2012 Baystate Health Financials

A Message From Dennis W. Chalke, Senior Vice President, Chief Financial Officer & Treasurer of Baystate Health

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Baystate Health, Inc. and subsidiaries (Baystate Health) reported income from operations of $46.7 million (2.8 percent operating margin) for the year ended September 30, 2012 as compared to operating income of $41.1 million (2.7 percent operating margin) in fiscal 2011. The change in the operating margin from the prior year was a result of improved operating performance at Baystate Medical Center (BMC), Baystate Franklin Medical Center and Baystate Mary Lane Hospital.

Total operating revenues increased by $110.1 million, or 7.1%, in 2012 compared to 2011 due to an increase both in patient service revenue and Health New England (HNE) premium revenue. Patient revenues increased primarily due to volume growth, minor rate increases from insurance companies and Medicare payment adjustments. HNE premium revenue grew as a result of increased Medicare Advantage and Medicaid HMO enrollment.

Total operating expenses increased by $104.5 million, or 6.9%, in 2012 compared to 2011 due to higher costs to deliver patient care services and increased HNE medical claims. The increase in patient care costs resulted primarily from higher volumes at BMC and expenses associated with the successful opening of BMC’s major facility expansion project.

Baystate Health relies on the operating margin to invest in technology, equipment, facilities, programs, and patient care improvements that benefit the community. Despite the challenges, this year we were able to invest almost $66 million. Unfortunately, $75 million in requests went unfunded. Our financial performance also allows us to maintain our strong credit rating (Standard & Poor’s A+) which enables us to borrow funds at more competitive rates to fund large facility projects.

Our commitment to caring for the uninsured and underinsured members of our community continues. Baystate Health often absorbs the cost of that care. In 2012, Baystate Health provided unreimbursed care to our patients at a cost of more than $98 million.

Baystate continues to monitor factors that impact patient revenues including expected reductions in Medicare and Medicaid payments due to health care reform and proposed cuts in federal spending. Despite these economic challenges, Baystate Health is committed to achieving its financial goals in support of our charitable mission to improve the health of the people in our communities every day with quality and compassion.

Our independent public accountants, Ernst & Young LLP, have completed an audit of Baystate Health’s consolidated financial statements and issued an unqualified opinion. View report here.

Annual Report Graphs

Annual Report Graphs

Annual Report Graphs

Annual Report Graphs