New Kaufman Hall analysis shows margins remain below national averages;
Hospital leaders warn services and patient access at risk without policy action

January 27, 2026 (INDIANAPOLIS) — Indiana hospitals are facing a worsening financial outlook that threatens access to essential health services across the state, according to a new analysis prepared by Kaufman Hall for the Indiana Hospital Association (IHA).

The report reveals that Indiana hospitals continue to operate on razor thin margins—with a median operating margin of just 1.9% in 2025 through August, below the national median of 2.6% during that time. Meanwhile, operating income among Indiana hospitals fell 5.5% year-over-year, representing nearly $50 million in diminished resources available to support patient care. Further, modeling shows a high probability of $1 billion in annual losses for Indiana hospitals over the next three to five years.

“These findings make clear that Indiana hospitals are approaching a breaking point,” said Scott B. Tittle, president of the Indiana Hospital Association. “With the 8th lowest Medicaid reimbursement rates in the nation and rapidly rising costs, hospitals simply do not have the tools they need to continue providing the level of care Hoosiers deserve. Without meaningful policy changes, more hospitals—particularly in rural communities—will be forced to scale back or eliminate essential services.

Rural Services Already in Jeopardy

Indiana’s rural hospitals remain among the most financially vulnerable. Earlier this year, Greene County General Hospital was forced to shut down its obstetrics (OB) department—an essential service for families in the region—due to chronically inadequate reimbursement.

“We could no longer sustain the OB unit because Medicaid and commercial insurance pay so far below the actual cost of care,” saidBrenda Reetz, CEO of Greene County General Hospital. “This was a heartbreaking decision for our community. No hospital wants to cut services, but when reimbursement fails to cover even basic operating costs, we are left with no choice.”

Medicaid Shortfalls Straining Urban Providers

For urban safety net hospitals, the financial challenges are equally severe, driven in large part by Medicaid underpayment and shifts in payer mix.

“At Methodist Hospitals, Medicare and Medicaid make up 80% of our payer mix, and the reimbursement simply does not match the cost of providing care,” said Matt Doyle, president and CEO of Methodist Hospitals. “Our mission is to provide high quality health care to all those in need, but as more patients move into government coverage programs or go uninsured due to gaps in coverage, hospitals like ours struggle to maintain the level of services our communities rely on.”

Rising Costs Outpacing Revenue

The Kaufman Hall analysis shows expenses increased by 4.7% for Indiana hospitals in 2025, outpacing revenue growth of 4%. Labor expenses alone rose 4.2%, even after hospitals reduced reliance on more expensive contract labor by nearly 50%. Nonlabor expenses—including medical supplies and purchased services—also grew significantly.

“This report reflects what our teams see every day,” said Dr. Patrick McGill, president and CEO of Community Health Network. “We’re caring for patients with increasingly complex needs, as we face continued financial pressure. Over time, that limits our ability to invest, grow services, and retain caregivers. What’s at risk is our ability to provide access to care for the communities we serve.”

Emergency Department Visits Surge — Adding Pressure, Not Relief

Indiana emergency department (ED) visits grew 16.8% in 2025, far exceeding the national average of 1.4%, according to the report.

Even with high patient demand, many hospitals are still operating at a loss. This increase represents a major financial strain for hospitals because ED care is extremely resource intensive and costly to provide—requiring high staffing levels, complex clinical capabilities, and absorbing a disproportionate share of uninsured and underinsured patients

“We were the busiest we have ever been last year—and we still ended up with a negative margin,” said Mike Schroyer, president of Baptist Health Floyd. “That is not sustainable. Hospitals cannot continue absorbing these losses year after year. Legislative reform is urgently needed to ensure we can continue meeting the needs of our patients and our communities.”

Indiana Hospitals Continue Prioritizing Patient Affordability

Despite these challenges, Indiana hospitals continue prioritizing efforts to make care more affordable. According to the report, hospitals in Indiana provide more charity care than the national average, demonstrating a strong commitment to ensuring patients can access needed services regardless of their ability to pay.

Simulation Modeling Shows Severe Risks Ahead

To better understand future risks, Kaufman Hall conducted simulation modeling examining likely financial scenarios for Indiana hospitals over the next three to five years. The results show a high probability of more than $1 billion in annual losses for hospitals statewide, driven by continued underpayment, shifts toward government payer programs, and rising costs. Under the most likely scenarios,Indiana hospital operating margins are projected to fall to –3%, pushing many hospitals into severe financial strain.

These projections illustrate that, without intervention, Indiana hospitals will face increasingly untenable conditions—leading to further service reductions, workforce cuts, and potential consolidations.

Urgent Need for Legislative Action

IHA is calling on state and federal lawmakers to address the systemic challenges facing hospitals by:

• Modernizing Medicaid reimbursement rates
• Reducing administrative burdens and insurer-imposed delays and denials
• Ensuring hospitals can continue providing essential services, particularly in rural areas
• Supporting financial stability to prevent hospital closures and service reductions

“Indiana hospitals have demonstrated remarkable resilience, but resilience alone cannot fix a fundamentally unsustainable financial environment,” Tittle said. “We stand ready to work with our state and federal policymakers on solutions that will protect access to care for all Hoosiers.”

INDIANAPOLIS – Governor Mike Braun today announced he has made selections to fill three judicial vacancies. Joshua McMahan, Kevin McDaniel, and Elliott McKinnis have been appointed to fill the vacancies.

“These appointments reflect a strong commitment to experience, fairness, and the rule of law,” Gov. Mike Braun said. “Each appointee brings a deep understanding of the courtroom and a clear dedication to public service, and I am confident they will serve their communities with integrity.”

Joshua McMahan has been appointed to the Howard Superior Court 1. McMahan received a bachelor’s degree and a master’s degree (summa cum laude) from Ball State University and received his Juris Doctor from IU McKinney School of Law in 2010. He has served as a deputy prosecuting attorney in the Howard County Major Felony Division, handling numerous major felony jury trials. McMahan has been a partner at Butcher, Ball, Lowry, McMahan & McClelland for 13 years.

Kevin McDaniel has been appointed to the Tippecanoe Superior Court 1. McDaniel received a bachelor’s degree from Purdue University in 2007 and a Juris Doctor from Valparaiso School of Law in in 2010. McDaniel has tried approximately 70 jury trials during his 15 years as a deputy prosecuting attorney in both Tippecanoe and Vandenburg County.

Elliott McKinnis has been appointed to the West Lafayette City Court. McKinnis received a bachelor’s degree from Ball State University and a Juris Doctor from IU McKinney School of Law in 2010. McKinnis served as deputy prosecuting attorney for the Tippecanoe County Prosecutor’s Office and the deputy public defender for the Tippecanoe County Public Defender’s Office. He currently works full time for Cook Research Incoporated and will retain his position while taking on this new part-time role.

Attorney General Todd Rokita recently secured the revocation of the medical license of Rensselaer physician, Dr. Patrick Sheets, for facilitating an illegal abortion, having sexual contact with patients and prescribing to addicts.

The Office of the Attorney General became aware of serious violations of state law, including Dr. Sheets’ facilitation of an illegal abortion for a patient with whom he had engaged in a sexual relationship and prescribing controlled substances despite her history of addiction. Following a nearly 8-hour hearing on Thursday before the Medical Licensing Board of Indiana, Attorney General Rokita’s team successfully argued for the revocation of Dr. Sheets’ Indiana medical license.

“Vulnerable patients should not be preyed upon when seeking health care services, and the provider is expected to act in the patient’s best interests,” Attorney General Rokita said. “Dr. Sheets’ actions violated the trust that so many of us have in our health care providers and the boundaries we expect they maintain as professionals. Our office will continue to protect Hoosiers from unsafe medical practices.”

Over a period of several months, the Office of the Attorney General (OAG) also received multiple consumer complaints alleging that Dr. Sheets engaged in dangerous prescribing habits, including prescribing controlled substances such as alprazolam to a patient with known substance abuse issues without proper evaluations, improperly securing a controlled substance key fob, and falsifying medical records.

In one complaint, a family member of a patient reported that Dr. Sheets continued prescribing addictive medications to their mother despite being informed of her addiction and alcoholism, contributing to her arrests and repeated rehabilitation stays. Another complainant, a former patient, alleged that Dr. Sheets coerced them into illegal activities to maintain access to prescribed medications and engaged in inappropriate relationships with patients and staff while prescribing controlled substances to them.

Attorney General Rokita expressed gratitude to Deputy Attorneys General Ryan Eldridge, Kelsey McKnight, Carah Rochester and Investigator Cassie McDaniel for their work on this case. Their thorough work bringing this case before the board resulted in the future protection of Hoosier patients.

In July, the Indiana State Board of Pharmacy agreed to accept an agreement by Dr. Sheets to suspend his license to prescribe controlled substances for 90 days.

• By Marilyn Odendahl, The Indiana Citizen
• As law enforcement arrested five people last week in connection with the shooting of a Tippecanoe County trial court judge, the Indiana Senate moved forward with a bill that would increase security for the state’s appellate court judges.

  Senate Bill 291, authored by Sen. Scott Baldwin, R-Noblesville, would establish a specialized court security unit for the Indiana Supreme Court, the Court of Appeals of Indiana and the Indiana Tax Court. These court marshals would attend court proceedings, provide security at events, such as judicial conferences and community outreach programs, and maintain a security system at the Statehouse, in judicial staff offices, and at the homes of the justices and judges.

  Presenting the bill to the Senate Judiciary Committee on Jan. 14, Baldwin said the court marshals “would ensure Indiana’s judges can carry out their constitutional responsibilities without fear, intimidation or disruption.”

  On Thursday, the Senate amended SB 291 to protect the personal information of judges and their families from being disclosed to the public. Judges in the state and federal district courts in Indiana would be covered, along with their spouses and children who reside in the same household. The personal information that would be private includes home addresses, phone numbers, email addresses, license plate numbers or other unique identifiers of a vehicle, Social Security numbers, birth or marital records, and election and campaign finance reports.

  Also, the amendment makes the unlawful publication of the personal information a Class A misdemeanor.

  Introducing the amendment on the Senate floor, Baldwin indicated the provision was added in response to the wounding of Tippecanoe County Superior Court Judge Steven Meyer and his wife in a shooting at their home in Lafayette on Jan. 18. The amendment passed on a voice vote.

  SB 291 passed its third reading unanimously in the full Senate Monday and now heads to the Indiana House.

  Increasing threats toward judiciary

  A day after the Senate amended the legislation, Indiana Chief Justice Loretta Rush and Tippecanoe County Circuit Court Judge Sean Persin led a security webinar for state judges. Security expert James Hamilton joined the 30-minute discussion and nearly 200 judges attended virtually.

  “An attack on a judge is not just an attack on that judge,” Rush said during the webinar. “It’s really an attack on our free society and the critical role the judiciary plays in securing that.”

  The webinar was broadcast from Judge Meyer’s courtroom in the Lafayette courthouse.

  Meyer and his wife, Kim, were shot on the afternoon of Jan. 18 by a man who showed up at their private residence and fired two shotgun blasts through the closed front door, according to reporting by Based in Lafayette. The attack wounded Meyer and his wife.

  Based in Lafayette reported that Kim Meyer was treated for a wound to her hip and released Sunday evening. Meyer sustained an injury to his arm and was transported to an Indianapolis hospital for treatment.

  “His left arm is badly injured and will require additional surgeries and most likely a long rehab,” Kim Meyer told Based in Lafayette. “It could have been so much worse, though.”

  After a manhunt that included Lafayette Police and Indiana State Police, the FBI, U.S. Marshals Service, and law enforcement in Lexington, Kentucky, and Allentown, Pennsylvania, five people have been arrested and charged in connection to the shooting, according to Based in Lafayette. Court documents, cited by Based in Lafayette, linked the attack to an alleged conspiracy involving Thomas Moss, 43, of Lafayette, who is a high-ranking member of the Phantom Motorcycle Club and had been scheduled to go on trial in Meyer’s court on Jan. 20.

  Chief Justice Rush has been vocal about growing hostilities in courtrooms and increasing threats toward judges. People appearing in court are using foul language toward the judges, attempting to intimidate them, being disrespectful, and getting into brawls, she said.

  A December 2023 survey by the Indiana Supreme Court’s Office of Judicial Administration found that nearly three-quarters of state judges had been the target of a threat. Judges told the survey that litigants had brandished firearms, threatened to set them on fire and blow up their homes.

  “Threats to the judiciary, in my time as a judge, are at an all-time high,” Rush said in October when the Indiana Supreme Court released its 2024-25 annual report. “I have judges that hear cases and sentence people with no security in the courtroom. So, it’s just dangerous.”

  Bill’s provisions called ‘a minimum effort’

  In 2025, Rush had sought from the Indiana General Assembly $1.5 million in additional funding for court security. The chief justice said she envisioned the money being used to create a matching grant program, which the trial courts could tap into to help fund protective measures like metal detectors or security guards.

  The funding request was denied.

  SB 291 would not require any additional appropriation from the legislature. Court of Appeals Judge Cale Bradford told the Senate Judiciary Committee that the Indiana Supreme Court already has its own security staff, and former Gov. Eric Holcomb had previously obtained funding for a security unit for the appellate court.

  However, Bradford said, state statute needs to be updated to expand the security provision to include the Court of Appeals.

  “We’re not looking to get any other police department’s business,” Bradford told the committee. “We just want to maintain the security for the people that are with us, meaning the kids at the schools, the public, and our judges and our staff.”

  Some members of the Judiciary Committee were taken aback that the appellate courts did not have security. Sen. Jim Buck, R-Kokomo, said he was shocked to find out the judiciary did not have protection, especially since the speaker of the House and the Senate president pro tempore do have that.

  Sen. Sue Glick, R-LaGrange, is an attorney and former LaGrange County prosecutor. Before casting her vote in support and asking the author to add her name to the bill, she told the committee she had clerked for the Court of Appeals early in her legal career.

  “It surprised me then and it surprises me now that we haven’t taken this step,” Glick said. “Most of these judges comes from the trial court. They’ve left behind them people they’ve sent to jail who may have an ax to grind. This is a minimum effort, I believe, but it is a good first step in protecting them.”

  This article was published by TheStatehouseFile.com through a partnership with The Indiana Citizen, a nonpartisan, nonprofit platform dedicated to increasing the number of informed, engaged Hoosier citizens.

  Marilyn Odendahl has spent her journalism career writing for newspapers and magazines in Indiana and Kentucky. She has focused her reporting on business, the law and poverty issues.