Dive Brief:
- Mayo Clinic reported operating income of $159 million in the second quarter of 2018, down 7.6% from $172 million in the same quarter in 2017, according to unaudited financial statements released this week. Mayo reported operating income of $198 million in the first quarter of this year.
- However, revenues at the Rochester, Minnesota-based nonprofit health system were $3.1 billion for the quarter, up from the $3 billion reported in the second quarter of 2017. As with the first quarter of this year, higher service revenues helped contribute to that growth in the second quarter, having risen 6.5% year over year.
- Despite Mayo's revenue growth, expenses for the nonprofit health system continue to rise, having jumped from $2.8 billion in the second quarter of 2017 to $3 billion in the second quarter of this year and ultimately contributing to the system's operating income slip.
Dive Insight:
Mayo, which was named top hospital for the third year in a row by the U.S. News & World Report earlier this month, does have a few big projects in the works management expects to boost results.
As reported last quarter, Mayo has committed $617 million (down from the previously reported $665 million) to construction projects over the next three to five years. Those projects revolve around patient care, research and education.
Mayo has also been working on rolling out Epic's EHR, with estimated costs totaling about $248 million, according to the organization. That project is anticipated to come to a conclusion sometime this year.
Placing Mayo's operating income dip aside, it seems to have been an otherwise solid quarter for nonprofit health systems. Pittsburgh, Pennsylvania-based nonprofit health system UPMC reported strong revenue gains last week, as did Highmark Health this week. Competitor Adventist Health is yet to release financial statements for what would be the end of its fiscal year.
In February, Mayo CEO John Noseworthy announced his decision to retire at the end of this year. Noseworthy has been with Mayo Clinic for 28 years, including nine years in his current position. Just last week, the board of directors announced the current CEO of Mayo Clinic in Florida, Gianrico Farrugia, will take over the top spot.