What started as an exceptionally strong financial first quarter for Mayo Clinic was pushed off a pandemic cliff on March 23, ending with revenue down by 3.8% to $3.22 billion and the net operating income plummeting by 88%.
The final eight days of the quarter drove net operating income down to $29 million, compared to $241 million for the same quarter in 2019.
“Mayo's 2020 first quarter results spanned two very different environments, beginning with a continuation of the previous year's strong performance for the first two and a half months of 2020 and concluding with the ramp down of services and near closure of the outpatient practice on March 23,” Mayo officials wrote in the financial report released May 15.
The COVID-19 pandemic sickened what was a very healthy start for 2020.
While revenue dropped, expenses were up slightly to $3.19 billion, a 2.7% increase from $3.11 billion for the first quarter of 2019.
Predictably, Mayo Clinic's cash on hand and investments also saw substantial decreases. At the end of 2019, Mayo Clinic had $11.19 billion in investments and cash. That number dropped to $10.55 billion by the end of March. The report attributes that as being “due largely to the volatility of the financial markets.”
The $10.55 billion includes $8.20 billion in Mayo Clinic’s long term fund, its primary investment portfolio. Another $874 million is in a segregated reserved fund.
“To meet the effects of the COVID-19 pandemic,” Mayo Clinic reported tapping $1 billion in short-term funds and a working capital balance of $537 million “to provide liquidity.”
Due to the pandemic, Mayo Clinic placed about 23,000 employees across all of its sites on furlough or reduced hours. While that strategy will be in place for the rest of the year, Mayo Clinic Spokeswoman Traci Klein stated, “As patients come back, we will call staff back to meet increased patient demand.”
Net operating income in 2019 topped $1 billion for the first time in the clinic's history. That was up from $617 million the previous year.