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Expanding hospitals target Bloomington

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Monroe Hospital in Bloomington is the latest target in the statewide buildup by hospital systems.

St. Vincent Health, St. Francis Hospital and Health Centers, and at least one other system all have had talks in the past month with Monroe executives, according to statements that the hospital’s CEO made to a newspaper in Bloomington.

"At best, it would be a relief to have a partner. It gets tiring to be seemingly alone," CEO Fred Price told The Herald-Times. Officials at Monroe, a 32-bed hospital, talked last year about a deal with St. Francis, but when talks broke down, it caused internal turmoil, Price said.

It’s not clear if Monroe might sell itself or simply affiliate with a larger hospital system. But the demands of recently passed health reform laws—including an effective mandate to adopt electronic medical record systems—are pushing many smaller health care providers to merge with larger peers.

Other reasons driving smaller hospitals to seek out partners are their need to negotiate better reimbursement from insurance plans and lower prices from suppliers. They also need to provide enough patients for high-value specialists, such as heart and orthopedic surgeons and cancer specialists, and a larger financial base also makes hospitals more creditworthy, driving down their borrowing costs.

Just this year, Indianapolis-based St. Vincent has signed deals to acquire hospitals in Salem and Bedford. Having one in Bloomington would create a nice line of facilities stretching south from Indianapolis, and would make for the 20th hospital St. Vincent owns outright.

St. Francis, which is part of a 13-hospital chain based in Mishawaka, has no presence south of Mooresville, which lies immediately southwest of Indianapolis.

The third network involved, according to the Herald-Times, is Community Healthcare System, which operates three hospitals near its headquarters in Munster in northwest Indiana.

And there may be more. The company that owns Monroe and its real estate has said it has opened discussions with “several” not-for-profit hospitals and more than one for-profit system.

“Monroe Hospital is currently not performing where we believe it should be,” Edward Aldag, CEO of Alabama-based Medical Properties Trust Inc., said during a conference call in May with investors.

Monroe lost $6.6 million on $31.1 million in operating revenue in 2008, the most recent data available, according to a financial filing with the state.

But Aldag added, “We still believe that this facility is a good hospital in a good market, and in a good location.”

Whichever hospital system scoops up Monroe, it would create a pitched battle with Bloomington Hospital, which was acquired Jan. 1 by Indianapolis-based Clarian Health. Clarian owns hospitals stretching from La Porte to Paoli.

In Indianapolis, Clarian, St. Francis and St. Vincent all compete fiercely against one another. They say their expansions statewide can improve patient care throughout the state. But having a network of outlying hospitals can also solidify a steady flow of patient referrals to feed the hospitals’ sprawling Indianapolis facilities.

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