Chalk it up to health care reform.

Franciscan St. Francis Health said its plans to build an emergency room and physician office building in Greenwood are on hold—something that was patently obvious to nearby business owners at State Road 37 and Fairview Road.

No construction has begun on the project, which was announced in November 2010 and was expected to open in September 2012.

“This is the result of our concerns about the changing reimbursement environment related to national health care reform,” Franciscan CEO Bob Brody said in a prepared statement.

What’s changing about reimbursement is that the federal Medicare program and private health insurers like WellPoint Inc. want to no longer pay hospitals for every procedure they perform, but instead pay them a yearly sum for each patient they care for—whatever that patient needs.

Other changes include giving bundled payments for things like kidney dialysis treatments, which will then require the various hospitals and doctors involved to figure out how to divvy up the payments.

Among Indianapolis hospitals, Franciscan has so far been the most outwardly eager to embrace these concepts. It was the only Indiana hospital included by the federal Medicare program in its pioneer “accountable care organization” initiative.

But the payment reforms also mean the days of hospitals using a “build it and they will come” strategy to attract patients may be ending. And that has put the Greenwood ER in doubt.

It has not, however, slowed Franciscan's plans to convert a medical office building in Carmel into a small hospital, which will include six inpatient beds and extensive outpatient facilities. That project, on North Meridian Street, is supposed to be fully operational by April.

“We are focused on designing the most cost-effective diagnosis, treatment and care-management options for the populations that we are privileged to serve,” Brody said.

He added that Franciscan would “re-evaluate” the Greenwood project to figure out the best “mix and scope of services” for the area: “Some of those might include what we have proposed in the past with other innovative ways to deliver health care services," he said.

Brody said Franciscan also has been concerned about the slow pace of redevelopment at vacant properties near the land Franciscan holds. Whereas Greenwood posted 32-percent growth in its population from 2000 to 2009, that growth has slowed since then, according to Census Bureau data.