New ER in Mooresville likely to intensify competition with Martinsville’s Morgan Hospital

St. Francis Hospital-Mooresville is seeing higher-than-projected use of a newly added emergency department that has firmed
up its status as a full-service hospital.

While good for patients in fast-growing parts of northern Morgan County, the latest St. Francis expansion threatens to open
old wounds in a battle waged against it three years ago by county-owned Morgan Hospital & Medical Center, down the road

It’s a feud that came to a head in 2005, when county leaders unsuccessfully attempted to impose a moratorium on construction
of health care facilities — including hospital emergency rooms — to ensure the viability of county-owned Morgan

It appears that county leaders had good reason to be concerned about what, three years later, would become a 14-room facility
staffed by more than two-dozen emergency physicians.

St. Francis administrators projected the hospital’s first ER, which opened Oct. 1, would serve about 12,000 people a year.

That estimate appears to have been conservative.

"I think we’re on pace to do about 20,000 visitors," said Jared Stark, executive director of St. Francis-Mooresville.
underscores the need in the community that we’re seeing so many visitors right out of the gate."

Morgan Hospital’s president, Tom Laux, could not be reached for comment. Morgan is fighting encroachment partly through a
partnership with Indianapolis hospital giant Clarian Health Partners.

Previously, the administrator estimated that about 10 percent of the Martinsville hospital’s 20,000 ER patients annually come
from the northern part of the county.

"They were always afraid, down there, of what we were going to do," said Bud Swisher, the former president and CEO
of Kendrick
Memorial Hospital, which became St. Francis Hospital-Mooresville. St. Francis bought Kendrick in 2000 and continued Swisher’s
vision for diversification beyond its focus on orthopedic and colorectal care.

"St. Francis came in and made it more of a general hospital, which is a direct competitor to Morgan Hospital," said
Zollinger, a professor at the Indiana University School of Medicine and associate director of the Bowen Research Center
at IU. "They see the St. Francis facility as a threat and I’m sure that it probably is siphoning some patients."

One advantage of an ER is that "it’s a gateway to everything else" at a hospital, said Duane Sobecki, principal
of Indianapolis-based
Focused Results LLC.

An ER "changes the complexion of your hospital considerably," Swisher said. "That’s a major, major step."

Competing for patients

Population trends have favored St. Francis in the chase for paying patients. Mooresville’s population has more than doubled
since 1990, to 11,516 from 5,541.

Mooresville by 2007 was nearly as large as county seat Martinsville, population 11,714. Since 1990, Martinsville’s population
has grown a mere 0.3 percent, according to U.S. Census data.

Meanwhile, St. Francis was on the move south and west from its home base in Beech Grove and its newer campus near Greenwood.
In 2000, it bought Kendrick and began investing $60 million in expansion aimed at turning it into a more comprehensive hospital.

To counter that move, county commissioners introduced an ordinance in 2005 to protect Morgan Hospital from encroachment. They
feared St. Francis and others would lure the most lucrative, insured patients away from Morgan Hospital, leaving the county
burdened with caring for a greater percentage of uninsured patients.

"Capital investments in health facilities by private hospital corporations or other outside interests may duplicate and
impact the viability of public facilities and services already available and may not be needed by the citizens of Morgan County,"
declared the ordinance. "These capital investments increase the cost of health care to all residents in the long term."

St. Francis responded by filing suit in U.S. District Court in Indianapolis, alleging the ordinance amounted to suppressing
competition and trying to protect a monopoly. St. Francis lawyers cited a letter Morgan Hospital had sent previously that
suggested the two hospitals essentially divvy up certain health care services in the region.

Months later, the court ruled in favor of St. Francis by granting a permanent injunction to prevent Morgan County from enforcing
the ordinance.

The following year, in 2006, Morgan Hospital formed a partnership with Clarian. It included a joint emphasis on cancer treatment,
women’s services, and orthopedic and pediatric care. Morgan Hospital’s cancer care is already highly ranked by the American
College of Surgeons.

Last month, Morgan Hospital and Clarian started a new offering for heart attack patients entering Morgan’s ER. Morgan’s doctors
prepare patients for a rapid heart catheterization and put them on a helicopter that flies them to Clarian’s Methodist Hospital
for the procedure. It gives Morgan Hospital a competitive edge against its in-county competitor and is the first such partnership
outside of Clarian’s own hospitals.

Similar partnerships are being explored involving other care, said Amy Wozniak, executive director of the Morgan Hospital
and Medical Center Foundation.

More and more of the county hospitals are going to have to look at an alliance, Sobecki said.

Big enough for two

Swisher, the former head of the Mooresville hospital, figures there’s room for two hospitals in the county, with Martinsville
far enough away and St. Francis-Mooresville now distinctly within the orbit of the Indianapolis suburbs.

Current head Stark said northern Morgan County clearly wanted additional health care, including better access to an ER.

"We responded to a need in this community and I think the response speaks for itself," he said.

From a business development standpoint, St. Francis is a big asset for the town, said Mark Chester, president of the Greater
Mooresville Chamber of Commerce. It’s also been a boon to the local economy, he said, what with the facility now employing
about 430 people. That compares with about 550 at Morgan Hospital.

The new emergency room was the last big piece in a $42 million expansion this year that also included a new intensive care
facility and orthopedics unit.

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