Written by Sarah Kliff
When the top-ranked Mayo Clinic stopped all nonemergency medical care in late March, it began to lose millions of dollars a day.
The clinic, a Minnesota-based hospital system accustomed to treating American presidents and foreign dignitaries, saw revenue plummet as it postponed lucrative surgeries to make way for coronavirus victims. The hospital network produced $1 billion in net operating revenue last year, but now expects to lose $900 million in 2020 even after furloughing workers, cutting doctors’ pay and halting new construction projects.
The future offers little relief, at least until the pandemic subsides and the economy recovers. The Mayo Clinic will have to rely more heavily on low-income patients enrolled in the Medicaid program, as others will be hesitant to travel across the country, or the world, for care. “It’s uncontrollable,” said Dennis Dahlen, the clinic’s chief financial officer.
The American health care system for years has provided many hospitals with a clear playbook for turning a profit: Provide surgeries, scans and other well-reimbursed services to privately insured patients, whose plans pay higher prices than public programs like Medicare and Medicaid.
The Covid-19 outbreak has shown the vulnerabilities of this business model, with procedures canceled, tests postponed and millions of newly unemployed Americans expected to lose the health coverage they received at work.
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