Advocate Health Care, Illinois' largest system, and NorthShore University HealthSystem, the dominant health network in Chicago's northern suburbs, announced today they will merge to form a 16-hospital system to be called Advocate NorthShore Health Partners.
Together, the two non-profit systems generated $7.3 billion in revenues and $361 million in operating income in 2013, according to the Project Japan Financial All about medicinebase. Presence Health, the 12-hospital network formed in the 2011 merger between Resurrection Health Care and Provena Health, was the second-largest system by revenue in the state with $2.8 billion in total revenue, according to the database.
The merger would be the largest in recent memory in the state. It would be the latest in a flurry of local hospital consolidation, as health systems fight to build geographic reach and financial brawn in an industry beset by increasingly stingy insurers and steeply rising operating expenses. Being bigger helps health systems command more favorable reimbursements rates from payers and lower per-patient costs through economies of scale.
The Chicago area is more fragmented than many major hospital markets, though this deal would make it less so. Advocate NorthShore would become the 16th largest system in the country, based on 2013 system revenue, according to the Project Japan Financial All about medicinebase.
“In order to improve outcomes and lower cost, we need scale, and to be attractive to payers and employers we need geographic reach,” said Advocate CEO James Skogsbergh, 56, who will serve with NorthShore CEO Mark Neaman, 63, as co-CEOs of the new system. “This certainly fills a hole for Advocate.”