Cleveland Clinic has reported a more than $1 billion loss for the first nine months of 2022 as salaries increase and inflationary pressures mount.
The 20-hospital health system reported $469.2 million in third quarter net losses, a significant drop from $422.2 million net income last year. Cleveland Clinic's investment returns were nearly $682 million lower for the third quarter this year than last due to "unfavorable financial markets," according to the health system's financial report.
For the nine month's end, Cleveland Clinic reported $1.5 billion net loss compared to nearly $1.7 billion net income over the same period last year. The system reported a -3.3 percent operating margin with $316.3 million operating loss for the nine month's end as operating expenses were up 14.5 percent.
"The growth in expenses is primarily due to higher personnel costs. Nationwide labor shortages have created staffing challenges that have resulted in increased overtime costs and premium pay for employed caregivers as well as an increase in the utilization of agency nurses and other temporary personnel to meet the demand of patient activity. Supplies, pharmaceuticals and other non-labor expenses have also increased due to recent inflationary trends and supply chain challenges," according to Cleveland Clinic's financial statement.
Salaries, wages and benefits were up 16.3 percent to $802.5 million for the first three quarters of the year due to more overtime, premium pay and agency costs. The health system awarded annual salary adjustments averaging 3 percent systemwide during the second quarter of the year.
Cleveland Clinic is also focused on boosting the revenue cycle as days of revenue in accounts receivable jumped from 48 days at the end of the third quarter in 2021 to 52 days as of Sept. 30. The days cash on hand also dropped from 445 on Sept. 30, 2021, to 333 a year later.