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November 15, 2015 11:00 PM

Mayo Clinic costs continue upward trajectory

Beth Kutscher
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    The Mayo Clinic has committed more than $10 million toward economic development around its Rochester, Minn., campus.

    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%.

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