- Revenue of $2.3 billion, down almost 12% year over year, and higher expenses of almost $2.4 billion amid the COVID-19 pandemic drove Cleveland Clinic to an operational loss of $201.8 million in the second quarter, according to new financial results. That's compared to an operating profit of $116.2 million same time last year.
- However, strong investment returns hoisted the Ohio-based nonprofit to net income of $276.1 million in the three months ended June 30, up almost 8% year over year.
- The full brunt of the pandemic's impact on Cleveland Clinic is more evident when viewed over the full first half of the year, as the system was significantly impacted by the delay in non-essential care. Cleveland Clinic reported a net loss of $554.5 million in the first six months of 2020, compared to a profit of almost $1.1 billion in the same time last year as admissions flatlined and expenses rose amid weaker market performance.
Hospital operators struggled financially and operationally because of the coronavirus pandemic in the first half of 2020 as they prepped for an onslaught of COVID-19 patients while facing plummeting volume. However, facilities weren't overrun, and many state guidelines were raised in April and May, allowing many hospitals to begin resuming elective procedures.
From the beginning of 2020 through July, Cleveland Clinic experienced net patient service revenue shortfalls of more than $830 million compared to what it expected, and spent more than $165 million to prep for COVID-19, the system said in its most recent filing. The nonprofit began resuming non-essential services in May, which resulted in steadily rising patient volume throughout May, June and July, but volumes have yet to return to pre-COVID levels.
In the second quarter, net patient service revenue dropped almost a fourth from the same quarter last year, from $2.4 billion to $1.8 billion. On a year-over-year basis, inpatient admissions were down 18%, patient days were down almost 19%, total surgical cases were down almost 40%, emergency department visits were down 31% and outpatient evaluation and management visits were down 25%.
Cleveland Clinic did see a steep increase in virtual visits due to the suspension of in-person care, conducting more than 200,000 telehealth visits in April alone, and almost 700,000 in the first half of the year. That's compared to just 58,000 virtual visits over the entirety of last year.
Despite flagging volume, stronger markets helped Cleveland's bottom line back into the black in the second quarter. Return from investments was $477.5 million, more than double the $181.7 million in investment return the same time last year.
Like many other major operators, Cleveland Clinic also benefited from millions in government assistance to the healthcare sector, including $324 million in grants year to date from the Coronavirus Aid, Relief, and Economic Security Act, and $849 million in advanced Medicare loans, which must be paid back.
The 18-hospital system, which is predominately located in northeast Ohio and southeast Florida, came into the pandemic on relatively strong footing, with a solid balance sheet and substantial liquidity, with 392 days of cash on hand. In the second quarter, to give itself more breathing room, Cleveland Clinic obtained multiple lines of credit totaling $650 million.
The system also announced last week it is pushing back the opening of its hospital in London. Construction is now expected to finish next September, and the opening has date has been revised from spring 2021 to early 2022.
Despite the ongoing pandemic, all major for-profit hospital chains reported increased profits in the second quarter, many helped significantly by congressional relief funds. Nonprofits' results have been more varied, with some systems like Sutter Health, Providence Health and Banner Health reporting major losses, and others reporting surprisingly profitable quarters. Kaiser, for example, more than doubled its net income.