November 1 , 2002

"I would like to thank everyone for their hard work and dedication to our patients."
-- James J. Mongan, MD, MGH president

Leadership meeting highlights hospital's fiscal performance, other activities

In one of his last leadership meetings as president of the MGH, James J. Mongan, MD, gave a status report Oct. 25 on the hospital's fiscal year 2002 performance and offered updates on a variety of other hospital issues.

The MGH had a fairly successful year with the operations budget, but hospital investments were down because of the difficult economy. Preliminary numbers show that admissions were higher than expected – 1 percent over budget and 4.4 percent better than last year – bolstering revenue for the hospital but adding pressure to staff workload and already-tight patient care space. Outpatient visits were 2 percent over budget and 3.5 percent better than last year. Length of stay remained steady at 5.86 days because of the hard work of doctors, nurses, case managers and administrators.

The hospital's net operating result was $63 million, which is a full $17 million better than budget. This gain will help support the hospital's capital expense needs, such as the construction of the new ambulatory care and research buildings and other financial planning efforts. Despite the hospital's strong operating performance, the nonoperating and investment results were significantly below budget, driving a bottom line that was $9 million behind budget.

"The lesson we learned this year is the importance of strong income from operations, without which our results could have been devastating because of the down market," said Mongan. "I would like to thank everyone for the hard work and dedication to our patients. I wish I could say that the financial pressures will come to an end soon, but unfortunately, these economic challenges will be with us for a while."

Mongan offered an update on the hospital's leadership transitions. As he prepares for his upcoming role as president and CEO of Partners HealthCare, Mongan has been working closely with Samuel O. Thier, MD, who will step down from the top role at Partners Jan. 1. Mongan also has been working with Peter Slavin, MD, chairman and CEO of the Massachusetts General Physicians Organization (MGPO), who will succeed Mongan as president of the MGH.

Mongan also listed a variety of important hospital activities, such as preparations for next fall's survey by the Joint Commission on Accreditation of Healthcare Organizations. Collaborations are under way among Newton-Wellesley Hospital and the MGH departments of Medicine and Surgery. And hospital residency programs are working to comply with new resident work-hour guidelines by next year.

Sally Mason Boemer, vice president for MGH Finance, reiterated Mongan's good news about this year's fiscal results and discussed the budget process for FY '03. In planning for the coming year, hospital managers worked to close what initially was a $95 million budget gap.

The budget also accounts for a significant amount of expense growth for pension costs, the wage and salary program, and essential nonsalary expenses such as blood, drugs, insurance, utilities and bad debt. Full-time equivalent (FTE) position requests were significantly scaled back, with only 115 new FTE positions approved.

Slavin delivered a report on the MGPO's 2002 performance. The MGPO also benefited from the increase in patient volume, with $250 million in net patient service revenue and $7 million in net income from operations.

MGPO leadership and staff accomplished many of their goals for 2002, including a significant improvement in the revenue cycle. The MGPO also is working with the hospital on a growth strategy that includes capacity management and increases in off-campus ambulatory and inpatient care.

"In making the transition with Dr. Mongan, I would like to thank everyone for your continued support," said Slavin. "When I take this new position in January, I particularly look forward to working with this leadership group."

The leadership meeting concluded with presentations about two employee and staff donation campaigns – the MGH United Way and the Kresge Challenge.