Hamilton County hospital surge comes amid closings elsewhere

Community Health Network’s announcement this month that it plans to open a $335 million campus near U.S. 31 and 196th Street in Westfield, including a 100-bed patient tower, marks the latest entry into the crowded Hamilton County hospital market.

The county is already home to 11 acute-care and specialty hospitals with a total of nearly 800 beds. Seven of the hospitals are bunched up in Carmel along the North Meridian Corridor, the stretch of U.S. 31 from 96th Street to 146th Street. Four are spread out in Fishers, Noblesville and Westfield.

Some consumer advocates say the hospital systems are chasing business in the suburbs, where household income is high and residents have generous health insurance packages, while curtailing or closing hospital services in less prosperous, more rural parts of Indiana.

Several of the health systems say they are simply following the market and providing health care where the population is growing the fastest. Hamilton County is the wealthiest county in Indiana and one of the fastest-growing.

Since 2000, the county’s population has more than doubled—growing 106%, to 377,826. During that same period, hospital systems have increased the number of hospital beds there 91%, to 790.

The Community Health project will feature a mix of new construction and renovations on the site of a former business park. It will include an emergency department, medical offices and an ambulatory surgical center. Altogether, the facility will span 425,000 square feet.

The campus will offer services that include women’s health, orthopedics, primary care, behavioral health, support services, outpatient imaging and cardiovascular care. It will also offer labor and delivery services and have a neonatal intensive care unit.

Community Health said it expects to complete the medical office building in the first quarter of next year, and the surgery center, hospital service building and patient tower in mid-2026.

“We’re constantly looking for growing markets or growing communities where we can expand services,” Jason Fahrlander, chief operating officer at Community Health Network, told IBJ. “And over the years we’ve done that, whether it was our reinvestment in our Community Hospital East or the expansion of our south side cancer center.”

‘Late to the game’

The move into Westfield marks Community Health’s first hospital in Hamilton County, more than 40 years after Ascension St. Vincent in 1985 became the first Indianapolis-based hospital system to open a hospital in Carmel.

Some health care market experts say they are puzzled about why Community Health waited so long to enter Hamilton County—years after most of its competitors had set up shop.

“They’re late to the game. It’s the only nice way to say it,” said Ed Abel, retired director of health care practice at Indianapolis-based Blue & Co., an accounting and consulting firm.

“Part of what I think they’re trying to do is build out their system so they can attract more employers to their health care network,” he added. “If you don’t have coverage in both of those areas [Marion and Hamilton counties], you may or may not get a contract with those employers.”

Indiana University Health opened its North Hospital in Carmel in 2005 and its Fishers Hospital (originally called Saxony Hospital) in 2011. Five years ago, IU Health built a $55 million cancer center on its Carmel hospital campus. In 2022, it broke ground on a $300 million expansion at its Fishers campus that will increase the number of inpatient beds from 38 to 88.

Nicole Paulk, chief strategy officer at IU Health, projected that Hamilton County’s population will grow nearly 7% over the next five years, compared with less than 1% for the state as a whole.

“We definitely see Hamilton County as a very attractive market and a market we want to continue to serve,” she said.

Ascension St. Vincent, with acute-care hospitals in Carmel and Fishers and a heart center in Carmel, noted that it was early to the game—opening there when Hamilton County was a sleepy, low-growth bedroom community of Indianapolis.

“For nearly 40 years, Ascension St. Vincent has proudly served the communities of Hamilton County,” Ascension St. Vincent told IBJ in a statement. “Since our hospital in Carmel opened in 1985, our presence and the services we offer have grown to meet the needs of residents, delivering compassionate and personalized care to patients at our three hospitals in Carmel and Fishers.”

Gloria Sachdev, president and CEO of Employers Forum of Indiana, a coalition that aims to build transparency and value in health care, questioned whether Hamilton County needs 100 more hospital beds.

“Community Health Network is not building their new multimillion-dollar hospital to increase health care access in Indiana,” she said. “They are building this hospital to gain more access to health care consumers with high household incomes.”

Pulling back

As the big Indianapolis-based systems rushed to prosperous Hamilton County over the past decade, some pulled back services in poorer parts of the state.

IU Health, for example, closed its emergency room and ended inpatient care at Blackford Hospital, a 15-bed, rural hospital about 80 miles northeast of Indianapolis. The year before, Ascension St. Vincent closed a critical care hospital in Bedford and has closed baby delivery services in Salem and Frankfort.

Meanwhile, all hospitals in Hamilton County had an inpatient bed occupancy rate below 70% in 2022, according to the National Academy for State Health Policy, a nonpartisan research organization based in Washington, D.C.

That includes IU Health North (69%), Ascension St. Vincent Heart Center (56%), Ascension St. Vincent Carmel (51%), Riverview Health (39%) and Franciscan Health Orthopedic Hospital (9%).

“I live in Hamilton County—we’ve got over 700 inpatient hospital beds and over half of them are empty,” Sachdev at Employers Forum said. “Perhaps they might better serve Hoosiers by building a new hospital in a county that actually needs greater access and more hospital beds.”

Yet some hospital systems say their Hamilton County hospitals are busy. IU Health said its North Hospital has been operating above 85% on average over the last two years.

The Indiana Hospital Association said it’s not surprising to see hospital services continue to expand in the state’s fastest-growing county.

“Hospital building and development projects are based on market research and are designed to reflect population growth and other factors that allow hospitals to best serve the current and future needs of a community,” the association said in a statement to IBJ. “Indiana has a competitive hospital market across the state and patients benefit from a variety of choices for care.”

The association added that Medicare and Medicaid remain the predominant payors for care, including in Hamilton County, where the two combined make up nearly 50% of a hospital’s payor mix on average. It said hospitals in Indiana lose 43 cents on the dollar for care provided under Medicaid and 18 cents under Medicare.

Beneficial to communities

Several mayors across Hamilton County say they’re excited to see more hospital builds taking place from Fishers to Westfield. That’s even though not-for-profit hospitals take property off the tax rolls and often use plenty of city services, from police to road upkeep.

Carmel Mayor Sue Finkam, who formerly worked as director of statewide marketing sponsorships and events at IU Health, said “access to great health care” is an important factor in attracting and retaining people and businesses in a community.

“Having helped open a hospital in this suburban market 20 years ago, I know that our competitors had to look internally at how they can serve their patients better, and that had to benefit patients everywhere,” she told IBJ.

Meanwhile, in Westfield, Mayor Scott Willis said the Community Health project will spur economic growth in the city’s northern corridor and provide patient care not currently offered in the city, including baby delivery.

“We are the sixth-fastest-growing city in America, and with projected population growth, our city’s needs around health care continue to grow,” Willis said.

The only other hospital in Westfield, a 16-bed hospital owned by Noblesville-based Riverview Health, does not offer baby delivery.

Riverview Health, founded in 1909 as the Harrell Hospital and Sanatorium, was the first hospital in Hamilton County. It was sold to the county in 1914 and changed its name to Riverview Health in 2014.

Baby delivery services are available at hospitals in Carmel, Fishers and Noblesville. But Community Health officials said maternity patients in Westfield don’t want to drive 15 or 20 minutes for delivery services.

“It is our belief, based on market research, that women in particular don’t want to have to drive a long distance to deliver a baby,” Fahrlander said.

David Hyatt, CEO of Riverview Health, said: “Like Community Health, Riverview recognizes the immense growth coming to Westfield. As Riverview has analyzed that growth, we have chosen to focus on access and reducing the cost of care to Westfield residents.”

Fahrlander said Community decided to build a hospital in Westfield not only because of the city’s demographics but also as a way to connect services to two other hospitals: Community Hospital North in the Castleton neighborhood of Indianapolis and Community Howard Regional Health in Kokomo.

Together, the three campuses form a nearly straight north-south line 42 miles long, with the new Westfield hospital (which has not been named) in the center.

The Westfield hospital might also be beneficial to some of Community Health’s 3,000 employees who live in Hamilton County.

“Many of them would just stay local to where their own community is,” Fahrlander said, instead of driving 10 or 20 miles to their current place of employment.•

Correction: This story has been changed to remove a reference to Indiana University Health’s services in Paoli. The story originally said incorrectly that IU Health had discontinued delivery services at its Paoli hospital, but although the health system initially announced a change in 2018, it later decided to continue to provide those services. See more corrections here.