- On Thursday, two of Chicago's dominant hospital systems announced plans to merge into a $6.8-billion, 16-hospital system. The state's largest hospital system, Advocate Health Care, and the North Shore suburbs' dominant chain, NorthShore University HealthSystem will create Advocate NorthShore Health Partners.
- The merger will create the largest nonprofit health system in Illinois and the 11th largest in the country. The combined operation will employ 45,000 individuals (including 2,000 physicians) and run 4,438 beds. It will provide care to 3 million patients a year at over 350 different facilities—hospitals, outpatient centers, clinics and physician offices alike.
- The deal is expected to close in early 2015. It still awaits approval from the Federal Trade Commission, state regulators and the Advocate-affiliated United Church of Christ. Officials from both hospitals are confident that the deal will receive approval.
This merger is a big deal, according to Jordan Shields, vice president at Juniper Advisory, which provides hospital M&A services. The deal "is going to shake people," Shields said. "What this does is change the gravity in the metropolitan area."
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. 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.
The big win for Advocate here—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.
There will likely be layoffs as the system reduces redundancies.