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Cleveland Clinic’s chief executive, Dr. Toby Cosgrove, is retiring from one of the most influential health systems in the country in January. His imminent departure come at a time when hospitals are contending with an array of financial pressures, including rising pharmaceutical costs and government reimbursements that don’t cover costs.

Last year, the clinic saw its operating income drop 71 percent, from $480 million to $139 million. Cosgrove sat down with STAT recently to discuss the challenges behind those numbers, and what should be done to address them. This interview is lightly edited for clarity.


How is the clinic’s patient population changing, and how is that change affecting your underlying finances?

We are seeing increasing movement toward Medicare and Medicaid, which now accounts for 62 percent of our patient volume, going up about one or two percent a year. So as that goes up and private pay goes down, we lose money on every Medicare and Medicaid patient.

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  • Pharma manufacturing is horrendously inefficient. Lack of economies of scale and lack of best processing methods contribute to the situation. There is no incentive to improve as the patients will pay the highest price. Regulations along with consternation of the internal regulators is significant interference for any and every improvement.

    There are ways and means but when profits are being made with the least efficient methods why improve and make drugs affordable.

    Affordability will raise revenues and profits but the focus of big ten is to make monies with new drugs rather than make drugs affordable. Some how laws of economics do not apply to pharma companies.

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