Insurance

New hospital endures rough start in Bloomington: Leader says Monroe Hospital expected potholes

January 15, 2007

A cash-flow squeeze and a shortage of baby deliveries caused Monroe Hospital to stumble after its October launch. But the leader of Indiana's newest general service hospital envisions a full recovery.

The $39 million, doctor-owned hospital in Bloomington recently dropped childbirth services due to lack of deliveries, CEO Dean Melton said. Monroe also struggled with tight finances as it waited more than two months for the first revenue to trickle in.

Meanwhile, a founding physician who has the hospital's road named after him already cut some ties to Monroe.

Dr. Kamal Tiwari no longer practices anesthesia there and has moved his painmanagement practice back to Bloomington's Southern Indiana Medical Park, said Arend Abel, Tiwari's Indianapolis-based lawyer.

Tiwari made headlines in late November, when Bloomington's Herald-Times reported that he was told to "step down" from Bloomington Surgery Center after an owner learned he had reused syringes, but not needles, on patients.

Tiwari, who still serves on the Monroe Hospital board, declined to comment through his attorney, who would not discuss the syringe issue.

Melton declined to comment on why Tiwari stopped practicing at his hospital. But he said in reference to the syringe use that "nothing of that nature happened here."

The 32-bed hospital decided to close its four beds devoted to labor and delivery after it delivered only 17 babies from October to December. It would have had to deliver about 35 a month to stay open, Melton said.

"That wasn't going to happen without some of the local obstetricians coming this way," he added.

Melton said his hospital had only one obstetrician. He brought some patients from his base in Martinsville but picked up few in Bloomington.

The CEO said the decision to start an obstetric department probably should have been examined "a little more in depth." Melton started at Monroe in April, after spending 25 years at Martinsville's Morgan Hospital and Medical Center.

Monroe competes with the well-established Bloomington Hospital, which is licensed for more than 300 beds.

"If we were a hospital out in the middle of nowhere, and there was no other option for obstetrical care, that would have been a different decision," Melton said.

Like most startup hospitals, Monroe also has suffered from meager initial cash flow. The hospital employs about 180 people and had to start paying them weeks before Monroe opened in order to ensure proper training.

Insurance reimbursement for care didn't start trickling in until December. Meanwhile, Monroe piled up a "high six figures" loss, Melton said.

However, the hospital budgeted for that and negotiated delayed payments with vendors to ease some of the startup pain.

"The founding physicians and investors knew that's just the reality of what you have to go through to get up and running," he said.

Indeed, some hospitals can take as long as three years to break even after opening, depending on how competitive their market is, said Ed Parkhurst, a principal with Illinois-based Prism Healthcare Consulting.

"You don't fill the hospital on the first day," he said, noting that it takes time for doctors to develop referral patterns to the new location.

Aside from Monroe, new general service hospitals have been built from scratch in suburban Indianapolis and Evansville in the past few years, said Bob Morr, vice president of the Indiana Hospital and Health Association.

Clarian Health Partners opened its West and North suburban hospitals in 2004 and 2005, respectively, and both reported early losses. But they've reported steady growth since, and Melton expects the same for Monroe.

He said patient counts and surgical procedures are "trending in the right direction." Hospital founders also are encouraged by research showing plenty of business in the market for another hospital.

"I think it's really kind of going about like I'd expect it to," he said. "The startup hump that you have to get over before you have any cash coming in the door, everybody was aware of that at the beginning."
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