Patients might not feel it right away, but a major shift in healthcare pricing is on the horizon — and Indiana’s biggest hospital networks are in the hot seat.

Starting July 1st, a new law in Indiana is set to shake up how nonprofit hospitals operate — and potentially how much patients pay. Five of the state’s largest hospital systems, including IU Health and Parkview, will soon face a stark choice: reduce their prices to a new state-calculated average, or lose their nonprofit privileges and start paying property taxes.

It’s a quiet revolution. But over the next four years, it could completely reshape hospital economics in Indiana.

The rule is simple — the consequences, not so much

Under the new legislation, these nonprofit hospitals must lower their charges to meet or fall below a benchmark set by the Indiana Office of Management and Budget.

They have until June 2029 to comply.

If they don’t?

They’ll forfeit their nonprofit status, meaning they’ll be required to pay local property taxes, which could run into tens of millions annually.

Matt Bell, president of Hoosiers for Affordable Healthcare, says it’s long overdue.

“For too long, large hospitals have been operating like corporations — while reaping the tax benefits of nonprofits,” he said. “This law levels the playing field and puts patients first.”

This isn’t just about dollars — it’s about fairness

Bell’s group has been tracking hospital charges statewide. What they found shocked a lot of people.

A recent study revealed that IU Health and Parkview Health — two of the largest systems in Indiana — would need to cut prices by over 40% to meet the new threshold.

That’s not trimming fat. That’s a seismic shift.

Bell insists this isn’t about punishing hospitals. It’s about aligning their tax privileges with actual community benefit.

“These are organizations that have profited while Hoosiers are drowning in medical bills,” he said. “They’ve got to decide — keep the profits or keep the nonprofit title.”

So how does this affect you?

If you’re a Hoosier with a hospital bill, the impact won’t hit your wallet immediately. The law doesn’t force price drops overnight.

But here’s what you can expect in the next few years:

• More transparency around hospital billing

• Increased pressure on hospitals to explain their costs

• Potential for lower insurance premiums as systemic pricing falls

• More public scrutiny of hospital executive pay and expenditures

Bell said, “Hoosiers should begin to understand more about how they’re billed, who’s profiting, and why their premiums look the way they do.”

For now, though, your out-of-pocket costs likely stay the same.

Not every hospital is affected

It’s important to know this law targets only five of the largest nonprofit hospital systems. Smaller, regional hospitals — especially in rural areas — aren’t included in the mandate.

The focus is entirely on the biggest players — the ones with billion-dollar budgets and expansive real estate holdings.

That matters, because if those hospitals decide to keep their pricing high and start paying property taxes, the tax windfall could be significant for local communities.

Table: Estimated Price Cuts Required by 2029

Data source: Hoosiers for Affordable Healthcare 2025 Price Benchmarking Report

Can hospitals just choose to pay taxes instead?

Yes. And that’s the twist.

If a hospital system decides it’d rather keep charging patients more than the state average, it can. But it’ll have to cough up property taxes — like any for-profit company.

That trade-off isn’t just financial. It’s also reputational. Losing nonprofit status could affect public trust, donations, and grant access.

Hospital systems haven’t said yet how they’ll respond. Many are still reviewing the new law’s finer points.

Bullet: Key things Hoosiers should know

Here’s what Matt Bell says you need to keep in mind:

• The law takes effect July 1, 2025, but enforcement ramps up through 2029

• Hospitals can still choose pricing — but risk big tax bills

• Patients won’t see price drops immediately

• Local communities could gain millions in property tax revenue if hospitals don’t comply

• Transparency tools are expected to improve starting in 2026

Will this lead to worse care?

That’s the concern critics have raised — and legislators anticipated it.

“The legislature took steps to make sure we don’t see sudden closures or care gaps,” Bell said. “This isn’t meant to shock the system.”

The law includes a phase-in period, giving hospitals four years to meet targets and avoid abrupt disruption. There are also hardship exemptions for facilities in high-need areas.

Still, there’s unease.

One Fort Wayne nurse who works at a large system and asked not to be named said, “We’re watching closely. Any big financial changes usually trickle down to staff eventually.”

What comes next?

Expect months of quiet negotiations — and possibly lawsuits.

Hospital executives may challenge the legality of tying tax status to pricing models. Others might push for exceptions.

Bell, meanwhile, says his team is preparing for transparency battles — including pressure on the state to define how it calculates the “average price” that hospitals must meet.

Still, he’s hopeful.

“This is the most aggressive step Indiana’s taken in years to fix healthcare affordability,” he said. “And it’s just the beginning.”