Despite the uncertainty of the health-care market, Mayo Clinic revenues grew by 6 percent to $9.4 billion in 2013.
CEO and President John Noseworthy and Chief Administration Officer Jeff Bolton discussed highlights of Mayo Clinic’s 2013 financial results Wednesday during a brief telephone press conference.
“It was a very successful year from a financial operations perspective. We had strong revenue growth,” Bolton said.
Overall, total revenues grew at a slightly slower rate than the previous year. Mayo Clinic posted $8.84 billion in total revenue in 2012, which was 6.3 percent higher than 2011.
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Noseworthy said the clinic faced many challenges in 2013, including the Affordable Care Act, Medicare, government sequestration, a sluggish economy and an ambitious construction program.
That spurred the clinic to slow its hiring to allow for attrition to reduce employee numbers in 2013 to 59,509, down from 61,125 in 2012. In Rochester, the workforce shrank at a similar rate to 33,779. That’s about 450 people fewer than worked here in 2012.
“We looked at our employee base and found areas that we needed to grow and areas that we needed to hold,” Noseworthy said. “We need to manage our growth.”
He added that Mayo Clinic’s employees have done a great job in dealing with the stress of “working differently.”
Mayo Clinic finished 2013 with $612 million in income, which is an operating margin of 6.5 percent. That’s within the 4 to 6 percent range that the clinic targets to support research, salary increases, pensions and future investments.
Dr. Stephen Parente, a professor at the University of Minnesota’s Carlson School of Management and director of the Medical Industry Leadership Institute, briefly reviewed the 2013 financials Wednesday.
“The good news is they are growing for the most part in regards to medical service,” he said. “This is a pretty good position to be in compared to most other medical centers.”
Parente said Mayo Clinic’s efforts to become more efficient makes sense given the lack of stability in the market.
“Because of a lot of changes that have been occurring nationally, overall growth in health care is less than it has been,” he said. “A lot of hospitals are finding efficiencies going forward.”
Mayo Clinic tightening up of its staffing makes sense, when taking the national uncertainty into account, Parente said.
“The biggest cost in health care is labor, though most people don’t think of it like that, ” he said.
Other highlights of the report:
• New patient appointments at Mayo Clinic in Rochester increased by 15 percent in 2013, and waiting lists have decreased substantially.
• In 2013, Mayo’s total budget for education and research programs was $912 million; Mayo Clinic contributed nearly $489 million of that total. Mayo research programs received nearly $368 million in external funding in 2013.
• In 2013, Mayo had a record number of academic promotions for women: 46 were promoted to associate professor, and 16 were promoted to full professor.
• In 2014, Mayo Clinic reduced the rate of its fee increases, despite growing costs associated with new technology and administrative requirements.
• Mayo Clinic’s portfolio realized an annualized investment return of 14.5 percent.A portion of this return supports research, education and operations — nearly $170 million in 2013.
•Mayo Clinic’s pension plan is fully funded. Mayo Clinic contributed $260 million to its pension plan in 2013. Mayo Clinic has contributed $1.1 billion to its pension plan over the past three years. Securing Mayo Clinic’s pension fund is a priority and underscores Mayo’s commitment to its staff.
Date: February 27, 2014