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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowIndiana University Health, one of the state’s largest and busiest hospital systems, saw patient volumes and revenue grow in the first six months of the year, but said operating income fell 73% as the costs of labor, supplies and drugs increased to meet higher demand for surgeries and patient care.
The Indianapolis-based hospital system on Thursday reported operating income of $53.1 million, with an operating margin of 1.2% for the first half of the year, compared with $195.7 million and an operating margin of 4.6% a year ago.
Consolidated revenue increased 5.1%, to $4.5 billion, due in large part to increased patient volumes. Consolidated expenses increased 8.8%, to $4.4 billion.
However, operating income from core operations was comparable year over year, IU Health said.
Core operating expenses, excluding strategic projects, increased 7.5%, or $302.7 million.
“Costs have surged at a faster pace than our revenue growth as labor and supply and drug costs continue to increase, and we focus on strategic capital investments that support our future vision,” Jenni Alvey, senior vice president and chief financial officer, said in written remarks. “We remain confident that our continued focus on operational efficiencies and growth will aid us in achieving IU Health’s vision of making Indiana one of the healthiest states in the nation by ensuring healthcare is of the highest quality, affordable and accessible.”
Patient visits were up across the board, including admissions (3.8%), inpatient days (4.3%), total surgery cases (14%) and emergency room visits (3.8%).
IU Health operates 16 hospitals and hundreds of primary care, specialty care offices and urgent care centers. It is one of the state’s largest employers, with more than 35,000 full-time equivalent employees.
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From an earnings perspective, IUH looks like an investment bank with a side business in hospital services. Its net income last year exceeded $1.1 billion, the greater part from investments. To get a balanced perspective, we need to know both operating margins and net income; instead of reporting just operating margins when investment income is high and reporting net income when investment earnings are low.
Agree with David Ks’ comments. IU Health is verging on a monopoly. I shake my head when not for profits derive a significant amount of income from investments. Shouldn’t not for profits publicly report a transparent financial statement.
For the most part, the Form 990, a public document, discloses this info in the statement of financial position (balance sheet), statement of activities by revenue type, and statement of functional expenses. Full audit reports are also public documents for hospitals and included as part of Form 990. All this can be found on Guidestar.org.
New Headline: Large not for profit hospital group upset about falling profits as customers realize hospital group is a major reason local health care costs are higher than most anywhere in the country and stop seeking treatment.