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IU Health, facing profit questions, gives med school $416M

By Associated Press

Posted March 14, 2022

IU Health new building

In January, Indiana’s top legislative leaders wrote letters calling for the state’s hospitals and health insurers to lower the “out-of-control costs” of health care. (File Photo: Alex Paul/WFIU News )

Indiana University Health quietly donated $416 million to the Indiana University School of Medicine — a move that comes as the state’s largest hospital system faces pressure to lower its prices and profits.

The donation wasn’t announced by either institution, which are separate organizations, but was noted as a “contribution to a related entity” made Dec. 30 in IU Health’s financial statements issued this month, the Indianapolis Business Journal reported.

An IU Health critic said the donation appeared aimed at reducing the hospital system’s 2021 profits to below $1 billion, to about $860 million, as it faces scrutiny from state legislators and others.

“It looks like it was an attempt to reduce their profitability so it didn’t look like it was so high,” said Al Hubbard, a former state Republican Party chairman who leads the group Hoosiers for Affordable Healthcare.

IU Health, a nonprofit organization that operates 16 hospitals around the state, said it typically supports IU’s School of Medicine as part of ongoing operational work. The large contribution allows IU Health to support the medical school “in a more meaningful way,” it said.

In recent years, IU Health, which holds more than $7 billion in cash and investments has contributed about $17 million a year to the School of Medicine. It has also made larger gifts to the medical school, including $65 million in 2021 and $61 million in 2020.

In January, Indiana’s top legislative leaders wrote letters calling for the state’s hospitals and health insurers to lower the “out-of-control costs” of health care, saying prices in Indiana were well above the national average.

IU Health reported an annual profit of $1.09 billion in 2019 and $1.1 billion in 2020. That is reported as “excess of revenue over expenses” since IU Health is a not-for-profit system. IU Health announced in December it was freezing its prices through 2025to help align with national average costs.

Indiana University spokesman Chuck Carney said IU Health provides annual funding for the School of Medicine, which is planning to move its classrooms in coming years to IU Health’s new downtown Indianapolis hospital. That hospital will be built just south of the existing Methodist Hospital campus.

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