How Mayo Clinic Saw $4.5B in Revenue for Q3, And Its $5B Plan for That Cash

After challenges in 2022, Mayo Clinic is witnessing a robust rebound, and it has "bold, forward, and unbound" plans for that added cash.

Nonprofit Mayo Clinic, operating hospitals across several states, recently released its 2023 third quarter earnings report. The filing indicates a significant turnaround, with revenues surpassing expenses, propelled by sustained high demand for healthcare services.

Read on for more details on what led to its third-quarter success and what Mayo plans to do with its cash.

An increase in cash and outpatient visits

According to the earnings report, Mayo’s third-quarter revenue increased 8.2% year over year to $4.5 billion, while expenses rose 4.8% to $4.2 billion.

Noteworthy is the surge in outpatient visits and surgeries, up by 6.6% and 7% compared to both 2021 and 2022. While supplies and service expenses grew by 9.5%, the rate of increase has slowed since last year.

This rebound is attributed to sustained strong demand for healthcare services, emphasizing the pivotal role of understanding and meeting patient demand in financial recovery.

Salary and benefits expenses, a huge pain point for most CFOs, rose modestly, under 3%, attributed to planned wage hikes and positive signs in recruitment progress. The addition of full-time equivalent staff, especially cost-effective allied health employees, helped keep these expenses low, the report says.

At a time when CFOs are pulling back on contract labor, this shows that the shift towards full-time equivalent staff, including allied health employees, is a positive approach to workforce management and could help foster long-term cost-effectiveness and stability.

A $5 billion "bold, forward, and unbound" redesign

A noteworthy capital expenditure of $282 million this quarter, part of a $792 million annual spend, emphasizes Mayo’s commitment to major projects, including modernizations and expansions, showcasing a forward-looking investment strategy.

In fact, on November 28, Mayo Clinic’s board of trustees approved an initiative involving a $5 billion redesign of Mayo Clinic's downtown Rochester campus. 

The "bold, forward, and unbound" redesign will introduce new facilities that incorporate innovative care approaches and digital technologies, according to the news release.

According to the health system, the concept will offer patients a centralized location for all required services related to their specific condition, eliminating the need for navigating between different departments and will create a neighborhood of sorts, Mayo says.

Other projects are well underway in Arizona, Florida, La Crosse, Mankato, and now soon in Rochester, Mayo says.