← Becker’s Healthcare Podcast
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- [00:00]
A
This is Madeline Ashley with the Becker CFO and Revenue Cycle podcast, and I'm thrilled to be joined today by Jenny Alvey, CFO of IU Health. Jenny, thanks so much for being on.
- [00:10]
B
Thank you for having me.
- [00:12]
A
So know that my. My colleague Alan connected with you for a podcast last year. But just for maybe some of our newer listeners, could you share a little bit about yourself and IU Health to kick us off?
- [00:25]
B
Sure. Great. I'm happy to. So I've been CFO at IU Health, and I've been here pretty much since 2011, but I've been in the CFO position itself since 2016 and actually started my career as an accountant for Indiana University, and that was back when a couple of the hospitals were actually owned by the university. So I've come full circle in my career, and I'm so glad to be back on the healthcare side, but also in the middle there. I spent a little bit of a time as an attorney practicing bond law for ICE Miller, and then worked for Governor Daniels as a public finance director for the state of Indiana before coming to IU Health. And just love being in healthcare. It certainly has its challenges, but I couldn't ask to work for a better institution. And IU Health is the largest healthcare system in. In the state of Indiana. We have about 9 billion in revenue. And we have 16 hospitals, more than 300 locations across the state, and about 3,000 physicians who are just really incredible caregivers. And I'm really happy to be part of this system.
- [01:47]
A
Well, thank you so much for sharing that background there, Jenny. So I want to dive right in. IU Health recently shared its Q2 results. So in those, IU Health reported a positive operating margin after reporting an $18 million loss in Q1 of 2025. However, you know, margins are still below pre pandemic levels. But could you share maybe some of the main drivers behind the changes here?
- [02:11]
B
Yeah, absolutely. So, like others, our system continues to face some pretty persistent workforce challenges. They've improved greatly, but they're still not where we want to be. But when you put that alongside some rising costs for supplies and medications, you know, as we're caring for our patients, we've certainly seen some increases on the expense side. However, our growth in our outpatient volumes has really helped to offset that continued cost pressure. And at the same time, we've continued to see a shift in our service mix from services that were traditionally inpatient to observation or outpatient settings. But really, the primary driver in the change in our margin has really been our Care Affordability Plan. So we acknowledge that the financial challenges ahead include, you know, growing regulatory uncertainty and ongoing workforce pressures. But despite these pressures, we have remained committed to making high quality care both affordable and accessible for all Hoosiers. So we adopted in around 2020, a five year care affordability plan. And that's where our savings are really directed back our patients and our employers, not to our balance sheet. We've been holding our prices steady even as inflation rise, and we're actively working to fund that inflation in ways that continue to support our patients. And that's really been a good internal philosophy for us is how do we fund our inflation so we're not passing our increasing costs onto our patients or our communities. So we've made that system wide pledge to really drive greater efficiency with a strong focus on optimizing our resources.
- [04:08]
A
I appreciate you sharing that and I was wondering if you could dive a little deeper here as well. I know you touched a bit on inpatient, but in the second quarter, IU Health's inpatient admissions were down and its outpatient volumes, particularly for surgeries, were down compared to the same quarter last year. So could you share some of the key drivers here as to why you think that might be and what IU Health is doing to combat this?
- [04:31]
B
Yeah, we. We've had a more complex mix. So we've had, especially in the last couple quarters, we've had quite a bit more from a respiratory perspective in our inpatient setting, which has had a higher length of stay. And so we have had higher length of stay pretty much across the system from a complexity perspective. And so that's really crowded out some of that volume. But at the same time, we've really struggled from a workforce perspective. We're trying to find the right balance between our travelers as well as our employed clinicians. And so in doing that, we've been really thoughtful about how much we actually have open from a volume perspective right now. So some of it is intentional, some is not, but we still feel like we're generally growing from where we want to be and we're very focused on access right now. And I think like a lot of others too, we have had a shift really from that inpatient into that observation status. Some of the traditional things that would have been inpatient in the past are now really shifting to outpatient observation.
- [05:49]
A
Right? Yeah. And you just touched on the just industry wide ongoing workforce pressures, just financial challenges, just everywhere people seem to turn. So could you dive a little deeper into some other key initiatives you're prioritizing to help mitigate some of these challenges a lot of systems are facing.
- [06:07]
B
Yeah, you know, if I just stick with the workforce theme. We are very lucky to be able to partner with our. With the IU School of Medicine, you know, one of the largest schools in the United States, as well as the School of Nursing here. We've also partnered with Ivy Tech, it's our technical college, community college across, across the state, in really doubling the size of the nursing classes. And so we did that several years ago. And that's really just starting to play out for us in which we're just starting to get some of those graduating classes out. So we're really optimistic that by partnering from a higher education perspective, we'll be able to lean in and, and get the workforce here in the state that we really need and, you know, that patients deserve. So we feel good about where we're head. A workforce perspective. I will say the other big focus is really just generally we have a new facility being built in downtown Indianapolis. I mean, we are the academic medical center for the state. And that hospital in some aspects was more than 100 years old. And so we have a new facility that is going up. And so I think you just mentioned even, even getting down here recently and seeing our new hospital being built. If you come through the downtown 60, 65, if you're on 65, you can totally see it being built. It's on the north side of the city. And we feel like it is really important to deliver on that new facility for patients, for employees, for physicians. To have our school of medicine that's sitting right next door to it. To be able to get all those learners in that type of a facility is really important. So we need to deliver on that and deliver really well at the same time. We've decided we need to get our technology up. And so we're doing a new EPIC implementation. We're focusing on AI. We're focusing on using our technology to really try to do everything that we can to be more productive, to be more efficient, to make sure people are operating at the top of their license. So that is another really big initiative. Both the new hospital and EPIC will go live in 2027. So we are very focused on doing that well. And then maybe lastly would be just continuing to grow in several of our communities that are also growing. Like, we just recently announced construction of a hospital in West Lafayette. We are in the process of building one up in Fort Wayne and then finishing our project out in our new community hospital out in Fishers.
- [09:07]
A
Amazing. And so Just for clarification, that epic launch that will be going system wide. Correct. And that's mid-2027. Okay. Awesome. Yeah. Thank you so much for sharing.
- [09:16]
B
Already a fully integrated system from a tech perspective, but being able to leverage that along with a lot of workflow and process changes. We have a new project that's called Project welcome that we're also going to really overhaul that patient experience up front to be definitely more service oriented to make sure you're not answering the same questions more than once and filling out a lot of forms and having a really good centralized scheduling and refill experience and being able to get a hold of a nurse. So we're really excited we've got all that work going on at the same time and think we're going to be really transformational in the next couple of years and what our health system looks like once our new systems and our new hospitals are in place.
- [10:05]
A
Yeah. And as you mentioned, I did just recently drive through India and I saw the hospital in development there. So a lot of really big things happening at IU Health.
- [10:16]
B
Could you share Exciting.
- [10:17]
A
Yes, very exciting. Could you share some other top financial priorities for IU Health maybe just through the rest of this year and into 2026?
- [10:27]
B
Yeah. I'm going to sum it up. I think for us it's really focusing on access and I really love trying to ensure that our financial priorities align with how we're taking care of patients and being able to take care of more and having a bigger impact. We have a really strong brand and take care of a lot of patients here and have great cutting edge medicine. And so it's important then that patients are able to see us, especially with our Riley Hospital and how we take care of the pediatric population in this state. And so by doing that, it's making sure that we're optimizing our operating rooms and we can see the patients that need us. We are focusing on reducing our length of stay and being able to get patients into the right care, coordinated type of an environment when they leave the hospital, increasing our physician clinic visits, especially in those specialty areas that are really hard to get into. We want to make sure we can see patients quickly and get to them when they need us and when they want us. And really by doing all of those things, it has a great financial impact as well. And so that's really where we're focusing right now.
- [11:44]
A
My final question for you here, Jenny. So it's kind of a big question that might take some sitting down and thinking about this, but over your career in healthcare. Could you share maybe the most valuable lesson that you've learned and how this has influenced your leadership approach as a CFO in your role today?
- [12:04]
B
Absolutely. And I've been giving this more and more thought recently. Yeah, all of the pressure, both at the federal and the state level that we've had from a governmental and regulatory perspective, I've started to realize probably the best advice that I've gotten in my career is don't lose sleep over what you can't control. So focus on what you can. And we don't know exactly what is going to get thrown at us. You know, there are a lot of changing dynamics going on from a reimbursement perspective pretty much in all places. Right. From the commercial pressure, from the employers wanting to control their costs, from individuals and their cost of their household, from Medicaid and Medicare. I mean, you see a lot of discussions around how all of that's going to change. So we need to be prepared for any of it. What can we do as a health system to be able to respond if certain things happen? And there's a lot of really good work that we can do and what we're realizing is it's big work and it's going to take a lot of people, but if we do it really well, it can benefit the patients. Just like the example that I gave you, actually providing more access to people at the right time and is a way to be able to react to any of the payer changes. How do we think about that? How do we make sure we're still seeing all the right patients? So there's a whole lot of things that you can do to be prepared. If this happens, then you need to do this. If this happens, then you need to do this. So how do you really build out a set of playbooks and are you ready to respond no matter what? But really overarchingly, we just have to keep working on figuring out how to get more efficient, how to control our costs, how to try to focus on inflation. And if you just keep working on that and you have big things that you're doing together as a system, you really can control. Control the uncontrollable and be ready for whatever is thrown at you.
- [14:22]
A
Well, that is some incredible advice there and also could probably be helpful to people just in life in general. I really appreciate you sharing that, Jenny, as always. It's been such a pleasure getting to chat with you and hear all the exciting things happening at IU Health and I look forward to chatting with you again sometime soon.
- [14:42]
B
Yes, Sounds great.
- [14:44]
A
Thank you.