Our Financials

Raymond McCarthy

Raymond McCarthy

Senior Vice President,
Chief Financial Officer
& Treasurer of Baystate Health

Baystate Health’s (Baystate’s) finances in fiscal year 2022 were the most challenging in the organization’s long history. Baystate experienced an operating loss of $178 million which represented a negative margin of 6.2% compared to the prior year that had a positive operating income of $27 million or 1.0%. It’s worth noting that in 2022, the finances of most healthcare organizations across the Commonwealth and the nation were in a similar situation.

The primary drivers that caused Baystate’s negative performance was the resurgence of COVID with the Delta/Omicron variants as well as sustained labor shortages and skyrocketing contract/temporary staffing costs that haunted all healthcare organizations throughout 2022.

Operating Margin (OM) %

A couple of the more notable trends that Baystate experienced during the past year:

  • A shutdown of elective procedures during January/February 2022 due to the outbreak of the Delta/Omicron variants.
  • Short staffing in community nursing homes and home care agencies slowed routine discharges from our hospitals leading to prolonged lengths of stay and crowding in our Emergency Departments.
  • For most of 2022 Baystate Medical Center was operating at 110-120% of our licensed bed capacity.
  • The cumulative effect of the “Great Resignation” adversely impacted our staffing. One in five healthcare workers has left the field since the start of the pandemic. At Baystate, this translated into 1,600 open positions for our 13,000 employees.
  • Baystate responded to the labor shortfall by paying overtime and bonuses to existing staff and hiring hundreds of contract workers to fill the gaps. These unexpected and higher labor expenses exceeded prior year spending by over $140M.
  • Federal relief dollars for hospitals dried up in 2021. From early 2020 through the fall of 2021, losses related to the pandemic amounted to $220M and were partially offset with $180M in combined state and federal relief. Since then, we have accumulated another $180M in losses with only $20M in state relief to offset them.

Total operating revenues in 2022 remained relatively flat at approximately $2.8 billion compared to 2021. Approximately 60% of Baystate's patient related operating revenues were generated from our four acute care hospitals, our employed provider group with over 1,000 providers, and our visiting nurse and hospice entities. The other large component of Baystate's operating revenues (30%) was generated on premiums from our managed care health insurance company, Health New England, with over 185,000 members.

Total Operating Revenues & Expenses
($ in Millions)

Net patient service revenue: $1,679M - 59%
Premiums: $923M - 32%
Other revenue: $249M - 9%
Salaries and wages: $1,118M - 37%
Supplies & expense: $1,266M - 42%
Medical claims & capitation: $557M - 18%
Depreciation, amortization & interest: $87M - 3%

Baystate’s balance sheet ratios calculated Days Cash on Hand at 127 days and a long-term debt to capitalization ratio at 40%. These metrics, coupled with volatility in the investment market returns, weaken Baystate’s historically strong balance sheet during a very challenging year. Overall, Baystate's total assets for the fiscal year ending September 30, 2022, decreased to $2.4 billion compared to $2.9 billion in 2021.

Assets, Liabilities & Net Assets
($ in Millions)

Our independent public accountants, Deloitte & Touche LLP, completed their annual audit of Baystate Health's financial statements for FY 2022 and issued an unqualified opinion. In addition, early in 2023 we were able to maintain our A+ rating with a stable outlook from the Fitch rating agency, however, Standard & Poor’s downgraded us from A+ to A rating with a negative outlook. The rating agency evaluations considered the negative impacts suffered by all healthcare entities during 2022 as well as the overall strength of Baystate's integrated delivery system, historical financial performance, and market leadership position which grew during 2022.