Cleveland Clinic posted an operating loss of $241 million in the first half of 2020 as patient revenue took a major hit, according to the system’s latest earnings.
The Ohio-based health system is the latest major system to post losses for the first half of the year as hospitals struggle to combat a financial crisis caused by the pandemic.
Cleveland Clinic generated $4.9 billion in unrestricted revenues in the first half of the year, compared with $5.1 billion in the second quarter of 2019.
But the 18-hospital system’s $241 million loss for the first half resulted in a nearly 5% negative operating margin for the first half of the year.
That was nearly $400 million less than the same period in 2019.
The system's patient revenue has taken a major hit as the system was forced to cancel or postpone elective surgical procedures back in March and patients have been afraid to head to the doctor's office or hospital.
“Through July year-to-date, the system has experienced net patient service revenue shortfalls of over $830 million compared to plan and has incurred more than $165 million in COVID-19 preparedness and readiness costs,” the system’s earnings report said.
The costs included increased expenses for personal protective equipment and other supplies, staff and costs for setting up testing.
“Due to the evolving nature of the pandemic, the system is unable to fully determine the financial impact of COVID-19 on its operations at this time,” the system said.
Cleveland believes it has enough liquidity to help weather the storm.
“At June 30, 2020, the system has 392 days of cash on hand,” it said.
Cleveland Clinic also got $849 million in advance payments under the Medicare Accelerated and Advance Payment program. But the money is essentially a loan that hospitals have to start repaying this month.
The system also got $324 million from a $175 billion provider relief fund passed by Congress as part of the CARES Act.
Cleveland also took advantage of a payroll tax deferral in the CARES Act, deferring payments of $82 million as of July 31.
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The provider relief fund has been a major lifeline for hospital systems to help them overcome major declines in patient volume in March and April. Some large, for-profit systems such as HCA and Tenet have generated profits in the second quarter of the year, while others such as Providence St. Joseph posted losses.
But hospital groups charge that more money is needed to help hospitals get back to normal, especially as patient volumes have stayed below pre-pandemic levels for some systems.
The American Hospital Association put out an estimate a few months ago that projects hospitals could lose $323 billion this year.
While more relief funding has gotten support in Congress from both parties, talks on a new COVID-19 stimulus package have broken down due to other issues.