Mayo Clinic built on its solid first quarter with an even stronger $300 million from operations (6.7% operating margin) and $547 million increase in net assets for the period ended June 30, placing the nonprofit's year-to-date bottom line at $967 million.
The quarter's performance nearly doubles the operating income of the second quarter of 2022 and is a stark turnaround from last year’s $604 million decrease in net assets.
It comes on the back of a 10.8% year-over-year increase in total revenues (which includes grants and contracts, investments and “other” items) that outpaced a 7.5% jump in expenses, per the quarterly results filed Thursday.
“Mayo Clinic begins the last half of 2023 in a very strong position and with considerable resources to support and advance the elements of our … strategic plan,” management wrote in the filing.
The Rochester, Minnesota, nonprofit attributed its nearly $4.5 billion in total revenue to “overperformance in core operations as well as positive investment returns.”
Here, medical service revenue rose 9.9% year over year and represented 84.5% of the system’s total revenues. Management also highlighted substantial year-over-year gains in year-to-date (six month) clinical volumes—a 6.5% increase in outpatient visits, 8.4% increase in surgical cases and 2.4% increase in admissions—while total patient days declined by 1.1%.
The system’s $4.3 billion of operating expenses during the second quarter included a 5.9% year-over-year rise in salaries and benefits spending, which management said was “due to planned salary increases as well as an increase in overall [full-time equivalents] in consultant staff and allied health employees as recruitment continues to make progress.”
As of the midyear mark, Mayo Clinic’s revenues are up 9.8% to more than $8.7 billion while expenses are up 8.2% to $8.3 billion. Operating income of $449 million is over twice that of the first half of 2022, while the $967 million bottom line more than compensates for the $781 million loss 12 months prior.
The organization’s cash and investments have increased by $472 million compared to the end of 2022. As of June 30, the system had 346 days of cash on hand.
Mayo Clinic had reported $16.3 billion in revenue, a 3.7% operating margin and a $655 million decline in net assets across the entirety of 2022. It employs more than 76,000 people and has major campuses in Minnesota, Arizona, Florida, Wisconsin and Iowa, though it provides care across the U.S. and more than 100 other countries through its programs.
With its latest numbers, Mayo Clinic joins the chorus of health systems reporting sunny skies across the past few months. Kaiser Permanente, Sutter Health and Mass General Brigham have each put the losses of 2022 behind them and, alongside for-profit giants like HCA Healthcare and Universal Health Services, are also reporting stronger patient volumes across their facilities.