Advocate, NorthShore to form 16-hospital system

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Advocate Illinois Masonic Medical Center | AP file photo

Illinois’ largest health system is about to get even bigger.

Downers Grove-based Advocate Health Care, one of the largest systems in the country, on Friday announced plans to merge with NorthShore University HealthSystem to create a health system with 16 hospitals, 4,438 beds and 45,000 employees.

The combined system would also have a new name: Advocate NorthShore Health Partners.

Jim Skogsbergh

Financial terms of the deal weren’t disclosed. Advocate had $4.9 billion in revenue in 2013, compared with $1.8 billion for NorthShore.

The agreement needs to be cleared by Illinois Health Facilities and Services Review Board and the Federal Trade Commission, among other regulators.

Both hospital systems said consolidation is necessary to stay competitive amid health care reform and other market trends.

“For us to continue to improve health outcomes and improve safety and reduce cost, we need scale,” said Advocate President and CEO Jim Skogsbergh. “And so this [merger] allows us to be in that kind of scale.”

Mark Neaman, president and CEO of NorthShore, noted that the deal would enable the systems to “collectively really respond to what’s going on in the external market.” He cited the Affordable Care Act, which encourages consolidation in the health care industry to coordinate patient care and reduce health care costs, including waste.

Mark Neaman

Hospital mergers have jumped dramatically since the ACA was enacted in 2010, and experts say the consolidation will continue.

“The ACA provided incentives for health systems to transition to value-based care,” Elyse Forkosh Cutler, president of Sage Health Strategy, said in an email. “The systems that must be put in place for value-based care are most effective when implemented across a large population. As a result, we’ve seen a significant wave of health care mergers nationally since the ACA was passed.”

Greg Shufelt, vice president of the Camden Group, agreed, saying, “I would expect this latest announcement will serve as a further spark for additional consolidation in the Chicagoland market, just as the previous affiliations contributed to this merger.”

Advocate has a total of 250 care sites, 12 hospitals, and the largest emergency and level one trauma network in Illinois. NorthShore has four hospitals in Evanston, Glenview, Highland Park and Skokie, as well as doctor’s offices and clinics from Gurnee to south suburban Harvey.

Neaman said the merger wouldn’t affect NorthShore’s partnership with Rochester, Minnesota-based Mayo Clinic, which gives NorthShore patients access to Mayo physicians at no extra cost.

Skogsbergh and Neaman will serve as co‐CEOs of Advocate NorthShore HealthPartners for 24 months. After that, Neaman would retire and Skogsbergh would become the sole CEO, according to the deal.

The merger could be complete by early next year.

The announcement comes as Northwestern Memorial HealthCare and Winfield-based Cadence Health combined into one health system Sept. 1. That merger, which is expected to bring in a combined revenue of nearly $3 billion a year, brought 60 care sites in Chicago and the suburbs, including four hospitals, under one umbrella.


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