IU Health tells Indiana General Assembly that health care costs CAN'T BE REDUCED
(The Center Square) – The head of the largest hospital system in Indiana told Republican legislative leaders last week in a letter that it is “unrealistic” to think health care costs can ever be reduced.
The leadership of IU Health, a private, non-profit hospital system, sent the letter to House Speaker Todd Huston and Senate President Pro Tempore Rodric Bray in response to their call for insurance companies and hospitals to work with them to come up with a plan to reduce the cost of health care in Indiana.
In the letter, IU Health president and CEO Dennis Murphy and Stephanie Motter, president of IU Health Plans, say the aging population of the United States and also "chronic disease" are to mostly blame for rising costs.
“Healthcare costs are high because the aging of our population and the prevalence of chronic illness are driving utilization of healthcare services higher while at the same time many of the inputs that determine the cost of providing healthcare are high and likely to increase in the future," they write.
The IU Health executives said it may be possible to slow the increase, however.
“It is not realistic to think we can actually reduce the growth of healthcare costs," they say, "but it is possible to slow that growth so that it is more in line with the growth of the economy.”
Specifically, they say IU Health can “achieve national average commercial pricing” by Jan. 1, 2025.
In a statement this week, Huston and Bray say they’re looking over responses from hospitals and will be continuing discussions with them about reducing costs.
“Our overarching goal is to bring down the cost of health care and deliver real savings for everyday Hoosiers and business owners,” said Huston. “While I’m still reviewing all of the responses from Indiana’s insurers and nonprofit hospitals, I’m fully committed to continuing these discussions and meeting with stakeholders. Hoosiers are rightfully frustrated about rising costs and simply can’t afford inaction on reducing health care expenses.”
In December, Huston and Bray sent a joint letter to IU Health and the other nonprofit hospital systems in the state, and also to the state’s health insurance carriers, requesting they work together to put together a draft plan by April 1 to lower the costs of health care.
“Studies continue to show health care price in Indiana remain some of the highest in the nation, and it’s time for that to change,” Bray said in a statement in January. “We understand that pricing structures are complicated, but that’s not an excuse to ignore the problem and let prices grow – at a rate significantly higher than inflation – at the expense of hardworking Hoosiers and business owners.”
A report by the Rand Corporation released in late 2020 showed Indiana hospitals charge, on average, 304% higher than the set Medicare prices when billing private employers and insurance companies, while the national average is 247%. Only five states had higher average hospital costs: Florida, Tennessee, Alaska, South Carolina and West Virginia.
In their letter, IU Health executives say the company has “sustained operating losses in the first two months of 2022” and will soon report that in the first quarter of the year, their bottom line was “dramatically impacted by higher-than-expected labor costs due to the premium pay required to retain critical clinical professionals to care for extraordinary patient volumes and unfavorable revenue due to the cancellation of non-urgent surgeries and procedures during the COVID-19 surges.”
The other entities that responded to Huston and Bray include Ascension St. Vincent, Community Health Network, Deaconess Health System, Franciscan Alliance, the Indiana Hospital Association, the Insurance Institute of Indiana and Parkview Health.
It was reported last month by the Indianapolis Business Journal that IU Health gave a $416 million gift to Indiana University. The non-profit hospital network is separate from the university, but affiliated, with the president of Indiana University serving on the board of IU Health. IU Health also has a partnership agreement with the IU School of Medicine.
Huston questioned the donation to reporters, saying it “creates a level of skepticism” about the goals the company is trying to accomplish."
IU Health has 16 hospitals in the state and more than 300 clinics.
Hospitals include:
IU Health Bloomington Hospital (Bloomington)
IU Health Methodist Hospital (Indianapolis)
IU Health University Hospital (Indianapolis)
Riley Children’s Hospital (Indianapolis)
A complete list of IU Health hospitals is HERE.
So many questions about the 416 million given to Indiana University. Did that provide a huge state and federal tax deduction for IU Health? Would that 416 million have shown up as profit on the balance sheet of this "nonprofit" had it not become a donation? What about the inflated costs to the consumers of healthcare from the IU Health system? It does appear that healthcare for Hoosiers may not be the highest priority for IU Health.