Healthy Growth.

• Author: KAELBLE, STEVE
• Position: A hospital building boom in Indiana - Brief Article

Indiana hospitals are in a building boom.

It wasn't all that long ago when hospitals were talking about downsizing. Shorter stays and increased emphasis on outpatient surgery meant that fewer beds were needed, and a lot of institutions took beds out of service. So why is there once again a hospital building boom in Indiana?

Not one but two new hospitals can he found in the Fort Wayne market. Evansville has a new hospital aimed at the needs of women. Indianapolis soon will have two new heart hospitals, and nearby Avon might get a new general medical facility. There's a new hospital in Huntington, and one in Winchester. And numerous other hospitals, from Columbia City to North Vernon, are undergoing significant upgrades.

Today's frenzy of hospital construction can be linked to a variety of factors. In some cases, there simply is a need for more beds. In other communities, new hospitals are replacing older, outdated facilities. Specialization is driving some decisions, as is the desire of physicians to stake their own claim on the facilities in which they work.

"Fort Wayne is a little bit unusual in that the three existing hospitals are generally full," says Dr. Michael Schatzlein, CEO of the city's fourth hospital, the new Dupont Hospital. "There's not a lot of extra bed capacity in Fort Wayne. On any given night there may be people waiting in recovery rooms and emergency rooms around the city for beds."

Ironically, there were a lot more beds in the area not all that long ago, he says, before the downsizing trend hit. Today, the number of beds in operation is down a few hundred from its peak, with the freed-up space filled by expanded outpatient and other facilities as well as more private rooms. "Now, we have aging baby boomers and an increase in demand for services," Schatzlein says.

It was about a decade ago that hospitals across the country began to view less as more when it came to licensed medical beds, says James Bremner, CEO of Bremner & Wiley, an Indianapolis developer and manager of health-care real estate. There were beginning to be rumblings about national health care, and advances in technology meant patients were spending less time, or no time at all, admitted to the hospital. "You had a push for downlicensing and down-staffing."

But as the hospitals in Fort Wayne found out, overall demand for services remained high even as hospital bed counts shrank, thanks to overall populations that were growing, and growing older. The situation is not limited to Fort Wayne. "Occupancy is running very high" in the Indianapolis market as well, Bremner says. "There's a big demand from a market perspective."

While no one would build a hospital without first determining that there's a need for additional or upgraded services, part of the motivation for some of today's projects is the desire of doctors to have a piece of the action, observes Donald Dunbar, executive vice president of Bremner & Wiley. Indiana's newest hospitals tend to be linked with existing non-profit health-care systems, but in many cases they are set up as for-profit affiliates, joint ventures with groups of doctors. "Those partnerships cannot be operated within the current acute-care hospitals."

For a number of the newest hospitals, particularly those that specialize in such areas as cardiac or maternity care, it makes sense to operate separately for other reasons. "In these new hospitals there is a push to become more efficient," says Dunbar. "You can right-staff for a known type of case." An emergency department, he points out, may not be able to be as efficient as a more focused unit, because the ER will...