IU Health gifted $416 million to the IU School of Medicine after reporting an excess of revenue of more than $1 billion in previous years, according to The Associated Press. IU Health holds more than $9 billion in cash and investments.
The gift is larger than all IU Health charitable donations in the last 11 years combined. The donation was not announced, but it was recorded in the hospital’s December 2021 financial statement, according to the Indianapolis Business Journal.
IU spokesperson Chuck Carney said there is a longstanding relationship between IU Health and the School of Medicine and clarified the gift is a three-year grant, unlike the typical single-year grants IU receives from the hospital. The School of Medicine plans to make announcements after they finalize how the funds will be used.
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 combat the Indiana nursing shortage, renew funding for health research and fund recruitment to improve diversity, equity and inclusion.
Although supportive of IU Health’s charitable work, Indiana state legislators like House Speaker Todd Huston have questioned the donation in light of IU Health’s high prices.
In a letter to Indiana nonprofit hospital systems, including IU Health, legislators noted IU Health’s prices are above the national average and cited a study which found Indiana hospital fees to be the fifth-highest in the nation.
In response, IU Health promised to freeze prices until 2025. IU Health said an aging population and chronic illnesses contribute to higher prices, which they hope to combat with a value-based model of preventative care.
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 prove they benefit the community in order to maintain nonprofit status. When judging how much excess revenue a nonprofit should have, Gazley believes critics should examine the services they provide.
“For an organization with an almost $4 billion budget, it really depends on the extent of their community benefit work,” Gazley said.
IU Health outlined their $500 million investment into community development in Indianapolis as an example of their community service.
Aaron Lingenfelter, a Bloomington resident and computed axial tomography scan technician at a hospital partly owned by IU Health, underwent a costly IU Health procedure 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 insurance stepped in, he was still left with $3,650 to pay, he said. The national average for a colonoscopy is $2,750.
The same year Lingenfelter underwent the procedure, IU Health reported a profit of $1.1 billion in 2020. Lingenfelter said he believes that IU Health chooses not to lower prices simply because they don’t have to.
When asked why IU Health has not lowered prices in response to criticism, Swiatek referenced IU Health’s commitment to freezing prices until January 2025, when they expect to meet the national average.
Matt Bell, chief policy analyst at healthcare reform organization Hoosiers for Affordable Healthcare, points to a lack of competition as the problem. Bell said that 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, maybe even a moral responsibility, to lower their prices for Hoosiers,” Bell said.
Bell suspects that IU Health made the donation late last year in order to lower their profits, which totaled about $860 million after the $416 million donation.
“I am of the belief that $9 billion far exceeds anything that can be considered reasonable,” Bell said, referring to IU Health’s reserves. “I would argue that money really belongs to their patients.”