Clarian and Hospital Construction and Health Care & Life Sciences

Clarian to restart Riley project, reverse pay cuts

January 13, 2010

Within weeks Indianapolis-based Clarian Health will restart work on a new bed tower at Riley Hospital for Children near downtown Indianapolis and the hospital system is set to lift other cost-saving restrictions it adopted 11 months ago. It’s the latest exhalation from a local hospital after massive investment losses and a scary economy forced them to tighten their belts a year ago.

Now, Clarian will resume full pay for its executives (who all took a 10-percent pay cut in 2009), and once again offer tuition reimbursement to its employees.

Clarian also plans to have the first phase of the Simon Family bed tower at Riley completed before the year’s out. The first phase of the 10-story, $475 million inpatient facility was initially supposed to open in June 2009. It is still scheduled to be in full use by 2013.

The Riley project was one of two Clarian halted and has since restarted. It announced last year that it was resuming construction on a $190 million, 44-bed hospital near Fishers.

In all of last year, Clarian saved a bit more than the $225 million it projected in February.

Clarian officials gave credit to the hospital system’s employees for generating additional ideas for saving money. They suggested various ways to do less printing of internal reports, to be more vigilant about turning out lights when not in use, and other items that added up to generate significant impact.

“We couldn’t be more pleased with the way our employees responded,” said Ron Stiver, Clarian’s senior vice president for external affairs. He added, “There were so many ideas coming in, that we actually launched, later in the year, a formal [online] process for them.”

Hospitals around the country went into cost-saving mode in late 2008 and early 2009, after they watched the meltdown on Wall Street decimate their investments.

In Indianapolis, however, only one other hospital system put a building project on hold. St. Francis Hospital & Health Centers “paused” work on a 221-bed tower at its campus on the southern edge of Indianapolis but resumed work late last year.

By contrast, Community Health Network plowed ahead with a $130 million expansion of its Community South Hospital, on County Line Road.

In spite of the fears, 2009 turned out pretty well for Clarian, which saw patient visits rise in spite of rising unemployment. Still, Clarian is mixing its regained optimism with a fair dose of caution.

CEO Dan Evans, in a letter to employees announcing the end of the cost-saving measures, wrote, “It is essential that we safeguard the progress we have made while continuing to rebuild our financial reserves that were so depleted by the economic downturn.”

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