Health Care and Technology

St. Vincent buys land near Lafayette for hospital: Market has long intrigued Indianapolis-based network

February 28, 2005

St. Vincent Health paid Arnett Health-System $3 million to $4 million for land Arnett owned along Interstate 65 in Tippecanoe County, said Rebecca Carl, Arnett vice president for marketing and communications. The two sides closed the deal in mid-February.

Lafayette-based Arnett includes a health care plan and a physician group of 150 doctors, and covers a 14-county area centered on Lafayette. Its leaders want another hospital there even though Lafayette already has two, Home Hospital and St. Elizabeth Medical Center. Both are owned by a sister company to Indianapolis' St. Francis Hospital and Health Centers.

"We have had serious discussions with [St. Vincent], and our hope is that there is a decision for a new hospital to be built in Lafayette sometime very soon," Carl said.

Arnett already tried building a hospital there. It broke ground last summer on a 140-bed Arnett Hospital. However, the company scuttled the project eight days later, according to a story published in Indiana Lawyer.

Arnett's plans for a Lafayette hospital led to a lawsuit from 20 doctors in its group who claimed the plans were made illegally and without the input of physician shareholders. Arnett officers, in turn, accused the doctors of conspiring with the competition to undermine their hospital plans.

That competition would be Greater Lafayette Health Services, owner of the two Lafayette hospitals and a subsidiary of Mishawaka-based Sisters of St. Francis Health Services Inc. The Sisters also own St. Francis Hospital and Health Centers.

The idea of a third hospital stirs plenty of debate in Lafayette. A new hospital would add a new building and updated

St. Vincent Health recently bought 83 acres of land already cleared for a hospital near Lafayette, a market the Indianapolisbased network has studied for years.

However, St. Vincent's chief strategy officer and system vice president said the move is no sign the hospital system has finally decided to build a hospital there. Deeni Taylor said that decision probably won't come for a few more months.

If the network does plant roots in Lafayette, they'll grow amid a messy fight between one of Indiana's largest doctor groups and an Indianapolis competitor of St. Vincent's.

technology, according to Dr. Michael Skehan, Arnett's president and chairman of the board.

But Greater Lafayette's two hospitals saved more than $50 million within the first four years after they merged in 1999, counters Sisters President and CEO Kevin Leahy.

"I think a third hospital will put us back in the situation we had before, when we had two hospitals trying to serve a relatively small population, offering the exact same services," he said.

A third hospital also would create an interesting dynamic: It would strengthen St. Vincent's relationship with the area's largest doctor group. Meanwhile, its Catholic rival would control most of the Lafayette hospitals.

However, St. Vincent is still studying the market, according to Taylor. Surveys indicated resident want more access to affordable health care and they're interested in the quality upgrades that might come with a third hospital, he said.

But Taylor said St. Vincent Health's board has made no final decisions.

"Given that we've been interested in [the market] for several years, there's no reason to rush at this point," he said. "It's not imminent or anything like that."

St. Vincent Health operates 16 hospitals that serve 45 counties in central Indiana. The network, a subsidiary of St. Louis-based Ascension Health, has been interested in Lafayette since it acquired hospitals in nearby Williamsport and Frankfort in 1997 and 2000, respectively.

Taylor said St. Vincent Health bought the plot from Arnett because it was on the market and the hospital group might eventually build there.

"We took advantage of an opportunity, and it's a piece of property that will be valuable no matter what it's used for," he said.
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