mayo clinic financial report

Transcription

1 mayo clinic financial report Mayo Clinic is driven by its mission of providing the best patient care to every patient every day through integrated clinical practice, education and research. As a not-for-profit institution, Mayo invests all of its net operating income back into programs that support this mission. In, Mayo Clinic had a strong financial year, performing within its financial targets for patient care and overall operations. This resulted from significant efforts by Mayo staff to provide the best patient care and service effectively and efficiently. During, Mayo Clinic s income from operating activities the best measure of Mayo s financial performance was $198 million. This gave the institution a 2.9 percent operating margin. Mayo s total revenues grew by 9.6 percent, while expenses grew by 8.5 percent. The growth in expenses is due in part to Mayo investments in patient care and research activities, as well as information technology infrastructure. Mayo Clinic sets its financial targets with the goal of achieving a return that will allow the institution to meet its expenses, reinvest in the practice, invest in education and research, cover pension and other liabilities, and grow its endowment. Continued strong financial performance is necessary to allow Mayo Clinic to pursue its strategic priorities and prepare for significant financial challenges that lie ahead, including a growing number of Medicare patients as the baby boomers approach retirement age, and constrained National Institutes of Health research funding. Mayo Clinic s endowment reached nearly $1.6 billion, growing by $280 million during, reflecting the generous contributions of many benefactors and strong investment performance. The endowment, which has grown by about $1 billion since 2002, helps provide a stable funding source for Mayo Clinic research and education programs. During 2008, Mayo will build on its patient care, research and education accomplishments. Mayo s strategic priorities for 2008 include a focus on quality, integration, individualized medicine and the science of health care delivery. By focusing on these priorities and maintaining its solid foundation, Mayo Clinic will continue to help create the future of medicine. income from patient care Mayo Clinic staff served approximately 520,000 individual patients in. Mayo Clinic hospitals admitted 135,000 patients during the year. Income from patient care was $294 million in compared to $279 million in Overall financial performance in patient care was consistent with Mayo Clinic s multiyear financial plan. 54

2 Operating Performance (in Millions) 2006 Percent Change Total Revenue 6, , Total Expenses 6, , Income from Current Activities Operating Margin 2.9% 1.9% 1.0p income from current activities (in Millions and % of revenue) income $ % income from patient care (in Millions and % of revenue) income $350 10% margin margin Target Margin = 3% Minimum = 1.8% Target Margin = 6.7% Minimum = 4.9% Investing in research and education Mayo Clinic s net operating income is reinvested to advance the science of medicine and to teach the next generation of health care professionals. However, Mayo can t rely on excess funds from operations alone to completely fund education and research. Overall funding for Mayo research and education programs was $710 million in, an increase of $75 million over Government, foundations and industry sources provided $364 million of the total amount. Mayo Clinic invested $346 million in research and education in, an increase of $34 million over This investment includes unrestricted income from other operating activities and benefactor gifts. Mayo will continue to partner with foundations, benefactors, government and industry with mutual aims to support education programs that train the next generation of medical professionals and research programs that identify tomorrow s medical breakthroughs. research and education funding (in Millions) Mayo Clinic Funds + Benefactor Gifts $710 total $635 total Extramural Funds $364 $323 $346 $312 patient care Operating Performance (in Millions) Percent Change Total Revenue 5, , Total Expenses 5, , Income from Patient Care Operating Margin 5.2% 5.3% (0.1)p 55

3 Support from benefactors Investment performance More than 100,000 benefactors gave $373 million in to support Mayo programs, a record year for contributions to Mayo Clinic. Support from grateful patients, foundations, corporations and other organizations is essential to Mayo Clinic s ability to carry out its mission in patient care, education and research, to provide outstanding facilities and technology, and to provide charity care. Mayo s investments in the financial markets made significant gains, returning about 15 percent. Each year, a portion of the investment return is used to fund research and education programs. However, because there is significant variability of results from year to year, Mayo can t rely on extraordinary stock market performance as a source of funding for the long term. investment Performance (Annualized Return) Endowment Mayo Clinic s endowment reached nearly $1.6 billion, growing by more than $280 million during. The endowment helps provide a stable funding source for Mayo Clinic research and education programs. Continued significant growth in Mayo Clinic s endowment is a critical element in providing a long-term stable funding base for these programs. Diversified activities Mayo Clinic s diversified activities include health information publishing enterprises, clinical laboratory reference services, technology commercialization, and other services and products that use Mayo Clinic s medical and scientific knowledge base. These diversified activities generated $39.3 million in, which was reinvested in Mayo Clinic programs in medical research and education. Capital projects one-year three-year five-year General Fund 14.9% 15.8% 17.3% Benchmark 11.6% 12.7% 14.5% In, Mayo Clinic continued to make significant investments in facilities and infrastructure. Capital expenditures increased by $118 million in over 2006 levels, totaling $706 million. The organization continued a number of major projects during, including construction of a new hospital in Jacksonville, the build-out of the Gonda Building in Rochester, the opening of the Mayo Clinic Specialty Building and hospital bed expansion in Arizona, and the development of the electronic medical record in Mayo Health System. These major projects, along with technology, medical equipment, major renovations and projects, are fundamental in providing advanced, quality care to our patients. 56

4 Consolidated Statements of Activities YEARS ENDED DECEMBER 31, & 2006 (In Millions) Revenue, gains, and other support: Expenses: Net medical service revenue Grants and contracts Investment return allocated to current activities Contributions available for current activities Premium revenue Other Total revenue, gains, and other support $ 5, $ 6, $ 5, $ 6,291.6 Salaries and benefits Supplies and services Facilities Provision for uncollectible accounts Finance and investment Total expenses Income from current activities Noncurrent and other items: $ 4, , $ 6,699.6 $ $ 4, , $ 6,174.1 $ Contributions not available for current activities, net Unallocated investment return, net Change in net deferred tax asset Asset retirement obligation Miscellaneous Total noncurrent and other items Increase in net assets (before other changes in net assets) Change in minimum pension liability Increase in net assets before effect of adoption of FASB Statement Numbers 48 and 158 Cumulative effect of adoption of the provisions of FASB Statement No. 48 Effect of adoption of recognition provisions of FASB Statement No. 158 Increase in net assets Net assets at beginning of year Net assets at end of year $ (3.8) (3.5) $ (2.2) (394.3) $ $ 4,076.3 $ 4,308.8 $ (25.7) (2.3) $ $ $ 3,551.7 $ 4,

5 Consolidated Statements of Financial Position YEARS ENDED DECEMBER 31, & 2006 (In Millions) Assets 2006 change Cash and cash equivalents Accounts receivable for medical services, net Investments at market Other assets Property, plant, and equipment, net Total assets $ , , , ,514.8 $ 8,964.4 $ , ,126.0 $ 8,226.2 $ (3.1) $ Liabilities and net assets Accounts payable and current liabilities Long-term debt Other long-term liabilities Net assets Total liabilities and net assets $ 1, , , ,308.8 $ 8,964.4 $ 1, , , ,076.3 $ 8,226.2 $ 55.6 (14.4) $ Mayo services and people Measures of service Total clinic patients* Hospital admissions Hospital days of patient care 520, , , , , ,000 People of Mayo (number of employees) Staff physicians, medical scientists, clinical and research associates Allied health, residents, fellows and students Total 3,400 51,500 54,900 3,300 49,900 53,200 * Includes Rochester, Jacksonville and Arizona locations only. The above summary is intended to present a brief review of Mayo Clinic s financial condition and activities for compared with The Consolidated Financial Statements of Mayo Clinic for the years ended December 31, and 2006 were examined by Ernst & Young LLP. A copy of its report and Mayo Clinic s financial statement can be obtained by writing to: Treasurer, Mayo Clinic Rochester, MN

6 COMMUNITY BENEFIT SUMMARY: Benefits to those in need and the Broader Community* YEAR ENDED DECEMBER 31, (estimated costs stated in millions) cost of Benefit Provided to those in need Charity care Unpaid portions of Medicaid and other indigent care programs Total quantifiable benefit to those in need $ $ Cost of Benefit Provided to the Broader Community Non-billed services and cash and in-kind donations Education and Research ** Total quantifiable benefit to the broader community Total estimated cost of quantifiable community benefit Unpaid portions of Medicare and other senior programs $ $ $ $ * The estimated cost of benefits to those in need and the broader community were calculated in accordance with the guidelines set forth by CHA/VHA. ** The estimated cost of education and research excludes externally sponsored funding that totaled $364 in. 59