HEALTH & FITNESS

Merging IU Health hospitals makes sense, experts say

Shari Rudavsky
shari.rudavsky@indystar.com

For about 100 years, the two Downtown hospitals sat two and a half miles apart. Then, about two decades ago, they took a conceptual step closer to one another when they joined the same health system.

Now their parent, IU Health, wants them to become one.

IU Health, the state's largest health system, said June 20 it was studying how to bring IU Health University Hospital and IU Health Methodist Hospital under one roof. No decision has been made as to whether to close one of the facilities or to shutter both and create a new location.

The move comes as IU Health poises itself as a top-flight academic medical center for the next 50 to 100 years, hospital officials say.

"We have got to come up with a model of care that makes the most sense for our patients," said Jonathan Curtwright, chief operating officer of the two hospitals.

Hospitals nationwide are facing pressures to reduce costs due to changes in health care that over the past decade have led to declining hospital revenues, industry experts say.

Smaller hospital systems do not have flexibility to adapt, but a larger entity like IU Health can react, said Douglas Leonard, president of the Indiana Hospital Association.

"This is a bold and major move by them (IU Health) to look at whether they can really sustain two hospitals in the Downtown area," he said. "Things have changed so fast over the last couple of years, what they may not have contemplated three years ago, they have to contemplate now."

Even before the Affordable Care Act went into effect earlier this year, hospitals saw inpatient censuses plummet because of the recession.

Employers have also become more aggressive about creating insurance plans for employees that encourage patients to use health care resources more prudently, he said. Medicare reimbursements have dropped.

The Affordable Care Act will put further pressure on hospitals, Leonard added. The law includes incentives for providers to use health care more thoughtfully and to reduce inpatient admissions and surgeries.

Other experts say it's not a surprise that IU Health would opt to look at closing two Downtown facilities so close to one another.

When the two facilities merged as Clarian Health 17 years ago, the proximity might not have been ideal but there would not have been a compelling reason to do anything, said Paul Ginsburg, the Norman Topping professor at the Schaeffer Center for Health Policy and Economics at the University of Southern California.

"As the facilities age and start becoming obsolete, the ideal thing would be to close one of them and expand the other one. In a sense it's not a surprise that it would ultimately happen," he said.

In some cities, hospitals are moving out of the urban core, Ginsburg said. In Denver, for instance, the only hospital downtown is a safety-net hospital.

More common is to start an advanced care hospital in a downtown setting with routine services available in suburban facilities, Ginsburg said.

Indianapolis benefits from having Downtown hospitals, said Bob Schultz, vice president of marketing and communications for Indianapolis Downtown Inc.

Three other hospitals are Downtown, but two of those — Riley Hospital for Children at IU Health and the Roudebush VA Hospital — serve specialty patient populations. Eskenazi Hospital, until recently known as Wishard, serves as the area's safety-net hospital.

But there's still room for at least one, if not two, Downtown health care facilities, Schultz said, as the area draws more residents.

While many of new Downtown residents are Millennials, not known for their heavy use of health care, older empty nesters are also flocking to the area, Schultz said. Downtown hospitals also serve those work or visit the area.

IU Health's planning committee will tackle the question of what the future looks like. A patchwork of different buildings cobbled together, IU Health Methodist has some sections dating back a century. University Hospital just celebrated its centennial, but its current building opened in the 1970s.

There are 616 operational beds at IU Health Methodist Hospital and 339 at University Hospital. The current occupancy rate at both is about 70 percent, Curtwright said.

After the merger 17 years ago, the health system allocated services between the hospitals. Methodist offers neurology and cardiovascular services; University provides cancer and transplant care.

In 2008, a $150 million cancer facility, now known as the IU Health Mel and Bren Simon Cancer Center, opened adjacent to IU Health University. Two years ago, IU Health opened the first phase of a state-of-the-art Neuroscience Center across the street from Methodist Hospital.

About four years ago, IU Health planned to build an inpatient bed tower next to Methodist but those plans were scrapped last year.

A bed tower alone will not meet IU Health's long-term plans, Curtwright said. The system needs to plan not just for providing both inpatient and outpatient clinical care but also medical research and education.

The team drawing up the blueprint for the future hopes to have a series of recommendations to the IU Health senior leadership by late this fall, Curtwright said.

Call Shari Rudavsky at (317) 444-6354. Follow her on Twitter @srudavsky.