Community Health plans $175M East hospital, $60M cancer center

Community Health Network plans to spend $175 million to build a hospital on its East campus instead of renovating its existing facility at 1500 N. Ritter Ave., the hospital system announced Thursday.

The announcement significantly alters plans Community publicized late last summe to renovate its 60-year-old facility, including an expansion of its emergency room. Community Health Network was founded at the East campus in 1956.

“At Community Hospital East, we realized building a new hospital for the future was, in the end, a better avenue than renovating antiquated buildings meant for a different time in our history,” said Community CEO Bryan Mills in a written statement.

Community, which operates eight hospitals in Indianapolis, Anderson and Kokomo, also plans to keep expanding its most active campus. It will build a $60 million cancer center on its North campus in the Castleton neighborhood, it said.

The number of inpatients at Community’s North campus rose 2.4 percent in 2014, to 20,463, even though inpatient admissions at all Community hospitals fell collectively by nearly 1 percent.

The building projects come after Community achieved stellar financial results in 2014. Net income from operations totaled $161.9 million last year, up from $54.2 million in 2013. Revenue for all of 2014 rose 10 percent, to more than $1.9 billion.

Community's operations generated cash equal to 13.6 percent of its operating revenue last year, up from a rate of 8.8 percent the previous year, according to Moody's Investors Service. In the first quarter of 2015, that rate went up to 14.3 percent.

Community’s East campus operates 163 beds—far below the 800 beds it once operated in the 1980s. Inpatients at Community East totaled 9,296 last year, down by nearly 7 percent over the past two years.

It was not immediately clear how many beds the new Community East hospital will have.

Also, it was not immediately clear how much more Community will be spending on the new hospital versus its original renovation plan. The price tag for the new hospital at Community East is the same as for the announced renovation plan—although the renovation plan also included the cost of building three new outpatient centers on the east side of Indianapolis.

Community said it will break ground on its new East hospital in July. The project will include demolishing four buildings on the campus, building a new hospital tower housing inpatient and procedural rooms and moving Community’s family medicine center from 10th Street and Mitthoeffer Road to the East campus. In 2016, a new emergency department, located at the back of the hospital, will be built.

The entire project is expected to be complete in 2019—about two years earlier than the renovation plan would have been finished.

“The new campus will provide the space our East employees need to deliver innovative health care in the most efficient manner.,” Mills said. “Community Hospital East will become a new modern structure that will be a pillar for the east side of Indianapolis.”