The Cleveland Clinic saw a significant increase in its operating margin in 2014 as it held down expenses through a number of cost-saving initiatives.
Revenue also increased 4% for the 11-hospital system, which did not break out operating statistics. However, the system, which is in a Medicaid expansion state, reported that the cost of charity care declined to $101 million for the year, down from $171 million in 2013.
For the year ended Dec. 31, the Cleveland Clinic's operating surplus was $467.5 million on nearly $6.7 billion in revenue compared with the prior year's operating surplus of $294 million on $6.5 billion in revenue. Its operating margin increased to 7% for 2014 from 4.5% the previous year.
The system said in a news release that it realized $498 million in cost savings last year. Some of the ideas came from employees themselves, who submitted 800 suggestions through the “My Two Cents” program that ultimately yielded $2.5 million in savings.
Its earnings report shows savings across the board, including for compensation and supply costs, but pharmaceuticals were the outlier, jumping up 13%.
The Cleveland Clinic also said it made quality improvements, such as cutting the number of hospital-acquired infections by two-thirds, from 30 a month in 2013 to 11 a month in 2014, and reducing the number readmissions from 14.4% to 13.8% year over year.
The system also saw a record number of gifts and commitments that reached $255 million in 214.
The Cleveland Clinic has a number of building projects underway, including a $276 million cancer center on its main campus, a $17.5 million emergency department expansion at Lutheran Hospital set to open this year and a $143 million acute-care facility in Avon, Ohio, which is being billed as a “hospital of the future” because of its smaller, high-tech campus that will treat lower acuity patients.
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