The Mayo Clinic Health System, which has cut compensation costs to rein in expenses, reported a higher operating margin and surplus in the third quarter of 2014.
The Rochester, Minn.-based system reported a third-quarter operating surplus (PDF) of $205.3 million on revenue of $2.4 billion for the three-month period ended Sept. 30. That compares to an operating surplus of $191 million on revenue of just under $2.4 billion during the same period in 2013.
Its operating margin improved to 8.5% from 8% in the year-ago period. The numbers reflected a continuation of trends that were also seen last quarter.
At a time when most systems are seeing salary and benefit expenses increase rapidly, Mayo reported a 2.1% reduction in compensation costs. The 25-hospital group in May said it planned to eliminate 188 medical transcriptionist positions and outsource those services to Amphion Medical Solutions. The move, which was expected to be completed by Nov. 1, should save about 40% on transcription costs.
Also, expenses related to its facilities as well as finance and investment continued to grow. In addition, like many of its peers, Mayo saw an 8.2% increase in its supply and service costs.
The system also booked lower investment returns to finish the third quarter with a net surplus of $234.9 million compared with $335.2 million in the prior-year period.
With the majority of its hospitals in states that have expanded Medicaid to some degree, Mayo also reported a 2.8% decrease in self-pay revenue for the first nine months of the year.
While its write-offs declined to $52 million in the nine-month period compared with $159.2 million during the same time last year, its allowance for uncollectible accounts was 25.5% as of Sept. 30 against 20.8% in the year-ago period.
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