Cleveland Clinic has reported huge losses for the first three quarters of 2022, and the health system’s financial woes underscore the dire financial realities across the industry.
Cleveland Clinic, a nonprofit multispecialty academic medical center based in Ohio that operates 20 hospitals and more than 220 outpatient facilities, is consistently rated one of the best hospitals in the United States. Its latest financial report lays bare the current economic headwinds that even top healthcare institutions are facing.
Cleveland Clinic reported more than $1.5 billion in revenue loss for the first nine months of the year, with the reporting period ending Sept. 30, 2022. That’s a world over from the nearly $1.7 billion in positive revenue during the same period in 2021.
Reports have consistently pointed to challenging operating environments for hospitals and health systems, with negative margins throughout the year. Just a few months ago, it became clear that hospitals were facing billions in losses this year and that finances weren’t likely to improve anytime soon, according to a September report from Kaufman Hall.
Hospitals and health systems have cited numerous economic challenges, including staffing shortages and higher labor costs, inflation and higher all-around costs, loss of revenue from changes in patient mix and more.
Cleveland Clinic is also still dealing with the impact of the COVID-19 pandemic. The United States is averaging nearly 4,400 new hospitalizations per day and more than 303,000 cases per week, according to the latest COVID-19 data from Centers for Disease Control and Prevention (CDC).
“The COVID-19 pandemic has presented financial challenges for the system. The system continues to incur incremental supply costs and other expenditures for COVID-19 preparedness in an effort to provide safe and effective patient care,” the report stated. “Nationwide labor shortages have created staffing challenges that have resulted in increased overtime costs and premium pay for employed caregivers as well as an increase in the utilization of agency nurses and other temporary personnel to meet the demand of patient activity.”
Cleveland Clinic postponed non-essential surgeries in December 2021 to make available beds for COVID-19 patients after a wave of the Omicron variant caused a surge in hospitalizations. The health system resumed its non-essential surgeries on Jan. 31, 2022. However, patient levels were still below normal.
“The recovery of patient activity through the third quarter of 2022 has been slow as patients served have remained below expected levels,” the financial report noted.
One big change in 2022 is the amount of financial help coming from the government. The loss of funding from several pandemic-related emergency relief efforts put an enormous strain on hospital resources across the industry.
“The System received $451.7 million and $222.6 million in PRF [Provider Relief Fund], ARP [American Rescue Plan] and ERC [Employee Retention Credit] payments in 2020 and 2021, respectively,” Cleveland Clinic said in its financial report. “Amounts received in the first nine months of 2022 were not significant.”
Cleveland Clinic also received $67.2 million and $6.7 million of Federal Emergency Management Agency (FEMA) grant revenue in other unrestricted revenues in 2020 and 2021, respectively. FEMA grant money “was not significant” in 2022, the system reported.
With the numerous challenges, Cleveland Clinic is working on improving efficiencies, the health system stated, but the ongoing economic headwinds are likely to continue impacting finances.
“The system has taken, and continues to take, actions to mitigate the effect of the pandemic on its financial condition and results of operations; however, predicting the course of this pandemic and its effect on future operations cannot be determined at this time,” the financial report stated.
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."