Grand Blanc, Mich.-based McLaren Health Care posted an operating income of $44.5 million in the first half of fiscal year 2024 down from an operating income of $47.1 million over the same period last year, according to its May 14 financial report.
The health system attributed the 5.6% decline to continued rising labor and benefits costs as well as increased costs of supplies and pharmaceuticals, according to the report
First half revenue increased 2.1% to $3.3 billion, according to the report. Operating expenses increased 2.3% to $3.3 billion.
McLaren saw a $57.7 million increase in salaries, wages and benefits and payroll taxes, which increased 6.2% and 10% respectively. McLaren said the increases resulted mainly from pay increases, locum tenens physicians, and additional physicians onboarded in 2023. Supply costs increased 10.8% to $422.5 million, due to a combination of manufacturer price increases and increased volume of oncology and surgical patients compared to the prior year.
Net patient service revenue increased 6.7% year over year, according to the report. The system attributed the increases in inpatient discharges, observation cases, emergency room visits, and surgical procedures.
Premium revenue decreased 3% from the same period last year to $1.5 billion. The decrease was attributed due to a year-over-year decrease in members as the Medicaid determination process continued in Indiana and Michigan.
After accounting for nonoperating items such as investment returns, McLaren ended the half with a net gain of $321.5 million, up 21.3% year over year.