Advocate Health Care Network, the largest health system in Illinois, finished the third quarter with a weaker margin as rising labor costs contributed to expense growth that outpaced revenue gains.
Advocate is the dominant health system in the Chicago-area's competitive market and is poised to grow even more in a deal with NorthShore University Health System.
The system ended the third quarter with salary, wage and benefit costs up 6.7% from the same three months the prior year. Advocate has reported growing demand at its hospitals, though data for the third quarter was not published. In the first half of the year, admissions increased.
Higher labor costs bumped overall operating costs by 3.4% to $1.27 billion for the quarter, which ended Sept. 30.
Revenue increased 1% during the quarter to $1.32 billion. The sluggish revenue growth left the system with a third-quarter operating margin of 3.7% compared with 5.5% a year ago.
Advocate finished the quarter with an operating surplus of $48.7 million, a decline of 32% from the surplus during the third quarter last year.
For the nine months that ended Sept. 30, Advocate earned a surplus of $213.7 million on revenue of $4 billion compared with an operating surplus of $194.8 million on revenue of $3.85 billion in the same period last year.