This article is written by Zhou Lujing
As one of the top three U.S. NEWS Hospitals in the United States for many years, Mayo Clinic has clearly become a belief in the medical community, and can be called "medical mecca".
In the 2021-2022 National Hospital Rankings, Mayo topped the list again (Source: U.S.NEWS)
Mayo's main campus is in Minnesota, and the other two are in Arizona and Florida. This small clinic in Rochester, Minnesota, has worked hard for a century to transform a small town into the ultimate mecca for medical care.
In 2014, I was further introduced to Mayo's patient-centered philosophy because of my project. In 2017, I learned more about Mayo as a management learner.
Courtesy of the author
As a non-profit organization, Mayo chose to publish his earnings report, which revealed what only doctors can see?
Analysis of data characteristics in the past three years
Overall revenue inventory
Visits: More than 1.2 million patients from 135 countries across the U.S. and around the world
Doctors and residents: 6900 people
Management and medical care: 63,100 people
Total number of all clinical staff: 70,000
Full-time scientific staff: 4221 people
Doctors involved in scientific research: 794
Overall revenue in 2019: US$13.8 billion
Since the beginning of 2020, the covid-19 epidemic has spread around the world, which has led to a significant decrease in cross-border medical visits in the United States, coupled with the priority treatment of severely ill COVID-19 patients, Mayo's revenue has decreased by 51.4% compared with the same period in 2019.
But despite this, the world tycoon of the non-profit organization Mayo is really a "profit organization", with Revenue reaching $3.7 billion in the third quarter of 2020 alone.
For example, the revenue of Zheng University First Affiliated Hospital, which is known as the "first courtyard in the universe", is 9.5 billion yuan in 2016.
In other words, under the difficult operation brought about by the background of the new crown epidemic, Mayo's revenue in one quarter can basically reach the income of ZhengDa First Affiliated Hospital for 2.5 years.
By 2021, Mayo's official third financial quarter grew significantly from the same period in 2020, totaling $4.018 billion. A steady pick-up in clinical volumes helped Mayo achieve a net revenue of $324 million.
So don't think that non-profit medical institutions don't make money, people can really make money, but the money earned needs to be reinvested in the medical industry, laboratories, equipment, etc., and capitalization is not allowed.
Revenue characteristics: main hospital + satellite network clinic revenue
Of course, such strong revenue is not achieved by a rochester general hospital alone. According to the financial report, Mayo's medical revenue is split into total hospital revenue + satellite network clinic revenue, and the two are comparable, showing a beautiful hierarchical diagnosis and treatment characteristics.
Mayo's three main campuses are responsible for medium to complex diseases: oncology, transplantation, cardiovascular, neurological, and international patients. More middle-level care is responsible for providing community-based family care or general practice, and if the general practitioner cannot solve the problem, they are referred up step by step.
The Mayo Health System, which primarily provides satellite clinic services, covers more than 50 satellite clinics and small hospitals in Wisconsin, Minnesota, and Iowa to bring people closer to the communities where people live. While rationally allocating medical resources, it also avoids the drawbacks of patients running around for medical treatment because of non-major diseases.
On the Mayo network introduction chart, it reads "Bring patients closer to home" (courtesy of the author)
In addition to Mayo's own system of medical systems, there are also Mayo Medical Consortium members (MCCN) and independent referral agencies (not counted in the financial report), and patients who need intermediate and high-level treatment after screening these primary diagnosis and treatment services are accurately referred to the main hospital for further treatment. This not only ensures the accurate matching of the patient's condition, but also ensures that the main campus and satellite clinic can operate most efficiently in their own diagnosis and treatment level and scope.
Doctors implement an annual salary system and attach importance to value assessment
The Glassdoor Economic Research Blog notes that over the past year: average Salaries for Mayo Registered Nurses increased by 3.4 percent to $61,306; pharmacists by 4.4 percent to $30,522; medical assistants by 6.3 percent to $33,244; doctors by 2.7 percent to $197297; and medical technicians by 0.1 percent to $53,221.
As we all know, Mayo's doctors are paid annually, and their income has nothing to do with outpatient volume, surgical volume, scientific research output, performance performance, medical quality, etc., and naturally there is no so-called performance bonus and dividend.
Mayo's salary design is roughly like this: if the doctor presets an annual salary of $500,000, the first year takes 60% of the preset annual salary, that is, 300,000, and then increases in equal amounts year by year until the target salary of 500,000 yuan is reached in the sixth year. Once you reach your target salary, regardless of your qualifications, you will continue to stabilize at this amount.
According to Mayo, the average income of doctors in the hospital is between 200,000 and 600,000 US dollars, and whether it is the so-called department director or the newly recruited Attending, the salary will not be very different.
However, because of this "big pot rice" salary setting, Mayo does not allow his full-time doctors to practice multi-site in foreign institutions, and is limited to multi-site practice in the Mayo Health System (community medical system) we mentioned earlier, which is actually very rare in American hospitals.
I once asked The mayo manager a question: Since it is an annual salary system and there is no other incentive, how do you recruit those big cattle doctors who are very good?
At that time, I got a surprising answer: The salary of the big cow doctor recruited by Mayo must be attractive in the industry (so the recruitment of big cow doctor is a matter of minutes). But when Mayo recruits doctors, it takes a lot of attention to see if they fit into Mayo's values and culture.
Every business has its values, mission and vision. Over the years, Mayo's value of "The needs of the patient comes first" has become familiar to almost every domestic medical person.
Mayo's mission and vision also revolve around patients: Mayo Clinic will provide an unparalleled experience as the most trusted partner for health care.
In the evaluation of each staff member, values are one of the contents of the evaluation, Mayo performance is based on the assessment of values, ordinary employees rely on self-evaluation, and physician employees will pass self-evaluation or combined with 360 degree assessment.
Performance reviews are annual and include 360 appraisal feedback from 4 to 6 people, supervisors' comments, self-assessments, Mayo's core values that apply to each role, professional competencies, degree of achievement and achievement of the previous year's goals, and goals and plans for the new year.
Even if the doctor is famous, once the interview or probation period finds that the employee's culture does not match, Mayo will say no to the doctor. Culture and values come first, which may ensure that Mayo's "patient-centered" medical values can be passed on to this day.
Of course, to find a big bull and a medical technician whose values match, there is also a high cost behind it.
Looking at Mayo's expenses compared over the same period, employee salaries and benefits rose by 7.7%. Good guys, the domestic industry general salary increase is estimated to be in the range of 5% this year.
Tall behind the charge price
Some people must ask: such a tall hospital must be very expensive, right? Indeed it is.
Currently, medical services in the United States are charged according to the CPT CODE. The quote below is image-guided thoracentesis (CPT 32555), which is $3678 based on the standard out-of-pocket price found on Mayo's official website, which includes $2411 for hospital facilities and $1267 for medical professionals (healthcare workers involved).
Screenshot of Mayo's official website
In addition, for the same CPT CODE treatment operations, U.S. hospitals can choose different pricing, the mainstream average charge is $2353, and the hospital can negotiate a discounted price with the insurance company, which means that the price paid to the hospital by different insurance companies is different.
In Shanghai, the 2017 Medicare Blue Book catalogue shows that the cost of chest puncture is 200 yuan. Even if an additional ultrasound guide is added, an additional 30 yuan is generated, for a total of 230 yuan. Private hospitals in the mainland set their own prices, and the fees are usually between 3 and 8 times that of the public, so the mainstream is 600 to 1600 yuan.
Who will bear the cost of such an expensive medical treatment? insurance.
In the United States, the commercial insurance system is already very mature, so most patients use commercial insurance or medicare /Medicaid for settlement, and Mayo also accepts both U.S. government insurance and various U.S. commercial insurance. Relatively speaking, the number of out-of-pocket patients is very small because the price is too expensive.
However, out-of-pocket patients are welcome in any medical institution, and Mayo is no exception. The staff inside told me that their favorite is the Middle Eastern tycoon, just to do a physical examination to drag the family with a mouth, not to mention, many cases will be wrapped up on the next floor (no problem, must be arranged, and can be customized Middle Eastern style).
Expect more hospitals to open financial reports
Finally, since treatment costs are mainly paid for by insurance, which means that hospitals need to wait for the payment cycle, let's take a look at Mayo's cash flow.
On the mainland, even at the level of section chief, with bonus coefficients or even secondary distribution powers for each doctor, may not be very concerned about the overall cash flow of a hospital. This is probably because in the cognition of most public hospital doctors, the overall operation of the hospital will certainly not be unpaid (once the public hospital is in arrears), it will be repaid), which is probably the chief accountant's concern.
But in the United States, hospitals are not owned by the government, but are self-financing, so as hospital executives, they will pay attention to whether they have healthy cash flow.
The so-called cash flow, Cash Flow, "flow" means flow, as the name suggests, there are inflows and outflows. We can simply think that cash flow is like the blood flowing in the life cycle of an enterprise, and when the cash flow is not enough, then the enterprise cannot continue to operate.
In the United States, because social insurance is highly developed, because the patient payment ratio (Payermix) will be different, healthcare provider managers need to monitor the proportion of insurance customers: commercial insurance customers, government insurance, out-of-pocket customers. Among them, the commercial insurance collection cycle is faster than that of government insurance, while self-funded patients pay directly after seeing a doctor (self-funded patients have a risk of bad debts on the other hand).
Imagine that if all the hospitals are medicare patients, and the medical institution has already spent all the costs of medical services (personnel salaries, equipment, consumables, drugs, etc.) in advance before the medical insurance pays the accounts payable, at this time, if the cash on the account is difficult to pay this part of the expenditure, there will be arrears in personnel salaries, arrears in supplier salaries, etc., and over time there will be a break in cash flow.
Enterprises can have no profits, but they cannot have no cash, no profits prove that temporarily enterprises cannot do it, products have no market, but without cash, enterprises will go out of business.
In the past 5 years, more than 2 hospitals in New York have closed their doors and gone bankrupt due to the excessive proportion of Medicare patients and the breakdown of cash flow. And Mayo can still do a beautiful cash flow when he accepts insurance reimbursement, which is really great.
In recent years, with the deepening of China's medical reform, the liberation of the system and the enthusiasm of investors, many people are looking forward to the emergence of "China Mayo".
Of course, this is destined to be a long process of incubation. All the qualities, brands, ideas, cultures... It can't come out for decades.
As a non-profit organization, Mayo dares to disclose its financial reports, and now Mayo has become the object of many hospitals' yearning and tribute, and our learning is not only at the level of medical technology, but also at the level of hospital management.
It is expected that domestic hospitals can also disclose their financial reports, and be healthier in the sun. The road is difficult to walk, but the more people walk, it will become a good road. (Curator: Gyouza)
The author is Zhou Lujing, a gastroenterologist at the Jing'an Branch of Huashan Hospital. Master of Science in Healthcare Management, Executive Program at the Wharton School of the University of Pennsylvania. He is currently the Director of Operations of Yuanhe.