Dive Brief:
- Mayo Clinic increased its net operating income by more than 80% in 2023 on increased demand for outpatient services and strong investment returns.
- The nonprofit’s operating income totaled $1.1 billion. It grew operating revenues by 10.2% year over year, with medical services revenue driving the lion’s share of growth, according to the company’s annual earnings report released Wednesday.
- Operating expenses rose 7.5% year over year to total $16.9 billion. Salaries and benefits ran the company $9.7 billion, accounting for more than half of total operating expenses.
Dive Insight:
Mayo’s performance in 2023 is a financial rebound from its 2022 results, when the company halved its operating income compared to the prior year amid high labor costs.
Mayo is Minnesota’s largest employer. It also has operations in Arizona, Florida, Iowa and Wisconsin. In total, the clinic employs about 80,000 people.
Salaries and benefits represented 57.3% of Mayo’s total expenses last year. The nonprofit said the growth was attributable to organizational expansion, including new hiring, investments in professional development and salary increases designed to improve workforce retention. In 2022, the company said its increased salary spend was going to temporary contract workers.
Mayo Clinic's revenues increased from $16.3 billion in 2022 to $17.9 billion in 2023 on rising patient volumes. Like other hospital operators, Mayo has experienced a shift toward outpatient services since the onset of the COVID-19 pandemic. In 2023, outpatient visits and surgical cases were up 8.5% and 9.3% since 2021, respectively, while inpatient admissions fell 0.2%.
Mayo’s investment portfolio also rebounded last year. The operator reported net investment earnings of $788 million last year after a net loss of nearly $1.4 billion in 2022.
Capital expenditures totaled $1.2 billion in 2023, with $551 million in major projects, $404 million in equipment, and $223 million in other projects. Major project spending included bed tower modernization and expansions in Mankato, Minnesota, and the Rochester, Minnesota campus project, which includes five new buildings, and technology and infrastructure investments.
