The Cleveland Clinic reported Wednesday that its finances have begun to rebound even as post-COVID inflation rates drive up the cost of supplies.
The nonprofit health system reported it moved out of the red in 2023, projecting an operating margin of 0.4%. Clinic CEO and President Dr. Tom Mihaljevic said the organization is now "stable" during the annual State of the Clinic address.
The Clinic also reported record-high revenue of $14 billion last year, which Mihaljevic attributed to serving more patients. Last year, the Clinic reported $13 billion in revenue for 2022, but operated at a $211 million loss for the year due to the increasing costs of pharmaceuticals, supplies and labor. A Clinic spokesperson said it will not be able disclose the full financial picture for 2023 until the audit is complete in late February.
The Cleveland-based international health system was able to grow revenue by increasing patient visits, Mihaljevic said in an interview ahead of the address.
“We have been able to find a way to serve more and more patients and, in particular, those who are in the greatest need,” he said. “We grew our mental health services, our pediatric services, because we saw that those are the services that our communities need the most.”
The Clinic’s operating margins are still tight, like most health systems across the country, Mihaljevic said. Due to inflation, he said across-the-board costs rose 15% last year, while reimbursement rates for the health system’s largest payers, Medicare and Medicaid, only increased by 2.5%.
“There’s absolutely no surprise that under those circumstances, for the first time in the postwar history of the United States, 75% of hospitals in the United States are registering either idle losses or very, very compressed margins,” said Mihaljevic.
Mihaljevic also touted some of the Clinic’s plans for the coming year, including testing an artificial intelligence tool that will be used for patient care. Patients with chronic diseases will be able to reach out to an interface on a yet-to-be-developed platform to get timely answers in between medical appointments.
The health system will also use an AI device to listen in on patient interactions and summarize them so physicians can type fewer notes and be more attentive to their patients.
A new training program will teach caregivers to deescalate difficult situations with patients and families to stem violence against health care workers. The Clinic reported it confiscated 30,000 weapons brought in by patients and visitors last year.
Finally, the Clinic will begin construction on two additional research buildings this year, and use quantum computing to investigate how to detect lung cancer with a blood test.
