Mayo Clinic was in a strong financial position before the COVID-19 pandemic hit. It had a record performance year in 2019, with revenue of $13.8 billion and operating income of more than $1 billion. The health system began 2020 with significant liquidity reserves, but its finances began to suffer in March after deciding to defer all elective care that could be postponed for at least eight weeks.
Mayo has taken several steps to mitigate revenue shortfalls and conserve cash, including temporary salary reductions for executives and senior administrators, furloughs, temporary benefit reductions, a hiring freeze and canceling or delaying capital projects, the health system said. Mayo said its mitigation efforts are projected to result in up to $1.2 billion in savings this year.
Since March 31, Mayo has improved its liquidity by applying for and receiving $900 million in advance Medicare payments, which must be repaid. The health system also received about $150 million in grants under the Coronavirus Aid, Relief and Economic Security Act, secured a $100 million taxable loan and increased its lines of credit by $200 million. The health system said it plans to close on an additional $300 million in loans in May.
Mayo expects the delay of elective surgeries, procedures and office visits, combined with restrictions on national and international travel, as well as other changes in response to COVID-19 “to have a significant impact on operations in the current quarter and possible for the remainder of the year.”
Though initial estimates showed Mayo losing up to $3 billion in revenue this year, the ultimate effect COVID-19 response and preparedness will have on its financial and operating results is unknown.
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