Cleveland Clinic Financial Improvement Fueled By Growth In 2019
Cleveland Clinic President and CEO Dr. Tom Mihaljevic presented an improved financial picture for the global health care organization during the State of Clinic address Wednesday.
The hospital system's operating income increased by 47 percent in 2019 to $390 million, according to clinic officials. The clinic reported $266 million in operating income for 2018.
Mihaljevic attributed the financial rebound in 2019 to the clinic's ability to bring in more patients, particularly in Florida.
The clinic had a major expansion of its Florida operations in 2019. It added four hospitals with the acquisition of the Indian River Medical Center and Martin Health System, he said.
“We grew sevenfold in Florida in 2019,” Mihaljevic said.
The hospital system overall saw a record number of patients in 2019, some 2.4 million, which is a 20 percent increase over the previous year, according to figures released by the clinic.
The CEO also attributed the improvements to the hospital system’s bottom line to a good U.S. economy, and to a $261 million donation from the Lord Foundation of Ohio. Mihaljevic called it the largest gift in the clinic’s history.
“When you take a look at the structure of our income, the vast majority comes from what we call nonrecurring income sources — from the financial returns of our endowment and from philanthropy,” he said in an interview with reporters after his speech.
The income from the hospital’s core operations, which includes inpatient and outpatient services, also increased, but “it was a relatively small proportion of our overall income,” he said.
Cleveland Clinic, and other hospital systems, are still facing the issue of lower reimbursement for its services, and the increasing costs to provide health care overall, he said.
The hospital system previously announced plans to expand some of its Northeast Ohio facilities. A new hospital in Mentor is scheduled to open next year, and officials have shared plans to upgrade and expand the Fairview Hospital over the next five years.
The clinic is also planning to expand its presence even further in Northeast Ohio. “We are having a conversation in Canton to grow south,” Mihaljevic said.
Projects on the main campus in Cleveland include the renovation and expansion of the Cole Eye Institute, which is scheduled to begin this year. Also on the drawing board for 2021 is the construction of a new Neurological Institute tower at Euclid Ave and East 96th Street.
Mihaljevic has said the Clinic plans to double the number of patients it serves — to 4 million — in the next five years through expansion to other states and through telemedicine.
“We are on our way to getting there,” he said.
The clinic's 2018 community benefit report, which is the most recent information available, shows the system spent more than $1 billion on outreach, education and assisting low-income patients. The 2018 community benefits report released in December of 2019.
The report details the clinic’s spending to improve community health, including education, subsidized health services, and research. Spending was up 6 percent from the previous year, bringing increases across the board.