Cleveland Clinic sees operating margin slip to 7.2% as investments drag down bottom line

Cleveland Clinic got a revenue boost from higher patient volume in the third quarter of fiscal year 2015, but the health system still saw its operating margin dip slightly to 7.2 percent, down from 7.4 percent the year prior.

The 11-hospital system reported operating income of $128 million on revenue of nearly $1.8 billion for the three-month period that ended Sept. 30. That's compared to operating income of $124 million on revenue of nearly $1.7 billion in the same period of last year.

The year-over-year revenue growth was partially attributable to higher patient volumes. Cleveland Clinic saw total admissions, emergency department visits and surgical cases increase in the third quarter of FY 2015.

However, the jump in revenue wasn't enough to offset growing expenses. The health system saw its expenses increase 6.6 percent in the third quarter compared to the same period of last year. Pharmaceutical costs were up 24.3 percent year over year as the system's new specialty pharmacy drove spending upward.

After accounting for a loss on investments of nearly $278 million, Cleveland Clinic ended the quarter with a net loss of $179 million. That's compared to a net gain of $134.5 million in the third quarter of last year.

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