Mayo Clinic posted a $227 million net loss for the first quarter of the year, the latest hospital system to grapple with a decline in investments and a surge of labor expenses.
The hospital system’s earnings report, released late Thursday, said it generated $3.9 billion in revenue for the quarter on a 3.6% operating margin. Several systems have posted losses in the first quarter due to heightened labor expenses as well as other cost pressures such as inflation.
“Workforce shortages and corresponding labor cost inflation, persistent supply chain disruptions and shortages, a higher interest rate environment and capital market volatility have all taken center stage for management attention,” the earnings report said.
Mayo added that the first quarter’s performance does reflect “long-term plans for revenue diversification, digitization of healthcare when appropriate, using platforms to accelerate innovation and investing in the treatments of complex and serious clinical care.”
Mayo’s operating expenses tallied $3.8 billion for the quarter, a roughly 10% spike compared to the same period in 2021.
Driving those costs were $2.3 billion in salaries and benefits, which increased 7.4% over the prior period and made up nearly 60% of all total expenses.
“The increase in salaries and benefits and supplies and services is due to contracted labor and temporary pay practice premiums,” the system said.
Mayo also suffered a decline in cash and investments. The system posted $17.6 billion at the end of the quarter, down from $465 million since the end of 2021 due to investment losses.
The system also experienced lower admissions compared to the previous two years. In the first quarter, Mayo saw 29,117 patient admissions compared with 29,226 in the same period in 2021 and 30,645 in 2020.
However, outpatient visits had increased compared to the previous two years. Mayo had 1.19 million outpatient visits compared with 1.15 million in 2021 and 1.13 million two years ago.
More hospital systems have experienced increases in their outpatient visits as patients are starting to return to facilities for foregone or delayed care due to the pandemic.
But systems are also grappling with massive investment losses and a continuing staffing shortage. Some hospitals such as Providence Health and Kaiser Permanente experienced losses of several hundred million due in part to investment losses and a surge of deferred care.
This article was written by Robert King on May 20th, 2022 for Fierce Healthcare and can be found here. Please be sure to visit FierceHealthcare.com for more articles written by Robert and other quality contributors.