Advocate Health Care has signed a deal with Blue Cross and Blue Shield of Illinois that would lead to the purchase of a 101-physician group practice and related HMO.
As part of the deal, estimated to be worth $100 million, Dreyer Medical Clinic would become part of Oak Brook, Ill.-based Advocate while Dreyer Health Plans would become part of the Blues. Both Dreyer organizations are based in Aurora, Ill., a western suburb of Chicago.
"This gives us access to an established physician group that has been around a long time and makes us even more attractive to managed-care companies," Richard Risk, co-chief executive officer of Advocate, said of Dreyer Medical Clinic, which was established 70 years ago. "It gives us access to another part of the Chicago marketplace in the far western suburbs and the Fox River Valley."
Advocate projects its 1996 net revenues will be $1.4 billion. The system has $1.6 billion in assets. Last month, Advocate said two other hospitals were preparing to join its system. With those, Advocate would have nine hospitals, including seven that would be fully merged into their organization.
Analysts say the deal edges Advocate ahead of its Chicago competitors, which are slower at tapping into the physician market.
"It's a terrific coup for Advocate because it goes a step further to solidify its physician-hospital relationships," said Scott Becker, an attorney with Ross & Hardies' Chicago office. "They are clearly emerging as the strongest player in Chicago as far as combined physician and hospital assets."
Advocate hospitals already have 3,500 physicians from 180 sites throughout the Chicago area on their medical staffs. Half those physicians are in Advocate physician-hospital organizations.
Dreyer's group practice has nine clinics serving a five-county area.
"It will generate more opportunities for growth, and over time, will provide the security that comes from affiliation with the leading provider network and managed-care organizations in the area," said Thomas Stemper, M.D., Dreyer's chairman of the board.
The Blues plan, which is trying to bolster its managed-care presence in Illinois, would add nearly 40,000 new enrollees from Dreyer Health Plans. The Blues' managed-care portfolio includes 1.7 million of its plans' 2.4 million subscribers.
Blue Cross and Blue Shield of Illinois recently announced its intention to merge with Blue Cross and Blue Shield of Texas (Feb. 5, p. 6).