Financial Report

Last year, I made the financial sustainability of Harvard Medical School one of my highest priorities. As my first full year as dean comes to a close, I’m happy to report positive news concerning the medical school’s finances. While there is still a great deal of work to be done, we made significant progress this year and we remain committed to our financial plan. We are confident the improvements we have made will make the School stronger in the future. These improvements have come from across the organization and could not have been accomplished without our close partnership with University leadership and our community’s commitment to strengthening the financial health of HMS while continuing to advance the School’s mission.

We are continuing to invest in our research and education missions through new pilot funding for our faculty from my recently established Dean’s Innovation Grants in the Basic and Social Sciences. I have been truly inspired by the incredible talents of our faculty at HMS, and these funds will directly support collaborative research in their labs and within our community. Faculty are encouraged to apply for these awards to bring forward exciting new projects they might not otherwise be able to initiate. As these new programs develop, opportunities will be created for faculty to apply for extramural funding or investment funds from other external sources. As we all contend with an austere and resource-constrained funding climate, I feel compelled to provide opportunities for our faculty to take risks and be creative.

As we think about our education mission and the upcoming Liaison Committee on Medical Education (LCME) accreditation site visit in 2019, we have fully committed to an evaluative self-study process over the past year. It has been gratifying to see the dedication and commitment from our faculty, students and staff throughout this process. The medical school as a whole is taking a deep, introspective look at its MD program, as well as its policies and procedures, with an eye toward continuous quality improvement. The students in our MD program will benefit from this process, as will our entire institution. While the School incurred additional costs in support of these efforts in FY18, the MD program is core to the HMS mission and is prioritized as such. I firmly believe we have all the necessary resources in place to keep the School’s MD program at the forefront of medical education.

In FY18, as planned, the School long-term leased one of its major research buildings, the Harvard Institutes of Medicine building. This generated a substantial inflow of capital for the medical school, which will have a major positive financial impact in FY19. HMS ended FY18 with a $39 million operating GAAP deficit, down from $44 million in FY17. In FY18, operating revenues totaled $703 million, an increase of more than $35 million compared with the prior year. The School’s research revenue grew by roughly 6 per- cent from $282 million to over $297 mil- lion. Total operating expenses increased by $30 million to $742 million.

As we continue our important work toward financial sustainability, we will also continue implementing our ambitious plans for the future to ensure that HMS remains the leading institution it is today.

—George Q. Daley.

FY 2018 Operating Revenue

Research grants and contracts: $297,041,843 (42%)
Endowment distribution for operations $183,334,673 (26%)
Other revenues* $96,477,114 (14%)
Gifts for current use $54,944,580 (8%)
Rental income $41,911,270​​​​​​​ (6%)
Tuition (net) $29,695,523 (4%)
Total $703,405,004​​​​​​​

*Includes continuing medical education, publications, service income and royalties

FY 2018 Operating Expenses

Personnel costs $280,435,628 (38%)
Supplies and other expenses $225,325,994​​​​​​​ (30%)
Research subcontracts and affiliates $103,608,834 (14%)
Plant operations and interest $84,052,842 (11%)
Depreciation $48,772,587​​​​​​​ (7%)
Total $742,195,885 ​​​