Community wins sweepstakes for Johnson partnership

Community Health Network won a three-way race for a close partnership with Johnson Memorial Hospital, besting Franciscan St. Francis and Indiana University Health.

Community, a five-hospital chain based on the eastern edge of Indianapolis, will form a close clinical collaboration with Franklin-based Johnson Memorial, the hospital owned by Johnson County.

The deal, while not an acquisition, solidifies Community’s presence in the fast-growing southern suburbs of Indianapolis, where it already maintains a 150-bed hospital along County Line Road. Johnson Memorial, located nearly 15 miles south, is licensed for 101 beds.

Community and Johnson Memorial call their partnership a “clinical collaboration.” Changes in payment arrangements by the federal Medicare program and private health insurers are pushing hospitals and doctors to merge or partner up to take on financial risk designed to encourage them to keep patients healthy—both before and after they actually seek medical care.

But Community and Johnson Memorial are also looking to expand their business offerings, particularly for heart patients. Johnson Memorial only began to offer cardiac catheterizations in 2008, with help from Community and some of its physicians. Now it wants to expand into vascular surgery and interventional radiology.

“The new relationship with Community Health Network will allow us to join forces to jointly develop programs, services and facilities that will benefit the future health care needs of Johnson County,” said Larry Heydon, Johnson Memorial’s CEO, in a statement.

Community Hospital South performed 153 cardiovascular surgeries in 2009 and another 69 vascular surgeries, according to Medicare data made available by AHD.com. Those procedures are quite lucrative, with charges for each case of roughly $50,000.

Down the road, Community and Johnson Memorial would like to jointly develop outpatient facilities that will provide more convenient access to Johnson County residents.

In 2009, before opening a 40-bed expansion, Community Hospital South pulled in revenue of $155 million, realizing a gain of $8.5 million, according to data filed with the Indiana State Department of Health.

Johnson Memorial pulled in about half as much revenue in 2009, with $75 million and a gain of $2 million.

Even together, Community and Johnson Memorial are still far outpaced on the south side by Franciscan St. Francis. Its hospitals in Indianapolis and Mooresville pulled in combined 2009 revenue of $359 million and recorded a combined gain of $29.4 million.

Community Health is also working to form a “strategic alliance” with Westview Hospital, a 67-bed facility in Indianapolis.

All Indianapolis-based hospitals have been aggressively buying or partnering with smaller hospitals in a bid for referrals and economies of scale. The smaller hospitals want larger partners to add physician specialty services and to expand service lines.

IU Health and St. Vincent Health have been the most aggressive acquirers of other hospitals, with IU Health recently completing a merger with Morgan Hospital n Martinsville.