Too healthy?: Influx of medical facilities in Hamilton County has side effects, experts say 

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Hamilton County residents seemed to be struck with déjà vu in 2018: Every few months, the headlines announced plans for another new or expanded hospital.

Last year, Riverview Health opened a new, full-service hospital in Westfield and announced plans for four new ER/urgent care centers in Carmel, Fishers and Indianapolis. St. Vincent announced its intentions to develop 30 acres in southwest Carmel. Franciscan Health unveiled plans for a specialty orthopedic hospital in central Carmel, and IU Health North Hospital began construction on an 88,000-square-foot cancer center expansion.

That’s not to mention other new urgent care centers, freestanding emergency rooms and other medical facilities popping up throughout the area.

Some professionals insist Hamilton County residents win by having a variety of health care options in their own backyard.

“It’s almost like by being co-located. People view it as a center of health care excellence, because you know they’re all competing,” said Seth Warren, president and CEO of Riverview Health. “It raises the level of care across the board, so I think there is some benefit to having competitors close to each other.”

But while the influx of health care options may help Hamilton County residents feel more secure should they have a medical emergency, its leaders are hitting the brakes on some of the proposed projects, saying an abundance of hospitals isn’t necessarily a good thing.

Riverview Health Westfield Hospital opened in August 2018. (Submitted rendering)

‘An aggressive marketplace’

Although the number of health care facilities expanding in Hamilton County seems excessive to some, it’s not surprising to Brian Tabor, president of the Indiana Hospital Association.

With a population that has increased 18 percent since 2010, and the county expected to be Indiana’s second-most populous by 2050, according to Indiana Business Research Center, Tabor said it makes sense that the number of hospitals also would rapidly expand.

Tabor also said that low interest rates have led to recent expansions of health systems throughout the state and nation.

Much of the new development Tabor’s seen has been for specialized services – such as Franciscan’s proposed orthopedic hospital – as opposed to traditional full-service hospitals. Franciscan did not provide an official to be interviewed. Officials from St. Vincent declined to be interviewed.

In addition to Riverview’s new full-service hospital in Westfield, it is preparing to open four freestanding emergency rooms/urgent care centers in Fishers, north Carmel, west Carmel and Nora by 2020.

Warren said Riverview explores several factors when considering a new facility, such as demographics, traffic and growth patterns. He said the area’s health care systems compete and cooperate with each other and that they’re constantly working to provide the best service to attract the most business.

“If you have too many craft brewhouses together, some are going to suffer because there are only so many people who go to breweries,” said Warren, comparing potential health care oversaturation to the restaurant industry. “We’ve been very circumspect on where we put our services and what services we offer at those locations based on what we perceive as the community need.”

Alicia Schulhof, president of the IU Health North suburban area, said Hamilton County is the healthiest in the state and an attractive place to live and work, so IU Health is working to identify specific issues in the county and provide services to address them. The future $55 million cancer center in Carmel, which is expected to open in early 2020, is an example, she said.

“I think it’s going to continue to be an aggressive marketplace, so we will continue to differentiate ourselves with our services and our culture,” she said.

Protecting the taxpayers

All of the hospital systems in Hamilton County are nonprofits, meaning they are exempt from paying property taxes on land they own. Many seek to build in busy corridors that are zoned for business development, leaving cities without tax revenue they could have received. At the same time, they use city services, such as police and fire protection.

To address the issue, some health care systems agree to make payments in lieu of taxes, or PILOT, for a set amount of time or for perpetuity. The payments cover the property tax revenue that would have been generated if a for-profit business had developed the site.

State leaders are paying attention, too. After Carmel and Indianapolis residents voiced opposition to St. Vincent purchasing land for a potential facility on Spring Mill Road, State Sen. John Ruckelshaus filed a bill for the 2019 legislative session that would require hospitals to prove a need in an area before building a new facility.

“The hospitals and health care providers are clustering these hospitals in areas where fully insured patients live, which is in the higher socioeconomic areas,” said Ruckelshaus, adding that this is happening across the nation. “They’re chasing that fully insured patient almost as a cost subsidy to Medicare and Medicaid, where they lose money.”

Ruckelshaus joked that his legislation has become a “jobs bill” because of all the lobbyists that have been hired to stifle it. He’s filed another bill that calls for a study of the issue if the first bill doesn’t move forward.

“I think the discussion is very worthwhile,” he said.

Competing for workers

In addition to competing for patients, local hospital systems also are competing for workers.

Tabor, of the Indiana Hospital Association, said a shortage of employees is what could keep the market from becoming oversaturated.

Riverview Health’s Warren said attracting and retaining employees is a constant challenge and that some of Riverview’s workers on the lower end of the pay scale commute from Anderson because affordable housing is difficult to find in many parts of Hamilton County.

“Like many businesses in Hamilton County, we do struggle at times to recruit new employees, especially those at the lower end of the wage scale,” Warren said. “With low unemployment rates, the growth in this area and more competition from a number of industries, there are a limited number of available staff.”

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