Holy Cross Hospital and Sinai Health System have signed a letter of intent to merge, according to an application filed with the state facilities board.
The transaction with Holy Cross, a struggling, 274-bed hospital on the Southwest Side, would likely propel the 421-bed Sinai Health into the top 10 health care systems in the Chicago area, based on revenue.
Holy Cross, a Catholic hospital, has been looking for a partner since June 2011, when Nashville, Tenn.-based Vanguard Health Systems Inc. walked away from a deal to buy the hospital. Sinai Health, on the West Side, and Holy Cross in May disclosed they were in talks about a possible partnership.
Sinai's acquisition comes as safety-net hospitals gear up for an expected surge of low-income and working-class people who will receive some form of insurance coverage in 2014 under the federal health care overhaul. Nationwide, about 30 million people are expected to gain coverage under the law.
While the rush of patients could bring in fresh revenue, some hospitals that heavily rely on the Medicaid program could be strained by the sudden rise in new patients.
“You can see that safety net being stretched even a little more thinly than it already is,” said Jennifer Tolbert, a Washington-based director of state health reform at the Henry J. Kaiser Family Foundation.
The application was filed with the Illinois Health Facilities and Services Review Board, which must approve the merger for it to take effect.
After the merger closes, Holy Cross would retain its Catholic identity, the application said. Sinai is an affiliate of the Jewish United Fund/Jewish Foundation of Metropolitan Chicago.
“This will be a unique arrangement because each of us as faith-based organizations will continue to serve our communities, but under one parent organization,” Holy Cross CEO Wayne Lerner said.
The application is a key step in Holy Cross joining the Sinai system, which also includes Schwab Rehabilitation Hospital.
The transaction is expected to close on Dec. 31, David Frankel, Sinai vice president for planning, marketing and communications, said in a statement.
Sinai is more than three times the size of Holy Cross based on revenue.
Holy Cross had $120.4 million in total revenue for the year ended June 30, 2011, and $1.7 million in operating income. Sinai had $409.1 million for the same period and $629,000 in operating income.