Cleveland Clinic 2017 operating income, revenue bounce back
- Cleveland Clinic saw net operating income climb to $328 million in 2017, after dropping to $243 million the previous year, CEO Tom Mihaljevic said in a Wednesday State of the Clinic address. Operating revenue rose 5% to $8.4 billion, with operating margin of 3.9%, up from 3% in 2016.
- Outpatient volume grew 7% to 7.6 million during the year, while emergency department visits dipped 1% to 645,000. The Clinic attributed the spurt to increased access via urgent and Express Care visits (276,000) and virtual visits (25,500), as well as shared medical appointments (26,000) and same-day appointments (1.35 million).
- Mihaljevic took over the reins of Cleveland Clinic on Jan. 1, following the departure of long-time CEO Toby Cosgrove.
The results mirror other health systems that saw a performance rebound last year. Mayo Clinic reported $707 million in operating income and $12 billion in revenue for 2017 — an increase of more than $225 million and $1 billion, respectively, from the prior year.
Some have questioned the billions many large nonprofits are reaping through Wall Street investments, mergers and acquisitions, credit default swaps and the like. The American Hospital Association has pushed back, saying nonprofits more than make up for their tax-exempt status through community partnerships and other programs aimed at community needs.
According to the Clinic, $809 million went toward community benefit in 2016, a 17% increase over the previous year.
Mihaljevic attributed the system's revenue and operating gains to increased efficiencies, noting an $800 million budget reduction in recent years. Part of that cut derived from the My TwoCents program, which encourages employees to submit ideas on ways to improve the organization.
International operations are also strong, the executive said. The Clinic’s Abu Dhabi site, opened in 2015, currently accounts for 41% of its international patients. A new 200-bed hospital is scheduled to open in London in 2021, the Clinic’s centennial.
Meanwhile, research funding grew 4.6% to $272 million, including a 5.9% hike in National Institutes of Health funding to $108 million.
Mihaljevic also announced a new office of caregiver experience, noting a recent survey found more than one in three Clinic physicians met burnout criteria. The office will be under the human resources department and will focus on workplace improvements.
The move follows other organizations, such as Stanford Medicine and Southern Permanente Medical Group, that have appointed C-suite level leaders to address physician stress and burnout. The Clinic already has a chief wellness officer who focuses on employee wellness and prevention, including reducing burnout, so it is unclear how the two offices will mesh.
Among the programs the Clinic currently offers is an online stress-reduction course, CWO Michael Roizen told Healthcare Dive recently. Physicians who take the course see their stress and burnout levels drop 75% and 44%, respectively, he said.