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Mayo Clinic's operating income soars past $1 billion for the first time

Christopher Snowbeck, Star Tribune (Minneapolis) on

Published in Business News

Mayo Clinic's operating income topped $1 billion for the first time in 2019 as the Rochester-based health system saw more hospital patients and surgery cases across its primary medical centers in Minnesota, Arizona and Florida.

The earnings figure surged by 72% compared with 2018, an increase fueled by patient demand that looked surprisingly strong compared with the flat or declining inpatient volume being reported at many medical centers.

Mayo says the income will help drive future growth and continued investments in facilities and personnel, yet the profitability also rekindled questions about whether the clinic could stand to lower its prices.

"Volumes kept growing last year. We thought we'd reached a new high, and we kept growing again," said Dennis Dahlen, the Mayo Clinic chief financial officer. "We're doing more transplants than ever and excelling at what it is that Mayo Clinic does really well."

Mayo Clinic is Minnesota's largest employer. The nonprofit group runs hospitals and clinics across five states with a systemwide workforce of about 70,000, including more than 40,000 in Minnesota.

Nonprofit groups are allowed to generate income from operations, much like investor-owned companies generate operating profits. The difference comes in what happens to earnings -- for-profit companies can distribute income to shareholders, whereas nonprofit groups retain earnings for operations.

 

Financial results released Tuesday show that for the year, Mayo attracted revenue of about $13.8 billion and paid expenses of about $12.8 billion, leaving $1.06 billion of income from clinic operations. In 2018, the clinic saw operating earnings of $617 million.

Add investment income to the mix, and Mayo's net income for 2019 was $2.28 billion. The numbers were the first full-year financial results under Gianrico Farrugia, the Mayo physician who became the clinic's chief executive in January 2019.

"We are leading the necessary changes in health care to benefit people worldwide," Farrugia said in a statement.

In 2019, Mayo treated more than 1.2 million patients, the clinic said, adding that they came from every state and more than 130 countries. Hospital inpatient cases were up 2.1% from 2018 while surgeries were up 3.6%.

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