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Illinois' Palos Health, Loyola Medicine in Merger Talks

Analysis  |  By John Commins  
   January 21, 2019

The acquisition of the 425-bed Palos Hospital and its affiliate services would expand Loyola's presence in the southern and southwestern suburbs of Chicago.

Palos Health and Loyola Medicine have signed a non-binding letter of intent that could end with a merger, the two Chicagoland health systems announced jointly on Monday.

The non-profit health systems said they hope to build on a strategic partnership that began in 2015, and they're entering the due diligence process with the goal of Palos Health and its affiliates joining Maywood-based Loyola, which is also a member of Trinity Health.

"We have built a strong relationship with Palos over the years," said Shawn P. Vincent, president and CEO of Loyola Medicine and president of Trinity Health's Illinois region.

"Many physicians at Palos Health trained at Loyola University Medical Center and we have been providing tertiary care to Palos patients in the south and southwest suburbs for decades. A strong partnership with the exceptional clinicians at Palos will provide greater value to the members of our communities," he said.

Palos Heights-based Palos Health is located in Chicago's south and southwestern suburbs and includes the 425-bed Palos Hospital, an affiliated medical group, an imaging and diagnostic center, home care and hospice services, and an integrated physician network.

"We are operating in an incredibly dynamic healthcare landscape," said Palos Health President and CEO Terrence Moisan, MD.  "Over the past few years, we've steadily evolved our institution to not only respond to these changes, but to capitalize and drive forward in a position of strength.""By fully integrating with Loyola Medicine, we will enhance our clinical strength, increase our flexibility and provide our community with more comprehensive care across an expanded region," Moisan said.

Last year, Palos opened an 83,000-square-foot expansion of the Palos Health South Campus in Orland Park, which features 47 specialty and primary care exam rooms, staffed by Loyola physicians. Palos and Loyola jointly own an outpatient surgery center and a radiation oncology center.

Loyola Medicine includes the 547-bed Loyola University Medical Center in Maywood, the 247-bed Gottlieb Memorial Hospital in Melrose Park, and MacNeal Hospital, a 374-bed teaching hospital in Berwyn that was acquired from Tenet Healthcare Corp. in 2018.

The health system also includes a large ambulatory network with locations throughout Cook, Will and DuPage counties.

The due diligence process is expected to take several months. The terms of the letter of intent are not being disclosed. 

The merger talks come as analysts foresee M&A activity among nonprofit health systems to continue through 2019. These consolidations are driven by tight finances challenging nonprofit health systems, and by the entrance into the provider space by nontraditional players, such as the newly consolidated CVS and Aetna.

Moody's Investors Service said this month that it expects nonprofit health systems to engage in partnerships with other hospitals, and to align with companies specializing in data analytics or ridesharing services to continue the transition from inpatient care to outpatient care.

“By fully integrating with Loyola Medicine, we will enhance our clinical strength, increase our flexibility and provide our community with more comprehensive care across an expanded region.”

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

A merger would create a four-hospital non-profit system serving suburban Chicago.

The two non-profit health systems hope to build on a strategic partnership that began in 2015.

The due diligence process is expected to take several months.


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