IU Health operating margin drops to 2.5% amid higher costs, expansion

Indianapolis-based Indiana University Health saw $173 million in operating income (2.5% margin) for the first nine months of 2024 ended Sept. 30, a 32.2% decrease from the $255 million (4% margin) during the same time period in 2023, according to an Oct. 31 financial report shared with Becker's.

Here are four things to know:

1. Total revenue for IU Health increased 7.6% year over year to $6.86 billion in the first nine months of 2024.

2. IU Health's operating expenses spiked 9.3% year over year to $6.68 billion for the nine months ended Sept. 30, 2024 due to higher inflationary costs as the health system works on strategic projects and as labor, supply and drug costs increased to meet higher demand for inpatient care and surgery.

3. "With ongoing expansions in Fort Wayne (Ind.), Fishers (Ind.) and downtown Indianapolis, continuing to invest in facilities and tools to best support our patients and our team members helps advance IU Health's vision to make Indiana one of the healthiest states in the nation," Jenni Alvey, senior vice president and CFO of IU Health, said in the report. "While the increase in our costs appropriately reflects caring for more patients and our ongoing strategic investments, we continue to simultaneously focus on reducing expenses and improving operational efficiencies to ensure long-term sustainability."

4. IU Health is also committed to a multi-year strategy and affordability plan regardless of financial and operational challenges plaguing the healthcare industry. The plan aims to "bring commercial prices as a percentage of Medicare consistent with national averages by 2025 to help with the cost of care" for Indiana residents. 

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