Keeping health care healthy.

• Author: Beck, Bill
• Position: Consolidation of the Indiana healthcare industry - Industry Overview

Major consolidations this year among Indiana hospitals

Indiana hospitals are preparing for a new world of health-care competition and managed-care penetration by coming together. Increasingly, Indiana hospitals - and some medical practices - are consolidating, merging, acquiring each other, affiliating and forming partnerships.

"There probably isn't a governing board of a hospital in the state that hasn't discussed some sort of an affiliation," says Bob Morr, vice president of the Indiana Hospital and Health Association in Indianapolis. "And more and more of these discussions are resulting in announcements."

IHHA represents 154 hospitals and medical centers in the Hoosier state, and although the association doesn't quantify hospital consolidations, Morr says "our own sense is that 1998 and 1999 appears to be resulting in an acceleration of major undertakings in consolidation. More of these activities are becoming reality. The activity has heightened in 1998."

Morr ticks off some of the major consolidations under way in the state. St. Mary's Hospital in Evansville is acquiring cross-town rival Welborn Baptist Hospital. The Quorum Group, the big national, Tennessee-based for-profit hospital chain, is in the process of acquiring St. Joseph Medical Center in Fort Wayne.

Home Hospital and St. Elizabeth's Medical Center in Lafayette are finalizing their creation of the Greater Lafayette Health System, and Bedford Medical Center and Bedford's Dunn Memorial Hospital are exploring the creation of a single medical entity in Indiana's limestone country.

In the Hoosier capital city, St. Francis Hospital and Community Hospital are working out the details of a major merger - just two years after Community's attempt to merge with St. Vincent fell through. Meanwhile, the Daughters of Charity, the Roman Catholic order of nuns which runs St. Vincent in Indianapolis and St. Mary's in Evansville, is in the process of creating the Central Indiana Health System, bringing together St. Vincent, St. Joseph in Kokomo, St. Vincent in Williamsport, St. Joseph-Mercy in Elwood and Lifelines Rehabilitation Hospital.

And Clarian in Indianapolis is expanding and growing through a series of outstate partnerships and management agreements. Formed early in 1997, Clarian brought together three major Indianapolis acute-care hospitals - Methodist, the Indiana University Medical Center and Riley Hospital for Children. With more than 65,000 admissions, the new organization is the second-largest acute-care hospital in the U.S.

Clarian has been expanding regionally by forging partnerships and signing management agreements with outstate hospitals. It created a partnership with LaPorte Hospital and Union Hospital in Terre Haute last year and with Tipton Memorial Hospital in 1998. According to John T. Fox, Clarian senior vice president, the company is in the discussion stage concerning partnerships with at least four other Indiana hospitals.

"If you talk to the folks at Tipton Memorial...