Cleveland Clinic recorded an operating income of $172.8 million (3.7% operating margin) in the first quarter of 2026, up from $52.8 million (1.3% margin) during the same period last year, according to its May 18 financial report.
Five things to know:
1. Total operating revenue for the three months ended March 31 was $4.7 billion, up from $4.2 billion during the same period last year. Net patient service revenue was $3.9 billion, up from $3.5 billion.
2. Cleveland Clinic saw a 1% increase in patient encounters year over year. The system also benefitted from recent year-over-year rate trends with managed care contracts that “more adequately reflect inflationary pressures and the cost of high-acuity clinical operations,” according to the report. Net patient service revenue also increased due to a new Ohio physician state-directed payment program that was approved by CMS in Q1, as well as the expansion of the Ohio hospital state-directed payment program that took effect in Q3 2025.
3. Total operating expenses were $4.3 billion in the first quarter of 2026, up from $4 billion during the same period last year. Salaries, wages and benefits totaled $2.5 billion, up from $2.3 billion. Pharmaceutical expenses totaled $734.8 million, up from $652.7 million. Supply expenses totaled $437.7 million, up from $387.4 million.
4. Cleveland Clinic said the increase in expenses was primarily due to the growth in patients served and inflationary trends that increased personnel costs and pharmaceutical expenses. The system implemented initiatives to stabilize its workforce, including reduced reliance on agency personnel and premium labor, which has allowed the system to manage year-over-year personnel cost growth to 5.1%.
5. The system reported a net income of $135.4 million in the first quarter of 2026, up from $84.6 million during the same period last year.
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