IU Health addresses rising patient needs amid increasing costs

INDIANAPOLIS – Indiana University Health posted higher operating revenue in the first quarter compared to one year ago; however, operating income decreased compared to the year before.

Operating revenue increased by 5.3%, or $110.8 million compared to the year-ago quarter, to $2.19 billion. Operating expenses increased 6.9% to $2.18 billion in the first quarter, as costs of labor, supplies and drugs increased to meet the increased demand for surgeries and inpatient care. IU Health recognized operating income of $15.4 million with an operating margin of 0.7% for the first quarter, compared to $45.1 million and an operating margin of 2.2% in the year-ago period; however, 2023 first quarter included an $18 million final adjusted payment related to a 2017 transaction which strengthened the operating income.

“Though operating results were marginally positive in the first quarter, economic challenges and unfavorable events in the external environment continue to create financial pressure,” said Jenni Alvey, senior vice president and chief financial officer. “IU Health continues to invest in its team members to reduce the use of costly contract labor while ensuring patients consistently receive high-quality care. While the increase in expenses appropriately reflects the growth in full-time team members and supplies to support higher patient volumes, as well as a different mix of patients, we continue our focus on reducing expenses and improving operational efficiencies.”

Even with the financial and operational challenges facing the healthcare industry, IU Health remains committed to a multi-year strategy and affordability plan to bring commercial prices as a percentage of Medicare consistent with national averages by 2025 to help with the cost of care for Hoosiers.