Memorial Sloan-Kettering operating margin falls as labor costs grow

New York City-based Memorial Sloan-Kettering Cancer Center reported operating income of $143.1 million on $2.7 billion in revenue for the nine months that ended Sept. 30, compared to operating income of $163 million on revenue of $2.5 billion for the same period a year ago.

The higher revenue was partially attributable to patient volume growth, as admissions, outpatient visits and surgical case volume all increased in the first nine months of 2015 compared to the year prior.

Although its revenue increased, Memorial Sloan-Kettering's expenses grew at a faster pace. The system said the growth in expenses was primarily due to an increase in full-time employees needed to staff current patient volumes and new clinical facilities. A $4.8 million expense related to the staffing and training for the Josie Robertson Surgery Center, which is scheduled to open in January 2016, was included in Memorial Sloan-Kettering's operating expenses for the period.

The system also saw its supply costs increase in the nine-month period that ended Sept. 30, growing 12.9 percent year over year.

Memorial Sloan-Kettering ended the first nine months of 2015 with an operating margin of 5.3 percent, compared to a 6.6 percent operating margin for the same period a year ago.

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