The Cleveland Clinic more than doubled its third-quarter operating surplus year over year, but lower investment returns hurt its bottom line, the system reported Wednesday.
The 11-hospital system reported an operating margin of 7.4% (PDF) in the third quarter compared with 3.6% in the prior year period. It attributed the improvement to higher outpatient volume and a shift from self-pay patients to Medicaid after Ohio expanded Medicaid eligibility to 138% of the federal poverty level.
In total, the Cleveland Clinic reported a third-quarter operating surplus of $123.9 million on $1.7 billion in revenue compared with an operating surplus of $57 million on $1.6 billion in revenue for the prior-year period.
However, when nonoperating gains were included, its net surplus was $134.5 million compared with $206.5 million in the third quarter of 2013.
Inpatient volume decreased 3.2% during the third quarter, but the system saw a 14.1% increase in the number of observation cases, which the earnings report attributed to CMS' two-midnight rule, which set new standards for how short-stay admissions should be classified.
The Cleveland Clinic also saw a 7.9% increase in emergency-room visits, and a 7.2% increase in outpatient visits.
Revenue from Medicaid patients accounted for 11.3% of its total revenue in the third quarter, up from 7.9% during the same period last year. The system also provided 25.9% less uncompensated care in the third quarter compared with the year-ago period.
In September, the Cleveland Clinic became the first not-for-profit health system to offer century bonds, gaining what it called “permanent capital” with a $400 million, fixed rate, taxable offering that doesn't mature until 2114.
The system has a number of projects in the works, including an $80 million renovation of the radiology department at its main campus, a $17 million replacement and expansion of the emergency department at Lutheran Hospital, a $20 million addition of an emergency department at Brunswick Family Health Center, a $92 million expansion of its Weston Outpatient Clinic, and building the new Avon Hospital.
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