Cleveland Clinic isn't immune to financial difficulties affecting U.S. hospitals.
The Clinic generated more than $14 billion in revenue last year. It resulted in an operating margin of 0.4%, which is an increase from 2022. Still, the system has not been immune to the financial challenges plaguing U.S. hospitals.
Mihaljevic said margins are “severely compressed” as a result of the rising costs of wages, supplies and pharmaceuticals, and inflation has outpaced increases in reimbursement.
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Year-over-year, the Clinic saw a 10% increase in labor costs and a 20% increase in the price of pharmaceuticals while reimbursements from the Centers for Medicare and Medicaid Services, the Clinic’s largest payer, grew by only 2.5%, Mihaljevic said.
Despite the financial difficulties of the times, the health system has seen increase in patient encounters, Mihaljevic said, and services to patients have increased by 53% since 2018.
The system is focused on caregiver retention amid global workforce shortages.
Workforce shortages are a lingering problem that will continue to affect health systems in the coming years, Mihaljevic said.
Shortages existed before the pandemic, he noted, and the industry will need to adjust to living with them for many more years. The Clinic has been focused on retaining its existing workforce and using technology to redesign healthcare delivery processes in the face of these shortages.
Incidents of violence against healthcare workers went up in 2023.
Last year, the health system’s caregivers reported 3,800 incidents of physical or verbal violence. That’s over 1,000 more reports than 2022 (2,761). Mihaljevic called violence against caregivers a “silent epidemic.
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The Clinic has continued to enhance its police and security presence, he said, and has installed in every emergency department. It confiscated 30,000 weapons brought in by patients and visitors in 2023.
Telehealth is a necessity for the system.
Continuing with the theme of technology, Mihaljevic said telehealth is now a well-established part of the Clinic’s offerings. More than 10% of visits take place remotely, he said.
As an example, every room at Cleveland Clinic Mentor Hospital, which opened to patients last summer, is equipped so patients can interact with caregivers virtually. Telehealth allows patients to gain quicker access to specialized healthcare services, he said.
This story first appeared in Crain's Cleveland Business.