IU Health operating income nearly tripled in 2023
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Indiana University Health, the state’s largest hospital system, said operating income nearly tripled last year, due to strong growth in outpatient care and slightly higher admissions and emergency care.
The Indianapolis-based network on Thursday reported operating income of $343 million last year, up from $121 million in 2022.
The improved results came after three years of the COVID-19 pandemic, marked by President Joe Biden signing a bipartisan congressional resolution to end the Public Health Emergency last spring.
IU Health called that a “major pivot point” from a year earlier when it was forced to suspend non-urgent surgeries and procedures due to the surge of COVID-19 patients early in 2022.
Construction also picked up last year on the new downtown hospital, which has a price tag of $2.31 billion for the construction of an expanded medical campus that will consolidate two existing downtown adult hospitals, and $1.98 billion for additional investments to the downtown Indianapolis campus and its neighboring property holdings, for a total of $4.3 billion.
While inpatient medical and surgical volumes across the system did not return to pre-pandemic levels, IU Health reported strong outpatient growth in 2023. Outpatient surgeries rose 8% and emergency visits rose 4%. Inpatient surgeries edged up 2% and admissions bumped up 1.5%.
Operating revenue grew 6.9%, to $8.64 billion, driven by higher inpatient and outpatient surgeries and medical inpatient discharges. Operating expenses rose 4.2%, to $8.3 billion, driven by rising labor, supply and drug costs.
Total earnings, when included $931 million in investment gains as markets rebounded, increased to $1.13 billion, from a year-earlier loss of $715 million, the system said.
“While overall financial performance improved in 2023 compared to the year prior, strong investment performance helped boost IU Health’s bottom line,” Jenni Alvey, chief financial officer, said in written remarks. “Increased volumes and growth in year over year operating income is promising, but we must continue our disciplined fiscal stewardship and commitment to reducing the cost of care to achieve our care affordability promise while still delivering high quality care.”
IU Health said revenue growth was limited by its pledge to bring average commercial prices as a percentage of Medicare consistent with national averages by 2025.
“Thanks to the pricing plan, hundreds of thousands of patients have benefited from focused reductions in prices in radiology, lab work, specialty pharmacy and ambulance services,” the organization said.
It added that total savings for patients and employers from the pricing plan are expected to exceed $1 billion by 2025.
“We have achieved significant price reductions in services used most frequently by our patients,” Dennis Murphy, president and CEO, said in written remarks. “Nevertheless, we still have work to do. We must navigate a careful and delicate balance between our care affordability plan and the rapidly changing dynamics of our environment.”
IU Health, with 15 hospitals and 38,000 employees, said salaries, wages, and benefits last year were comparable to 2022.