Montefiore Health System continued to struggle with higher expenses in the first six months of the year, leading to a sharp decline in its operating surplus.
Rising salary, benefit and supply costs have been an ongoing issue for the New York City-based system, which has been expanding beyond its base in the Bronx.
Its latest earnings report for the first half of 2015 shows that expenses increased 8.3% year over year, while revenue grew more slowly, increasing 6.6%.
Montefiore reported an operating surplus of $3.1 million for the six-month period, down 89.8% from the $30.5 million surplus it had in the first half of last year. Its operating margin slid to 0.2%, a marked decline from the comparable period's 1.8%.
The pressure came largely from higher wages and supply costs. Revenue increased to $1.8 billion in the period, up from $1.7 billion in the first half of 2014.
Montefiore has been expanding in the Westchester County suburbs over the past two years. It bought three hospitals out of bankruptcy in two separate deals and turned one facility into a free-standing emergency room and ambulatory-care center.
The system also is seeking to add Nyack (N.Y.) Hospital, a facility currently affiliated with New York-Presbyterian Healthcare System, to the group.
While Montefiore is growing its footprint, it also has ambitious plans to take on responsibility for keeping people out of the hospital. The system plans to move all its Medicare and Medicaid patients into risk-based contracts by 2018—building on its success in the Medicare Pioneer ACO program.
Its utilization statistics show that its number of patient days and average occupancy rate both decreased in the first half of the year as patients came in with lower acuity conditions. Admissions increased 2.1% and outpatient visits were up 4%. Emergency room visits increased 3.5%.
