“In today’s healthcare environment, we must continue to evolve and plan for the unexpected.” That quote from Jenni Alvey, senior vice president and CFO of Indianapolis-based Indiana University Health, in the system’s second quarter results is one that might resonate with many finance leaders – forcing them to split thinking between expected versus unexpected.
On the known side, Ms. Alvey told Becker’s that IU Health is running “about where expected” regarding its finances. In the second quarter of 2026, IU Health reported an operating income of $51.2 million (1.9% margin), down from $132.7 million (5.4% margin) during the same quarter last year. Operating revenue was $2.7 billion and operating expenses were $2.7 billion.
“I’ll say maybe more so than just Q2 — in 2025, ’26 and ’27, we have intentionally been in a period in which we are spending a lot of money on one-time costs.”
Ms. Alvey pointed to three major investments driving IU Health’s spending: the system’s new $4.7 billion downtown Indianapolis hospital set to open at the end of 2027; a systemwide Epic implementation with a go-live day of May 1, 2027; and a new Fort Wayne, Ind., hospital opening that same day.
The health system is also heavily investing in its workforce to reduce reliance on premium and temporary labor ahead of a fast-paced 2027.
“It’s going to be kind of crazy to do two new hospitals and a new Epic if we don’t have our workforce in place,” Ms. Alvey said. “So we’re betting on the short term for the long term…but we’ve done this before. We’ve been in big periods of growth in which we do big things, and then we shore up operationally to prepare for the next big thing. I would say Q1 through Q4 this year, and probably through most of next year, is going to look pretty similar.”
Ms. Alvey expects a more material financial pickup to arrive in 2028, backed in part by additional Medicaid dollars flowing through a state-directed payment program IU Health worked on with Indiana and federal officials, funding created under HR 1. That funding, however, is only guaranteed for a few years before other provisions in the law phase in. The system is also continuing to work on a push to bring commercial costs down to national-average levels.
When asked what she is planning for on the “unexpected” side, Ms. Alvey mentioned pressures on 340B, site-neutral payment policy and disproportionate share hospital payments. Preparing for the unexpected takes shape in multiple playbooks built around different funding scenarios.
“If you get materially less on reimbursement, you have to make bigger decisions on what services you can provide,” she said. “We may have to say, ‘Hey, we can’t be in this business. Others are providing those services, so we’re out.'”
IU Health’s 10-year long-range plan is reviewed every three years, with yearly refreshes to account for known changes.
With its downtown Indianapolis and Fort Wayne hospitals and the Epic go-live scheduled for next year, Ms. Alvey said IU Health isn’t taking on anything else of similar scale in that window.
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