Advocate Health Care will expand its reach well beyond the Chicago area later this month, tapping into Illinois' second-largest market.
Executives confirmed they are near a deal with 298-bed SwedishAmerican Hospital in Rockford. Advocate also last week completed its merger with 240-bed South Suburban Hospital in Hazel Crest, Ill., but executives said the Rockford deal would be different.
"In all likelihood (the deal) won't commence as a full-asset merger," said Stephen Ummel, co-chief executive officer and chairman of the board at Oak Brook, Ill.-based Advocate. "We've been in conversation with SwedishAmerican Health System for some time. Our discussions are quite advanced and serious."
The affiliation agreement, expected to be announced near the end of this month, would allow Advocate to tap a market of 250,000 people, linking the system's providers in the Chicago area across northern Illinois and up to the Wisconsin border.
SwedishAmerican Hospital had net income of $7.5 million on net revenues of $115.5 million in 1994, according to HCIA, a Baltimore-based healthcare information company. SwedishAmerican had $129 million in assets in 1994.
With South Suburban and Swed-ishAmerican, Advocate would have nine hospitals, including seven that are fully merged into the system.
If completed, it would be Swed-ishAmerican's first major attempt at an affiliation since its proposed merger with Rockford Memorial Hospital was successfully blocked by the Justice Department. That case was appealed as far as the U.S. Supreme Court, which denied the hospitals' petition for review in 1990.
Advocate projects its 1996 net revenues to be $1.4 billion. The system has $1.6 billion in assets.
In addition, Advocate's health plan boasts some 110,000 enrollees. Adding SwedishAmerican wouldn't add many covered lives because managed-care has less than 20% penetration in the Rockford area.
However, Advocate would be able to tap into two medical groups with 50 physicians affiliated with Swed-ishAmerican.
In other Chicago-area related network developments, Grant Hospital, owned by Columbia/HCA Healthcare Corp., has eliminated 136 full-time employees and suspended obstetric services. The hospital now has about 800 employees.
"The suspension of services in the OB department and reduction in force should in no way be construed as a message that Grant Hospital is closing," said Timothy Crowley, president and CEO at Grant. The hospital has applied to the Illinois Health Facilities Planning Board for a discontinuance of that service.