Reform, revenue behind Franciscan expansion

Back to TopCommentsE-mailPrintBookmark and Share

Changes unleashed by health reform are pushing Franciscan St. Francis Health’s expansion into Hamilton County—in addition to the obvious pull of the area’s well-heeled population.

The hospital system that dominates the southern side of Indianapolis will invade the northern suburbs by leasing an 89,000-square-foot building on North Meridian Street in Carmel. That’s just up the road from the Indiana University Health North Hospital, formerly called Clarian North Medical Center. It’s also about halfway between St. Vincent Carmel Hospital and St. Vincent Heart Hospital.

Franciscan St. Francis will spend $23 million to convert the three-story building to its uses: a six-bed inpatient unit, inpatient and outpatient surgical suites, an imaging center, facilities for cardiac testing, physical therapy, oncology infusion therapy and study of sleep disorders, as well as physician offices.

North-side patients don’t even account for 10 percent of Franciscan St. Francis' current revenue of $1.7 billion. But Hamilton County residents have median household incomes of $86,000—the highest in the state and 22nd-highest in the nation—and most have generous health insurance sponsored by their employers.

Those employers, however, are crying "uncle" after their costs for providing health benefits more than doubled in the past decade. To get a handle on costs, some employers are looking to contract directly with hospital systems in exchange for lower rates, or to sign on to health insurance plans that restrict workers’ access to a narrow network of low-cost providers.

Franciscan St. Francis wants to play that game—but to do so, it needs to be able to provide convenient access to employees all around the city.

“We’re seeing the marketplace change a little bit,” said CEO Bob Brody, adding, “We want to create access points across the marketplace that are convenient for patients, that are affordable for patients, and that ensure the St. Francis standards of care.”

In addition, the 2010 health reform law instructed the federal Medicare program to contract with health care providers that form themselves into accountable care organizations—and to give those organizations a bonus if they reduce costs and improve quality. Many private health insurers are following suit.

To qualify as an accountable care organization with the federal government, a group of hospitals and doctors must take responsibility to care for at least 5,000 Medicare recipients, who are all 65 and older. Other rules for the organizations, however, have yet to be written.

“As we move into our accountable care organization planning and development, it will be important to have a broader geographic presence, spanning the central Indiana marketplace,” Brody said. Franciscan St. Francis currenty operates hospitals in Beech Grove, Mooresville and in Indianapolis, near Interstate 65 and Emerson Avenue.

In addition to spawning accountable care organizations, the health reform law reduced some payments to hospitals and instructed the Medicare program to further moderate spending by not paying for patients readmitted to hospitals shortly after discharge and by making “bundled” payments to hospitals and doctors for major procedures—and letting them argue over how to divvy it up.

Brody, who has publicly criticized the hospital arms race in Hamilton County of the past decade, defended Franciscan’s Hamilton County expansion as a move designed to be much lower in cost than the massive hospitals it will compete against along Meridian Street.

“I’m particularly incensed with health care providers spending hundreds of millions of dollars in markets around the state which are already served by an existing community-based hospital, and the negative impact that has on the cost and quality of care,” he said. “In this situation, we’ve been very, very intent on developing a cost-effective alternative in what is certainly an over-served market, but is over-served in a manner that is not consistent with the changing economics and the intent of our reform legislation.”

In other words, Franciscan St. Francis thinks its facility will be the low-cost option on the block.

Brody also noted that Franciscan St. Francis has seen increasing business from north-side patients in the past year, particularly in such areas as orthopedics, cancer and heart services.


  • subsidized care
    In a nutshell, they are trying to capture more of the patients with corporate health care plans, which makes up for the losses on medicare and unsinsured patients. Make no mistake, those with employer-sponsored insurance are paying for those without.

Post a comment to this story

We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
You are legally responsible for what you post and your anonymity is not guaranteed.
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
Subscribe to IBJ
  1. Of what value is selling alcoholic beverages to State Fair patrons when there are many families with children attending. Is this the message we want to give children attending and participating in the Fair, another venue with alooholic consumption onsite. Is this to promote beer and wine production in the state which are great for the breweries and wineries, but where does this end up 10-15 years from now, lots more drinkers for the alcoholic contents. If these drinks are so important, why not remove the alcohol content and the flavor and drink itself similar to soft drinks would be the novelty, not the alcoholic content and its affects on the drinker. There is no social or material benefit from drinking alcoholic beverages, mostly people want to get slightly or highly drunk.

  2. I did;nt know anyone in Indiana could count- WHY did they NOT SAY just HOW this would be enforced? Because it WON;T! NOW- with that said- BIG BROTHER is ALIVE in this Article-why take any comment if it won't appease YOU PEOPLE- that's NOT American- with EVERYTHING you indicated is NOT said-I can see WHY it say's o Comments- YOU are COMMIES- BIG BROTHER and most likely- voted for Obama!

  3. In Europe there are schools for hairdressing but you don't get a license afterwards but you are required to assist in turkey and Italy its 7 years in japan it's 10 years England 2 so these people who assist know how to do hair their not just anybody and if your an owner and you hire someone with no experience then ur an idiot I've known stylist from different countries with no license but they are professional clean and safe they have no license but they have experience a license doesn't mean anything look at all the bad hairdressers in the world that have fried peoples hair okay but they have a license doesn't make them a professional at their job I think they should get rid of it because stateboard robs stylist and owners and they fine you for the dumbest f***ing things oh ur license isn't displayed 100$ oh ur wearing open toe shoes fine, oh there's ONE HAIR IN UR BRUSH that's a fine it's like really? So I think they need to go or ease up on their regulations because their too strict

  4. Exciting times in Carmel.

  5. Twenty years ago when we moved to Indy I was a stay at home mom and knew not very many people.WIBC was my family and friends for the most part. It was informative, civil, and humerous with Dave the KING. Terri, Jeff, Stever, Big Joe, Matt, Pat and Crumie. I loved them all, and they seemed to love each other. I didn't mind Greg Garrison, but I was not a Rush fan. NOW I can't stand Chicks and all their giggly opinions. Tony Katz is to abrasive that early in the morning(or really any time). I will tune in on Saturday morning for the usual fun and priceless information from Pat and Crumie, mornings it will be 90.1