Rebound in demand boosts Mayo Clinic balance sheet

Two years ago, the Mayo Clinic recovered from the credit crisis and recession with a tight grip on expenses. Officials expected the system's flat spending would not last. It did not. After modest growth in 2010, Mayo's expenses increased 5.9% last year.

Nonetheless, Mayo reported an 18% increase in income for the year that ended last December. Mayo said its operating income totaled $610.2 million for a 7.2% operating margin. That's because revenue increased 6.7% last year.

The system credits demand for surgery and complex medical care for increased revenue and expenses. Philanthropy also boosted revenue.

“This exceptional financial performance was fueled by strong revenue growth,” Jeff Bolton, Mayo's chief financial officer, told reporters as the results were released. “In the patient-care arena, that growth was associated with increased volumes and surgical cases as well as increased numbers of patients with very complex and serious illnesses that require significant diagnostic and therapeutic programs,” Bolton said.

More surgery and more acutely ill patients mean more nurses and laboratory technicians to care for them, said Pat McCarty, Mayo's vice chairman of financial planning and analysis. Labor costs increased with new workers and annual raises for Mayo employees, driving up the system's expenses last year, he said.

McCarty said surgery volume increased 1.5% last year and efforts to treat patients outside the hospital when possible has left capacity for the sickest patients to be admitted. “This is the most significant growth we've had since the recession,” McCarty said.

You can follow Melanie Evans on Twitter: @MHmevans.