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Revenue, expenses are up for Mayo Clinic resulting in a 41% drop in operating income

On Thursday, Mayo Clinic posted an unaudited consolidated financial report from the first quarter on the Electronic Municipal Market Access website. The report showed revenue was up 6.9% over the same quarter in 2021, when Mayo Clinic reported $3.67 billion in revenue. However, the operating margin for Q1 2022 is 3.6%, which is well below the 6.6% margin that Mayo Clinic posted in the first quarter of 2021.

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A sign for Mayo Clinic's Mayo Building Monday, March 22, 2021, in downtown Rochester.
Joe Ahlquist / Post Bulletin file photo
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ROCHESTER — Mayo Clinic said 2022 brings “new challenges” in a report showing that it tallied $3.9 billion in revenue with a net operating income of $142 million, a 41% decrease from $243 million in the same quarter in 2021.

On Thursday, Mayo Clinic posted an unaudited consolidated financial report from the first quarter on the Electronic Municipal Market Access website.

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The report showed revenue was up 6.9% over the same quarter in 2021, when Mayo Clinic reported $3.67 billion in revenue. However, the operating margin for Q1 2022 is 3.6%, which is well below the 6.6% margin that Mayo Clinic posted in the first quarter of 2021.

“The year 2022 begins with new challenges that follow nearly two years of pandemic operations. Workforce shortages and corresponding labor cost inflation, persistent supply chain disruptions and shortages, a higher interest rate environment, and capital market volatility have all taken center stage for management attention,” stated Mayo Clinic officials in the report. “First quarter performance results reflect these new considerations which also serve to reinforce long term plans for revenue diversification, digitization of health care when appropriate, using platform models to accelerate innovation, and investing in the treatments of complex and serious clinical care.”

Operating expenses were $3.8 billion, a year-over-year growth of 10.4%. Salaries and benefits climbed by 7.4% to $2.3 billion. Those costs accounted for 59.7% of Mayo’s expenses for the quarter.

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“The increase in salaries and benefits and supplies and services is due to contracted labor and temporary pay practice premiums,” according to the report.

Mayo Clinic reported that its cash and investments plummeted by $465 million to $17.6 billion. The drop was “largely” due to investment losses. Mayo's cash and investment position included $13.36 billion in its Long-Term Fund. The fund includes $6.29 billion of endowed funds and $7.07 billion of unrestricted reserves.

Net medical service revenue increased to $3.35 billion, a 6.3% rise from the same quarter in 2021.

Outpatient visits were up with 1,196,234 compared to 1,156,158 in 2021 and 1,134,583 in 2020. Surgical cases also show an increase to 33,552, up from 32,689 in 2021 and 31,165 in 2020.

Admissions were on the decline. Mayo Clinic reported 29,117 admissions for the quarter, which is down from 29,226 in 2021 and 30,645 in 2020.

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

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Jeff Kiger writes a daily column, "Heard on the Street," 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. Readers can reach Jeff at 507-285-7798 or jkiger@postbulletin.com.
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