Dive Brief:
- The Mayo Clinic saw a nearly 6.1% drop in revenue during the second quarter ending June 30, with much of that decline attributed to the COVID-19 pandemic. Revenue at the Midwest division, where it is headquartered, was down more than 10%. While the Rochester, Minnesota-based nonprofit did post a $ 154 million operating profit for the quarter, it was down 49% from the $ 300 million reported during the second quarter of 2019.
- In response, Mayo cut its supplemental and contract workforce, halted most construction projects and cut staff salaries. The system received $ 303 million in funding from the Coronavirus Aid, Relief, and Economic Security Act, as well as $ 915 million in advanced payments from the Medicare program. Mayo returned the advanced Medicare payments to the federal government in late July.
- Nevertheless, cash on hand excluding the Medicare advance payments increased to 287 days during the quarter, up from 258 days for the second quarter of 2019. The organization also said its second quarter numbers were “stronger than expected.”
Dive Insight:
The Mayo Clinic has had a storied history dating back more than a century, and it expanded outside the Upper Midwest in recent decades. However, the COVID-19 pandemic has, for now, put a temporary stop to that growth.
Revenue from medical services declined 16.2% during the quarter, down nearly 8% for the first half of the year. Medical represents about 81% of Mayo’s total revenue. Money from grants and contracts declined 3.5% during the quarter and 10% during the first half. And while Mayo said it cut costs by about $ 300 million through about 9,000 job cuts (about 12% of the total workforce) and halting construction projects, expenses still grew by 0.3%.
The system was buoyed by gains in investment income. They were up 39.3% during the quarter, to $ 124 million, compared to $ 89 million during the second quarter of 2019.
Moreover, the system was in the black, as opposed to huge losses reported by systems such as Providence Health and Banner Health.