First it was double-digit increases in hospital costs in the 1970s and 1980s, and now it's likely to be a cut of $115 billion out of health care provider payments over the next five years, says William Loveday '67. The president and CEO of Clarian Health Partners, an Indianapolis, Ind., hospital with revenues of $1.2 billion and the country's second largest number of in-patient admissions, Loveday is a cutting-edge manager who pays close attention to costs. "Our goal is to take fifty million dollars out of cost, and that's a conservative number," he said. Clarian Health Partners is a not-for-profit private corporation formed last January 1 by the consolidation of three existing Indiana hospitals, health plans and occupational health programs. Fifty percent of the new entity's revenue comes from Medicare and Medicaid, and the two powerhouses "tell us what they're going to pay us. They don't negotiate," said Loveday, who was president and CEO of Indianapolis's Methodist Hospital for eight years before the recent consolidation. "The only way you can deal with a fifty-percent buyer whose payments are not keeping up with inflation is to control your price." As more and more patients come to hospitals on contracts with private insurance companies and self-insured employers, he says he and other health care administrators in the competitive health care industry "are trying to put together effective networks to deal with these larger payers." Clarian Health Partners has been in existence for only seven months, so it's early to speak of accomplishments, he believes, although he says consolidating the teaching programs of the three existing hospitals into a single program will cut costs. A single board of directors, shared human resources staff and one benefit program covering all 9,700 employees also helps. He projects savings in the first year to be $12 million. Health care issues will present private hospitals with great challenges in the future, says Loveday, an economics major who earned an M.B.A. at the University of Chicago. For instance, he is certain that the consumption of health care by those over 65, already four times the rate of those under 65, will increase as the American population ages. Although some critics argue that social infrastructure and funding mechanisms don't work or that Social Security won't exist in 2010 when Baby Boomers begin to turn 65, Loveday says he's optimistic. "We need to get more involved in preventive medicine and individual responsibility. Insurance companies need to provide more incentive and be less focused on disease and injury. We need to step up," he said. Loveday, who still holds a pair of Colby passing records 30 years after his quarterbacking days on Seaverns Field, enjoys golf and backpacking. The father of five--his wife, Joyce, is a clinical psychologist--he also has run the Long Beach Marathon and aims to run the Boston Marathon. "Running helps you manage all the pressure and keep it all in focus," he said. "Half of keeping fit is for mental health. You've got to pay attention."--Robert Gillespie