- The Federal Trade Commission has informed Advocate Health Care and NorthShore University HealthSystem that it will need more time to review the proposed merger between the two. The deal, announced in September, would create a 16-hospital system with a reported $6.8 billion in combined revenue in 2013.
- Though the agency was originally expected to announce a decision in April, a delay was not unexpected.
- The FTC has not provided an additional timeline.
"This is not unexpected given the complexity of the agreement," Advocate CEO Jim Skogsbergh and NorthShore CEO Mark Neaman said in a joint statement to employees. "Our respective teams have already begun to gather the information and look forward to advancing this process with the FTC."
In other words, neither hospital was taking regulatory approval for a merger of this size for granted. Still, despite the scale of the merger, the combined system will still control only 25% of the local market, which the Chicago Tribune calls "fragmented" compared to other metropolitan areas. As we reported when the deal broke in September, perhaps its biggest influence on the Illinois healthcare market will be a fresh spate of mergers in the area. Michael Sachs, chairman Skokie-based healthcare consulting firm Sg2, expects a rise in M&A activity following the deal:
"This will probably trigger another set of consolidations; it's bound to occur," said Sachs.
If the deal receives approval, this is a big win for Advocate. Beyond the normal benefits of merging, like reducing costs through coordinated care and boosting buying power with suppliers, is the incorporation of NorthShore's patient base into its business model. The North Shore suburbs are a wealthy area and as such, have a lot of patients with commercial insurance, as opposed to less-lucrative Medicare or Medicaid coverage. Moreover, the four-hospital system has a reputation as an efficiently-run operation with a strong balance sheet.