IU Health’s $416 million donation to IU under scrutiny

IU Health donated $416 million to the IU School of Medicine after reporting a revenue surplus of more than $1 billion in previous years, according to The Associated Press. IU Health holds over $9 billion in cash and investments.

The donation is larger than all of IU Health’s charitable donations in the last 11 years combined. The donation was not announced, but was recorded in the hospital’s December 2021 financial statements, according to the Indianapolis Business Review.

IU spokesperson Chuck Carney said there is a long-standing relationship between IU Health and the School of Medicine and clarified that the donation is a three-year grant, unlike typical grants from IU Health. a year that IU receives from the hospital. The School of Medicine plans to make announcements after finalizing the use of funds.

In an email to the Indiana Daily Student, IU Health public relations consultant Jeff Swiatek said the grant would help increase the number of nursing graduates to address the nursing shortage in Indiana, renew funding for health research and fund recruitment to improve diversity, equity and inclusion.

Despite supporting IU Health’s charitable work, Indiana state lawmakers like House Speaker Todd Huston have questioned the donation in light of IU Health’s high prices.

In a letter to Indiana’s nonprofit hospital systems, including IU Health, lawmakers noted that IU Health’s prices are above the national average and cited a study that found Indiana’s hospital costs were the fifth highest in the nation.

In response, IU Health promised to freeze prices through 2025. IU Health said an aging population and chronic disease are contributing to rising prices, which they hope to combat with a value-based preventive care model.

Beth Gazley, a professor at the Paul O’Neill School for Public and Environmental Affairs and an expert in nonprofit management, said nonprofit hospital systems must demonstrate that they benefit the community in order to retain their status as ‘non-profit organisation. When evaluating how much surplus revenue a nonprofit should have, Gazley thinks critics should look at the services they provide.

“For an organization with a budget of almost $4 billion, it really depends on the extent of its work to benefit the community,” Gazley said.

IU Health introduced its $500 million investment in community development in Indianapolis as an example of their community service.

Aaron Lingenfelter, a Bloomington resident and CT axial scan technician at a hospital partly owned by IU Health, underwent an expensive procedure from IU Health in May 2020.

Lingenfelter said he was billed $10,232 for a colonoscopy, $8,847 for the procedure and $1,253 for the doctor. After the insurance intervened, he still had $3,650 left to pay, he said. the national average for a colonoscopy is $2,750.

The same year Lingenfelter had the procedure, IU Health reported a 2020 profit of $1.1 billion. Lingenfelter said he believes IU Health is choosing not to lower prices simply because they don’t. didn’t have to.

When asked why IU Health has not lowered prices in response to criticism, Swiatek referenced IU Health’s commitment to freeze prices until January 2025, when they expect to reach the national average.

Matt Bell, chief policy analyst at healthcare reform organization Hoosiers for Affordable Healthcare, says lack of competition is the problem. Bell said IU Health is the second most expensive hospital system in the state, with prices 44% higher than the national average.

“IU Health absolutely has an ethical, perhaps even moral, responsibility to lower its prices for Hoosiers,” Bell said.

Bell suspects IU Health made the donation late last year to cut into its profits, which totaled about $860 million after the $416 million donation.

“I’m confident that $9 billion far exceeds anything that can be considered reasonable,” Bell said, referring to IU Health’s reservations. “I would say the money really belongs to their patients.”

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