Two greater Chicago health systems are joining forces to create what could become Illinois’ third largest health network. But don’t call it a merger.
Alexian Brothers Health System and Adventist Midwest Health have signed a non-binding letter of intent to create a joint operating company with the goal of pursuing a “possible affiliation” that would lead to an integrated health system.
Leaders from the two organizations say the affiliation will help advance both of their faith-based healthcare missions by offering protection from strong economic headwinds and complementing existing coverage areas.
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Since 2012, Alexian Brothers has been a part of St. Louis-based Ascension Health, the largest Catholic and nonprofit health system in the country. Alexian operates five hospitals, 13 primary care practices and seven walk-in clinics in the northwest Chicago suburbs, with the largest acute care hospital located in Elk Grove Village, Ill.
Adventist Midwest Health, a part of the Altamonte Springs, Fla.-based Adventist Health System, has four hospitals and a number of physician practices in the western and southwestern Chicago suburbs, extending as far outside the city as Bolingbrook.
An affiliation, said Alexian Brothers president and CEO Mark Frey in a media release, will extend the systems’ reach and strengthen their positions “in the highly competitive Chicago healthcare market.”
It will also “will bring a new level of clinical integration for population health to our communities that has never existed before, resulting in new health care options for the patients we serve,” said David Crane, president and CEO of Adventist Midwest Health.
“By joining together, we’ll offer new services and levels of care while reducing costs and enhancing value to a combined population service area of more than 3.8 million potential patients,” Crane said.
The letter of intent should lead to a definitive agreement after due diligence reviews, Crane and Frey said. Then they will seek regulatory approval, with the partnership expected to be complete by early fall.
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The deal is not a merger of ownership and financing, but the affiliation is designed to help foster the type of healthcare delivery integration so many hospital M&A deals seek. If carried out and approved, the deal with make the Alexian and Adventist network the third largest health system in Illinois as measured by hospitals, after the 13-hospital Advocate Health and the 12-hospital Presence Health.
While falling in line with the trend of health system integration, the Alexian-Adventist deal also represents a model that tries to avoid the problems with M&A — a clinical partnership, but not institutional consolidation.
In greater Philadelphia, Abington Health, Aria Health, Crozer-Keystone Health System and Einstein Healthcare Network are staking out a similar strategy with an organizational collaboration called the Noble Health Alliance, “a vehicle for developing a clinically integrated network and population health organization,” as Noble’s president and CEO Lynda Mischel said.
As Mischel said, the four institutions will be able to have new opportunities for working with public and private payers, from Medicare accountable care organizations to health insurance exchange networks. “We hope we will come together as partners to develop narrow network products for commercially insured beneficiaries across our region,” she said. They're also doing “readiness assessments" to explore the possibility of joining the Medicare shared savings ACO program.