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Surging expenses, particularly for labor, trimmed first quarter operating income at the Mayo Clinic.

Costs grew faster than revenue during the first three months of the year, even as the Rochester-based health care system saw more outpatient visits, surgeries and total patient days.

A higher volume of patient care drove up the overall salary and benefits expense, Mayo said in a statement to the Star Tribune on Friday. Other factors include pay raises that took effect in mid-March, temporary pay premiums and more contract workers.

The clinic saw nearly 1.2 million outpatient visits during the first quarter and more than 33,000 surgical cases, increases of 3.5% and 2.6% year-over-year. Admissions were down slightly, but the total number of days spent by patients in the hospital increased by 10%.

The clinic's large investment portfolio also took a hit amid broad stock market declines.

After factoring investment losses, Mayo posted a net loss of $227 million — down significantly from net income of $782 million during last year's first quarter.

"The year 2022 begins with new challenges that follow nearly two years of pandemic operations," the clinic said in a financial statement released to bondholders Thursday. "Workforce shortages and corresponding labor cost inflation, persistent supply chain disruptions and shortages, a higher interest rate environment and capital market volatility have all taken center stage for management attention."

Mayo Clinic is Minnesota's largest employer. With hospitals and clinics across the southeast part of the state — as well as Arizona, Florida, Iowa and Wisconsin — the clinic employs about 73,000 people.

During the first three months of the year, Mayo posted $142 million in operating income on $3.93 billion of revenue, a 42% decline in operating income from the same period a year ago.

Expenses grew by 10% year-over-year, while revenue grew by 7%.

"At $2.3 billion, salaries and benefits increased 7.4% over the prior period and comprised 59.7% of total expenses," the financial statement reported.

As of March 31, the clinic was expecting to spend $1.53 billion to complete all current construction projects, with all expenses coming in the next three to five years. One year earlier, the comparable figure was slightly higher at $1.66 billion