Driven in part by strong patient volumes, Cleveland Clinic's operating income for the first half of this year was more than four times the like timeframe in 2016, according to a new bond disclosure document.
Through June 30, the system's operating income was $191.2 million, resulting in a 4.5% operating margin, according to the system's Interim Unaudited Consolidated Financial Statements. In the first half of last year, the system reported operating income of $47.6 million and an operating margin of 1.2%, which the clinic last year attributed to small reimbursement and rising operating costs.
The improvement comes after a tough year for the clinic's finances in 2016, in which the system saw a nearly 50% decrease in operating income and an operating margin of about 3%. In February, clinic president and CEO Dr. Toby Cosgrove said he didn't expect to see a "substantial drop" ahead, and that the clinic was off to a "very fast start" so far in 2017.
The higher operating income for the first half of this year resulted in a 7.8% increase in total unrestricted revenue, "which was primarily due to strong patient volumes and a non-patient payment received from a payor in the second quarter of 2017," the bond disclosure document stated.
For the first six months of the year compared to the first half of last year, inpatient acute admissions were up nearly 5% overall, and clinical outpatient evaluation/management visits were up 5.6%. Inpatient surgical cases rose 3.5%. Outpatient surgical cases were up 1.9%.
Total operating expenses for the first six months of the year increased by 4.1% compared with the like period last year. The "notable increases" in expenses were in salaries, wages and benefits, pharmaceutical costs and supplies, which are partially due to higher patient volumes. To address the expenses growth caused by inflationary pressures in these categories, the system implemented care affordability initiatives designed to transform patient care and business models to provide quality, affordable patient care, the document stated.