In a sign the economy is rebounding, St. Francis Hospital and Health Center is resuming construction of a $265 million expansion at its Far-Southside hospital.

St. Francis stopped most work on the six-story tower at its Indianapolis campus in March as the stock market and overall economy were in sharp decline.

Back then, the Dow Jones industrial average had been below 7,000, and pessimism ran high. The Catholic hospital system said it would restart work when it saw visible signs of an improved economy.

“As we’ve been watching the market and we’re seeing it start to rebound, we’re seeing some signs that the worst of our national recession might be behind us,” said Keith Jewell, St. Francis’ chief operating officer. “We wanted to continue this project.”

While many see signals of a rebound — the Dow has rebounded to about 9,700 — some still see reason for caution.

Indianapolis-based Clarian Health still has not restarted work, halted early this year, on its $475 million Simon Family Tower at Riley Hospital for Children or its planned $180 million Clarian Saxony Medical Center in Fishers.

Many other hospitals across the state remain hesitant to move forward with capital projects. Hospitals say they are reporting more uncompensated care from uninsured patients.

The downturn also has made it more difficult for hospitals to borrow money or use tax-exempt bonds to invest in new equipment and to build or expand facilities. Investment portfolios, a key source of financing for nonprofit hospitals, are still well off their highs. Hospitals are looking to preserve their bond ratings.

“As I talk with hospitals, things are still very cautious,” said Doug Leonard, chief executive officer of the Indiana Hospital Association.

At St. Francis, limited work on the exterior of the new tower continued after the March slowdown announcement to protect the unfinished structure.

But over the next 60 days, an additional 300 workers will be added to the project along South Emerson Avenue.

Tonn and Blank Construction, of Indianapolis and Michigan City, is general contractor for the St. Francis-Indianapolis project. Other subcontractors are performing work, too.

“It’s going to be a great announcement for Indianapolis and Central Indiana,” said Michael Hicks, director of the Center for Business and Economic Research at Ball State University. “Health care is important here; it’s important everywhere.”

Hicks also said St. Francis’ decision to resume work on such a major project is a sign the Indianapolis area is again moving toward the growth pattern the region saw before the recession.

James Wide, spokesman for Clarian, said the hospital system is looking at financing options to resume work at Clarian Saxony in Fishers and the Riley Simon Family Tower.

Clarian has continued work at its new Fishers medical office building, which is set to open by early 2011.

The estimated completion date for the St. Francis project is now early 2012, back from the previously planned opening date of 2011. St. Francis said the project is about 37 percent complete.

St. Francis has extra motivation to compete the project. The hospital system is planning to end inpatient services at its Beech Grove hospital in 2012 — and those services are to be consolidated at the Far-Southside campus.

The building project includes 221 inpatient beds, new outpatient surgery suites, and expanded emergency and imaging services.

Right now, St. Francis-Indianapolis has about 231beds, and St. Francis-Beech Grove has about 233 beds. While St. Francis will end inpatient care at Beech Grove, it is planning to keep some outpatient services there.

Even as it resumes work on its $265 million building project, St. Francis said it has been feeling the effects of the down economy. Charity care is up about 20 percent in 2009 compared with last year, Jewell said.

“We have felt this very turbulent economic time,” he said. “We’ve been in a cash conservation mode for the last year.”