Mayo Clinic's operating income drops 9.8%: 7 things to know

Rochester, Minn.-based Mayo Clinic saw its operating income fall from $526 million in 2015 to $475 million in 2016, reflecting increased costs associated with growing its workforce and providing uncompensated care to patients in Medicaid programs. 

Mayo Clinic officials estimated its unreimbursed costs for providing services to Medicaid-covered patients grew from $476 million in 2015 to $546 million in 2016. In addition, the clinic reportedly increased its workforce by about 5 percent to 63,078 employees by the end of 2016.

"It's not like demand is down," Kedrick Adkins, CFO of Mayo Clinic, told the Post Bulletin. "Our volume growth was strong. Our revenue was up 6.6 percent. Surgery was up over 2 percent. ER visits were up by 3.5 percent," he said.

Here are seven things to know about Mayo Clinic's 2016 financials.

1. The health system recorded a 4.3 percent operating margin for 2016, down from 5.1 percent the year prior, according to the Post Bulletin.

2. Mayo Clinic's revenue increased 6.6 percent from $10.3 billion in 2015 to $10.9 billion in 2016.

3. Mr. Adkins said the system is "in growth mode … [the clinic's] 6.6 percent [revenue] growth … is characteristic of some strong revenue growth across the organization."

4. The system's net revenue for medical services was $9.22 billion in 2016, up from $8.62 billion the year prior, according to the report.

5. Mayo Clinic's capital expenditures in 2016 were unchanged from fiscal year 2015, exceeding $600 million, according to the report. The Mayo Clinic said the spending represented a multiyear plan of investments in equipment, facilities and technology, including a new EHR and revenue cycle management system.

6. Mayo Clinic didn't see a change in its number of outpatient visits for 2016 compared to 2015, as outpatient visits remained at 4.8 million. In addition, its number of surgical patients for 2016 — 132,420 — didn't change year over year.

7. Mayo Clinic saw its donations increase to $296 million for 2016, up from $277 million in 2015. 

This article was updated on Feb. 27 at 12:10 p.m. to reflect Kedrick Adkins, CFO of Mayo Clinic, not Mayo Clinic CEO John Noseworthy, MD, said "It's not like demand is down … Our volume growth was strong. Our revenue was up 6.6 percent. Surgery was up over 2 percent. ER visits were up by 3.5 percent." We regret this error. 

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