Indiana University Health is the latest to attribute dismal 2022 financial results to rising costs and investment-related losses.
Indianapolis-based IU Health on Friday reported a loss of $715.11 million in 2022, compared with a profit of $861.51 million a year earlier. The nonprofit system’s annual losses include $698.16 million lost due to underperformance in financial markets.
Year-over-year operating revenue increased 2.8% to $8.09 billion, including a 4.6% increase in patient services revenue with the number of surgeries, emergency department visits, and procedures X-ray increased. Hospitalization is slightly reduced. Expenses for 2022 increased 3.3% to $7.97 billion, driven by labor, drug and supply costs.
IU Health will seek to overcome economic obstacles by limiting capital expenditure, optimizing resources and implementing operational efficiency, the hospital said in a press release.
As Indiana’s largest healthcare system, IU Health operates 16 hospitals and more than 300 physician offices, surgery centers, and other care facilities.
IU Health also notes that their ongoing sale is having a negative impact on sales. In late 2021, IU Health announced it would take measures to bring Medicare percentage-average commercial prices in line with the national average by 2025 — a move that is expected to consume system cost more than 1 billion dollars in revenue. IU Health has previously been criticized for the higher prices it charges commercial customers.
In 2020, commercial prices equal 280% of Medicare prices, falling to 269% in 2021. Prices were at 265% for the first nine months of 2022, the latest data available.
The spokesperson said IU Health recorded a $120 million drop in revenue in 2021 due to the price reduction plan. That equates to 1.5% of the system’s total operating revenue for that year. The spokesperson did not provide a figure for 2022.
“IU Health has recognized and accepted its responsibility to help address health care costs in Indiana. We acknowledge that hospital prices for commercial customers in our state are above the national average and We are the only health system to date that has not only publicly committed to reducing them but has actually taken concrete steps to do so,” the system said in a statement last year.
To date, the system has offered an average of 45% off radiology services, 30% off specialty pharmaceuticals, and nearly 24% off ambulance services. IU Health says almost all testing services cost Medicare or less. The system is planning a similar price adjustment in 2023.
