Cleveland Clinic ended the first quarter of this year with an operating loss, which the health system attributed to a decline in patient volume and more expenses tied to the COVID-19 pandemic.
Cleveland Clinic's revenue climbed to $2.6 billion in the first quarter of this year, up from $2.5 billion in the same period a year earlier, according to unaudited financial documents. Including April, the first full month the health system limited services due to the pandemic, Cleveland Clinic experienced net patient service revenue shortfalls of more than $500 million, compared to plan, and incurred about $100 million in COVID-19 preparedness costs.
"The effect of COVID-19 on the operations of the system and the resulting negative impact on operating revenues due to the suspension of nonessential services is expected to be significant for the second quarter of 2020," management wrote in comments on the financial results.
During the first three months of this year, higher expenses offset the 18-hospital system's revenue gains. Operating expenses climbed 5.7 percent year over year to $2.4 billion in the first quarter of this year. Expenses grew across several categories, including supplies, pharmaceuticals and salaries, benefits and wages.
To reduce spending, the health system has postponed some capital expenditures, cut administrative service expenses and other nonessential costs.
Cleveland Clinic ended the most recent quarter with an operating loss of $39.9 million, compared to operating income of $36.2 million in the first quarter of 2019.
After factoring in investment losses and other nonoperating items, Cleveland Clinic closed out the first quarter of this year with a net loss of $830.6 million. In the same period a year earlier, the health system posted net income of $828.6 million.
To help offset financial damage, Cleveland Clinic has received $199 million in federal grants from the $175 billion in relief aid Congress allocated to hospitals and other healthcare providers to cover expenses and lost revenues tied to the pandemic. The health system also applied for and received $849 million in Medicare advance payments, which must be repaid.