Indianapolis-based Indiana University Health reported $1.1 billion in net income in 2023, including investment gains of $931 million, compared to a net loss of $715 million in 2022, according to its most recent financial report.
In 2023, IU Health's operating revenue increased by 6.9% year over year to $8.6 billion, due to higher inpatient and outpatient surgeries and medical inpatient discharges in 2023. Its operating expenses climbed 4.2% to $8.3 billion, due to rising supply, labor and drug costs.
Operating income increased 183.5% from 2022 to $343 million, with a 4% operating margin.
IU Health has continued to invest in its 38,000 employees, including $85 million of incremental investments to help address existing workforce challenges and ensure care stability.
"While overall financial performance improved in 2023 compared to the year prior, strong investment performance helped boost IU Health's bottom line," Jenni Alvey, senior vice president and CFO of IU Health, said in the report. "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."
Revenue growth in 2023 was limited by IU Health's pledge, which is unique across Indiana health systems, to make average commercial prices as a percentage of Medicare consistent with national averages by 2025, while still ensuring proper care. As a result of its pricing plan, "hundreds of thousands" of patients benefited from radiology, lab work, specialty pharmacy, and ambulance service price reductions.
IU Health's price plan is expected to exceed $1 billion in total patient and employer savings by 2025. The health system also assists its patients with a price transparency program, which offers comprehensive estimates, like out-of-pocket costs, for all medical procedures. The service provides more than 150,000 estimates annually.
"Three years into our commitment to bring our commercial hospital prices to the national average by 2025, our plan remains on track and has provided hundreds of millions of dollars in cost savings to Indiana employers. We have achieved significant price reductions in services used most frequently by our patients," Dennis Murphy, president and CEO of IU Health, said in the release. "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's capital projects include $2.3 billion for the construction of an expanded medical campus that will combine two existing adult hospitals. Another $2 billion will go to added investment to the health system's Indianapolis campus and neighboring property holdings.