IU Health CEO says new hospital will be worth $4.3B price tag
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Indiana University Health’s planned $4.3 billion hospital complex in Indianapolis, one of the most expensive capital projects in state history, is designed to be an “indispensable, always-ready facility” to treat some of the state’s sickest patients, the system’s top executive said Tuesday.
“That’s why this hospital is really an investment in the health of Hoosiers,” CEO Dennis Murphy told a lunch audience at the Economic Club of Indiana. “It’s how we continue to bring health to the state. And I think we are the only organization in the state who can take care of the truly complex and the sick.”
In a 35-minute speech, Murphy made the case that IU Health treats some of the sickest patients in the state and needs the best hospital possible to continue doing that.
IU Health has a higher mix of seriously ill patients than many other top-tier health systems in the country, including Barnes-Jewish Hospital in St. Louis, NYU Lagone Health in New York City, and Stanford University Medical Center in Palo Alto, California, Murphy said. Many other big hospitals in the country routinely send tough cases to IU Health for treatment, he added.
“I have friends at Northwestern [Medicine in Chicago] who refer patients to IU Health, because they know there are better people here,” Murphy said. “I have friends [at Johns Hopkins Hospital] in Baltimore who do the same thing.”
About 20% of the patients who come to IU Health come from other hospitals in the state “who believe that we can take better care of them in our downtown hospitals than they can,” Murphy said.
IU Health’s planned new hospital, with the latest equipment and technology, will also help the Indianapolis-based system recruit and retain top physicians, nurses and other health care providers, he said.
“To maintain this level of excellence for decades to come, we needed to build a new downtown hospital,” Murphy told an audience of several hundred at the Indiana Convention Center. “And I’ll keep saying, one that’s worthy of the people who work there.”
The complex will stretch across a 40-acre site just south of IU Health’s century-old Methodist Hospital, at West 16th Street and North Capital Avenue. Construction work on the new hospital is underway, with patients set to move in near the end of 2027.
The hospital will consolidate much of the existing Methodist Hospital and University Hospital, about 1.5 miles southwest, on the IUPUI campus. The eight-block expansion will extend IU Health’s footprint south to 12th Street and from Capital Avenue to Interstate 65.
The complex will include a medical office building, a support building that will contain parking, a utility plant and retail space. It will also be home to the Indiana University School of Medicine’s education and research building.
The hospital, which has yet to be named, will have three patient towers that rise 16 floors. Altogether, it will contain 864 beds and 50 operating rooms.
The $4.3 billion price tag does not include the cost of demolishing or renovating part of Methodist Hospital. IU Health has not yet announced what portions of the existing Methodist Hospital complex it plans to preserve or repurpose. The hospital, built in 1908 and expanded over the decades, is a hodgepodge of buildings and wing that have been stitched together, with mismatched floor plates, uneven ceiling and a conglomeration of electrical, mechanical and plumbing systems.
Murphy said the new hospital will save $50 million a year in heating, lighting and other operational costs, compared with the two existing downtown hospitals.
Even though it carries a high price tag, the new hospital will actually cost less per square foot than other recent big hospital projects across the country, Murphy said. When it’s done, IU Health’s new hospital will cost about $1,400 a square foot.
That’s cheaper than Mayo Clinic’s recent $5 billion expansion, which cost about $2,000 a square foot, or Stanford University Medical Center’s $2 billion new hospital, which cost about $2,400 a square foot, he said.
“We’re conscious of the cost,” Murphy said. “We want to make sure we’re building an efficient, cost-effective facility, because we know we have to be stewards of those resources.”