2016 TOP STORIES: Micro- hospitals trend lands here

December 24, 2016

The latest trend in hospital construction—tiny hospitals with small overhead and big profits—swept through central Indiana in 2016.

St. Vincent announced in August it would build eight “micro-hospitals”—or “emergency hospitals,” as the organization calls them. The first four are planned for Noblesville, Plainfield, Avon and Castleton.

In November, Franciscan Health said it would build a micro-hospital and medical complex in Johnson County.

Some other hospital systems here say they are keeping an eye on the trend, but have no plans to jump in yet. Meanwhile, some hospital observers say they wouldn’t be surprised to see 20 or 30 micro-hospitals spring up in the next five years.

What’s driving the tiny hospitals here and around the country is cost. They’re often only 15,000 to 50,000 square feet in size and cost only $7 million to $30 million to build.

Yet they seem ready to rake in big profits for their owners. With small overhead, the tiny hospitals can bill patients the same prices as large, traditional, acute-care hospitals for treating medical conditions that aren’t life-threatening, such as the flu or a twisted ankle. (The facilities aren’t suitable for major emergencies, such as gunshot wounds or traffic injuries.)

At the same time, they can fetch higher reimbursements than urgent-care centers or clinics for a wide assortment of related services, such as diagnostics imaging and surgery, due to recent changes in rules by the Centers for Medicare & Medicaid Services.

Despite the trend, some hospitals are planning complete overhauls to remain competitive. Johnson Memorial Hospital plans to spend $42 million to build a new emergency and outpatient building and a rehabilitation center on its main Franklin campus, the largest project in the hospital’s history.

Community Health is laying out substantial money on big construction projects, including a new $175 million East hospital and a $60 million cancer center at its North hospital.•


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