IU Health sees operating income dip 30% in 2016

Indiana University Health said revenues increased in 2016, but the Indianapolis-based system ended the year with a lower operating income than in 2015.

IU Health reported operating revenues of $6.2 billion in 2016, up from revenues of $6.1 billion in the year prior, according to recently released bondholder documents. Although the system's net patient service revenue was down, IU Health benefitted from a 51.7 percent year-over-year increase in revenue attributable to its health plan last year.

The system said operating expenses grew to $5.7 billion in 2016, up about 7 percent from $5.3 billion a year earlier. This growth was partially attributable to an increase in labor and supplies costs. 

In March 2016, Franklin, Tenn.-based Community Health Systems acquired an 80 percent ownership interest in a joint venture entity with IU Health that includes essentially all of the assets of 227-bed IU Health La Porte (Ind.) Hospital and 50-bed IU Health Starke Hospital in Knox, Ind. In December, Goshen Health ended its affiliation with IU Health. These three transactions resulted in nonoperating losses for IU Health.  

IU Health ended 2016 with operating income of $548 million, down 29.9 percent from operating income of $781.8 million in 2015.

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