- By Jay Furst
Mayo Clinic leads in COVID-19 response, accelerates innovation to transform health care
ROCHESTER, Minn. — Mayo Clinic's financial performance continues a strong trajectory of recovery from the early months of the COVID-19 pandemic, building on the momentum that followed reactivation of the clinical practice in late April and May, and accelerating its 2030 strategy to Cure, Connect and Transform.
"Due to our staff's perseverance and innovation, we have been able to continue providing the patient care, the extraordinary research, and the training and education that we're known for," says Gianrico Farrugia, M.D., Mayo Clinic's president and CEO. "Our resilience is a testament to the hard work of our staff and the enduring strength of our values."
Mayo Clinic's reported revenue for the third quarter was $3.65 billion, with net operating income of $288 million. Total revenue for the first nine months was $9.98 billion, 1.5% below the same period a year ago. Net operating income for the first three quarters was $355 million, 51.4% below the same period a year ago. This equates to an operating margin of 3.6%.
The third-quarter results include $156 million in one-time staff payments, retroactive pay and benefits restoration, which was recorded in August and scheduled for the fourth quarter. These payments compensated staff for expense reductions made in May and June.
"The early months of the pandemic were among the most challenging in Mayo Clinic's history, and many challenges remain," says Dr. Farrugia. "Our staff responded as they always do, with consummate professionalism, compassion and dedication to our patient-centered values. As a result, we are in a stronger financial position than we predicted, and we want to express our gratitude for our staff's unwavering commitment."
Two other nonrecurring items were included in third-quarter and year-to-date results:
- Reclassification of staff pension service cost offsets, from operating to nonoperating activities. The reclassification was recorded in September, retroactive to Jan. 1, and totaled $148 million through Sept. 30. An additional monthly reclassification of $17 million through year's end will result in a total impact of $198 million for 2020.
The reclassification, which provides clarity and transparency for Mayo Clinic's financial reporting, has no impact on excess of revenues over expense (net income). It also has no impact on the staff pension plan and benefits or on Mayo’s commitment to fully funding the plan.
"This change more accurately reflects the cost of our staff pension plan and Mayo Clinic's financial performance, as measured by net operating income," says Dennis Dahlen, Mayo Clinic's chief financial officer.
- Relief funding and tax credits received from the federal CARES Act and state programs that provided health care organizations with financial assistance due to COVID-19. The nine-month results include $237 million in funding and credits. Mayo Clinic continues to anticipate that it will return a portion of the CARES Act funding received and will finalize the details of that return before the end of the year.
"Mayo Clinic is grateful for the federal provider relief funding, which was critical to supporting our COVID-19 response efforts," says Jeff Bolton, Mayo Clinic's chief administrative officer. "These funds provided much-needed support in the early days of the pandemic, when Mayo Clinic paused its practice to ensure the safety of our patients, staff and communities. We understand that these relief funds are intended to support organizations that experience uncompensated losses due to COVID-19, and we are determining what is appropriate to retain and return."
In July, Mayo Clinic fully repaid $915 million in Medicare advance payments received in April. This program, also authorized as part of COVID-19 relief efforts, helped Mayo Clinic and other health care providers support liquidity needs during the time that elective care was disrupted. Under program requirements, repayment was to start in September, but Mayo Clinic was able to repay the amount in full in July.
Though Mayo Clinic continues to recover financially, the pandemic and the resulting economic downturn will present challenges well into 2021. "Our financial results show Mayo's resilience and strength,” says Jeff Bolton, Mayo Clinic's chief administrative officer. “While the days ahead will be challenging, we are well positioned to manage whatever comes our way because of our staff’s commitment to research, testing and treatment to help patients with COVID-19."
Mayo Clinic has been a leader in COVID-19 care, research and testing, with multidisciplinary teams developing experimental therapeutics and clinical trials. Mayo Clinic Laboratories has developed highly accurate diagnostic and antibody tests for COVID-19 and has performed more than 2 million molecular tests for patients. Mayo Clinic was the lead institution for the national Expanded Access Program for Convalescent Plasma, which led to emergency authorization for the use of plasma to help critically ill patients.
COVID-19 has been a catalyst for Mayo Clinic innovation and has accelerated work on Mayo's transformational goals for 2030, including rapid growth of virtual consultations, as well as tele-ICU capabilities, remote patient monitoring, Advanced Care at Home via a new technology platform, and other digital initiatives from Mayo Clinic Platform. The Platform is creating a portfolio of new digital ventures and partnerships that leverage Mayo Clinic's expertise with emerging technologies, including artificial intelligence, connected health care devices and natural language processing.
"These are historic times, and the compassionate care that our staff is providing to all our patients, and the research and technological innovations that Mayo Clinic is advancing every day, are making a difference," Dr. Farrugia says. "We are proud to be transforming health care for the benefit of our patients and for patients around the world."
The third-quarter consolidated financial reports, through Sept. 30, were filed to the Electronic Municipal Market Access website on Wednesday, Nov. 18. Electronic Municipal Market Access is funded and operated by the Municipal Securities Rulemaking Board, the self-regulatory organization charged by Congress with promoting a fair and efficient municipal securities market.
About Mayo Clinic
Mayo Clinic is a nonprofit organization committed to innovation in clinical practice, education and research, and providing compassion, expertise and answers to everyone who needs healing. Visit the Mayo Clinic News Network for additional Mayo Clinic news and Mayo Clinic Facts for more information about Mayo.
- Jay Furst, Mayo Clinic Public Affairs, 507-284-5005, email@example.com