Greater patient volumes weren’t enough for Mayo Clinic to overcome investment losses and higher expenses, resulting in a $595 million operating income and a 50% decline compared to 2021.
Mayo released its earnings for 2022 on Monday, which showed a major challenge for the healthcare system. Overall, Mayo generated $16.29 billion in revenue with a 3.7% operating margin but saw a $655 million decline in net assets.
“Workforce shortages and resulting capacity constraints, as well as inflation in both labor and nonlabor costs, have impacted operating results,” according to Mayo’s release.
Mayo’s $595 million in operating income is a roughly 50% decline compared to the $1.2 billion it generated for 2021. The decline comes as clinical volumes were higher in 2022 compared to 2021 and 2020. For example, the hospital system performed 141,452 surgeries in 2022 compared with 137,186 in 2021 and 121,267 in 2020.
Outpatient visits also increased slightly from 4.8 million in 2021 to 4.9 million last year.
Hospital admissions were lower in 2022, though, at 118,014 compared with 122,830. Mayo hospitals were still operating near capacity, though, due to an increase in patient days.
But while patient volumes were on the increase, the system still struggled with an 8% year-over-year increase in expenses that were a drag on its balance sheet.
Mayo posted $15.69 billion in expenses last year, with $9.17 billion of that coming from salaries and benefits. The hike in labor costs represented a 5.9% increase over 2021. There was an even larger hike for supplies and services of 37% compared to 2021, thanks mostly to contract labor expenses.
Contract labor and related costs have been a hindrance to hospital finances in 2022, as a recent report from Kaufman Hall showed facilities had the worst financial year since the start of the pandemic.
Mayo also saw a decline in its cash and investments for 2022. The system logged $17.32 billion in total cash and investments at the end of the year, a $747 million decline compared to the end of 2021 due to investment losses.
The system, though, gave some highlights that include starting major construction projects in Minnesota, Wisconsin and Florida to build out new facilities.
Mayo also reached a strategic collaboration with biomanufacturing firm National Resilience to deliver “new biotherapeutics for rare and complex conditions,” the earnings report said. “The collaboration brings together science, engineering and manufacturing to advance Mayo Clinic’s vision of bringing new cures to clinical care.”