The budget for the hospital and its affiliated physician practices projects total revenues of nearly $28 million, and operating expenses of $27 million, for a consolidated operating income of $972,765, a 3.5% margin. Including non-operating income will result in an overall net income of $1,127,175.

Net income is reinvested back into the nonprofit hospital to fund depreciation, acquire new equipment and develop new programs.

Chief Financial Officer Dennis Allen said Mayo's budgeted income for the new fiscal year, which began Oct. 1, is less than the projected net income for 2002. That change is being driven by a budgeted increase in operating expenses of 6.4%, while operating revenues are anticipated to increase by only 2.4%. The change in expenses is primarily related to payroll expenses and ongoing operating costs associated with the recently completed Phase I construction project.

Allen said the new budget anticipates no significant changes in overall utilization of hospital services. Admissions are expected to remain stable, at 1,676 per year. The budget estimates an average daily census of 14.8 patients, with an average length of stay of 3.2 days. Outpatient revenue is expected to account for 62% of Mayo's budget.

Total operating expenses are expected to increase by $1,318,995, with 64% of that total due to increased wage and benefit expenses. Mayo anticipates having 236 full-time equivalent employees. A 3% annual merit increase will be available to all eligible employees, based on job performance. Mayo CEO Ralph Gabarro characterized these expenditures as valuable investments in Mayo's greatest resources - its employees.

HAD 4 directors also authorized a hospital capital equipment budget of $1 million, including $300,000 in funding for Phase II of Mayo's construction project and a contingency account of $140,000. Some of the larger items in the capital equipment budget are an ambulance van, radiology equipment, operating room equipment and resurfacing of the hospital's parking lot.