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Rising expenses, lower volumes hurt Kaleida Health financials


By Bob Herman
Posted: June 23, 2014 - 3:30 pm ET
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Kaleida Health, Buffalo, N.Y., lost $15.3 million from operations in fiscal 2013 as expenses rose at almost twice the rate of revenue.

Kaleida's results mirror a Moody's Investors Service report from this year that said expense growth at not-for-profit hospitals and health systems continues to surpass the rate of revenue growth—due in part to federal reimbursement cuts and small rate bumps from commercial insurers. Kaleida's revenue rose 3.5% to $1.26 billion (PDF). Expenses, however, increased 6.1%. Supplies alone soared almost 10% year over year, while salaries and benefits ticked upward 7.4%.

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Catholic Health System, Kaleida's three-hospital competitor in Buffalo, did not face quite the same rising cost pressures in 2013. Its expenses grew 4.6% compared with 2012, and revenue increased 5% to $922.2 million.

Utilization at Kaleida also was down in nearly all areas (PDF). Discharges, outpatient surgeries and emergency-room visits dropped 7.4%, 4.8% and 1.7%, respectively.

Including investment gains and other nonoperating revenue, Kaleida posted a $1 million deficit in 2013. In 2012, the system had a total surplus of $42.8 million.

Kaleida encompasses three general acute-care hospitals as well as a children's hospital. The system has undergone a makeover in its executive ranks this year. Jody Lomeo took over as full-time CEO in April after James Kaskie resigned in January. Jonathan Swiatkowski and Dr. David Hughes were named chief financial officer and chief medical officer, respectively, this month.

Follow Bob Herman on Twitter: @MHbherman


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