In sudden reversal, Anthem and St. Vincent agree to include tiny hospitals in network

In a surprising about-face, Indiana’s largest health insurer is telling members they can use St. Vincent’s small, freestanding hospitals without paying out-of-network penalties.

Anthem Blue Cross Blue Shield confirmed Monday that it has reached an agreement with St. Vincent to include the small hospitals in its network.

Just three months ago, Anthem told members that St. Vincent’s small hospitals that have opened in the past few months are not in its network. At the time, St. Vincent had opened one each in Noblesville, Avon and Plainfield.

“Recently, some hospital systems have opened so-called 'micro-hospitals,'” Anthem told its members in March. “While all of the traditional hospitals in the Indianapolis metro are in Anthem’s provider network, these micro-hospitals are not in our network at this time.”

A network is a group of hospitals, doctors, laboratories and other providers that enter a contract with an insurer, with agreed-upon payment rates.  Members of insurance plans who go out of network are likely to pay much more out of pocket for visits.

St. Vincent said Monday it had reached an agreement with Anthem that puts Anthem members in network with its neighborhood hospitals, effective immediately.

The Indianapolis-based health system has since opened a fourth location in Castleton and is preparing to open a fifth this summer on the south side, just a few blocks from Franciscan Health’s huge campus. Several more are in the works, including locations in Greenwood and Brownsburg.

“We’re pleased that we were able to reach an agreement with Anthem,” said Dr. Richard Fogel, chief clinical officer for St. Vincent. “As we open more neighborhood hospitals in the coming months, our goal is to continue educating key stakeholders and the community about the benefits of this new model.”

Anthem confirmed to IBJ that it had reached an agreement with St. Vincent but declined to say what changed its mind.

St. Vincent’s tiny hospitals span just 17,000 square feet each, or less than one-third the size of a football field, making them much smaller than traditional hospitals.

Instead of patient towers and a clinical staff of thousands, the small hospitals have a skeleton staff of a few dozen workers who tend to seven emergency beds, eight overnight beds, imaging, pharmacy and lab services. The hospitals do not offer surgeries. They are cheaper to build than full-service hospitals and have less overhead.

Some critics have described the entire class of micro-hospitals as glorified emergency rooms that stand to make huge operating returns.

But St. Vincent touts the compact hospitals as more convenient than traditional, large hospitals. They say patients can often see doctors within 15 minutes and have given the hospitals high marks on satisfaction surveys.

St. Vincent is one of Indiana’s largest health systems, operating 19 hospitals in addition to numerous urgent care centers and physician clinics.