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Employee costs and inflation are pushing Mayo Clinic's expenses up faster than revenue

A financial report for the second quarter states that Mayo Clinic generated $4 billion in operating revenue for the quarter and a total of $7.9 billion for the first two quarters of 2022 combined.

Mayo Clinic
An "Unaudited Condensed Consolidated Financial Report" for the second quarter of 2022 filed with the Municipal Securities Rulemaking Board stated that Mayo Clinic generated $4 billion in operating revenue for the quarter and a total of $7.9 billion for the first two quarters of 2022 combined.
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ROCHESTER — Mayo Clinic’s latest financial report shows that the top-ranked medical center’s revenues are up 4.6% over 2021 to $7.9 billion for the year to date. However, expenses, driven by higher labor costs and inflation, are climbing even faster with a 10.8% increase over the previous year at this time .

An "Unaudited Condensed Consolidated Financial Report" for the second quarter of 2022 filed with the Municipal Securities Rulemaking Board stated that Mayo Clinic generated $4 billion in operating revenue for the quarter and a total of $7.9 billion for the first two quarters of 2022 combined.

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“At the midpoint of the 2022 fiscal year, performance results reflect the challenges facing both the health care industry and the nation,” according to the report summary. “Workforce shortages and inflation in both labor and non-labor costs have had an impact on the first and second quarter operating results but Mayo Clinic is well-positioned to enter the second half of 2022.”

Net medical service revenue, which represents 85.3% of the total revenue, was $3.4 billion. That's an increase of 2.9% over the same quarter in 2021.

“The increase is notable considering that during 2021, Mayo Clinic experienced limited COVID surges, pent up demand for services and limited travel by staff, whereas during 2022 Mayo Clinic is encountering workforce shortages, vacancies due to recurrent COVID transmission and restored travel for staff resulting in capacity constraints,” Mayo Clinic officials stated in the report.

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While those numbers are increasing, expenses climbed to $3.88 billion for the second quarter and $7.66 billion for the first two quarters of 2022 combined.

Salaries and benefits are the top expense category and it spiked to $2.29 billion for the quarter and $4.55 billion for the first two quarters of 2022 combined. Salaries and benefits increased 7% over the second quarter in 2021 and comprised 59.1% of total expenses.

Supplies and services, the next largest expense category, climbed to $1.3 billion in the second quarter. That’s a 20.8% increase over 2021. This category includes the cost of contract labor, which grew by 60% compared to the same quarter in the previous year.

Most patient numbers were in the report, though admissions for the year-to-date dropped by 2.2%, from 60,468 in 2021 to 59,158 in 2022.

“Outpatient visits, surgeries, and patient days were higher than both 2021 and 2020, reflecting sustained strong demand for services," according to the comments on volume metrics. “While hospital admissions were lower than 2021, Mayo Clinic hospitals are operating at near capacity reflected in the increase in patient days. The difference between years is attributable to capacity constraints and the changing mix of hospital patients with longer lengths of stay during 2022. “

Jeff Kiger tracks business action in Rochester and southeastern Minnesota every day in "Heard Around Rochester." Send tips to jkiger@postbulletin.com or via Twitter to @whereskiger . You can call him at 507-285-7798.

Related Topics: ROCHESTERMAYO CLINIC
Jeff Kiger writes a daily column, "Heard Around Rochester," in addition to writing articles about local businesses, Mayo Clinic, IBM, Hormel Foods, Crenlo and others. He has worked in Rochester for the Post Bulletin since 1999. Send tips to jkiger@postbulletin.com or via Twitter to @whereskiger . You can call him at 507-285-7798.
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