The Mayo Clinic reported another increase in expenses in the third quarter of the year, which again lowered its surplus in the period.
The Rochester, Minn.-based system had been trying to get its costs under control in 2014 by trimming its workforce, scaling back health benefits and introducing more cost-sharing for employees. Yet after experiencing a payoff from those efforts last year, it is once again seeing its expenses outpace revenue growth.
For the quarter ended Sept. 30, Mayo reported a 9.2% increase in salaries and benefits, a 9.7% increase in supplies and services, and a 9.1% increase in facility costs.
In contrast, the system reported a 5% increase in revenue in the quarter.
Mayo did not break out operating statistics such as patient volume in a financial statement filed for bondholders. However, its charity write-offs decreased to $43 million in the first nine months of the year, down 17.3% from $52 million during the same period in fiscal 2014.
The system is one of the major investors in the city of Rochester's Destination Medical Center, a local economic development initiative to create a premier health and wellness campus that also includes retail, dining, sports, arts and convention space. Mayo has committed more than $10 million in capital as well as staffing hours to the project.
The system reported a third-quarter operating surplus of $120 million on $2.5 billion in revenue compared with an operating surplus of $205 million on $2.4 billion in revenue in the prior-year period.
Its operating margin declined to 4.8% from the year-ago period's 8.5%.