THIS ONE 11mayo financial FRONT PAGE mk/ab
By Jeff Kiger
Post-Bulletin, Rochester MN
Mayo Clinic fell $133 million short of its revenue goals in 2008, although it broke even, Mayo employees were told in a memo from top clinic officials Tuesday.
The value of Mayo’s investment portfolio also fell by $745 million last year, leaving the clinic’s pension fund underfunded by $1.2 billion at year’s end.
The clinic released the discouraging financial numbers in a memo written by President and CEO Dr. Denis Cortese and Chief Administrative Officer Shirley Weis that reported that Mayo broke even for 2008, but only because of the $39 million sale of its hospital in Jacksonville, Fla.
Without that sale, the nonprofit medical center, with annual revenues of $7 billion, would have posted a loss for the year.
Cortese and Weis issued the memo in advance of releasing the full annual report on Friday. Mayo officials declined comment on the letter in advance of releasing the full report.
While breaking even is not impressive compared to Mayo’s $117 million gain in 2006, the result compares favorably to the 2008 numbers of its peers.
"Of the approximately 2,000 health systems, I’d estimate Mayo would be in the top 25 percent in revenue," Jeff C. Bauer of ACS Healthcare Solutions said in reaction to the memo Tuesday. "Breaking even is sort of the top of heap right now."
Bauer has a doctorate in economics and serves as ACS’s Chicago-based partner in charge of forecasting.
"I’ve heard far worse stories from national and international health systems that would be seen as Mayo’s competitors," he pointed out.
However, the preliminary Mayo report is still "… nothing to write home about," Bauer said.
While certainly opposite of what one would want, "The fact of expenses rising faster than revenue is pretty much the norm of the industry," Bauer said.