Clarian plans $375M hospital tower at Methodist

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Clarian Health is planning to build a bed tower at Methodist Hospital in a massive project that shows renewed commitment to the downtown campus.

The tower would have 175 to 250 beds and allow Methodist to make all its rooms private. Right now, half of Methodist’s 760 beds are in pairs in semi-private rooms.

Clarian projects it could spend $375 million to $500 million on the project, which would not be complete until mid-2015.

The work, all centered on the intersection of Capitol Avenue and 18th Street, will include demolition of an aging bed tower with 100 psychiatric beds as well as a partially used parking garage. Clarian is likely to build a parking facility with room for offices on the east side of Capitol.

Methodist factbox

“The downtown location is the best place for us to serve the 6 million people of Indiana,” said Sam Odle, Clarian’s chief opperating officer. He added, “We’re modernizing all of our facilities and expanding those facilities to meet the patient demand.”

Since the 1997 creation of Clarian as a joint venture of Methodist and the Indiana University School of Medicine, Methodist has seen only one modest expansion. In 2002, Clarian centralized cardiovascular procedures there with a $36 million addition.

Meanwhile, Clarian has poured hundreds of millions of dollars into its two other downtown hospitals—Indiana University Hospital and Riley Hospital for Children—and also built outlying hospitals in Avon, Carmel, Lafayette and now Fishers.

“There’s always been a question as to whether one organization is going to predominate,” said hospital accountant Ed Abel, referring to IU and Methodist.

But Methodist seems to be getting more love now. The bed tower is the second project Clarian has announced at Methodist this year.

Clarian plans to start construction this year on a $75 million neurosciences outpatient hub across from Methodist along West 16th Street. In addition, the hospital spent $27 million to renovate its operating rooms to accommodate more neuro surgeries.

Odle Odle

Odle noted that Methodist had the most modern facilities when it merged with the IU hospitals. The hospital nearly doubled in size when it constructed its main entrance along Senate Boulevard in the 1980s. It added a new trauma unit in 1995.

But privately, Clarian officials acknowledge they have ignored the Methodist hub for too long.

Private rooms

If Clarian is committed to Methodist, it has to make all its rooms private, said Deeni Taylor, a regional executive vice president at BremnerDuke Healthcare Real Estate, an Indianapolis-based developer.

Just about every hospital built in the past 25 years has had all private rooms, and most older hospitals have tried to convert their rooms to have just one bed each.

“Obviously, that’s a patient preference,” Taylor said. “But you’ve also got all the HIPAA [privacy rules] and infection control. Really, just good patient care leads to private rooms.”

Abel, who is director of health care services at Indianapolis-based Blue & Co., said Methodist has been losing at least some patients because it does not have all private rooms

It also can be more costly to operate semi-private rooms, Abel said, because hospitals often try to juggle patients so they aren’t mixing those of different sex or religion or even race—anything that might lead later to patient complaints or disputes.

“You take that across 500 beds, and, oh my goodness. It’s costing them money,” Abel said.

Clarian is trying to convert all three of its downtown hospitals to all private rooms. Those three hospitals receive more than 850,000 patient visits each year.

Clarian does not break out financial results for Methodist Hospital, but combines its results with the IU and Riley hospitals. As a group, those hospitals brought in $2 billion in revenue in 2008, the most recent year available. They posted an operating gain of $96 million.

Pricey project

The bed tower project at Methodist has been planned since the 1980s but was delayed in part because of its high cost. The project will require expensive removal of asbestos from Building C, which contains the 100 psychiatric beds.

In addition, Odle said, many of the main utility connections for Methodist come in through or near Building C. Those will need to be re-routed.

On the east side of Capitol Avenue, Clarian likely will tear down a nursing home to make way for the parking garage with office space. It also wants to beautify 18th Street to act as an attractive gateway to the tower and the hospital. But the main entrance will remain on Senate Boulevard. The details and cost estimates of the plans are still being worked out and will go before the Clarian board later this year.

Clarian is currently raising money quietly from its employees and “internal friends,” Odle said. Clarian expects the rest will come from cash and tax-exempt bonds, he said.

Olde said Clarian officials have yet to decide what kinds of patients will be treated in the new tower. They are studying patient volume trends and the impact of the recently passed health reform law to determine what demand will be in 2015.

Clarian was the most active builder among Indianapolis-based hospitals in the past decade. But it halted its major construction projects in late 2008 after the meltdown on Wall Street hammered its investments by $633 million.

As a result, Clarian stopped construction on its new hospital in Fishers and on a bed tower at Riley. It resumed the former project in October and the latter one this spring.

St. Francis Hospital & Health Centers stopped and then restarted work on a 221-bed tower at its campus on the southern edge of Indianapolis. St. Francis will consolidate operations there after it closes its Beech Grove hospital in 2012.

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

And Wishard Health Services, the publicly supported safety-net hospital for Indianapolis, started construction this year on a $754 million new hospital just west of the IUPUI campus. When that hospital opens in 2013, it will replace Wishard’s existing hospital.•


  • Costs
    Chris, have you done any research into what percentage of the total cost to a patient is a professional (physician) fee versus a facility (hospital) fee for the "expenssive procedures" you refer to? I think this would be enlightening for you.
  • Realistism in Cost
    As a previous employee of some of the mentioned facilities and a current employee of one of the others, I was there during the Clarian merge. Although they took away the uniqueness of the the University Hospital setting, they poured their resources into helping us all when we where students looking for clinicals. For that I am very thankful. I worked there 2 years prior to the merge and 6 years post. They were good to their employees and customers.

    Chris, seriously, you talk about our "high salaries". Why don't you talk to the people that charge medical students $400,000 for medical school and $80,000 for PUBLIC nursing school. Private nursing schools and PA schools will cost evern more.

    The price of medication is NOT passed onto the consumer by the hospitals. The next time you have a raging infection and need to take a medication that will save your life, remember it took many, many scientists years of research and development to develop the medication. Some medications have been in the making for 20+ years. The next time you think about how much Lilly charges for the meds, why don't you thank them for ALL of the money they pour back into the community for health education.

    St. Francis, Community, Clarian, and Wishard has put alot of money into their communities. They donate to so many causes. They don't turn you away because you can't pay.

    Then take Wishard, before they EVER decided to build a new hospital. They raised $100M+ so they would only have to take out a 20 year bond so they wouldn't cause an increase in Marion county taxes.

    If anything, the hospitals are doing everything they can to meet the needs of everyone, even during the uncertain times of uncertainty of Healthcare Reform.

    My salary, if you look at other non-medical disciplines and their working hours, I am underpaid for what I do. I don't look at it that way. When you are in my care, you are my ONLY priority. I don't clock watch. I make sure you are safe and secure before I turn off my office lights. No amount of money can cover that.

    Chris, the next time you see your healthcare provider, try to thank them.
  • Check Property Lines
    Two large renderings of the hospital are available on Property Lines: http://www.ibj.com/property-lines/2010/04/17/a-new-tower-for-methodist-hospital/PARAMS/post/19383
  • Patients Demand it
    the reason hospitals are building such facilities is justifiable because they need to meet the expectations of the patients they want to attract (insured!) and since they also often overnighters, the patients want a hotel like feel. The old hallways and layouts are also not conducive to modern technology and coordination of care. If anyone wants to argue my earlier point, ask the average insured patient (not the clinically in the know) if they would have rather gone to St. Vincent or to Winona in 2003.
  • costs
    Chris - Since you are so critical of what things cost, when you need a "expensive" procedure, I think you should do your part and no. You will be helping us all out.
  • Amazed
    Wow...I am amazed at the cost of this thing. All justifications aside, $1.092M per bed? I can't think of anyone that wouldn't want a private room, or infection control...however, does that really cost over $1M per bed? Anyone else think there should be big red arrows pointing towards this project as a reminder of the problems with rising healthcare costs?
  • Nice Facilities Aren't the Problem
    Healthcare costs are sky-high because of the extraordinary salaries paid to top practitioners and health administrators and the massive fees charged for medical procedures. Expensive and complex high-tech equipment and pricey medications also add to the burden. Modern facilities are not the problem. Clarian is merely responding to the market. Most people want a private room, not a shared room. It seems to me if people want less expensive facilities in return for somewhat reduced costs, then they would choose to have elective procedures and routine treatment in such facilities, but they don't.
  • Rooms
    Don't worry JG. I'm sure there will still be psych beds for Berwick and his buddies.

    Patients are demanding private rooms more and more and I can see a time when non-private rooms are a thing of the past, just like wards with multiple beds are now.
  • YES!
    Great news... Much needed, but... Is this structure going to be green? Clarian could save immense amounts of money each year if they do so. My college build a new 100,000 sq ft building and it is only using about 60% as much energy as the average 100,000 sq ft education building
  • Nice Design
    The structure on Methodist being replaced is a very forgettable design, and this new one looks fantastic. Smaller private rooms are incredibly important for infection control and increasing the restfulness of a hospitalization, though double rooms could still serve a purpose for low acuity over night stays and should not be across the board phased out.

    Since the psych ward is being removed, where will Berwick live?
  • Clarian
    Obama blames the Insurance Companies for skyrocketing health care costs. What they do is pass through the charges and act as a watchdog to approve expenses. Since all of the hospitals have decided their facilities should look like Taj Mahals and have private rooms only, who is the culprit here?

    Thanks a lot Clarian for doing your part to make the ever increasing health care costs go even higher.


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