After closing out 2020 on a strong note, Mayo Clinic maintained its momentum with $243 million in operating income—a 6.6% operating margin—during the opening quarter of 2021.
The performance eclipses the system’s numbers during the same three-month period last year when COVID-19 hit and Mayo Clinic reported a $30 million loss in net operating income.
Total revenue for the quarter landed at $3.7 billion, a 17.1% increase over the same period in 2020 as well as an 11.6% increase over 2019. Much of this came from the 12.1% year-over-year increase in Mayo Clinic’s net medical service revenue during the quarter.
“Mayo Clinic's first quarter 2021 financial report continues the recent trend of strong revenue and income performance,” the system wrote in its quarterly filing. “This is a direct outcome of the efforts of our committed staff who have been on the front lines of caring for COVID-19 patients, developing lifesaving treatments, and conducting the testing and research that is essential to finding therapeutics, while advancing our mission to cure, connect, and transform.”
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Much like the rest of the provider industry, Mayo experienced ups and downs across clinical volumes. Outpatient visits and surgical cases rose 1.9% and 4.9% over last year’s first quarter, but admissions and patient days were down 4.6% and 0.7%.
The nonprofit’s expenses, meanwhile, leaped up 8.4% year over year to nearly $3.5 billion. While part of this was attributable to a 5.6% increase in supplies and services costs, Mayo also reported an 11.1% increase in its salaries and benefits payouts since the same period last year.
Hospital executives across the industry have discussed the disruption COVID-19 fueled among the clinical workforce. Organizations have often turned to incentives and higher salaries in their efforts to retain additional nurses and other staff when needed.
Despite the cost and volume hurdles, Mayo’s added another $781.7 million to its balance sheet in the opening months of the year. It attributed $442 million of that increase to its operations and another $422 million to investment gains. The nonprofit said it’s now sitting on 362 days of cash on hand.
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“Key balance sheet ratios are stable or improved, reflecting the combined effects of continued strong operating performance as well as liquidity management,” the system wrote.
Mayo is one of several large nonprofit systems to tout strong numbers in the wake of a pandemic year.
Over the past week, names like CommonSpirit Health and Advocate Aurora Health reported hundreds of millions in gains for the quarter. Some of their counterparts on the for-profit side of the fence also fared well—HCA Healthcare reported a stronger-than-expected $1.4 billion profit just last month.
But the quarter hasn’t been kind to every health system. Providence Health, Atrium Health and Sutter Health all posted losses in their most recent filings. Hospital chain Community Health Systems was in a similar boat during the first quarter but hinted this week that a rebound in lower-acuity services and procedures could potentially turn the page during its upcoming quarter.