Indiana University Health, a 17-hospital system, more than doubled its operating margin in 2014 as it improved its payer mix, treated higher-acuity patients and held down its expense growth.
The Indianapolis-based system reported an operating margin of 13.9% for the year ended Dec. 31 compared with 6.2% for 2013. Its operating surplus more than doubled to $795.3 million from the prior year's $323.6 million.
Revenue in 2014 came in at $5.7 billion, a 9.1% increase over the $5.2 billion in revenue it generated the prior year.
The system's financial situation improved despite a decrease in patient volume (PDF) almost across the board. Admissions fell 4.1% year over year while surgeries declined 3% and emergency room visits were flat.
However, radiology exams increased 3.2% and the system also reported an increase in its Medicare case mix index, a measure of the seriousness of patient conditions. Moreover, a greater percentage of its revenue came from commercial insurers than in the previous year, while revenue from self-pay patients made up a smaller share of the pie.
Indiana University Health has been cutting hundreds of jobs over the past several years to lower its expenses. As of Dec. 31, it had reduced the number of full-time equivalent employees by 6.2%, leading to lower salary and benefit costs for the year. Costs for supplies and purchased services also decreased.
The system also provides health services to certain members and employees under a per-member per-month payment contract. Although premium revenue from those contracts increased nearly 66%, medical claims grew faster, by 81%, which contributed to an overall increase in expenses year over year.
