In a state where just a few large institutions provide a majority of the hospital care, the financial well-being of any one of them is crucial at a time when inflation and other cost pressures on providers, insurers, businesses, and consumers are all colliding at once.
“Point to any Massachusetts hospital, and you will find two commonalities: they are doing everything in their power to maintain accessible patient care, and they are operating within an exceedingly challenging — and increasingly daunting — financial environment,” Daniel McHale, senior vice president of health care finance and policy at the Massachusetts Health & Hospital Association, said in a statement.
The stakes are particularly acute for hospitals such as Tufts that treat larger proportions of patients on government insurance, which often pays less than commercial insurers for the same services.
About two-thirds of patients at three Tufts hospitals — Tufts Medical Center, Lowell General Hospital, and MelroseWakefield Hospital — were on Medicare or Medicaid in 2024, according to Massachusetts Center for Health Information and Analysis data.
For Tufts, fiscal year 2025 was the fourth year in a row it operated in the red, a reality the hospital system is trying to reverse.
The system has implemented a number of revenue-boosting strategies, including expanding cardiac, neuroscience, and surgical subspecialties and growing patient volume, a Tufts spokesperson said. It reduced reliance on expensive contract labor and better leveraged its electronic medical record system to collect bills on services it was already providing.
In one important measure, Tufts reported higher patient volumes. And while its expenses increased from the prior period, so did its income from investments. It’s also significantly increased its available cash. The health system can now survive 78 days paying its daily operating expenses from its cash reserves, up from 51 days at the same time last year, though still much less than the average among institutions in the state.
The improvements, a Tufts spokesperson said, have been limited by “a wide range of inflationary pressures” driving rising costs.
Tufts Medical Center recently came under fire when more than 70 unionized nurses filed complaints with state and federal officials alleging a critical nursing shortage in the hospital’s operating rooms. They expressed no confidence in their manager and alleged they were required to be on call or work overtime for too many hours without the option to say no. It’s unclear whether the supposed staffing shortage stemmed from cost-cutting efforts.
In response, a Tufts spokesperson previously said that the system stood by leaders’ staffing decisions and that a high volume of surgical care was “an encouraging sign of the community’s trust in our services.”
In a separate statement, a Tufts spokesperson said the system is focused on its financial improvement, while being “very attentive to the headwinds facing the healthcare industry.”
Tufts is far from the only health system in Massachusetts to report operating losses over the first half of its fiscal year. In the first quarter, 67 percent of health systems reported negative operating margins, according to the state’s Center for Health Information and Analysis. The agency hasn’t yet released statewide results for the second quarter.
Boston Medical Center, the state’s largest provider of medical care to low-income patients, reported an operating loss of $41.7 million during the first half of the year, worse than the $30.4 million reported for the same period in 2025.
These hospitals, which compete against health system giants Mass General Brigham and Beth Israel Lahey Health, are staring down substantial cuts to the low-income insurance program MassHealth that are set to begin next year.
Mass General Brigham reported an operating loss of $65 million for the first half of the fiscal year, according to financial documents. The health system reported operating gains of $20 million in the second quarter. Beth Israel Lahey, meanwhile, reported operating gains of $70.7 million in the first half of the year.
Already, federal health care cuts are having an impact. The reduction of Affordable Care Act subsidies has contributed to more than 27,500 people dropping enrollment on the state’s health insurance exchange. A recent survey of ACA customers who lost coverage this year found that 58 percent don’t have health insurance of any kind now.
Alan Sager, a health policy expert at the Boston University School of Public Health, predicts Tufts will have trouble fully digging out of its financial hole.
“As a relatively small teaching hospital at the heart of a relatively small system, they don’t have much leverage” to demand higher reimbursement rates from commercial insurers the way Mass General Brigham and Beth Israel can, Sager said.
Marin Wolf can be reached at marin.wolf@globe.com.