Cleveland Clinic ended 2016 with a steeper decline in operating income than even CEO Dr. Toby Cosgrove had projected.
The 14-hospital system posted operating income of $139.4 million in 2016, a 71% drop from the $480.2 million reported in 2015, according to Cleveland Clinic’s audited year-end financial report.
During his February “state of the clinic” address to staff, Cosgrove said operating income was $243 million in 2016, but those were unaudited numbers.
At the time, Cosgrove said the system’s operating fall-off from a record-high 2015 was the result of care getting more expensive, insufficient reimbursement rates and Cleveland Clinic treating older and sicker patients.
“I think we’ll continue to have a positive operating income,” Cosgrove said during his address. “I also think that it’s going to be harder and harder to do that, because we’re getting paid less for what we do and what we do is more expensive.”
A Cleveland Clinic spokeswoman was unable to provide an explanation for the projected and actual income difference by deadline.
Revenue for the health system in 2016 reached $8 billion compared to $7.2 billion in 2015.
Cleveland Clinic’s operating decline was partially offset by a much more productive year on the investment front.
The system’s non-operating gain was $374.2 million in 2016, including an investment gain of $404.2 million. That compared with a non-operating gain of $138 million in 2015, with an investment loss of $56.3 million, the financial disclosure showed.
The improved non-operating gain in 2016 helped narrow Cleveland Clinic’s decline in net income for the year. It was $513.5 million compared with $618.2 million in 2015.