Mayo Clinic's operating income drops 88% in Q1

Mayo Clinic's financial and operating performance was strong for most of the first quarter, but financial damage from the COVID-19 pandemic in the last half of March pushed the health system's operating income lower. 

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 it deferred all elective care that could be postponed for at least eight weeks. 

"Mayo's 2020 first quarter results spanned two very different environments, beginning with a continuation of previous year's strong performance for the first 2 ½ months of 2020 and concluding with the ramp down of services and near closure of the outpatient practice on March 23," Mayo said in financial documents released May 15. 

Mayo Clinic's revenue totaled $3.2 billion in the first quarter of this year, down nearly 4 percent from the same period a year earlier. Net medical service revenue was up less than 1 percent year over year.  

The health system's operating expenses climbed 2.7 percent year over year to $3.2 billion in the first quarter of this year. Mayo saw expenses increase across several categories, including supplies and salaries and benefits. 

Mayo closed out the first quarter of 2020 with operating income of $29 million, down 88 percent from operating income of $241 million a year earlier. 

After factoring in nonoperating losses, Mayo reported a net loss of $623.3 million in the first quarter of this year. In the same period a year earlier, Mayo recorded net income of $639 million. 

To help offset financial damage from the COVID-19 pandemic, Mayo said it has received $915 million in advance Medicare payments, which must be repaid. The health system also received about $220 million in grants under the Coronavirus Aid, Relief and Economic Security Act.

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