Advocate-Aurora Health Care merger would combine 27 hospitals
- Almost a year after Advocate Health Care was forced to drop its years-long bid to merge with NorthShore University Health System, the group announced Monday it now plans to merge with Aurora Health Care.
- If successful, the new company, deemed Advocate Aurora Health, would be the 10th largest non-profit healthcare system in the U.S. with almost three million patients served each year. The two companies say they expect to close the deal by mid-2018.
- The announcement of the deal comes days after CVS Health and Aetna announced the pharmacy chain would buy the insurance company for $69 billion.
The merger between Advocate and Aurora would put 27 hospitals with 3,300 physicians and 70,000 other employees under the same roof. Together, the new organization would have approximately $11 billion in combined annual revenues.
Advocate and Aurora say the partnership would improve value for both patients and providers, but challenges may remain convincing regulatory bodies that the merger would be in the interests of consumers.
The Chicago Tribune reports that Advocate’s failed attempt to merge with NorthShore University Health System cost Advocate $15 million after the Federal Trade Commission (FTC) challenged the deal saying that the merger would result in 8% higher prices for consumers at the hospitals and potentially lower quality of care. FTC argued that the combined system would have enough pricing power to force insurers to accept higher prices.
Advocate dropped that bid to combine with NorthShore after a federal judge sided with the FTC’s preliminary injunction to temporarily stop the merger, citing the cost of appealing the decision. The merger would have at the time created the 11th largest healthcare system in the U.S.
But Advocate President and CEO Jim Skogsbergh told the Tribune that prices for Illinois patients would not rise due to the merger with Aurora, pointing to the presence of Blue Cross and Blue Shield of Illinois.
The new company, Advocate Aurora Health, would share a board of directors with an equal number of members from both Advocate and Aurora. The two companies would consolidate their balance sheets, but each system would keep using its current headquarters.
Consolidation among providers has been a trend in 2017 as investors increase pressure on health systems.
The merger between Advocate and Aurora is subject to review and approval by the FTC and certain Illinois and Wisconsin agencies.
- Chicago Tribune Advocate plans to merge with Wisconsin hospital giant Aurora
- Chicago Tribune NorthShore, Advocate drop merger plan after judge's ruling
- Healthcare Dive How hospital M&A has been driven by investors and industry evolution in 2017
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