Cleveland Clinic mum on COVID-19 hit, reports jump in 2019 operating income

Dive Brief:

  • Cleveland Clinic on Monday reported operating income of $390 million for 2019, a 46% increase from the prior-year period, resulting in an operating margin of 3.7%.
  • The health system tallied across the board increases in inpatient admissions, surgical cases and emergency room visits for the full year of 2019.
  • As the outbreak of the novel coronavirus grips the nation and squeezes hospitals financially, the health system said it’s unable to fully determine the financial impact on its operations at this time.

Dive Insight:

The financial filing from the nonprofit health system comes amid the COVID-19 pandemic that’s putting downward pressure on the sector as hospitals have had to put off elective procedures to free up available resources to respond to the outbreak.

There are more than 165,000 confirmed cases in the U.S., eclipsing total cases of any other country, including China, where the outbreak started.

Despite financial projections from other major health systems, particularly in New York, Cleveland Clinic did not disclose the potential financial hit it could have on its operations.

The majority of the Cleveland Clinic’s hospitals (13 of 18) are located in northeast Ohio. Ohio may fare better than other locations as it swiftly implemented measures to blunt a widespread outbreak in the state. The state is being held up as a shining example for other states to follow after Gov. Mike DeWine banned certain large gatherings before a single confirmed case in the state.

That was not the situation in Florida, where the system operates five hospitals and outpatient facilities in the southeastern part of the state.

The organization did note that “the postponement of non-essential procedures and other scheduled appointments has adversely affected the operating revenues of the System,” according to the audited financial statement released Monday.

During the full year of 2019, expenses grew nearly 17%, mainly driven by supplies, pharmaceuticals and purchased services. For the fourth quarter of 2019, expenses outpaced revenue resulting in a 1% decrease in the system’s operating income.

Expenses for the quarter were mainly driven by insurance, supplies, pharmaceuticals and purchased services.

The system also provided insight into its strategy over the next few years both in the U.S. and abroad. In Florida, it is focused on expanding services but will “prioritize initiatives to better prepare the Florida facilities for value based care, while enhancing its position as the regional referral center for complex care,” according the financial statement.

The system will continue to expand its global footprint abroad. It plans to open its 185-bed London hospital in 2021 and has appointed a CEO and senior leadership positions there.

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