The two competing health systems in Fort Wayne, Ind., have upped the ante for doing business there.
To expand a hospital already filled to capacity and match a rapidly expanding for-profit competitor, Parkview Health System, a not-for-profit, is building not one but two new hospitals on a 67-acre site in unincorporated north Allen County, just outside the city limits.
Parkview is building a $40 million, 38-bed general acute-care facility to be called Parkview North Hospital. Adjoining it will be $15 million, 24-bed Orthopaedic Hospital at Parkview North. Parkview will own and operate the general hospital and lease the specialty hospital to Orthopaedics Northeast, a 28-physician group practice.
The new hospitals will be Parkview's fifth and sixth facilities when they're completed in 2002. The system's flagship is 509-bed Parkview Hospital in downtown Fort Wayne.
Parkview's hospital complement will match that of Quorum Health Group, the Brentwood, Tenn.-based chain that operates five hospitals in the market and is building its sixth.
In January, Quorum broke ground on 87-bed Dupont Hospital, 12 miles north of downtown Fort Wayne. The $50 million women's hospital will open in spring 2001.
Quorum owns Fort Wayne's other two acute-care facilities, 449-bed Lutheran Hospital of Indiana and 191-bed St. Joseph Hospital.
Parkview Senior Vice President James Tobalski said competition from Quorum was one reason Parkview decided to build the new hospitals. Another reason, he said, was that Parkview Hospital's emergency, maternity and outpatient diagnostic departments are operating at full capacity at the main campus.
"That caused us to look at alternatives," Tobalski said. "And adding on to our existing campus would have been more expensive." He said the hospitals would be financed through reserve funds, cash and investments, not debt.
Parkview is sitting on large cash reserves, local healthcare observers said. And the system is profitable. Parkview earned $25 million in fiscal 1999 on revenue of $366 million, Tobalski said.
"Fort Wayne is a highly competitive environment and one of the few communities in the country that has been underbedded from a healthcare standpoint," said Thomas Miller, president and chief executive officer of Lutheran Health Network, the name of the local Quorum health system.
Miller declined to disclose financial data about the system. The system's flagship facility, Lutheran General, earned $35.6 million in fiscal 1999 on revenue of $190.9 million, according to HCIA-Sachs, a Baltimore-based healthcare information company.
"Both systems (Parkview and Lutheran Health) are running at over 100% census frequently this year and last year. There is a need for another hospital because there are not enough hospital beds today," Miller said. "But I don't know if there's a need for two hospitals."
Competition, not Indiana's certificate-of-need law, will determine that. Indiana dropped its CON law in 1985.
The population of Fort Wayne's six-county metropolitan area has grown to 486,000 in 2000 from 455,000 in 1990 and is predicted to reach 501,000 by 2005, said Scott Naltner, vice president of economic development for the Greater Fort Wayne Chamber of Commerce. Naltner said the business community welcomes the building boom, and the chamber sees it as a lure for medical industry research and development, services and manufacturers. "We think the new hospitals will be good for competition," he said.
Jay Gilbert, president and CEO of Physicians Health Plan of Northern Indiana, a 56,000-enrollee HMO based in Fort Wayne, said the Fort Wayne hospitals are bucking a national trend to reduce beds.
"The usual response from the business and payer community is, this new bricks and mortar will drive up costs, and we'll end up paying for it," Gilbert said. "But I am relieved that competition so far between Quorum and Parkview is keeping prices in check, and the higher prices you would expect just haven't played out."