- Mayo Clinic has become the latest nonprofit hospital to report weaker operating income in the second quarter as cost inflation, especially for labor, dented its second quarter results.
- The nonprofit’s net operating income fell 65.6% to $155 million compared to the prior year, the Rochester, Minnesota-based system said Thursday. Revenue increased 2.4% from a year ago to $4.03 billion. However, expenses were up 11.1% to $3.88 billion.
- Cash and investments totaled $17.07 billion on June 30, a decrease of $993 million since the end of 2021, driven by investment losses, the hospital system reported.
Mayo Clinic management called out the workforce shortages that have dampened its operating performance in its quarter ending June 30, noting that the healthcare industry along with the rest of the country continues to face the same struggle.
Fitch Ratings cautioned last week that the picture for nonprofit hospitals is deteriorating, revising its neutral outlook for the sector. Labor expenses could stay elevated through 2022 and beyond, even if overall inflation slows, the ratings agency warned.
For its labor expenses, Mayo said salaries and benefits increased 7% over the prior period. Staff vacancies due to recurrent COVID-19 transmissions added to its difficulties, the system said.
At the same time, outpatient visits, surgeries and patient days all are higher compared to both 2021 and 2020, Mayo said, reflecting strong demand for services. Mayo Clinic hospitals are operating at near capacity.
A rise in patient days, a result of delayed care during the pandemic, is challenging systems and resulting in lengthier hospital stays, the American Hospital Association said last week in a report. The hospital lobby called for increased government support to help hospitals cope with the added burden on staff and ease “unsustainable” financial strain.
Even with the pressures it is facing, Mayo Clinic said it is well-positioned as it enters the second half of 2022. The system has several construction projects in the works.
In April, it broke ground on a six-floor, 70-bed hospital in La Crosse, Wisconsin, and in May on a $155 million expansion that will add 121 hospital beds in Mankato, Minnesota. In August, construction began on a $233 million, 225,000-square-foot integrated oncology building at its Florida hospital.