Medicaid and Medicare typically cover 80% of Methodist Hospitals’ patient base, according to president and CEO Matt Doyle.
But, the reimbursements don’t keep up with the cost of patient care at the facilities in Gary and Merrillville, Doyle said. Currently, Medicaid covers 57% of the cost of providing care and Medicare covers 82% of the cost of providing care, he said.
And it, like many Indiana hospitals, is facing financial headwinds with thin margins and looming Medicaid cuts, officials said at a Tuesday press conference held by the Indiana Hospital Association.
Scott Tittle, president of the Indiana Hospital Association, said Indiana hospitals “are facing a combination of significant pressures” including persistent workforce shortages and high labor costs, inflation impacting the cost of medication and utilities and Medicaid and Medicare continuing to reimburse “well below” the cost of care.
Meanwhile, hospitals are being asked to invest in the access, quality, workforce, behavioral health, and rural extension services, Tittle said.
“Margins remain very thin and unsustainable for Indiana’s hospitals,” Tittle said. “ Hospital finances aren’t abstract. They directly affect patient access.”
The Trump administration’s budget bill proposed further federal reductions to Medicaid, which means the hospital will receive less in reimbursements, Doyle said. Meanwhile, the expiration of Affordable Care Act subsidies will increase the number of Medicaid and charity cases the hospitals would have to take on, he said.
Methodist saw an additional $27 million reduction annually in its budget under a federal cut, which changed the way funds were divided among Indiana hospitals, passed three years ago, Doyle said. But, Doyle said a current bill is being considered in the Indiana Legislature to correct the way the funds are divided among Indiana hospitals.
Despite the budget shortfalls, Methodist continues to provide charity care within northwest Indiana, which amounted to $82 million in 2024, he said.
“We remain committed to ensuring every patient’s need is taken care of and that access to all is provided regardless of their ability to pay. But this becomes more challenging during these difficult reimbursement declines,” Doyle said.
In 2024, Doyle said Methodist reported a negative operating margin and likely will again in 2025.
“We’re doing everything possible to ensure that we can continue the mission of providing high quality care to all of those in need in northwest Indiana,” Doyle said. “We’re working with our state and federal lawmakers to help find meaningful pathways for reimbursement reform.”
Erik Swanson, a managing director of Kaufman Hall, said the organization conducted a study of Indiana’s hospitals and found that margins “remain quite fragile and somewhat anemic” at 1.9% in 2025, which is less than the national median.
About 40% of Indiana’s hospitals had a negative operating margin in 2025, Swanson said.
The total Indiana hospital operating margins in 2024 and 2025 were below pre-COVID-19 pandemic levels, Swanson said.
The study found that most hospitals reported a decline in operating income by 5.5% through August 2025 compared to 2024, which resulted in $50 million reduction in income available for reinvestment, Swanson said. That means, Swanson said, $50 million less to invest in patient care.
Operating expenses grew 4.7% at the median in 2025, outpacing growth in operating revenue of 4%, Swanson said.
Indiana hospitals reported a 4% increase in net operating revenue in 2025, compared to 8% nationally, Swanson said.
Indiana inpatient revenue growth outpaced the national average in 2025, at 8.3% compared to 7.5% respectively, but outpatient revenue lagged behind the national average, at 7.2% compared to 9.3% respectively, Swanson said. The state saw an increase in emergency room care as well in 2025, he said.
“This is somewhat unique to the state of Indiana. What this highlights here is that the patient acuity in the state of Indiana has risen. As care begins to shift towards an outpatient setting, those lower cost settings, we find higher and higher concentrations of higher acuity, high cost care being delivered through the hospitals,” Swanson said.
Meanwhile, labor expenses increased 4.2% and medical supply expenses increased by 6.8% for Indiana hospitals in 2025, he said
Indiana hospitals see slightly higher than the national average when it comes to charity care, Swanson said.
Without any changes to the Indiana hospitals, an analysis found a $1 billion reduction in income over the next five years, Swanson said.
“Hospitals in the state of Indiana are in a relatively tenuous position and face a number of financial challenges and headwinds,” Swanson said.
To help offset the lost tax revenue in the tax cut bill signed into law in July, it includes $1.2 trillion in cutbacks to Medicaid, health care and food stamps, largely by imposing new work requirements, including for some parents and older people, and a major rollback of green energy tax credits.
The bill also directed nearly $350 billion toward national security, President Donald Trump’s deportation agenda, and to help develop the “Golden Dome” defensive system.
The nonpartisan Congressional Budget Office estimates the package will add $3.4 trillion to the deficit through 2034 and 10 million more people will go without health insurance within the same timeframe.
While Indiana hospitals are currently struggling, Tittle said the impacts of the Trump Administration budget bill won’t go into effect for another two years.
“There are certainly things that the federal and state governments could focus on (to address hospital budgets),” Tittle said. “We’re hopeful that there’s still an opportunity to have a productive conversation, but that remains uncertain at this time.”
Brenda Reetz, chief executive officer of the Greene County General Hospital, said the hospital system’s profit margin last year was a negative 1.75%, which means the hospital lost $1.4 million. This is especially concerning as the hospital’s cash-on-hand could only cover 10 days of operation, she said.
Reetz said she’s concerned when she hears Indiana legislators say that a profit margin for a nonprofit hospital is a bad thing.
“They are villainizing health care for making money,” Reetz said. “No individual is profiting when we make $1.4 million. That $1.4 million would go into a rainy day fund that we would then use to maintain our critical infrastructure.”
For example, Reetz said she could’ve used that money to replace the hospital’s boilers, which have a 40-year expectancy and have been in use for 50 years. A new boiler costs $15 million, which would take 15 years to raise funds for at a 1% profit margin, she said.
“We’re seeing the critical infrastructure continually decline throughout our state in our hospitals because we don’t have the profit margins to actually maintain the critical infrastructure that we have,” Reetz said.
Reetz said Trump’s budget bill offered some hope for rural hospitals through rural health transformation funds because the federal government seemed to recognize that rural hospitals would have “a few really rough years” through cuts to Medicaid. But, ultimately, the funds were heavily restricted, especially with limited use for infrastructure projects, Reetz said.
“While this rural health transformation fund seems like it’s going to be this great big beautiful bandaid to help rural healthcare survive the Medicaid cuts that we’re seeing, it’s not going to happen. There are too many rules in place that we can’t use that funding for what it actually needs to be used for in rural healthcare,” Reetz said.
Anthem Blue Cross Blue Shield and UnitedHealthcare have been underpaying for the patients going to the hospital, Reetz said. Last week, Anthem sent Reetz “claw backs” to request reimbursement for third trimester ultrasounds going back to 2023, she said.
“In any other industry this would be absurd,” Reetz said. “No one would accept this in any other industry, but in healthcare we’re forced to accept it because patients walk through our doors every single day and we have to give them care.”
The hospital’s obstetrics unit, which has been open for 100 years, will close Sunday as a result of budget constraints, Reetz said. It’s likely that the last baby delivered in Greene County will be on Wednesday, she said.
“It’s heartbreaking for our community,” Reetz said. “It is heartbreaking to hear the comments from our patients saying, ‘We’ve had three generations of our family delivered in this hospital and now we can’t have our baby here.’”
The hospital gets paid $6,000 for a vaginal birth and $13,000 for a cesarean, Reetz said. The hospital delivers 70 babies a year, she said, and just the cost of physicians alone is $1.7 million to cover a 24-hour obstetrics unit.
“It doesn’t take very much math skills to realize those numbers don’t break even,” Reetz said. “We are losing a ton of money on our OB unit.”
The Associated Press contributed.
