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Hancock Regional Hospital goes after Geist market

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Hancock Regional Hospital will have its first presence in the northeastern suburbs in March, five years after first plotting the expansion.

The $7.8 million medical office building in McCordsville is on Mount Comfort Road, just north of Pendleton Pike. It will offer urgent care, imaging and physical therapy, but about half as much space for doctors’ offices as first envisioned.

The scaled-down plan emerged after other hospitals targeted exit 10 of Interstate 69, a fast-growing area about five miles to the north.

Greenfield-based Hancock Regional’s leaders think they can still scoop up plenty of patients because their new building is south of Geist Reservoir. That’s an important geographic distinction for Hancock County residents, said Rob Matt, vice president of marketing and business development.

“They’re targeting Noblesville, Fishers, more so than they’re targeting high-quality care for Hancock County folks,” Matt said of other hospitals’ existing and planned facilities around exit 10. “People don’t necessarily want to drive to the most congested part of the metroplex.”

Despite the recession, hospitals continue to throw up new buildings in the suburbs because they’re desperate to capture patients who have private insurance, said Ed Abel, director of health care services at Blue and Co., an Indianapolis accounting and consulting firm.

Hancock Regional actually saw a slight increase in the number of patients with private insurance in 2008. But it also wrote off $4.9 million in charity care, which was more than twice the amount in 2007.

“The competition for the paying patient is going to heighten,” Abel said. “There are more of those patients in the suburban than in the urban areas.”

In that regard, Hancock Regional is no different from the Indianapolis-based hospitals, Abel said. Northwestern Hancock County has more commuters—people with jobs that include health insurance benefits—than the rural area southeast of Greenfield.

Hancock Regional’s main competitor in the area is Community Health Network, which opened its Saxony medical pavilion on Olio Road near 131st Street in 2005.

Jon Fohrer, Community’s CEO of ambulatory services, said Hancock Regional’s new offerings are remarkably similar to those of Community’s at Saxony. Yet the hospital isn’t trying to top Hancock in order to keep its McCordsville patients.

“That particular market is in that overlap market,” he said. “The fact they’re out there is not surprising.”

Community was the pioneer in Fishers, but the other central Indiana hospitals already have or are working on a major presence. St. Vincent Health built a stand-alone emergency room, outpatient surgery and other services near exit 10.

Clarian Health Partners is going one step further with a full-fledged hospital, called Clarian Saxony Medical Center, in the same area.

Clarian halted work on the $190 million hospital after the stock market tanked last year. In October, the work restarted. By 2011, Clarian will have a 44-bed hospital and 100,000-square-foot medical office building.

“The project Hancock’s looking at is really kind of small potatoes compared to the other location,” Abel said, referring to exit 10.

The county-owned hospital is financing the 27,000-square-foot medical building out of its cash reserves, Matt said. Until the spring of 2007, Hancock Regional was planning more than 50,000 square feet in two stories, mostly for doctors’ offices.

Faced with increased competition for doctors, the hospital decided to skip the extra floor of offices and concentrate on a strategic mix of services. Hancock will offer some of the most frequently ordered services: physical therapy, imaging and lab tests.

Although there are some Hancock Regional-affiliated doctors in the northwestern corner of the county, their patients have to choose between fighting traffic to the north or the south to get those basic services, Matt said.

Most often, and unfortunately for Hancock Regional, they’ve chosen Community Health.

“We have limited market share in that quadrant of our county,” Matt said.

Hancock Regional hopes to grow its market share around McCordsville from 10 percent today to about 20 percent in five years, he said.

Outpatient services, which generally account for 65 percent of hospital revenue, are crucial to that growth, Matt said.

Hancock Regional saw its operating income increase 25 percent, to nearly $8 million, in 2008. That was thanks in part to double-digit increases in the number of imaging services and outpatient surgeries.

Urgent care is one new service Hancock Regional will bring to McCordsville residents. It might not become a profit center, but it could ensure that the other areas stay busy and net a few new patients, Abel said. About half of all true urgent-care visits result in some sort of scan, he said.

“It serves essentially as a feeder source for the other services you provide,” he said.

The number of doctors who will work out of the McCordsville building isn’t final yet. Hancock Regional will rely on St. Vincent, which has a partnership with the hospital and has leased 5,000 square feet of space, to bring in specialists. The specialists may refer patients to Hancock Regional in Greenfield or to St. Vincent.

St. Vincent has been a Hancock Regional partner for 10 years, splitting the cost of its 26-doctor network. The doctors refer to St. Vincent for high-level care, such as open-heart surgery.

Northeast Medical Group, a practice with ties to Hancock Regional, will move from its current location on Oaklandon Road to take about 6,500 square feet in the new building, Matt said.

Even with the stripped-down plan, Hancock Regional is looking for growth to continue around McCordsville.

Town Manager Tonya Galbraith thinks it’s only a matter of time.

“Residential building permits are already more than we had all year last year,” she said. “I’m still confident the growth that was in Fishers is going to come this way.”

The medical building will be part of a 300-acre planned-unit development. Other projects on the site are slow to emerge. Lowe’s recently backed out of McCordsville, along with 11 other Midwestern sites. A senior-living project that’s planned behind the medical building hinges on a tax credit award, Galbraith said.•

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