Cleveland Clinic's $282 million quarterly loss due to rising expenses
Overall expenses were $2.96 billion for the quarter, an increase from the $2.56 billion in expenses posted in Q1 2021.
Photo: Douglas Sacha/Getty Images
Despite more than $3 billion in revenue during the first quarter, the Cleveland Clinic saw a $282 million loss in the three-month period ending March 31, largely due to rising expenses, according to the system's recently released financial documents.
Signs were positive on the revenue front, with first-quarter revenue hitting about $3.03 billion, compared to $2.81 billion during the first quarter of 2021. Net patient revenue also increased during that time from $2.53 billion to $2.73 billion.
But expenses offset those gains, rising in all categories, including salaries, wages and benefits. Overall expenses were $2.96 billion for the quarter, an increase from the $2.56 billion in expenses posted in Q1 2021.
All of that translated to an operating loss of more than $104 million for the quarter. By comparison, the health system recorded an operating income of $61.7 million during the same period last year.
The $282 million net loss in the latest quarter was another dramatic swing from Q1 2021, in which the system saw net income of more than $350 million.
The Cleveland Clinic said operating revenues were affected by lower numbers of patients served, which the system hypothesized was due partly to the postponement of nonessential surgeries and procedures in January, spurred by the COVID-19 pandemic.
WHAT'S THE IMPACT?
A spike in COVID-19 cases in Cleveland in December led the Cleveland Clinic to postpone some surgeries, which in turn affected the organization's financials.
Delaying non-urgent and elective surgeries was a common tactic hospitals used at the height of the initial wave of the pandemic in 2020. Then, as now, surges of COVID-19 patients strained hospital staff and forced many to reprioritize their resources.
If the move to delay some procedures is a foreshadowing of things to come nationally, hospital finances in the U.S. could be affected significantly. In July 2020, American Hospital Association president and CEO Rick Pollack, pulling from Kaufman Hall data, said the cancellation of elective surgeries was among the factors contributing to an industry-wide loss of $120 billion from July to December 2020 alone. When including data from earlier in the pandemic, the losses were expected to be approximately $323 billion.
THE LARGER TREND
The disappointing quarter isn't stopping the Cleveland Clinic from investing about $1.3 billion in capital projects this year, including new hospitals, buildings and renovations to current facilities.
This commitment was prompted in part by strong financial performance in 2021. Total operating revenue for the year reached $12.4 billion, with an operating income of $746 million. The health system performed 10.4 million outpatient visits – a 17% increase from 2020 – and more than 22,800 COVID-19 admissions.
Due in part to that strong financial showing, the health system will be targeting a number of projects and investments in 2022, including the opening of Cleveland Clinic London hospital, a building in central London that will encompass eight stories and 324,000 square feet.
Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com
