Published: 26 May 2000
Analyst(s): Patrick J. C. Powers
Management Summary Unlike other major metropolitan areas where integrated delivery system (IDS) formation is well advanced, consolidation of the Indianapolis healthcare market is still moving slowly and the final configuration of local alliances is far from determined. All major hospital systems are implementing regional strategies of hospital acquisitions and affiliations to ensure a constant flow of patient referrals from affiliated rural communities. Managed care penetration inches forward, with new HMOs struggling to break into the market while preferred provider organization (PPO) formation and membership continues to lead the way. Local hospital systems are divesting themselves of owned physician practices and developing joint ventures with physicians after spending several years following the national trend of acquiring physician groups. Indianapolis is a provider-driven healthcare market that is home to four competing hospital systems, each with three hospitals: Clarian Health, 24 percent of inpatient bed capacity; St. Vincent Hospitals and Health Services, 14 percent of inpatient bed capacity; Community Hospitals of Indianapolis, 14 percent of inpatient bed capacity; and St. Francis Hospital and Health Centers, 9 percent of inpatient bed capacity. Three years after Clarian Health was formed from the merger of Methodist Hospital of Indianapolis with Indiana University Medical Center, it is wrestling with the difficulty of integrating clinical physicians with teaching physicians. The outcome of Clarian Health's efforts at consolidating all cardiology services on one campus may determine whether Indiana's largest IDS can deliver on its original promise that the merger would provide integrated, high quality and cost-efficient healthcare. Last year, the celebrated 3-year old merger of the University of California at San Francisco Medical Center and Stanford University Hospital fell apart largely because of the IDS' inability to integrate the...
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