Mayo Clinic’s Earnings Drop 35% in FY 2012

In fiscal year 2012, operating income at Rochester, Minn.-based Mayo Clinic (pdf) fell 35.2 percent, from $610.2 million last year to $395.4 million this year due in part to higher expenses associated with the health system’s expansion.

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Mayo completed two affiliations last year — one with Satilla Health Services in Waycross, Ga., and another with Fairview Red Wing (Minn.) Health Services. Although Mayo’s growth resulted in higher employee salaries and supply/facility costs, Mayo increased its net asset value (before pension adjustments) from $650.5 million to $859.4 million.

Overall, Mayo’s total revenue increased 6.3 percent to $8.84 billion in FY 2012, compared with $8.32 billion in FY 2011.

The drop in earnings was somewhat expected, as last year, Mayo executives announced the system would spend $600 million in capital projects in 2012. Last month, Mayo also unveiled a $5 billion economic development initiative called Destination Medical Center to secure its position as a global medical hub.

Other financial results of interest from Mayo’s 2012 year-end report included $44.7 million in electronic health record incentives from the federal government, $59.6 million of cash and cash equivalents at the end of the year and more than $1.2 billion in unfunded pension obligations.

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