Cleveland Clinic's 2018 operating revenues increased by 6.2% to $8.9 billion thanks in part to the health system caring for more than 2 million patients, which was its highest total in the organization's history. The system also added a hospital and about 30 outpatient facilities and picked up more than 100 inpatient beds during the year.
However, the nonprofit health system's operating income dropped 19% from $331 million in 2017 to $266 million in 2018. Operating margin dipped from 3.9% to 3%, according to financial results released Wednesday.
Cleveland Clinic CEO Tom Mihaljevic said the system expects to double the number of patients served in the next five years.
Cleveland Clinic's expanding footprint, including four new Florida hospitals this year, an expansion in Ohio and international construction in Abu Dhabi and London, will inflate patient loads. Also, the system plans to invest in telemedicine to increase access "to patients in every corner of the world," Mihaljevic said.
Cleveland Clinic's report follows results from Mayo Clinic. The Minnesota-based system similarly reported a 5.1% revenue increase, but lower net operating income.
Nonprofit health systems have gotten the attention of federal and state officials in recent months. Republican Senate Finance Committee Chairman Chuck Grassley recently requested information from the IRS about whether nonprofit hospitals are fulfilling their charitable obligations.
Meanwhile, a legal fight in Pennsylvania pits state Attorney General Josh Shapiro against one of the state's largest providers, UPMC. Shapiro criticized UPMC for "corporate greed." The attorney general alleged the health system isn't following its charitable obligations by rejecting contracts with its rival, Highmark. Instead, UPMC is solely pursuing "commercial success," Shapiro said.
Both the Pennsylvania case and greater focus on Capitol Hill show that nonprofit health systems' tax-exempt status has taken center stage. Nonprofit hospitals face headwinds and risks, such as concerns about a recession, Medicaid changes and nontraditional competitors. However, S&P Global expects a stable industry this year.
Mihaljevic said Cleveland Clinic is aware of burnout among healthcare workers. The organization launched the Office of Caregiver Experience and interviewed more than 11,000 Cleveland Clinic caregivers about the issues. Mihaljevic said the system will use "technology, teamwork and improving wellness" to confront burnout.
"We have hired scribes and deployed voice recognition to make documentation more seamless. We expanded the care team by doubling the number of advanced practice providers in the last four years," he said.