Cleveland Clinic posts $339M profit in Q2 after major patient revenue rebound

The Cleveland Clinic's patient volumes rebounded past pre-pandemic levels in the second quarter, leading to a major $339 million profit. (Marc Buehler/CC BY-NC 2.0)

The Cleveland Clinic generated $339 million in operating income for the second quarter of the year as its patient service revenue saw a massive 50% rebound compared to the same period in 2020 when the system faced major strain from the pandemic.

The hospital system generated $3.2 billion in operating revenue for the second quarter compared to $2.3 billion for the second quarter in 2020. A major reason was the boosted $2.7 billion in net patient service revenue, up from $1.8 billion over the same period last year.

The Cleveland Clinic used a series of measures to reduce costs including “restricting travel, reducing purchased/administrative service expenses and other controllable costs, suspending annual pay increases for caregivers in 2020 and postponing certain non-critical capital expenditures,” according to its earnings report.

The system’s patient revenue in the second quarter of 2020 was hammered by the pandemic, which caused hospital systems to shutter elective procedures and outpatient volumes to plummet. Volumes have rebounded since and for some systems even surpassed pre-pandemic levels.

“On a same facility basis, acute admissions increased 23%, total surgical cases increased 65.5% and outpatient evaluation and management visits increased 34.9% in the second quarter of 2021 compared to the same period in 2020,” the Cleveland Clinic’s report said.

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Volumes also increased slightly compared to the same period in 2019.

Acute admissions increased 0.5% in the second quarter, total surgical cases increased 0.6% and outpatient visits increased by 3.4% compared to 2019.

“Net patient revenue has also benefited from rate increases on the system’s managed care contracts that became effective in 2021,” the Cleveland Clinic said. “Over the last few years, the system has initiated national, regional and local revenue management projects designed to improve patient care access throughout the system while striving to ensure the safety of patients, visitors and caregivers.”

The clinic’s operating income was also a major boost compared to the operating loss of $201 million it posted for the second quarter of 2020.

However, the system did pay more in expenses compared to 2020, as total operating expenses increased $334.8 million in the second quarter.

“The growth in expenses is primarily due to the increase in patients served,” the report said.

Supplies accounted for the biggest increase in expenses, growing by 20.2% and by $52.8 million in the second quarter compared to 2020. But a $3.4 million decrease in nonmedical supplies helped offset the boost.

A major reason for the boost is an increase in surgical cases.

“The decrease in non-medical supplies was driven primarily by a decrease in minor equipment and software costs as part of the system’s initiatives to reduce controllable costs,” the report said.

Drug costs and staffing expenses were also major drivers, with salaries and wages going up by 13% in the second quarter compared to the same period in 2020 and pharmaceuticals by 14.7%.

Hospitals across the country have been squeezed by increasing expenses linked to the pandemic, especially for supplies and staff.

But major systems have been reporting profits in the second quarter thanks to the major rebounds in patient volumes, in some cases recovering to above pre-pandemic levels.