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Competition drives hospital chief: Lennen labors to grow hospital, county to stay ahead of Indianapolis peers

April 16, 2007

Competitive.

That's how Shelbyville community leaders describe Tony Lennen.

Indeed. Any CEO of the city's Major Hospital needs to be.

Shelby County residents can, in just 20 to 45 minutes, drive up Interstate 74 or Interstate 65 to any of Indianapolis' large hospitals, many of which boast massive marketing budgets and stables of specialists.

But in nearly 14 years at the helm of Major Hospital, Lennen has found creative ways to boost profits, enhance technology, woo specialists and even-through aggressive economic-development efforts-attract new customers to Shelby County.

Lennen has taken a more active approach than most hospital executives in working to boost the economy of Shelby County, the slowest-growing county in metropolitan Indianapolis.

"We haven't had the luxury of having our population grow here," Lennen said.

Major Hospital sits a block and a half off the downtown public square of Shelbyville, a city of 18,000. All of Shelby County boasts 44,000 residents, and has grown about 9 percent since 1990, slower than the state average.

Major is dwarfed by its peers in Indianapolis. Its 56 staffed beds are one-tenth what St. Francis Hospital and Health Centers offers on Indianapolis' south side. Indianapolis' largest hospital network, Clarian Health Partners, boasts more than 20 times the number of beds and nearly 10 times as many physicians as Major.

"There's a boatload of options in Indianapolis. We spend most of our time fighting that battle," said Lennen, 49, as he gave a tour of the hospital, clad in a navy suit, light orange shirt and black sneakers.

Lennen, an avid golfer and jogger, has been leading Major since 1993. He joined the hospital in 1985 as its chief financial officer.

Lennen has kept Major in the battle. Major holds onto more than 50 percent of county residents as inpatient customers and attracts more than 80 percent to its outpatient services.

Major brings numerous Indianapolis specialists, such as cardiologist Horace Hickman and neurologist Gus Spenos, to Shelbyville for regular office hours.

Lennen credits the hospital's ability to recruit and retain staff to two main things: an inviting culture and cutting-edge technology.

On a recent tour, Lennen grew excited as he showed off Major's digital MRI machine and CT scanners. While standing over a radiologist examining a myriad of high-resolution CT images on a computer screen, Lennen said, "This is like science fiction."

The imaging tests those machines perform are the "bread and butter" of the hospital business, Lennen said.

"We have to keep this business," he said. "We've tried to have the latest technology so people don't have to go to Indianapolis."

And Major has done that. It has been recognized three times by Hospitals & Health Networks magazine as one of the nation's most wired hospitals.

But Lennen hasn't stopped there. He's looked for non-traditional ways to make money, too.

In 2001, Major needed high-speed Internet service to send images back and forth to its physicians. So it formed a joint venture to purchase three Internet service providers and then offered the service throughout the county. Major and its partners have since sold a majority stake of that business to IQuest.

When a local pharmacist was closing down his business, Major Hospital bought it, ran it for a few years, then sold it. Major also started a drug distribution business to nursing homes.

"He's got good business instincts," said Frank Learned, Lennen's predecessor at Major Hospital, and later a vice president at Methodist Hospital in Indianapolis.

Lennen's instincts also tell him his hospital's business fundamentally turns on population growth in Shelby County. And not just any growth, but growth of workers with employer-sponsored health insurance.

So Lennen has been active in various economic development groups, including the Shelby County Development Corp.

Major Hospital gives money to help market the county. And it partners with city and county officials to develop plans to lure employers in.

Major Hospital's most visible contribution to economic development was buying the land for Intelliplex, a certified technology park on the north side of Shelbyville. Major invested $22.8 million in the project and made its cancer center the park's first tenant.

Shelbyville and Shelby County are the other owners of the park, which is designed to bring higher-paying technology-based jobs to this blue-collar area.

"His main interest is just in making our community better," Shelbyville Mayor Scott Furgeson said of Lennen.

Lately, however, Lennen has begun to worry that his competing for customers and competing for economic growth could be running up against each other.

He worries that his ardent advocacy for economic growth could turn off Major Hospital customers, giving them another reason to drive to Indianapolis for health care.

"I don't want people taking their business elsewhere," Lennen said.

He suffered sharp criticism from some county residents a year ago for supporting a new Shelby County housing development called Tillison Farms. The project, which would have straddled the line between Marion and Shelby counties, ultimately was rejected.

"He has taken a very aggressive stance when it comes to economic development-which automatically puts you in the bull's eye," said Doug Warnecke, past president of the Shelby County commissioners and a current member of the Shelby County Plan Commission. "He is not shy about his positions. ... He will get involved in other people's projects, in other words throwing his influence into the fray."

Shelby County, being the last metropolitan county to see suburban growth from Indianapolis push across its borders, is hotly debating its future.

Last year, Shelby County approved a 192-page comprehensive plan, the result of two years of hearings, meetings and discussions.

The plan aims to preserve Shelby County's rural nature by steering development to Shelbyville and what it calls "rural town centers." It forswears the style of growth that has swept Hamilton and Hendricks counties, or what it calls "leapfrogging" housing developments into farm areas.

"The county should discourage patterns of land use and development that threaten those elements that define Shelby County," the plan reads.

But Lee McNeely, a well-known attorney in Shelbyville who has represented Major Hospital since the 1970s, said Lennen is overly sensitive to such criticism.

"We talk about CAVE people, Citizens Against Virtually Everything. Every community has them," McNeely said.

But that sensitivity might be key to Lennen's continued success.

Learned, his predecessor at Major, recalled a time when Lennen, then the hospital's chief operating and financial officer, deftly cleared the way for a new occupational health service to Shelbyville's industrial employers.

He not only worked out the finances of the new venture. He also persuaded Shelbyville-area general physicians, who had been providing occupational health on a part-time basis, to step aside in the interests of the employers and their workers and let Major's occupational health specialists take over the work.

"Tony's done a really nice job of creating an umbrella for the medical community," said Learned. "He's taken that place a long way."
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