IU Health sees operating income plunge 49% due to COVID-19 outbreak

Indiana University Health, the state’s largest hospital system, said operating income plunged 49% in the first quarter, as it was forced to postpone elective surgeries and inpatient procedures while paying out more money for expenses related to the COVID-19 pandemic.

The Indianapolis-based health system, which operates 16 hospitals, on Thursday afternoon posted operating income of $77.6 million for the quarter, down from $153.9 million a year ago.

The number of surgeries fell by 7.5% and the number of inpatient discharges fell by 7.2% in the quarter. That happened as Gov. Eric Holcomb last month ordered all hospitals to delay non-essential and elective surgeries and procedures to conserve personal protective equipment. Elective surgeries and procedures are among the biggest money-makers at most hospitals.

On Monday, Holcomb said hospitals could resume elective procedures as soon as next week if supplies held up.

But even as surgeries and inpatient treatments fell, IU Health said revenue climbed 2.5% to $1.6 billion during the quarter. The health system attributed that to annual rate increases, increased volumes in retail pharmacy and unspecified strategic initiatives.

The revenue increase was eclipsed by an 8% increase in costs—to $1.55 billion—including spending on personal protective equipment and higher wages associated with the COVID-19 outbreak. Salaries, wages, and benefits climbed 6%, some of it attributed to base pay increases and an increase in full-time employees by 2.4% to 31,009.

“The salaries, wages and benefits increase also reflects that the Indiana University Health System continued to pay its team members who were impacted by lower volumes and deferral of elective procedures but were willing to be part of a resource pool to assist where needed as the impacts of COVID-19 ramped up,” the health system said.

IU Health said it has received $348 million from the Centers for Medicare and Medicaid Services as an advance relief payment associated with the pandemic that must be paid back. It also received $67.7 million as part of a stimulus package to hospitals. Both of the payments were received in  April and aren’t reflected in the quarterly filings, which run through March 31.

The health system said it would closely monitor its liquidity and cash reserves, but still had $463.4 million in cash and equivalents on hand as of March 31, more than twice the $223.7 million it had on hand on Dec. 31.

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