As 2019 nears its end, Mayo Clinic is reporting 2018 financial numbers, with total revenue up 5 percent to hit $12.6 billion.
Mayo Clinic Chief Financial Officer Dennis Dahlen points out that 2018 was the year the clinic implemented its massive, $1 billion installation of the Epic computer records system at all of its sites.
"Even with that heavy lift, it (2018) was a tremendously successful year," he said. "We've got continuing strong demand for the services that Mayo provides ... and a global brand brings people to Rochester and to our other campuses as well."
An independent audit of Mayo Clinic financials is published every year. Complied by the accounting firm of Ernst and Young, the 2018 report showed a net income of $706 million, a slight decrease from $707 million in 2017. The net margin was 5 percent, the same as 2017.
Compared to medical peers Cleveland Clinic and Johns Hopkins Health System, Mayo Clinic posted numbers well ahead of both. Cleveland's 2018 audited report showed revenues of $8.92 billion, with a net income of $266 million for a net margin of 2.9 percent. Johns Hopkins reported revenues $6.55 billion with a net income of $249.4 million for a net margin of 3.8 percent.
"Cleveland Clinic, Hopkins and Mayo are in kind of a league of their own, though none of them have Mayo's reach that pulls clinical patient demand from outside the local marketplace," Dahlen said.
In addition to revenue growth, Mayo Clinic also reported an uptick in system-wide "full-time equivalents" employee growth to 51,740 in 2018, up from 51,523 in 2017. Dahlen says Mayo Clinic expects employee numbers and salaries to continue to climb in the coming years.
"We do expect employment to continue to grow across the spectrum," he said. "We are making a commitment to our employees that we intend to keep pace with the tight labor marketplace."
Mayo Clinic's annual group filing with the IRS this month shows that the number of employees who received more than $100,000 in compensation grew from 7,117 in 2017 to 8,432 in 2018. The number of employees who made more than $1 million increased to 17 people from 13 in 2017.
As the concept of "Medicare for all" is discussed as a political issue, $2.5 billion of Mayo Clinic's 2018 medical service revenue came from Medicare, up from $2.35 billion in 2017. Contract or insured care accounted for $6.25 billion in 2018, up from $5.69 billion.
"We continue to see our Medicare patients at a net loss. It's all balanced out in the mix of business across spectrum of payor classes," Dahlen said. "We couldn't function as a clinic without those patients. They are a significant part of the volume that we see at our care sites."
Looking to 2019 and into 2020, the financial news looks even better than 2018. Mayo Clinic's financials for the first three quarters of 2019 are all better than the previous year without the capital cost of the Epic installation.
"In general, I feel pretty positive for the short term (the next two to three years)," he said. "Confidence is high."
While hoping for the best, Mayo Clinic is preparing for the possibility of unexpected turns.
"We're in the process of implementing strategies that will create a greater reliability and sustainability of performance over the long-term with investments in digital platforms ... and the recent announcement of our international joint venture in Abu Dhabi," said Dahlen. "We're trying to diversify the portfolio and trying to invest in things that will be the next generation of clinical care and patient service to try to make the business model and the economics more reliable and more sustainable."