Although operations won't be launched until Jan. 1, 1997, key executive positions were established last week for the $1.1 billion system created by the merger of Indiana University Medical Center and Methodist Hospital of Indiana.
The system named four executive vice presidents to lead the organization created through the merger of Indiana's largest not-for-profit hospital and the state's only academic medical center. The four are currently physicians or administrators at the hospitals.
"We want to have physicians be prominent in the overall leadership structure, and this is just another step in identifying key aspects of the consolidation," said William Loveday, president and chief executive officer of Methodist and the new organization. The Methodist-IU deal had Loveday anointed as the new organization's CEO from the beginning.
The executive vice presidents are David Handel, who has been director for hospitals at IU Medical Center and will be responsible for operations of the consolidated organization; John Fox, currently chief financial officer and executive vice president of Methodist, who will retain his CFO title in the new organization; Lee Jordan, M.D., current chief medical officer of Methodist Medical Group; and Stuart Kleit, M.D., associate dean for clinical affairs of the IU School of Medicine. Jordan and Kleit will jointly lead the consolidation of clinical programs.
Earlier this year, the trustees of Indiana University and Methodist's board of trustees and corporate board, Methodist Health Group, approved the full-asset merger. The deal is merging the two hospitals' assets, governance and leadership, creating a corporation with a new 13-member board (May 6, p. 20).
The board members are expected to be selected in the next month, and the board's first meeting will be held sometime in July. The new organization has yet to select a name.
"We're putting together a full consolidation that we don't believe will fall apart," Loveday said.
The leadership hurdle is one the crosstown rivals couldn't get past earlier this year. The boards of 836-bed St. Vincent Hospital and Health Care Center and 822-bed Community Hospitals of Indianapolis dissolved their network after they couldn't agree on which executives would lead the system (Feb. 5, p. 8).
Industry observers are following the IU-Methodist consolidation closely because of both facilities' statewide presence in Indiana. Like other academic medical centers, IU is projected to have trouble competing with less costly community hospitals for managed-care contracts.
The hospitals are expected to maintain current charity-care levels and provide similar support for the medical school, which will receive between
$8 million and $10 million annually. The hospitals said they expect the consolidation to save at least $50 million a year by the end of five years.