IU Health’s year-end revenue rises, but earnings fall with sale of three hospitals

Indiana’s largest health system saw revenues and occupancy rates climb last year, but earnings tumbled 58 percent due in part to the sale of three hospitals in the northern part of the state.

Indiana University Health posted earnings of $260.1 million in 2016, down from $612.7 million a year earlier. The health system released its year-end financial results late Friday.

IU Health, with 14 hospitals from Muncie to Bloomington, divested much of its interest last year in three small hospitals close to the Michigan border, saying it wanted to focus on central Indiana. The divestiture resulted in “unfavorable adjustments.”

The hospitals—in Goshen, LaPorte and Starke—were sold to other organizations, resulting in nonoperating losses.

Yet IU Health said core clinical operations remain strong, and the system is continuing to spend on new buildings and equipment. Two years ago, the board approved plans to build a regional health campus on the campus of Indiana University in Bloomington on the current site of the IU golf driving range, adjacent to IU Technology Park. The board has not yet approved or disclosed the cost of that project, which is still in the early planning stages.

Total operating revenues last year for the 14-hospital system—along with its surgery and urgent care centers—were $6.23 billion, up 2 percent from a year earlier.

The organization attributed the growth to more patients with insurance, including those on the Medicaid expansion plan, known as HIP 2.0, which accounted for more than 6 percent of operating revenue.

The occupancy rate at IU Health’s hospitals last year was 62 percent, up from 60.3 percent a year earlier. The system performed 84,000 outpatient surgical cases, up from 83,769. The system opened two new urgent care centers last year, in Plainfield and Zionsville, for a total of five.

Altogether, IU Health served more than 1 million patients last year at its hospitals and clinics.

Here's a look at a few other numbers:

Inpatient days: 646,509 (2016); 668,160 (2015)

Admissions: 119,908 (2016); 129,612 (2015)

Emergency room visits: 493,565 (2016); 509,592 (2015)

FTE employees: 29,148 (2106); 28,691 (2015)