It looks like Clarian may be back to deal-making. The Indianapolis-based hospital system has signed a letter of intent to absorb Morgan Hospital and Medical Center.

Clarian has had a formal partnership with the Martinsville hospital since January 2006, helping recruit physicians and secure accreditation for key programs. But the merger talks, which would still need approval of the hospital’s board of trustees and Morgan County commissioners, make the relationship even more serious.

Clarian has used its relationships with smaller hospitals around the state to provide a steady flow of patients to its massive facilities in downtown Indianapolis. Also, Clarian CEO Dan Evans has been open about his interest in acquiring suburban hospitals to help generate profits to support Clarian’s downtown Indianapolis facilities.

Since 2002, Evans has engineered Clarian’s acquisitions of hospitals in Bloomington, Hartford City, Muncie and Paoli, as well as pulling affiliated hospitals in Bedford, Goshen, LaPorte and Tipton into even tighter relationships.

Also, Clarian has built hospitals in Avon, Carmel and Lafayette, and has another underway in Fishers.

Evans declared in January that Clarian was in “digestion mode” and wasn’t seeking more acquisitions at the time.

Since then, Clarian’s erstwhile rival St. Vincent Health has continued to grow its statewide network, agreeing to purchase hospitals in Bedford and Salem.

Smaller hospitals have been increasingly open to merging with larger systems because they want more heft in negotiations with health insurers and suppliers, a greater ability to attract specialist physicians, and stronger balance sheets to make borrowing less expensive.

Also, hospitals systems like Clarian are trying to improve care quality ranging from physician visits to complex surgeries because public and private insurance programs are pushing to make more of their compensation based on quality and the results of patient care.

Morgan Hospital is licensed for 106 beds. In 2009, it had operating revenue of $49.3 million and a surplus of $2.7 million.

Morgan CEO Tom Laux told The Reporter-Times in Martinsville that strengthening the hospital’s relationship will continue to help improve patient care and expand services in Martinsville.

“After extensive due diligence by the board of trustees, and discussions with our medical staff leadership, managers and employees, this seems to be the next logical step in our relationship with Clarian,” Laux said in a statement. “If this agreement happens, it will clearly demonstrate achievement of our mission and more advances, more care for future generations."