The Cleveland Clinic logged another negative operating margin and nine figures of net losses during the three months ended Sept. 30, according to unaudited financial statements released this week.
The nonprofit reported a $14.9 million operating loss (-0.4% operating margin) for the third quarter of 2023.
This was an improvement over the same period in 2022, when the system logged a $28.3 million operating loss (-0.9% operating margin), and a narrow increase over the $21.4 million operating loss (-0.6% operating margin) of the immediately preceding quarter.
In commentary accompanying the results, Cleveland Clinic’s management highlighted a 10.1% year-over-year rise in third-quarter operating revenue that outpaced the 9.6% bump in operating expenses.
The former was bolstered by “strong demand for services,” including year-over-year increase in acute admissions (5.8%), total surgical cases (2.8%) and outpatient evaluation and management visits (3.7%), they wrote. Managed care rate adjustments and other adjustments with third-party payers also contributed to the higher revenues, as have “national, regional and local revenue management projects designed to improve patient access throughout the system” that launched in recent years, they said.
Expense growth compared to the prior year’s third quarter was “primarily due to higher patient volumes and inflationary trends that increased salaries, wages and benefits [8.1% year over year], supplies expenses [11.7% year over year] and pharmaceutical costs [21.1% year over year],” management said.
Over $120 million of investment losses headlined Cleveland Clinic’s nonoperating items and ultimately pulled the system’s bottom line to a $127.4 million loss for the third quarter. Still, those numbers are a substantial improvement over the $417.6 million investment loss and $469.2 million net loss seen during the third quarter of 2022.
Across the first nine months of 2023, Cleveland Clinic now sits at a $4 million operating loss (0.0% operating margin) as opposed to the $316.3 million operating loss (-3.3% operating margin) of the prior year. The system has also amassed a $353.3 million net gain year to date, a major turnaround from the investment-fueled $1.5 billion net loss of a year prior.
The organization has seen its cash and cash equivalents decline from $858.4 million at the top of the year to $441.4 million as of Sept. 30.
Cleveland Clinic, which operates 20 hospitals and dozens of other clinical locations in its home state of Ohio and beyond, had reported a $211.3 million operating loss and over $1.2 billion in net losses across the entirety of 2022. Among other nonprofits, Cleveland Clinic’s latest performance falls in between the extremes of CommonSpirit Health’s $738 million net loss and Mayo Clinic’s $307 million net gain.