 Advocate Health Care, Illinois’ largest hospital system, and NorthShore
University HealthSystem will join forces to form a 16-hospital system called
Advocate NorthShore Health Partners.
Critics worry that such a merger could have negative effects on healthcare
pricing and costs to consumers, as well as regulatory issues.
Jon Sanders is the director of regulatory studies at the John Locke Foundation,
and says while these kinds of mergers may appear beneficial from an efficiency
standpoint, they rarely deliver on their promises.
“In other examples of major hospital mergers across the country, the promise is
always that prices will go down and care will be delivered at a higher quality
level more quickly,” Sanders said. “But that doesn’t usually end up being the
case. When companies combine for a larger percentage of the market share, there
is less competition and fewer reasons to keep costs down.”
Sanders warned against large hospital conglomerates rendering smaller
physicians’ offices unnecessary and pushing them out of the market, which could
be harmful to rural areas.
“We’ve seen a similar thing happen in North Carolina,” he said. “It has allowed
these big companies to find regulatory loopholes where they hike prices in
unregulated areas so it appears prices stay lower for everyone when that really
isn’t the case.”
“It has not kept costs down,” Sanders said.
For their part, leaders for both Advocate and Northshore have expressed strong
praise for the move.
“We have great respect for the NorthShore organization. We see the world through
the same lens – providing exceptional patient care by delivering better health
outcomes at a lower cost,” Jim Skogsbergh, president and CEO of Advocate, said
in a statement. “In addition to an outstanding leadership team, medical group
and strong reputation for quality, NorthShore is a pioneer in developing a
tightly integrated system – advancing alignment with physicians and hospitals.”
Northshore’s president and CEO expressed a similar sentiment.
“This agreement brings together the best of our two health systems: quality,
safety and clinical integration supported by translational research and
technology advancements,” Mark Neaman said in a press release. “Advocate leads
the way in their proven approach to population health. By joining together, we
will raise the bar regionally and nationally for a new model of health care
delivery.”
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 The merger would be the largest in state history,
and bring together two non-profit groups that two non-profit systems
generated $7.3 billion in revenues and $361 million in operating
income in 2013.
Following the 2011 merger between Resurrection Health Care and
Provena Health, the newly-named Presence Health become the
second-largest system in the state with $2.8 billion in total
revenue from its 12-hospital network.
“We share a long-term strategy to reduce costs while
improving efficiencies and advancing quality,” NorthShore Board
Chair Steven Crown said in a press release. “We have to be leaders
in an ever-changing health care marketplace and by working together,
we can enhance access to care across the diverse communities we
serve.”
Advocate Board Chair Michele Richardson echoed Crown’s enthusiasm.
“Combined we will create economies of scale that will allow us to
reduce the trend of rising health care costs,” Richardson said in a
statement. “Both organizations have a long standing commitment to
quality, and together we will continue to advance innovation and
outcomes.”
Hospital systems merging is a trend, according to a report from The
Heritage Foundation. There have been more than 1,100 such deals in
the U.S. since 1998, and 100 in 2012 alone.
The merger would make Advocate Northshore the 16th largest hospital
system in the country, according to the Modern Healthcare Financial
Database.
“Both organizations have a rich history of serving our communities
and we will continue to build upon that strength,” Skogsbergh said.
The merger is pending approval by the Illinois Health Facilities and
Review Board, a state body that overseas and regulates mergers,
acquisitions and changes of ownership within the healthcare
industry. The Federal Trade Commission will also become involved in
the process to monitor the groups’ navigation of antitrust laws.
A representative for the Illinois Hospital Association declined to
comment for this story.
[This
article courtesy of
Watchdog.]
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