Becker's Hospital Review

12 CFO / FINANCE Mayo Clinic's operating income drops 48.7% By Alia Paavola R ochester, Minn.-based Mayo Clinic re- corded a net operating income of $154 million in the second quarter of 2020, a decrease of 48.7 percent compared to the same period last year, according to financial documents released in late August. In the three-month period ended June 30, Mayo Clinic recorded revenue of $3.2 billion, compared to $3.4 billion in the same three- month period in 2019. In the second quar- ter, Mayo's net medical service revenue hit $2.4 billion, a 16.2 percent dip from the same quarter one year prior. Mayo Clinic's expenses decreased 2.1 per- cent in the second quarter of this year to $3.1 billion. It credited management expense reduction measures with savings of $300 million in May and June. ose measures included salary re- ductions, suspension of employee retirement matches and temporary workforce reductions. In May, 9,800 employees were furloughed or had their hours adjusted, and in June, 8,600 staff members were either furloughed or had their hours adjusted, according to the report. Mayo Clinic received $303 million in federal and state relief funding in the second quarter. e health system recognized $173 million of the funding and said it is deferring recogni- tion of the remaining funds until the financial impact of the pandemic is clear. Mayo also said it repaid in July the $915 mil- lion in Medicare advance payments received in April. At the end of the three-month period ended June 30, Mayo Clinic had $10.3 billion in net assets, including donor restrictions. "is performance spanned a remarkable period that included the near closure of out- patient clinical practice and a deferral of all elective and nonemergent care in April, the rapid reopening of the practice in May, and stabilization at near normal levels of volume in June. e receipt of provider relief funds as well as expense reductions also played signifi- cant roles in the quarter's performance," Mayo Clinic said. n Chicago's Mercy Hospital to close in 2021 By Molly Gamble A fter nearly 170 years of operation, Mercy Hospital & Medical Center in Chicago will close in 2021, pending approval from the state review board. The hospital noted that it can no longer sustain monthly oper- ating losses of $4 million. The 292-bed hospital will close between Feb. 1 and May 31 depending on state approval, a Mercy spokesperson confirmed. The decision to end services at Chicago's first chartered hospital comes after a deal fell through in which Mercy would have joined forces with three other South Side hospitals — Advocate Trinity Hospital, South Shore Hospital and St. Bernard Hospital — to create an independent health system. The newly formed system had plans to build one to two state-of-the-art hospitals and three to six outpatient centers to ultimately replace their existing four hospi- tal facilities. Mercy and its would-be partners called off the deal in late May after the state funding for the $1.1 billion project fell through. Livonia, Mich.-based Trinity Health purchased Mercy Hospital in 2012 and has since put more than $236 million toward infrastructure improvements and short-term operating needs. A spokesperson for Mercy also noted that its aging facility will require at least $100 million of additional capital investments in the next five years. "The decision to discontinue services at Mercy Hospital was not an easy one. But patients on the South Side have unmet needs within the current system," Carol Schneider, hospital president, said in a statement. But Mercy does not plan to leave Chicago's healthcare landscape entirely. A spokesperson confirmed that Mercy is planning to develop an outpatient center that offers diagnostics, urgent care and care coordination and will treat 50,000-plus patients annually. "The transformation from an inpatient model to one with greater access to outpatient services will better address the disparate outcomes in health from which our community suffers today," Ms. Schneider said. n Houston hospital closes within 4 years of opening By Ayla Ellison F irst Texas Hospital Cy-Fair, a 50-bed hospital in Houston, closed July 26, less than four years after opening, according to Bloomberg Law. Irving, Texas-based Adeptus Health opened First Texas Hospital Cy-Fair in 2016. When the hospital shut down, 62 workers were laid off, according to the Houston Chronicle, which cited a federally required notice filed in late May. Adeptus Health, which owns a network of freestanding emergency depart- ments, did not respond to Bloomberg Law's request for comment. First Texas Hospital Cy-Fair is the second Texas hospital to close this year. Central Hospital of Bowie (Texas) closed Feb. 4. It was the 21st rural hospital in Texas to close in the last 10 years, according to the Cecil G. Sheps Center for Health Services Research. n

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