- Mayo Clinic’s operating income was cut in half in 2022, falling to $595 million from $1.2 billion in 2021 as the health system reported a rise in labor costs, particularly contract labor.
- The Minnesota-based health system said contract labor expenses for the year increased 37% compared to the prior year.
- Outpatient and surgeries increased in 2022, but admissions declined year over year, due to capacity constraints and longer patient stays, Mayo said.
Workforce shortages led to capacity constraints last year, which weighed on 2022 financial results, Mayo said.
Mayo joins other hospital operators whose annual financial results were hampered by labor challenges. Hospital consultancy Kaufman Hall said 2022 “was the worst financial year since the start of the pandemic.”
Roughly half of U.S. hospitals ended the year with negative margins as expenses outpaced revenue and hospitals relied more on expensive contract labor amid a tight labor market, according to Kaufman Hall.
Although Mayo saw some patient volumes increase, hospital admissions fell and the system said workforce shortages played a role in its ability to take on more capacity.
Hospitals are competing with other facilities like nursing homes for workers. The workforce shortage at nursing homes can have ripple effects on hospitals and can lead to longer patient stays, creating a bottleneck for discharging patients, according to earlier reports.
The pressure to rein in expenses is unlikely to wane in 2023, Kaufman Hall said.
Hospitals are likely to clash with insurers this year as they push for rate increases in light of the financial challenges.
“It’s going to be very bumpy, very contentious this year,” senior director of U.S. Public Finance at Fitch Ratings Kevin Holloran previously said, characterizing 2022 as a terrible year for most providers.