Steward was early in bankruptcy proceedings for all of its Massachusetts hospitals and had not yet announced it would shutter Nashoba Valley Medical Center in Ayer and Carney Hospital in Dorchester.
The CHIA data through June 30 showed Steward’s hospitals all in the red, with operating margins ranging from -0.2% at Saint Anne’s Hospital in Fall River, which has since been acquired by Lifespan, to -38.2% at Carney, which is closed. (The worst outlook was at Norwood Hospital, which has been closed since 2020 due to a flood and ran a -111% operating margin through June 30.)
Over the six-month span through June, Steward’s hospitals collectively reported their expenses outpacing revenues by $117.4 million.
But financial pressures were not limited only to the for-profit system that has been lambasted on both Beacon Hill and Capitol Hill.
Several non-Steward facilities ranked among the bottom 10 in operating margin, including Anna Jaques in Newburyport (-25.3% operating margin) and MetroWest Medical Center in Framingham (-11%).