Unable to meld their managed-care markets, Advocate Health Care of Oak Brook, Ill., and Swedish American Hospital in Rockford, Ill., called off their merger last week.
The deal was originally designed to link Advocate's eight Chicago-area hospitals to 298-bed Swedish-American, which has a market that stretches across northern Illinois and into south-central Wisconsin. The Rockford market consists of 250,000 people, but less than 20% are enrolled in capitated health plans.
"It became apparent that the Chicagoland and Rockford healthcare markets are in substantially different stages of managed-care evolution," a joint statement from the hospitals said. "This made the value and benefits of a merger less evident at this time."
Somewhere between the time talks began last year and last week's announcement, the two systems decided to focus on a full merger. In January, executives said the deal wasn't a full-asset merger (Jan. 15, p. 14).
It was Swedish-American's first major attempt at a merger since its proposed link with Rockford Memorial Hospital was successfully blocked by the U.S. Justice Department. That landmark case was appealed as far as the U.S. Supreme Court, which denied the hospitals' petition for review in 1990.
The two systems said they hope they can work jointly in some areas in the future. "All the doors remain open despite the decision to end merger plans," executives said.