The rising costs of labor, supplies and other expenses led to a sluggish first nine months of 2014 for Montefiore Health System, as they have for many other health systems this year.
New York City-based Montefiore said in a financial disclosure to bondholders (PDF) that its operating margin in the nine months ended Sept. 30 was 1.4%, down from 2.9% in the same period of 2013. Overall, the system posted a $35.6 million operating surplus on almost $2.6 billion of revenue, compared with a $71.4 million operating surplus on $2.5 billion of revenue last year.
Expenses grew at 5.8%, faster than its 4.2% revenue growth. Salaries and employee benefits both rose considerably, but supplies shot up the most at 10.2% year over year.
Montefiore's total bottom line, which includes investment income, also took a hit compared with the same period of 2013. The health system's gains on Wall Street and other market securities fell 73%. Although Montefiore still posted investment income, the total surplus was down 62% in the first nine months of the year, totaling $48.7 million.
The system's financial results may signal some growing pains. Montefiore, which is based in the borough of the Bronx, is expanding into a much larger regional player with six hospital campuses in New York, including two it recently bought out of bankruptcy. And the system is looking to scoop up 375-bed Nyack (N.Y.) Hospital from its competitor, New York-Presbyterian Healthcare System.
Montefiore also is investing heavily into accountable care projects that aim to coordinate patient care and lower costs, like Medicare's accountable care organization program. It has one of the more successful Pioneer ACOs in the country and recently announced it would keep $13 million out of $24.5 million it saved Medicare last year.
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