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Clarian Health looks to scoop up White County hospital

December 9, 2010

Clarian Health is nearing a merger with White County Memorial Hospital in Monticello—its second attempt to acquire a county hospital in the past three months.

The Indianapolis-based hospital system’s board of directors could vote on the White County deal as early as next week, although they might put off a decision until February, Clarian spokeswoman Traci Robison said . White County officials already have decided to move ahead with integrating the hospitals.

White County Memorial operates a new 25-bed facility about 30 miles north of Lafayette. But officials are concerned about possibly getting stuck with the bill for the $33.5 million spent to build the 2-year-old hospital and nearby medical office building.

"The hospital owes the money, but the county is ultimately responsible for the debt if the hospital cannot service it," White County Council president Buzz Horton said, according to the Journal-Courier of Lafayette. "There's a general unease that we don't know what the face of health care will look like in a couple years.”

In September, Clarian signed a letter of intent to merge with Morgan Hospital and Medical Center in Martinsville. That deal is awaiting agreement from Morgan County officials.

Smaller hospitals were looking to merge with larger systems even before the health reform law passed in March. They want access to the better borrowing terms or the specialist physicians a larger system can attract. They also need help acquiring the electronic medical record systems that will be required by the federal Medicare program beginning in 2015.

But health care reform has also induced many health care providers to merge in order to build up so-called accountable care organizations that will be asked to take on some financial risk in order to encourage them to keep patients healthy and out of the hospital. And the extra heft helps in price negotiations with private health insurers.

White County Memorial had $25 million in patient revenue in 2008, the most recent year of financial results it has publicly reported. Clarian is more than 10 times as large.

Clarian now has 16 hospitals in its system, and in recent years has added Bloomington Hospital, Blackford County Hospital in Hartford City, Ball Memorial in Muncie, and Orange County Hospital in Paoli. Since 2004, Clarian has built hospitals in Avon, Carmel and Lafayette, and has another under way in Fishers.

Hospitals in rural areas of the state help provide a steady stream of referrals to Clarian’s massive medical campuses in downtown Indianapolis, which include Methodist Hospital, Indiana University Hospital and Riley Hospital for Children.

But Clarian emphasized that its potential merger with White County would bring the benefits of the IU School of Medicine to the Monticello area. Clarian is a joint venture of the IU med school and Methodist Hospital. Next year, Clarian will change its name to Indiana University Health.

“A possible integration will go beyond that of just a hospital and will offer medical expertise with Clarian and IU School of Medicine’s commitment to education, research and community health,” Robison, the Clarian spokeswoman, wrote in an e-mail. “Collaboration benefits everyone and connection with Indiana University School of Medicine is the key to collaboration. It’s important to spread the knowledge and translate that knowledge to the bedside in individual communities we serve.”

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