The six-hospital Provena Health and the six-hospital Resurrection Health Care have reached a definitive agreement to merge. The two signed a letter of intent in February 2011 to explore merge opportunities. No financial details were disclosed.
With more than 100 sites in Illinois and Indiana, the merged Provena-Resurrection will be one of the largest health systems in Illinois. The merger will create a 12-hospital system with more than 3,600 beds, almost 23,000 employees and a medical staff of more than 4,900. It will include 28 long-term care and senior residential facilities, more than 50 primary care and specialty care clinics and six home health agencies. The new system will have combined operating revenues of $2.7 billion.
Still, the 10-hospital Advocate Health Care with more than $4.5 billion in operating revenue in 2010 is expected to remain the dominate system in the Chicago area. According to articles in the Chicago Tribune, Advocate has embarked on a series of mergers and acquisitions to strengthen its market position. It is considering a merger with Sherman Hospital in Elgin. Advocate is also shoring up its physician alignments. The 800-physician Advocate Medical Group announced in June its merger with the 50-physician Midwest Heart Specialists.
James Unland, president of the Chicago-based Health Capital Group, which helps with mergers, acquisitions and reorganizations, sees the deal as part of a potential statewide move by the merged health systems. He points to the OSF Saint Francis Medical Center in Peoria as a possible acquisition target for the newly merged Provena and Resurrection health systems.
Unland views the merger as strengthening both systems in the bond market, which could make capital development funds available to their facilities.
The state-required certificate-of-need application for the Provena-Resurrection merger was filed on Tuesday morning with the Illinois Health Facilities Services Review Board. A specific timeline has not been developed for the review, which will include a public hearing.
Courtney Avery, administrator for the IHFS board, estimates that a vote could come at the board's Oct. 12 meeting. Because of the size of the merger, the Illinois Attorney General' office is also expected to conduct a review.
In a telephone conversation Brian Campbell, senior vice president for public affairs at Resurrection termed the deal a "merger of equals." He said Provena and Resurrection will merge into a single system with a new name. The new system's CEO has not yet been named. It is unknown if Sandra Bruce or Guy R. Wiebking, the CEOs and presidents of Resurrection Health Care and Provena Health, respectively, will be considered to head the merged system. The CEO will be named by the five sponsoring religious congregations.
In recent reports Moody's Investors Service has noted that Provena and Resurrection and have each struggled with volume declines related to the economy and that physician relationships have been a trouble spot for both systems. Physician alignments and their referral streams are of growing importance as healthcare reform is implemented.
Pages
Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.
