Commonwealth Massachusetts Acute Hospital of Massachusetts Financial Performance Fiscal Year 2012, Q1-Q3 Center for Health Information and Analysis October 1, 2011 - June 31, 2012

December 2012 Áron Boros Executive Director

Center for Health Information and Analysis Center for About the Fiscal Year 2012, Quarter Three Report Health Information and Analysis On November 5, 2012, Chapter 224 of the Acts of 2012 (Chapter 224) went into effect. Chapter 224 dissolved the Division of Health Care Finance and Policy (Division) and created a new, independent state agency, the Center for Health Information and Analysis (Center). The Center assumed many of the Division’s responsibilities including the reporting of acute hospital financial performance information. The Center continues to supports the Division’s priority of timely, relevant, and accurate information in its Fiscal Year 2012 Quarter Three (FY12Q3) Report. This quarterly edition presents data on the following metrics: total margin, operating margin, non-operating margin, current ratio, and equity financing ratio. Each page allows for easy comparisons between individual hospitals, and provides a clear sense of the performance of hospital cohorts. Further, the bulleted text identifies key trends and provides context. Analysis for certain metrics, such as days in accounts receivable, average payment period, debt service coverage, and cash flow to total debt, will be published annually. These metrics are provided in the databook released concurrently with this report. The Center also continues to publish factsheets for individual hospitals.

Center for Key Findings for FY12, Q1-Q3 Health Information and Analysis This report examines hospital profitability, liquidity, and solvency in order to monitor and compare the financial status of acute care hospitals. Presented are industry analyses and comparisons of financial performance trends of different hospital cohorts: teaching hospitals versus community hospitals, and Disproportionate Share Hospitals (DSH) versus Non-Disproportionate Share Hospitals (Non-DSH). The reporting period is based on the fiscal year of the majority of Massachusetts hospitals: October 1st through September 30th. The financial data used in this report is cumulative from quarter one through quarter three, referred to as FY12Q3 throughout this report. Massachusetts Acute Hospital Financial Performance FY12Q3 Medians Total Operating Non-Operating Current Equity Margin Margin Margin Ratio Financing

Statewide Median 2.8% 2.4% 0.6% 1.51 38.8% (65 hospitals) 2.1% 1.7% 0.3% 1.52 39.6%

Teaching Hospitals 5.0% 3.0% 1.0% 1.59 45.4% (18 hospitals) 3.3% 2.6% 0.2% 1.55 43.4%

0.5% 1.49 Community Hospitals 2.5% 2.3% 37.3% (47 hospitals) 1.8% 1.6% 0.3% 1.40 35.3%

Disproportionate Share Hospitals (DSH) 1.3% 1.3% 0.3% 1.25 21.5% (29 hospitals) 0.1% 0.1% 0.2% 1.22 12.3% Non-Disproportionate Share Hospitals 3.4% 2.7% 0.8% 1.58 43.7% (Non-DSH) (36 hospitals) 3.1% 2.4% 0.5% 1.59 41.3%

Key: FY12Q3 results compared with FY11 year-end results (grey value): Same Value , Improved , Declined .

• Overall, Massachusetts acute hospital financial performance improved from FY11 to FY12Q3. • The median total margin increased from 2.1% in FY11 to 2.8% in FY12Q3. Additional Data Most hospitals reported profitable financial performance in FY12Q3. Hospital fact sheets and • Liquidity remained fairly stable with the majority of hospitals able to meet supplemental data released short-term obligations. with this report include • Solvency, as measured by the equity financing ratio, remained fairly stable for additional financial metrics most hospitals. not reported here. • In FY12Q3, hospitals in the Southeast region continued to have the highest median total margin at 5.2% while hospitals in the Central region had the lowest at 1.1%. More information can be found on our website at MA Region Medians Total Margin % www.mass.gov/chia. Statewide Median (65 hospitals) 2.8% Southeast Region (11 hospitals) 5.2% Central Region (8 hospitals) 1.1% Western Region (11 hospitals) 3.6% Metro Boston Region (25 hospitals) 2.4% Northeast Region (10 hospitals) 3.2%

Massachusetts Acute Hospital Financial Performance, Fiscal Year 2012 Q3 Page 1 Center for Health Information and Analysis Massachusetts Acute Hospital Profitability Total Margin, FY12 Q3 Total Profitability measures a hospital’s ability to generate earnings as compared to its revenues Hospital Name Type Margin and is expressed here by three ratios: total margin, operating margin, and non-operating margin. Sturdy Memorial Hospital 13.41% Cooley Dickinson Hospital 13.03% Massachusetts Eye and Ear Infirmary T 12.46% Steward Saint Anne’s Hospital D 11.97% Total Margin T D 11.25% Signature Healthcare D 10.85% Total Margin reflects the excess of total revenues over total expenses, including Lahey Clinic T 10.56% North Adams Regional Hospital D 10.29% operating and non-operating activities such as investment income as a percentage (FY12) T D 9.89% of total revenue. Profitability improved for the acute hospital industry in FY12Q3. Baystate Medical Center T D 9.81% More hospitals posted a positive total margin, improving from 2.1% in FY11 to 2.8% Massachusetts General Hospital T 9.76% in FY12Q3, driven primarily by improved operating performances. D 9.14% Newton-Wellesley Hospital 9.10% Acute Hospital Total Margin T 8.34% Hallmark75th percentileHealth 7.59% Milford Regional Medical Center 6.92% 8.0% 6.7% 75th percentile WinchesterMedian Hospital 6.70% D 6.53% 6.0% 5.0% 5.3% 25th percentile 4.8% Mercy Medical Center (FY12Q2) D 6.49% 3.8% 4.0% 2.8% Brigham and Women’s Hospital T 6.05% 2.2% 2.6% 2.1% Median New England Baptist Hospital 6.02% 2.0% 0.9% Southcoast Hospitals Group D 5.19% 0.4% 0.1% 0.0% Beth Israel Deaconess Medical Center T 5.11% 0 Boston Children’s Hospital T 4.96% -1.3% 25th percentile Health Alliance Hospital 4.77% -2.0% -2.3% 4.36% -4.0% Fairview Hospital 3.59% FY08 FY09 FY10 FY11 FY12Q3 Northeast Hospital 3.50% Lawrence General Hospital D 3.37% Benchmark: Northeast US median FY10 = 2.3% Beth Israel Deaconess Hospital - Needham 3.27% (Almanac of Hospital Financial and Operating Indicators. INGENIX, 2012) Faulkner Hospital T 3.24% Steward Holy Family Hospital D 3.08% • The median total margin improved from 2.1% in FY11 to 2.8% in FY12Q3. D 2.85% In FY12Q3, the median total margin for all hospital quartiles improved. Heywood Hospital 2.69% Hospitals in the lowest quartile showed the most improvement, increasing Wing Memorial Hospital and Medical Centers D 2.55% their total margin by 2.3%. Harrington Memorial Hospital 2.49% Dana-Farber Cancer Institute T 2.44% • The median total margin for all hospital cohorts (teaching and community, 2.40% DSH, and Non-DSH) improved in FY12Q3. Jordan Hospital 2.37% 1.70% • Continuing the trend from the prior period, the median total margin for teaching Cottage Hospital 1.48% hospitals was higher then the median total margin for community hospitals in FY12Q3. Saints Medical Center D 1.33% • The median total margin for Non-Disproportionate Share Hospitals (Non-DSH) Anna Jaques Hospital 1.15% 1.05% out-performed the median total margin for Disproportionate Share Hospitals (DSH) Martha’s Vineyard Hospital (FY12) 0.52% between FY11 and FY12Q3. See Median Total Margin by Cohort table below. T 0.49% Cohort Comparison T D 0.32% Baystate Franklin Medical Center D 0.25% North Shore Medical Center D 0.00% Median Total Margin by Cohort Noble Hospital D -0.06% Marlborough Hospital -0.32% FY08 FY09 FY10 FY11 FY12Q3 UMass Memorial Medical Center T D -0.36% Statewide Median Steward St. Elizabeth’s Medical Center T D -0.38% (65 hospitals) 0.9% 2.2% 2.6% 2.1% 2.8% Steward Good Samaritan Medical Center D -0.51% Steward D -0.85% Teaching Baystate Mary Lane Hospital -1.69% (18 hospitals) 3.9% 5.1% 5.3% 3.3% 5.0% MetroWest Medical Center (FY12) -2.42% Community Steward Morton Hospital and Medical Center D -2.53% (47 hospitals) 0.8% 1.7% 2.3% 1.8% 2.5% Steward , Inc. T D -2.74% DSH Steward -3.90% (29 hospitals) -0.4% 1.1% 1.9% 0.1% 1.3% Clinton Hospital D -4.50% Cambridge Health Alliance (FY12) T D -5.36% Non-DSH 0.9% 2.5% 3.1% 3.1% 3.4% Steward Nashoba Valley Medical Center -9.84% (36 hospitals) D -12.35% Steward Merrimack Valley Hospital D -17.46% Massachusetts Acute Hospital Financial Performance, Fiscal Year 2012 Q3 Page 2 Key: T: Teaching Hospital, Center for Health Information and Analysis D: Disproportionate Share Hospital Massachusetts Acute Hospital Operating Margin, FY12Q3 Profitability Operating Hospital Name Type Margin Profitability measures a hospital’s ability to generate earnings as compared to its revenues Cooley Dickinson Hospital 12.21% and is expressed here by three ratios: total margin, operating margin, and non-operating margin. Steward Saint Anne’s Hospital D 11.88% Lahey Clinic T 10.51% Berkshire Medical Center T D 10.16% Operating Margin North Adams Regional Hospital D 10.07% Signature Healthcare Brockton Hospital D 9.98% Saint Vincent Hospital (FY12) T D 9.89% Operating Margin is the ratio of operating income/loss to total revenue. It reflects Massachusetts General Hospital T 9.61% revenues and expenses associated with patient care activities, but does not include Sturdy Memorial Hospital 8.72% investments, research, and other non-operating expenses. In FY12Q3, the median Newton-Wellesley Hospital 8.60% Falmouth Hospital D 7.86% operating margin improved from 1.7% in FY11 to 2.4% in FY12Q3. Hallmark Health 6.67% Baystate Medical Center T D 6.42% Acute Hospital Operating Margin Mount Auburn Hospital T 6.15% Milford Regional Medical Center 6.01% Brigham and Women’s Hospital T 5.99% 6.0% Mercy Medical Center (FY12Q2) D 5.97% 6.0% 75th percentile Cape Cod Hospital D 5.81% 4.7% 4.2% 4.0% Southcoast Hospitals75th percentile Group D 4.60% 4.0% New England Baptist Hospital 4.35% 2.9% Median 2.4% Boston Children’s Hospital T 4.34% 1.9% 2.0% 2.0% 1.7% Median Lowell General25th Hospital percentile 3.86% 0.7% 3.33% 0.1% -0.3% Health Alliance Hospital 3.29% 0 -1.1% -0.9% Faulkner Hospital T 3.23% 25th percentile Lawrence General Hospital D 3.13% -2.8% -2.0% Steward Holy Family Hospital D 3.08% Northeast Hospital 2.90% -4.0% FY08 FY09 FY10 FY11 FY12Q3 Beth Israel Deaconess Medical Center T 2.80% Beth Israel Deaconess Hospital - Needham 2.79% Fairview Hospital 2.56% Benchmark: Northeast US median FY10 = 1.4% (Almanac of Hospital Financial and Operating Indicators. INGENIX, 2012) Holyoke Medical Center D 2.40% Emerson Hospital 2.39% Wing Memorial Hospital and Medical Centers D 2.28% • All quartiles experienced improved operating margins in FY12Q3. South Shore Hospital 2.20% • Hospitals in the lowest quartile showed the most improvement; however, their Heywood Hospital 2.06% margins remained negative. Anna Jaques Hospital 1.69% Jordan Hospital 1.62% • The median operating margins at teaching and community hospitals improved in Saints Medical Center D 1.27% FY12Q3 compared to FY11. See Median Operating Margin by Cohort table below. Harrington Memorial Hospital 0.73% Milton Hospital 0.72% • The median operating margins at Disproportionate Share Hospitals (DSH) and North Shore Medical Center D -0.02% Non-Disproportionate Share Hospitals (Non-DSH) improved in FY12Q3 compared Noble Hospital D -0.25% to FY11. See Median Operating Margin by Cohort table below. Steward St. Elizabeth’s Medical Center T D -0.39% Steward Good Samaritan Medical Center D -0.51% Cohort Comparison Baystate Franklin Medical Center D -0.54% Tufts Medical Center T -0.58% Median Operating Margin by Cohort Boston Medical Center T D -0.70% Steward Quincy Medical Center D -0.86% FY08 FY09 FY10 FY11 FY12Q3 Massachusetts Eye and Ear Infirmary T -1.10% Martha’s Vineyard Hospital (FY12) -1.23% Statewide Median 0.7% 1.9% 2.0% 1.7% 2.4% UMass Memorial Medical Center T D -1.43% (65 hospitals) Steward Morton Hospital and Medical Center D -2.53% Teaching MetroWest Medical Center (FY12) -2.53% (18 hospitals) 4.1% 5.0% 4.2% 2.6% 3.0% Steward Carney Hospital, Inc. T D -2.75% Marlborough Hospital -2.82% Community Baystate Mary Lane Hospital -3.09% (47 hospitals) 0.4% 1.5% 1.6% 1.6% 2.3% Dana-Farber Cancer Institute T -3.83% DSH Steward Norwood Hospital -3.94% (29 hospitals) 0.7% 1.3% 1.2% 0.1% 1.3% Clinton Hospital D -5.83% Cambridge Health Alliance (FY12) T D -6.50% Non-DSH Steward Nashoba Valley Medical Center -9.84% (36 hospitals) 0.7% 2.2% 2.4% 2.4% 2.7% Nantucket Cottage Hospital -9.86% Athol Memorial Hospital D -12.61% Steward Merrimack Valley Hospital D -17.46%

Massachusetts Acute Hospital Financial Performance, Fiscal Year 2012 Q3 Page 3 Key: T: Teaching Hospital, Center for Health Information and Analysis D: Disproportionate Share Hospital Massachusetts Acute Hospital Profitability Non-Operating Margin, FY12Q3 Non- Operating Profitability measures a hospital’s ability to generate earnings as compared to its revenues Hospital Name Type Margin and is expressed here by three ratios: total margin, operating margin, and non-operating margin. Massachusetts Eye and Ear Infirmary T 13.56% Nantucket Cottage Hospital 11.34% Dana-Farber Cancer Institute T 6.27% Sturdy Memorial Hospital 4.69% Non-Operating Margin Baystate Medical Center T D 3.39% Winchester Hospital 3.38% Non-Operating Margin is the ratio of non-operating income/loss to total revenue. Marlborough Hospital 2.50% It includes items that are not related to operations such as investment income, Beth Israel Deaconess Medical Center T 2.30% contributions, gains or losses from the sale of assets, and other unrelated business Mount Auburn Hospital T 2.20% Harrington Memorial Hospital 1.75% activities. The median non-operating margin improved from 0.3% in FY11 to Martha’s Vineyard Hospital (FY12) 1.75% 0.6% in FY12Q3. New England Baptist Hospital 1.67% Health Alliance Hospital 1.48% Acute Hospital Non-Operating Margin Baystate Mary Lane Hospital 1.41% Clinton Hospital D 1.33% 1.2% Falmouth Hospital D 1.28% 1.2% 1.1% 1.1% Cambridge Health Alliance (FY12) T D 1.14% 1.0% 75th percentile 1.0% 0.9% Berkshire Medical Center T D 1.09% UMass Memorial Medical Center T D 1.07% 0.8% 0.7% 0.6% Tufts Medical Center T 1.07% 0.6% Median Fairview Hospital 1.03% 0.4% 0.3% Boston Medical Center T D 1.02% 0.4% Hallmark Health 0.92% 0.2% 0.2% 0.2% 0.1% Milford Regional Medical Center 0.90% 0.0% 25th percentile Signature Healthcare Brockton Hospital D 0.87% 0.0 -0.2% -0.2% Cooley Dickinson Hospital 0.82% -0.2% Baystate Franklin Medical Center D 0.79% -0.4% Jordan Hospital 0.75% FY08 FY09 FY10 FY11 FY12Q3 Cape Cod Hospital D 0.72% Heywood Hospital 0.63% Benchmark: Northeast US median FY10 = 0.50% (Almanac of Hospital Financial and Operating Indicators. INGENIX, 2012) Boston Children’s Hospital T 0.62% Northeast Hospital 0.61% • A majority of hospitals reported positive non-operating margins in FY12Q3. Two Southcoast Hospitals Group D 0.59% hospitals reported negative non-operating margins compared to sixteen in FY11. Mercy Medical Center (FY12Q2) D 0.52% 75th percentileLowell General Hospital 0.51% • In FY12Q3, non-operating margins in all hospital quartiles improved. Median Newton-Wellesley Hospital 0.50% • Seven hospitals generated sufficient non-operating gains to compensate for Beth Israel Deaconess Hospital - Needham 0.48% 25th percentileHolyoke Medical Center D 0.44% operating losses and allowed them to post positive total margins. These hospitals Milton Hospital 0.33% were: Boston Medical Center, Baystate Franklin Medical Center, Dana-Farber Wing Memorial Hospital and Medical Centers D 0.26% Cancer Institute, Massachusetts Eye and Ear Infirmary, Nantucket Cottage Athol Memorial Hospital D 0.26% Hospital, Martha’s Vineyard Hospital, and Tufts Medical Center. Lawrence General Hospital D 0.24% North Adams Regional Hospital D 0.22% • In FY12Q3, the median non-operating margin improved for all hospital cohorts. Noble Hospital D 0.19% See Median Non-Operating Margin by Cohort table below. Massachusetts General Hospital T 0.16% MetroWest Medical Center (FY12) 0.11% Cohort Comparison Steward Saint Anne’s Hospital D 0.09% Brigham and Women’s Hospital T 0.05% Median Non-Operating Margin by Cohort Saints Medical Center D 0.05% Lahey Clinic T 0.05% FY08 FY09 FY10 FY11 FY12Q3 Steward Norwood Hospital 0.05% North Shore Medical Center D 0.02% Statewide Median Emerson Hospital 0.01% (65 hospitals) 0.4% 0.2% 0.7% 0.3% 0.6% Faulkner Hospital T 0.01% Teaching Steward St. Elizabeth’s Medical Center T D 0.01% (18 hospitals) -0.1% 1.0% 1.2% 0.2% 1.0% Steward Quincy Medical Center D 0.00% Community Steward Carney Hospital, Inc. T D 0.00% (47 hospitals) 0.5% 0.2% 0.5% 0.3% 0.5% Steward Good Samaritan Medical Center D 0.00% Saint Vincent Hospital (FY12) T D 0.00% DSH 0.2% 0.1% 0.4% 0.2% 0.3% Steward Nashoba Valley Medical Center 0.00% (29 hospitals) Steward Morton Hospital and Medical Center D 0.00% Non-DSH Steward Merrimack Valley Hospital D 0.00% (36 hospitals) 0.5% 0.2% 0.7% 0.5% 0.8% Steward Holy Family Hospital D 0.00% South Shore Hospital -0.50% Anna Jaques Hospital -0.54% Massachusetts Acute Hospital Financial Performance, Fiscal Year 2012 Q3 Page 4 Key: T: Teaching Hospital, Center for Health Information and Analysis D: Disproportionate Share Hospital Massachusetts Acute Hospital Current Ratio, FY12Q3

Current Liquidity refers to assets readily convertible into cash. It is a measure of how quickly Hospital Name Type Ratio assets can be converted into cash to meet current liabilities. Sturdy Memorial Hospital 10.17 Boston Children’s Hospital T 7.22 Lahey Clinic T 4.40 Mount Auburn Hospital T 4.22 Milford Regional Medical Center 3.26 Current Ratio Beth Israel Deaconess Medical Center T 3.20 Hallmark Health 3.17 Current Ratio measures short-term financial health and indicates whether a hospital New England Baptist Hospital 2.99 is able to meet current liabilities with current assets. The higher the current ratio, the Baystate Medical Center T D 2.87 Mercy Medical Center (FY12Q2) D 2.80 more financially stable a hospital is in the short-term. A ratio of 1.0 or higher indicates Anna Jaques Hospital 2.58 that current liabilities could be adequately covered by the existing current assets. Martha’s Vineyard Hospital (FY12) 2.51 Massachusetts acute hospitals’ median current ratio declined slightly with a median of Clinton Hospital D 2.42 1.51 in FY12Q3, compared with 1.52 in FY11. Cooley Dickinson Hospital 2.33 Emerson Hospital 2.26 Health Alliance Hospital 2.06 Acute Hospital Current Ratio Wing Memorial Hospital and Medical Centers D 2.02 Lawrence General Hospital D 1.95 2.50 Massachusetts Eye and Ear Infirmary T 1.92 Boston Medical Center T D 1.90 2.08 Beth Israel Deaconess Hospital - Needham 1.83 1.99 2.02 2.00 1.93 75th percentile Baystate Mary Lane Hospital 1.70 1.85 UMass Memorial Medical Center T D 1.69 Massachusetts General Hospital T 1.63 1.50 1.55 1.52 1.51 Winchester Hospital 1.58 1.50 1.45 Median Southcoast Hospitals Group75th percentile D 1.58 Steward Nashoba Valley Medical Center 1.57 1.19 1.21 Median 1.15 Baystate Franklin Medical Center D 1.56 1.03 1.07 1.00 25th percentile Tufts Medical Center 25th percentile T 1.55 FY08 FY09 FY10 FY11 FY12Q3 North Shore Medical Center D 1.55 Falmouth Hospital D 1.55 Benchmark: Northeast US median FY10 = 1.58 Berkshire Medical Center T D 1.55 (Almanac of Hospital Financial and Operating Indicators. INGENIX, 2012) Lowell General Hospital 1.51 Northeast Hospital 1.49 Steward Morton Hospital and Medical Cente D 1.49 • The current ratio for all quartiles have remained stable and above 1.0 for all Milton Hospital 1.44 periods presented. Brigham and Women’s Hospital T 1.40 MetroWest Medical Center (FY12) 1.39 • The median current ratios at teaching and community hospitals improved in Saint Vincent Hospital (FY12) T D 1.34 FY12Q3. See Median Current Ratio by Cohort table below. Jordan Hospital 1.34 • The median current ratio at DSH hospitals increased slightly, whereas the Dana-Farber Cancer Institute T 1.33 Marlborough Hospital 1.28 median current ratio at Non-DSH hospitals decreased slightly in FY12Q3. Saints Medical Center D 1.25 See Median Current Ratio by Cohort table below. Holyoke Medical Center D 1.19 Cohort Comparison Faulkner Hospital T 1.18 Harrington Memorial Hospital 1.18 Median Current Ratio by Cohort South Shore Hospital 1.15 Cape Cod Hospital D 1.10 Cambridge Health Alliance (FY12) T D 1.07 FY08 FY09 FY10 FY11 FY12Q3 Fairview Hospital 1.02 Statewide Median Heywood Hospital 1.00 (65 hospitals) 1.45 1.50 1.55 1.52 1.51 Newton-Wellesley Hospital 0.98 Steward Saint Anne’s Hospital D 0.80 Teaching 1.46 1.50 1.55 1.55 1.59 Steward Quincy Medical Center D 0.80 (18 hospitals) Signature Healthcare Brockton Hospital D 0.78 Community Steward Holy Family Hospital D 0.73 (47 hospitals) 1.44 1.49 1.55 1.40 1.49 Steward St. Elizabeth’s Medical Center T D 0.66 Steward Carney Hospital, Inc. T D 0.62 DSH 1.33 1.33 1.39 1.22 1.25 Steward Good Samaritan Medical Center D 0.61 (29 hospitals) Steward Norwood Hospital 0.60 Non-DSH Noble Hospital D 0.59 (36 hospitals) 1.48 1.62 1.57 1.59 1.58 Steward Merrimack Valley Hospital D 0.56 North Adams Regional Hospital D 0.49 Athol Memorial Hospital D 0.42 Nantucket Cottage Hospital 0.00 Massachusetts Acute Hospital Financial Performance, Fiscal Year 2012 Q3 Page 5 Key: T: Teaching Hospital, Center for Health Information and Analysis D: Disproportionate Share Hospital Massachusetts Acute Hospital Equity Financing, FY12Q3

Equity Solvency measures the ability of a hospital to meet its total debt obligations and is Hospital Name Type Financing generally an indicator of long-term financial health. Saint Vincent Hospital (FY12) T D 161.50% Sturdy Memorial Hospital 91.82% Martha’s Vineyard Hospital (FY12) 89.95% Health Alliance Hospital 76.70% Equity Financing Clinton Hospital D 75.75% Nantucket Cottage Hospital 69.06% Equity Financing, measured by the proportion of total net assets financed with the Falmouth Hospital D 68.31% hospital’s equity, reflects the ability of a hospital to take on more debt. High values Lawrence General Hospital D 67.60% indicate hospitals with little or no long term liabilities. Lower values indicate that Baystate Mary Lane Hospital 67.50% Boston Children’s Hospital T 65.82% hospitals are highly leveraged and may have difficulty securing access to debt financing Dana-Farber Cancer Institute T 64.66% in the future. In FY12Q3, Massachusetts acute hospitals’ median equity financing ratio Massachusetts75th General percentile Hospital T 63.00% declined to 38.8% from 39.6% in FY11. Harrington Memorial Hospital 59.04% Southcoast MedianHospitals Group D 58.15% Acute Hospital Equity Financing Mount Auburn25th Hospital percentile T 57.90% Boston Medical Center T D 55.52% Wing Memorial Hospital and Medical Centers D 55.50% 60.0% 58.0% 55.7% 55.5% 53.1% 54.4% 75th percentile Baystate Franklin Medical Center D 54.85% 50.0% Winchester Hospital 53.98% 43.2% Berkshire Medical Center T D 53.37% 37.9% 39.2% 39.6% 38.8% 40.0% Median Cape Cod Hospital D 52.06% Massachusetts Eye and Ear Infirmary T 51.02% 28.2% 27.1% 30.0% New England Baptist Hospital 50.59% 18.7% 20.0% Heywood Hospital 49.47% Milton Hospital 48.41% 10.0% 7.0% 6.7% Hallmark Health 46.47% 25th percentile Faulkner Hospital T 45.75% 0 Mercy Medical Center (FY12Q2) D 45.64% FY08 FY09 FY10 FY11 FY12Q3 Beth Israel Deaconess Medical Center T 44.95% Baystate Medical Center T D 42.63% Benchmark: Northeast US median FY10 = 43.0% (Almanac of Hospital Financial and Operating Indicators. INGENIX, 2012) Beth Israel Deaconess Hospital - Needham 42.51% Milford Regional Medical Center 42.21% Marlborough Hospital 38.80% • In FY12Q3, the median equity financing ratio for hospitals in the upper quartile Fairview Hospital 37.51% increased to 55.5%, which is greater than the Northeast US median FY10 Lowell General Hospital 37.34% benchmark of 43.0%. Cambridge Health Alliance (FY12) T D 36.31% Cooley Dickinson Hospital 36.05% • In contrast, the median equity financing ratio for lower quartile hospitals declined Northeast Hospital 33.31% slightly to 6.7% in FY12Q3 compared to 7.0% in FY11. South Shore Hospital 32.20% • The median equity financing ratio for teaching, community, DSH and Non-DSH hospital Newton-Wellesley Hospital 29.41% cohorts increased in FY12Q3. See Median Equity Financing by Cohort table below. Anna Jaques Hospital 28.40% Emerson Hospital 27.57% • The median equity financing ratio for DSH hospitals improved 9.2% between FY11 Jordan Hospital 26.84% and FY12Q3. See Median Equity Financing by Cohort table below. Steward Saint Anne’s Hospital D 26.29% Signature Healthcare Brockton Hospital D 21.53% Cohort Comparison Brigham and Women’s Hospital T 20.47% Tufts Medical Center T 14.45% Median Equity Financing by Cohort UMass Memorial Medical Center T D 12.22% North Adams Regional Hospital D 6.66% FY08 FY09 FY10 FY11 FY12Q3 North Shore Medical Center D 4.75% Steward Quincy Medical Center D 0.65% Statewide Median 43.2% 37.9% 39.2% 39.6% 38.8% Lahey Clinic T 0.06% (65 hospitals) Steward Holy Family Hospital D -2.88% Steward Morton Hospital and Medical Center D -2.92% Teaching Steward Good Samaritan Medical Center D -3.52% (18 hospitals) 48.3% 42.4% 43.6% 43.4% 45.4% Athol Memorial Hospital D -8.14% Holyoke Medical Center D -9.06% Community 40.3% 34.8% 37.4% 35.3% 37.3% (47 hospitals) Steward Carney Hospital, Inc. T D -12.48% Steward Nashoba Valley Medical Center -19.72% DSH Steward Norwood Hospital -20.92% (29 hospitals) 37.7% 36.3% 39.7% 12.3% 21.5% Steward St. Elizabeth’s Medical Center T D -22.95% Non-DSH 47.5% 38.7% 39.2% 41.3% 43.7% Saints Medical Center D -33.00% (36 hospitals) Steward Merrimack Valley Hospital D -45.54% MetroWest Medical Center (FY12) -54.94% Noble Hospital D -62.24% Massachusetts Acute Hospital Financial Performance, Fiscal Year 2012 Q3 Page 6 Key: T: Teaching Hospital, Center for Health Information and Analysis D: Disproportionate Share Hospital Acute Hospital Financial Performance, By Hospital System: FY12Q3 (continued on next page)

Multi-Hospital Systems

Operating Non-Operating Hospital Name Type Total Margin Profit (Loss) Margin Margin

Baystate Health Inc., and Subsidiaries $70,953,000 Baystate Franklin Medical Center D 0.25% -0.54% 0.79% $152,000 Baystate Mary Lane Hospital -1.69% -3.09% 1.41% ($374,000) Baystate Medical Center T D 9.81% 6.42% 3.39% $71,175,000 Berkshire Health System $31,997,211 Berkshire Medical Center T D 11.25% 10.16% 1.09% $30,808,684 Fairview Hospital 3.59% 2.56% 1.03% $1,188,527 Cape Cod Health Care and Affiliates $31,712,624 Cape Cod Hospital D 6.53% 5.81% 0.72% $21,038,266 Falmouth Hospital D 9.14% 7.86% 1.28% $10,674,358 Care Group $86,305,153 Beth Israel Deaconess Hospital - Needham 3.27% 2.79% 0.48% $1,482,726 Beth Israel Deaconess Medical Center T 5.11% 2.80% 2.30% $53,945,000 Milton Hospital 1.05% 0.72% 0.33% $585,808 Mount Auburn Hospital T 8.34% 6.15% 2.20% $20,355,619 New England Baptist Hospital 6.02% 4.35% 1.67% $9,936,000 Partners Healthcare $386,554,393 Brigham and Women’s Hospital T 6.05% 5.99% 0.05% $112,178,000 Faulkner Hospital T 3.24% 3.23% 0.01% $4,787,000 Martha’s Vineyard Hospital (FY12)* 0.52% -1.23% 1.75% $312,393 Massachusetts General Hospital T 9.76% 9.61% 0.16% $239,360,000 Nantucket Cottage Hospital 1.48% -9.86% 11.34% $362,000 Newton-Wellesley Hospital 9.10% 8.60% 0.50% $29,568,000 North Shore Medical Center D 0.00% -0.02% 0.02% ($13,000) Steward Health Care System ($195,621) Carney Hospital, Inc. T D -2.74% -2.75% 0.00% ($2,442,818) Good Samaritan Medical Center D -0.51% -0.51% 0.00% ($852,269) Holy Family Hospital D 3.08% 3.08% 0.00% $4,494,400 Merrimack Valley Hospital D -17.46% -17.46% 0.00% ($7,274,481) Morton Hospital and Medical Center D -2.53% -2.53% 0.00% ($2,416,354) Nashoba Valley Medical Center -9.84% -9.84% 0.00% ($3,213,356) Norwood Hospital -3.90% -3.94% 0.05% ($5,320,731) Quincy Medical Center D -0.85% -0.86% 0.00% ($647,748) Saint Anne’s Hospital D 11.97% 11.88% 0.09% $18,373,545 St. Elizabeth’s Medical Center T D -0.38% -0.39% 0.01% ($895,809) UMass Memorial Health Care Inc., and Affiliates $3,029,597 Clinton Hospital D -4.50% -5.83% 1.33% ($842,000) Health Alliance Hospital 4.77% 3.29% 1.48% $5,887,122 Marlborough Hospital -0.32% -2.82% 2.50% ($181,000) UMass Memorial Medical Center T D -0.36% -1.43% 1.07% ($3,584,525) Wing Memorial Hospital D 2.55% 2.28% 0.26% $1,750,000 Vanguard Health System $28,432,544 MetroWest Medical Center (FY12)* -2.42% -2.53% 0.11% ($6,275,877) Saint Vincent Hospital (FY12)* T D 9.89% 9.89% 0.00% $34,708,421

Key: T: Teaching Hospital, D: Disproportionate Share Hospital Notes: Profitability percentages may not add due to rounding * These hospitals reported data on an alternative fiscal year. See Report Notes for more information.

Massachusetts Acute Hospital Financial Performance, Fiscal Year 2012 Q3 Page 7 Center for Health Information and Analysis Acute Hospital Financial Performance, By Hospital System: FY12Q3 (continued from previous page)

Individual Hospitals

Operating Non-Operating Hospital Name Type Total Margin Profit (Loss) Margin Margin

Anna Jaques Hospital 1.15% 1.69% -0.54% $981,747 Athol Memorial Hospital D -12.35% -12.61% 0.26% ($1,823,510) Boston Medical Center T D 0.32% -0.70% 1.02% $2,367,000 Cambridge Health Alliance (FY12)* T D -5.36% -6.50% 1.14% ($28,533,985) Children’s Hospital Boston T 4.96% 4.34% 0.62% $48,860,000 Cooley Dickinson Hospital 13.03% 12.21% 0.82% $16,786,479 Dana-Farber Cancer Institute T 2.44% -3.83% 6.27% $18,226,134 Emerson Hospital 2.40% 2.39% 0.01% $3,418,301 Hallmark Health 7.59% 6.67% 0.92% $16,832,000 Harrington Memorial Hospital 2.49% 0.73% 1.75% $2,230,710 Heywood Hospital 2.69% 2.06% 0.63% $2,065,128 Holyoke Medical Center D 2.85% 2.40% 0.44% $2,665,344 Jordan Hospital 2.37% 1.62% 0.75% $3,645,660 Lahey Clinic T 10.56% 10.51% 0.05% $64,130,758 Lawrence General Hospital D 3.37% 3.13% 0.24% $5,250,000 Lowell General Hospital 4.36% 3.86% 0.51% $9,253,586 Massachusetts Eye and Ear Infirmary T 12.46% -1.10% 13.56% $23,634,579 Mercy Medical Center (FY12Q2)* D 6.49% 5.97% 0.52% $7,510,471 Milford Regional Medical Center 6.92% 6.01% 0.90% $10,744,391 Noble Hospital D -0.06% -0.25% 0.19% ($26,038) North Adams Regional Hospital D 10.29% 10.07% 0.22% $5,055,698 Northeast Hospital 3.50% 2.90% 0.61% $8,670,122 Saints Medical Center D 1.33% 1.27% 0.05% $1,407,350 Signature Healthcare Brockton Hospital D 10.85% 9.98% 0.87% $19,336,436 South Shore Hospital 1.70% 2.20% -0.50% $5,876,046 Southcoast Hospitals Group D 5.19% 4.60% 0.59% $27,265,488 Sturdy Memorial Hospital 13.41% 8.72% 4.69% $17,300,516 Tufts Medical Center T 0.49% -0.58% 1.07% $2,441,000 Winchester Hospital 6.70% 3.33% 3.38% $14,676,058

Key: T: Teaching Hospital, D: Disproportionate Share Hospital Notes: Profitability percentages may not add due to rounding * These hospitals reported data on an alternative fiscal year. See Report Notes for more information.

Massachusetts Acute Hospital Financial Performance, Fiscal Year 2012 Q3 Page 8 Center for Health Information and Analysis Center for Report Notes (continued on next page) Health Information and Analysis This report is prepared pursuant to M.G.L. c. 12c, section 8A, which requires the Center for Health Information and Analysis (Center) to assess and report on Massachusetts acute hospital financial performance. This report provides a statewide analysis of acute hospital financial data over five periods (fiscal year 2008 through fiscal year 2012 quarter three). The most recent available data as of June 30, 2012 is used for fiscal year 2012, quarter three reporting (FY12Q3). The fiscal year for Cambridge Health Alliance, MetroWest Medical Center, and Saint Vincent Hospital ends on June 30, and Mercy Medical Center’s fiscal year ends on December 31. The most recent data available is used for these four hospitals. Martha’s Vineyard Hospital recently changed their fiscal year from March 31 to September 30. Martha’s Vineyard Hospital’s year-end data was used in this report. Depending on the organization of each hospital, data may exclude other aspects of financial health, such as the financial performance of endowments, or the financial health of parent companies or other affiliated organizations.

The Financial Accounting Standards Board issued an update in July 2011 requiring the provision for bad debt to be reported as a deduction from patient service revenue in future statements of operations. While this update is not required to be implemented for all hospitals until fiscal year 2013, some hospitals have already adopted this standard. In order to maintain uniformity of financial data and comparability of financial ratios among hospitals, the Center standardized the data so that expenses and the resulting ratios for all hospitals were calculated by including the provision for bad debt as an expense item.

Quartile values can shed light on information about the distribution of financial measures across hospitals. Averages can often be materially affected by outlier/extreme values at the low and high ends of a distribution. Examining quartiles, therefore, is a preferred means of assessing the overall distribution of values across hospitals. The reported values of one- quarter of the hospitals at the lower end of the distribution will fall at or below the 25th quartile value. Similarly, the reported values of one-quarter of the hospitals at the upper end of the distribution will fall at or above the 75th quartile value. The 50th percentile is the median of the distribution of values. Half of the hospitals’ reported values will fall below the median, and half will fall above the median. These quartile measures are particularly useful when a distribution is markedly skewed, or where it is generally symmetrical but includes a few outliers.

Teaching Hospital (TCH): The Medicare Payment Advisory Commission (MedPAC) defines a major teaching hospital as having at least 25 full-time equivalent medical school residents per one hundred inpatient beds. Based on this definition, and using the fiscal year 2011 DHCFP 403 Cost Reports, the 18 hospitals listed below were assigned to the teaching cohort for fiscal year 2011 of this analysis. All other hospitals were designated as community hospitals.

Baystate Medical Center Lahey Clinic Hospital Berkshire Medical Center Massachusetts Eye and Ear Infirmary Beth Israel Deaconess Medical Center Massachusetts General Hospital Boston Medical Center Mount Auburn Hospital Brigham and Women’s Hospital Saint Vincent Hospital Cambridge Health Alliance Steward Carney Hospital Children’s Hospital Boston Steward St. Elizabeth’s Medical Center Dana Farber Cancer Center Tufts Medical Center Faulkner Hospital UMass Memorial Medical Center

Individual hospital fact sheets are available on the Center’s website at www.mass.gov/chia.

Massachusetts Acute Hospital Financial Performance, Fiscal Year 2012 Q3 Page 9 Center for Health Information and Analysis Center for Report Notes (continued from previous page) Health Information and Analysis Disproportionate Share Hospital (DSH): Hospitals with 63% or more of patient charges attributed to Medicare, Medicaid, and other government payers, including Commonwealth Care and Health Safety Net. Based on this definition, and using the fiscal year 2011 DHCFP 403 Cost Reports, the 29 hospitals listed below were assigned to the Disproportionate Share Hospital (DSH) cohort for fiscal year 2011 of this analysis because of their high proportions of public payers. All the remaining hospitals were designated as Non-Disproportionate Share Hospitals (Non-DSH).

Athol Memorial Hospital North Shore Medical Center Baystate Franklin Medical Center Saint Vincent Hospital Baystate Medical Center Saints Medical Center Berkshire Medical Center Signature Healthcare Brockton Boston Medical Center Southcoast Health Systems Cambridge Health Alliance Steward Carney Hospital Cape Cod Hospital Steward Good Samaritan Medical Center Clinton Hospital Steward Holy Family Falmouth Hospital Steward Morton Hospital Holyoke Hospital Steward Quincy Medical Center Lawrence General Hospital Steward St. Anne’s Hospital Mercy Hospital Steward St. Elizabeth’s Medical Center Merrimack Valley Hospital UMass Memorial Medical Center Noble Hospital Wing Memorial Hospital North Adams Regional Hospital

Individual hospital fact sheets are available on the Center’s website at www.mass.gov/chia.

Massachusetts Acute Hospital Financial Performance, Fiscal Year 2012 Q3 Page 10 Center for Health Information and Analysis Center for Health Information and Analysis Acknowledgments: The Center would like to thank the staff who were involved in the development of this report including: Mary Byrnes, Janice Horton, Jacob Guggenheim, and Ateesha Jackson.

Massachusetts Acute Hospital Financial Performance, Fiscal Year 2012 Q3 Page 11 Center for Health Information and Analysis Center for Health Information and Analysis

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