Mayo Clinic’s 2020 profit down, but net assets increase considerably

Dive Brief:

  • The Mayo Clinic saw a modest uptick in revenue but a significant decline in profit for calendar 2020, the Rochester, Minnesota-based nonprofit hospital system reported Friday.
  • Overall, Mayo Clinic’s revenues were up 1.5%, including donations, while net income was down 23.5%. However, total assets increased 19% and now are well over $12 billion.
  • Two actions suggest that the worst financial gyrations of the COVID-19 pandemic have passed for the organization. In December, it returned $156 million of the $338 million it received in coronavirus relief payments from the federal government. The system also sent back $915 million in advanced Medicare payments last July.

Dive Insight:

COVID-19 has made for a tough financial road for many healthcare providers, which either had to postpone elective procedures or whose patients passed on care in order to avoid becoming infected. But larger healthcare systems with significant resources have performed relatively well. Mayo Clinic is in this category.

Despite the disruptions to normal patient care that marked 2020, Mayo Clinic’s revenue increased 1.5%, reaching $13.9 billion, compared to $13.7 billion in 2019. And while its net income declined, it was still in the black to the tune of $728 million, compared to $952 million in 2019.

Like other systems, Mayo needed to equip its facilities with personal protective equipment, respirators and other equipment intended to address the pandemic. Still, its expenditures on supplies and services were up less than 1%, while salaries and benefits paid to employees rose more than 5%. That seems contrary to a recent Kaufman Hall report suggesting providers could wind up being overwhelmed by COVID-19-related expenses.

And despite returning the advanced Medicare payments and the Coronavirus Aid, Relief, and Economic Security funds in the waning days of 2020, Mayo ended the year with $12.4 billion in net assets, versus $10.4 billion at the end of 2019. Much of that increase came from major donations, of which $1.3 billion had no restrictions attached.

Even with the relatively good numbers, Mayo Clinic officials remained cautious. “COVID-19 could still negatively affect the operating margins and financial results of the Clinic, as the duration of the pandemic is unknown,” its financial report concluded.

That final note is in line with a recent report from Moody’s Investors Service, which placed a negative outlook on non-profit hospitals in 2021, despite the increasing distribution of a COVID-19 vaccine.