UMass Memorial posts positive performance

UMass Memorial Health Care Inc., the region’s dominant health care provider, posted a surplus of $55.5 million in its 2008 fiscal year ending Sept. 30, results that were boosted by operations but hurt by investment losses.

The health system, which has about 12,500 employees and operates hospitals and clinics throughout Worcester County, posted a surplus of $93.2 million in 2007 when its investments were booming.

UMass Memorial officials said impacts to investments and other factors have made them cautious about spending, but operating margins remain in a desired range, hiring continues, and no large layoffs are anticipated. The system’s operating surplus, which does not include investment income, was $59.4 million in 2008, down from $77.1 million in 2007.

“We are pleased that we have another strong year and we continue to operate a very, very strong structure under these hospitals,” said UMass Memorial Chief Executive and President John G. O’Brien.

The UMass Memorial results come as some hospitals in Massachusetts are laying off workers and grappling with expenses because of smaller returns on investments, a tight credit market that makes it difficult to borrow money, and state budget cuts that could mean smaller payments to hospitals for patients on Medicaid, the government health plan for the poor.

Boston Medical Center reported this week that it would lay off or cut hours for 250 workers and reduce certain patient services. Holyoke Hospital has cut jobs. The Massachusetts Hospital Association estimates that state budget cuts to hospital payments could reach $250 million.

UMass Memorial controls about two-thirds of the Worcester County health care market. In 2008, the system was busier in a number of departments. Discharges stayed relatively steady, but ambulatory visits were up 2.5 percent and emergency visits were up 3.1 percent, according to figures provided by UMass Memorial Chief Financial Officer Todd A. Keating. The system posted $1.8 billion in net revenue from patient services, up about 11 percent over the previous year.

All of the system’s hospitals recorded surpluses, UMass Memorial reported. UMass Memorial Medical Center Inc., which has two primary campuses in Worcester, posted a total surplus in the 2008 fiscal year of $53.1 million and an operating surplus of $54.1 million, Mr. Keating said. Clinton Hospital, Marlboro Hospital, Wing Memorial Hospital in Palmer, and the HealthAlliance system in Leominster posted a combined surplus of $7.6 million and an operating surplus of $8.7 million, he said.

UMass Memorial reported that its investments declined in value by $51.2 million in 2008.

Investment income, contributions and other gains totaled $3.7 million in 2008, down from $30.3 million in 2007, according to the system’s financial statement. The system also reported $25.9 million in non-temporary losses to the value of investments.

Mr. Keating said the system was not impacted by any one investment.

“What we saw was a decrease across a spectrum of investment opportunities,” he said.

One big expense dropped. UMass Memorial and its affiliates provided $101.6 million in charity care in 2008, down from $120.7 million in 2007, as the state’s new health insurance law kicked in and more people were covered by health insurance.

UMass Memorial spent $112 million on capital spending in 2008 and had planned $115 million in capital spending during the current fiscal year, according to Mr. O’Brien. Now, the system may slow down that spending, which typically involves spending on equipment and buildings.

“With the credit crunch, we do expect going forward we won’t have the same level of capital spending we’ve been able to enjoy,” Mr. O’Brien said.