Net income rose 55 percent at the Mayo Clinic during 2013 as the Rochester-based system of hospitals and clinics treated more patients and attracted more in donations.
In releasing annual financial statements on Wednesday, Mayo officials said the better-than-expected results came after a year of focus on improving operating efficiencies, which included shrinking its workforce and creating a "working differently" culture that launched 400 quality-improvement projects in various departments.
For the year, Mayo reported $612 million in net operating income, a margin of 6.5 percent, which is at the high end of its traditional target of 4 to 6 percent.
"We're in an era where there's broad and increasing downward pressure on our revenues for the work we do — from Medicare, from the sequester, from the impending changes with the Affordable Care Act and the market in general from commercial payers," CEO Dr. John Noseworthy said in a conference call. "So facing that, we need to manage our growth and manage expenses."
Mayo received $399 million in gifts in 2013, including a $67.3 million donation from Wisconsin businessman Robert Kern and his wife, Patricia, who earmarked funds for Mayo's Center for the Science of Health Care Delivery. The donation helped increase Mayo's revenue from development gifts by 63 percent from the previous year.
Mayo also saw an increase in the number of patients across its organization. Its doctors treated more than 1.26 million patients at its network of clinics and hospitals, an increase of 8 percent over last year. In addition to major campuses in Rochester, Jacksonville, Fla., and Phoenix, Mayo operates primary-care clinics in 70 communities in Iowa, Georgia, Wisconsin and Minnesota.
That boost in patient care drove a 6 percent increase in revenue, to $9.4 billion. Expenses rose just 4.3 percent, to $8.8 billion as Mayo, the state's largest employer, shrank its staff, largely through attrition.
The company trimmed its total ranks by about 2.6 percent, to 59,509 employees nationwide. In Rochester, the workforce declined about 3 percent to 33,179.
About 25 health care systems are now part of the Mayo Clinic Care Network, which Mayo described as the "centerpiece" of its "evolved health care delivery model." The partnership enables Mayo clinicians to work with local doctors to keep some patients closer to home for care, while directing more complex cases to one of Mayo's three hospital centers. About 7 million patients received treatment through the network last year.