Cleveland Clinic earned $61 million in profits for the first quarter of the year, a major boost from the $39 million loss it posted for the same quarter in 2020.
The hospital system reported $2.8 billion in total unrestricted revenue for the quarter and $61 million in operating income thanks to higher-than-expected patient service revenue. However, the system is still expecting to face major cost pressures throughout the year due to the COVID-19 pandemic.
“In many cases, patient volumes will be suppressed,” the system’s earnings report, released Friday, said. “More services may be delivered through lower-cost settings, such as virtual or in-home care.”
Cleveland Clinic posted $2.5 billion in net patient service revenue, a major improvement over the $2.3 billion it posted for the first quarter of 2020 when the pandemic started.
But the system still is facing higher expenses for supplies and salaries for workers, which have shot up for hospitals across the country throughout the pandemic. Cleveland Clinic spent $1.5 billion on salaries and benefits for the first quarter compared with $1.48 billion for the same period last year. Costs for supplies also increased to $297 million, slightly above the $269 million it paid in the first quarter of 2020.
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The first-quarter earnings are also an improvement on Cleveland Clinic’s 2020 income. The system reported operating income of $232.4 million for 2020, down 40% from the $390.2 million it reported at the end of 2019.
Another bright spot is an increase in patient volumes. Total surgical cases for Cleveland Clinic increased 6.5% for the first quarter compared to the first quarter of 2020. Inpatient admissions also increased by 1.1% for the quarter.
Hospitals were forced to cancel or postpone elective procedures near the end of March 2020 as the first surge of the COVID-19 pandemic occurred. Since then, patient volumes have rebounded but remain below pre-pandemic levels for some hospital systems.
“Although non-essential services resumed January 4, 2021, patient levels across the system have not returned to budgeted levels,” Cleveland Clinic reported. “The system is concerned that routine care has been avoided or delayed by patients during the pandemic, which can lead to worsening or other emerging health issues.”
The system also gave its outlook on how the hospital industry is going to change as a result of the pandemic.
“There will be significant cost pressure in the payor environment due to decreased commercial insurance and increased reliance on government programs,” the report said. “Payors will rely on narrow and high-performance networks and/or cost-shifting to consumers.”
Cleveland Clinic anticipates health systems will need to expand regionally to spread out costs and serve more patients, and systems could face more workforce attrition due to lower patient volumes.
“Remote work rates will remain high,” it added.
Cleveland Clinic has made some moves to expand in the Ohio region. In the first quarter, it took over control of Mercy Hospital, which serves several counties in southeastern Ohio.