Memorial Sloan Kettering Cancer Center is among the health systems hit especially hard by the COVID-19 pandemic, posting a 12% operating loss in its latest financial statement.
Even after factoring in $100 million in federal relief grants, the New York-based cancer center lost $453.3 million on operations in the nine months ended Sept. 30, 2020 on $3.8 billion in revenue. That's compared with a $76.9 million operating gain on $3.9 billion in revenue in the comparable 2019 period.
The substantial loss in the 2020 period was driven in part by lower patient revenue as providers were forced to suspend elective procedures during the pandemic and, even when suspensions were not in place, many patients chose to hold off on getting care to avoid potentially contracting the coronavirus.
MSK's total revenue was down 2.9% year-over-year. Within that, hospital care and services—most of the organization's revenue—was down 6.1% year-over-year. But even smaller revenue categories like grants and contracts and assets released from restrictions were also down.
One category within MSK's revenue, royalty income, was up 72% to $252 million in the 2020 period. MSK said that's due to an extra $142 million in the 2020 period from the organization selling a portion of its royalty rights to a third party in October 2020. An MSK spokesperson did not respond to questions about the royalty sale or the organization's overall performance.
A 10.8% spike in expenses also contributed to the loss. MSK's expenses rounded out the 2020 period at $4.3 billion. The largest spending category, compensation and benefits, was up 12% year-over year. The second largest category, supplies, was up 3.4% year-over-year to $1.5 billion. Depreciation and interest also grew year-over-year.
More of MSK's patients were covered under government programs and fewer by commercial insurance in the 2020 period. The proportion of patients on Medicare jumped 3% year-over-year to 30% in the 2020 period. Medicaid patients jumped 0.7% to 2.8% of patients. And the proportion of commercially insured patients dropped more than 6% to 60.7% in the 2020 period.
MSK also reported a sizable jump in its outstanding bills, or accounts receivable, from -$35 million in the 2019 period to $106 million in the 2020 period. The cancer center said 36% of that was from government-related programs, 18% from Empire Health Choice and 10% from UnitedHealthcare.
On the volumes front, MSK's admissions declined 13% year-over-year. Clinic visits dropped almost 48% year-over-year. Healthcare leaders have expressed concern throughout the pandemic about delayed cancer screenings and other care contributing to another health crisis. The American Cancer Society over the summer said 50% of cancer patients and survivors reported some impact to their care as a result of the pandemic.
In June, a Memorial Sloan Kettering executive said in an interview that it's important patients know MSK and other providers are open and have put precautionary measures in place to ensure safety.
