Margin stability and mission commitment in a time of rising costs and reimbursement uncertainty

Margin stability and mission commitment in a time of rising costs and reimbursement uncertainty

INDIANAPOLIS - In the face of rising costs and evolving reimbursement models, Indiana University Health sustained a positive operating margin during the first nine months of 2025. Operating income, however, decreased by more than $50 million compared to the same period last year, reflecting the continued challenge of delivering more and better care under tightening economic constraints.

Operating revenue increased 3.7% year-over-year, reaching $7.11 billion. This growth was driven by increased demand for services primarily in the outpatient setting and strong retail pharmacy performance. These gains helped offset lower inpatient and surgical volumes, reflecting broader shifts in how patients seek care.

Operating expenses also climbed by 4.6%, totaling $6.99 billion. The increase was largely due to higher costs for labor and supplies, reflecting evolving patient care needs. As a result, IU Health’s operating margin declined to 1.7%, down from 2.5% during the same period in 2024.

"We continue to evaluate the immediate and potential long-term financial impacts of policy changes at the state and federal levels and stay focused on what is within our control during these uncertain times. Our disciplined approach today will position IU Health to remain resilient and mission-focused regardless of how the policy environment evolves,” said Jenni Alvey, senior vice president and chief financial officer. “In addition to our ongoing commitment to affordability and access, we are also focused on recruiting and retaining our highly skilled, compassionate workforce who deliver the best care to patients across the state. This focus on our team members allows us to serve more Hoosiers while realizing additional operational efficiencies.”

IU Health is committed to being a leader in addressing the cost of healthcare in Indiana. The recent multi-year affordability strategy has continued to decrease commercial prices as a percentage of Medicare to be closer to national benchmarks helping to reduce the cost of care for Hoosiers.