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Report: COVID-19 relief funds boosted Massachusetts hospital finances in 2021

Entrance to Baystate Franklin Medical Center in Greenfield, Mass.
Paul Franz
Daily Hampshire Gazette / gazettenet.com
Entrance to Baystate Franklin Medical Center in Greenfield, Mass.

In a look back at hospital finances in Massachusetts, state officials in a new report found that overall acute hospital profitability in fiscal 2021 was 6%, but operating margins were slim at community hospitals and the numbers were colored by $405 million in onetime COVID-19 relief funds logged as operating revenue.

The Center For Health Information and Analysis said aggregate operating revenue for hospitals increased by $2.8 billion, or 9%, while aggregate expenses increased 8%, or $2.5 billion, in fiscal 2021.

The statewide median hospital operating margin in fiscal 2021 was 1.2%, a decrease of 0.1 percentage points compared to fiscal 2020. Community hospitals, whose finances are a constant concern among lawmakers, reported the lowest operating margin, at 0.6%, according to the report.

The House last year passed a bill creating new procedures to guard against the expansion of larger providers into new territories where they can pull more privately insured patients that command higher rates away from community hospitals, leaving those local providers with a greater share of patients on Medicare and Medicaid.

Under the bill (H 4262), providers applying to the Department of Public Health for a license to expand their operation would also have to include a letter of support from the CEO or board chair of an independent community hospital if the primary service area for the proposed expansion project overlaps with the service area of the pre-existing hospital. The support letter would not be necessary if the project is a joint venture.

It's unclear if the bill will emerge for a vote in the Senate, where it remains under review in committee.

The CHIA report provides insight into 47 of the 61 Massachusetts acute hospitals, and includes data on specific hospitals and affiliated physician organizations. The report said that 37 of 45 affiliated physician groups reported a net loss in fiscal 2021, which analysts described as "consistent with prior years."

CHIA said an updated fiscal 2021 report will be released when data from hospitals with a Dec. 31 fiscal year end date becomes available.

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