Cleveland Clinic was stung by a dip in financial performance in third quarter 2017, with a more than 30 percent drop in operating revenue, and a $60 million drop in net income, according to financial statements released by the system.
Operating income dropped to roughly $39.7 million from $58.4 million third quarter last year due at least in part to noticeable increases in salaries, wages and benefits, supplies and pharmaceuticals. Salaries, wages and benefits swelled from $1.1 billion as of September 30, 2016 to $1.13 billion this September 30 this year.
Two other areas saw notable spikes: pharmaceutical costs rose $30 million from $221 million to $251 million. Supply costs increased by $7 million to for the period ending September 30, the documents showed.
There was a slight increase in revenue from $2.01 billion this time last year to $2.05 billion, but it was overshadowed by other shifts in budgetary categories. In the end, third quarter closed with a $60 million drop in net income to $227.6 million from $287.6 this time last year.
The last six months have had at least one other hiccup for the juggernaut healthcare system, as a major fraud case came to light involving a former executive there, Gary Fingerhut. Though Fingerhut had been dismissed in 2015, he was charged this September with accepting an estimated $130,000 in payment from a shell company that allegedly defrauded the health system out of more than $2.7 million, according to the U.S. Department of Justice in Northern Ohio. His alleged co-conspirator was charged about a month later.
However, the system also turned a major page in its leadership history when they announced the successor to long-time and renowned CEO Toby Cosgrove. The system named the current CEO of their Abu Dhabi facility, Tom Mihaljevic, as the leader who will take the helm of Cleveland Clinic.
Mihaljevic will step in as the new leader effective January 1, 2018.