- Cleveland Clinic reported $2.12 billion in revenue for the first quarter of 2018, up 3.6% from $2.07 billion in the 2017 first quarter.
- The gain was muted, however, by higher operating expenses, which rose 3.3% from the prior year, according to unaudited financial statements released this week.
- Operating income for the period dropped 22% to $47.6 million, from $60.7 million last year.
Although nonprofit health systems have reported some positive financial results recently, they face a gloomy landscape. Last year saw an increased number of credit downgrades for nonprofit hospitals, and Moody's Investors Service downgraded its outlook for the sector to negative in December. A vast institute like Cleveland Clinic, however, can count on relative stability.
In its report, the system affirmed a strategy that focuses on value-based care with the goal of adapting to "consolidation, a blurring of traditional roles, and new entrants with innovative business models and compelling customer value propositions." That includes strengthening population health and community-based efforts as well as more attention to the needs of caregivers.
Cleveland Clinic attributed the Q1 jump in operating expenses to increases in salaries, wages and benefits, up $26 million or 2.2% for the quarter, as well as pharmaceutical costs and supplies. To address the upswing in expenses, the health system is developing and implementing a series of cost management and containment initiatives that will make care more affordable for patients and enable investments in key strategic goals.
Inpatient admissions declined 3.4% to 41.6 million, from 43.1 million year ago, while total patient days inched up 0.3% — from 222,794 to 223,358. Emergency room visits also dipped slightly, to 160,286 from 161,138. Outpatient evaluations and management visits were flat,compared with last year.
After adjusting for nonoperating gains — down 76% to $37.1 million — net income for the quarter totaled $106.5 million.
Cleveland Clinic’s operating income was up and down in 2017, ending the year at $328 million after dropping to $243 million the prior year. Operating income plunged 71% from 2015 to 1016.
Other nonprofit hospitals also saw gains last year. UPMC reported net income hit $1.3 billion on revenues of $16 billion for 2017. Mayo Clinic also had a good year, with operating income of $707 million and $12 billion in revenue. Operating income grew by more than $225 million and revenue was $1 billion more than in 2016.
And Geisinger Health System reported its net income climbed nearly $200 million to $324.9 million in the first half of fiscal year 2018, compared with the same period a year earlier, for an excess margin of 9%.