Healthcare Costs in Indiana

The Indianapolis Business Journal's (IBJ) breakfast series offers a window into central Indiana's vital business sectors, with Technology and Healthcare events standing out as must-attend gatherings. At the September 25 healthcare breakfast, two critical discussions emerged: the transformation of downtown healthcare delivery and the pressing challenge of Indiana's healthcare costs.

Dr. Ryan Nagy, President of IU Health Methodist and Academic Health Center, shared compelling insights about their new downtown facility. The vertical design—which prompted Otis's largest-ever elevator order—will consolidate Methodist and University hospitals, reducing their combined footprint by the equivalent of the Salesforce tower. This strategic move is expected to yield $50 million in annual savings through reduced parking needs, fewer inter-building transfers, and enhanced energy efficiency. Notably, the facility emphasizes rapid diagnosis and treatment, backed by robust data infrastructure and cybersecurity measures.

The subsequent panel discussion, featuring healthcare leaders and policymakers, revealed troubling trends in Indiana's healthcare landscape. A recent RAND study ranked Indiana eighth highest nationally in healthcare costs, with employers and employees paying nearly triple Medicare rates for identical services in 2022. This disparity is particularly striking given Indiana's otherwise low cost of living.

Devin Anderson, President of E&A Cos, attributed these high costs to provider consolidation and reduced competition. However, Jennifer Alvey of IU Health highlighted their commitment to reaching national average pricing and supporting breakthrough treatments—including a $2 million gene therapy for spinal muscular atrophy—often at a loss to ensure patient access.

The discussion exposed concerning trends in healthcare claims. John Gause of Apex Benefits noted that since 2014, million-dollar claims have surged, while prescription costs have jumped from 2-3% to 20% of total medical expenses. Operating costs at major providers have also risen sharply, from 3% to 9%, with healthcare service inflation reaching 220% compared to 88% in other sectors.

As Anderson aptly stated, "Before you solve the problem, you have to acknowledge it." This challenge demands collaboration among payors, providers, policymakers, and patients—particularly as Indiana's high healthcare costs could deter potential residents and businesses.

Stay tuned for our upcoming series exploring healthcare systems worldwide as we examine different approaches to investing in community well-being.