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Methodist Hospitals, Franciscan Alliance suspend merger talks

Methodist Hospitals North Campus in Gary is pictured. Methodist Hospitals and Franciscan Alliance have ended talks to merge the two hospital systems. 

Damian Rico, The Times

Two of Northwest Indiana's largest health care providers have ceased talks of a blockbuster merger they have been exploring over the past year.

Methodist Hospitals and Franciscan Alliance suspended talks about partnering because of shifts within the health care industry.

"Unfortunately, after months of thorough and thoughtful negotiations, we were unable to align on critical issues around the financial, operational and clinical service line implications of the proposed partnership," Methodist Hospitals said in a news release. "These discussions were compounded by headwinds in the health care industry. We are disappointed that this partnership did not come to fruition."

Methodist Hospitals, the nonprofit system with hospitals in Merrillville and downtown Gary, said it remains viable on its own as an independent and is "resolute in its commitment to continue to look for the right opportunities to chart a path forward that will ensure sustainability, continued growth and success."

"In the meantime, we are financially sound and are confident in our ability to continue navigating the current marketplace," Methodist Hospitals said in the release. "We will continue building on our history of excellence, guided by a commitment to do what is in the best interest of our patients, employees, physicians and community."

Franciscan Alliance said it would be open to eventually rekindling talks about bringing the two together "for the purpose of improving the quality of care and lowering the costs of health care delivery for all six of the two systems’ hospitals in the county." 

“The Franciscan Alliance Board and its management staff have the utmost respect for the members of Methodist’s Board and the excellent leadership team that Franciscan’s staff has had the pleasure to dialogue with over the past year," President and Chief Executive Officer Kevin Leahy said. "Although the two organizations were unable, at this time, to develop a plan that was financially viable, we both remain committed to doing all that we can to improve Lake County’s health care needs. If in the future, (there is) another opportunity to work together to achieve better care, better access and lower costs, Franciscan Alliance would welcome it.”

Franciscan Alliance had proposed building a new $300 million hospital at Interstate 80/94 in Gary if the merger went through, which would have been one of the largest private-sector investments in the city in some time, as well as a $75 million to $100 million expansion of the Southlake campus.

“While I am disappointed to hear that the negotiations between Franciscan and Methodist have ceased, I am confident in the leadership of Methodist Hospital to provide exemplary health care while looking for a partner who will serve their business needs and the community," Gary Mayor Karen Freeman-Wilson said. "Their recent $30 million investment in the Northlake Campus is evidence of their commitment to this community.  I do not expect that commitment to change. Like so many citizens, I like new buildings. But I also know that there is a significant litmus test to drive the level of investment required for new construction."

Some residents of Gary raised concerns about disinvestment in downtown and, because Fransican is Cathoic based, a potential restriction of medical treatments like sterilizations and some palliative end-of-life care across Northwest Indiana.

"This is good news for the people of Gary," said chaplain and minister Marie Siroky, a longtime Miller resident. "My concern and those of many has always been on accessibility to services. Catholic health care is clear on services and treatments they will not provide. Everyone deserves accessible health care."

Gary residents had a number of concerns about the proposed merger, including it might jeopardize the new Level III Trauma Center at the Methodist Northlake Campus at 600 Grant St., said the Rev. Dena Holland-Neal with Trinity United Church of Christ. After all the expense and effort to bring a trauma center to town, Holland-Neal was worried about its future if the downtown hospital were turned into a rehabilitation/senior facility.

That potentially could have caused problems for many Gary residents, especially seniors and those who rely on public transportation, Holland-Neal said.

"The new hospital would be further out," she said. "A concern was if people would receive the type of health care they deserve. ... Public transportation doesn't exist on weekends. A lot of times people would have no choice but to take ambulances, and that's not cost-effective."


Business reporter

Joseph S. Pete is a Lisagor Award-winning business reporter who covers steel, industry, unions, the ports, retail, banking and more. The Indiana University grad has been with The Times since 2013 and blogs about craft beer, culture and the military.