Two Ill. hospitals announce merger plans

Officials from Edward Hospital in Naperville, Ill., and Elmhurst (Ill.) Memorial Hospital have signed a letter of intent to merge, according to a news release (PDF).

The hospitals' boards voted last week on the merger. The parent companies—Edward Hospital & Health Services and Elmhurst Memorial Healthcare—include more than 50 locations with 7,600 employees and 1,680 staff physicians. The transaction also includes Linden Oaks Hospital at Edward, a 94-bed psychiatric hospital in Naperville. Once officials secure approval, they expect to finalize the move by the middle of the year. Edward has 330 staffed beds, while Elmhurst has 277. According to the news release, the new not-for-profit system would have revenue of more than $1 billion.

Officials from stand-alone hospitals are in a scramble to find stable partners with new capital to ensure survival. Meanwhile, larger systems are searching for scale and absorbing stand-alones that they perceive hold value. Northwestern Memorial Healthcare, Chicago, was interested in acquiring Elmhurst, but negotiations broke down last year. The deal could have given Northwestern a larger footprint in Chicago's western suburbs.

“With this transaction, we can assure residents of our local communities that we will preserve both Edward and Elmhurst Memorial as vital healthcare resources for years to come,” Edward President and CEO Pam Davis said in the release. “The delivery of healthcare is changing rapidly. Hospitals are under tremendous cost pressure while being asked to take a much more active role in managing the overall health of patients. Together, Edward and Elmhurst can enhance the quality and cost-effectiveness of healthcare while still maintaining our strong local community focus.”

The latest documents filed with the IRS showed that Elmhurst (PDF) failed to turn a profit in fiscal 2011, posting an $11.3 million deficit on $364.9 million in revenue and $376.2 million in expenses. Edward made $31.2 million (PDF) in profit during the same timeframe with $493.7 million in revenue and $462.5 million in expenses.

Davis would serve as CEO of the new yet-to-be named system. A spokesman commenting on behalf of both hospitals would not say how the new organization would be structured and described the move as a straight merger. It's unclear what role Elmhurst President and CEO Peter Daniels would hold. The spokesman said only that Daniels played a key role in the merger talks and continues to play a critical role at Elmhurst.

There was no word on staffing changes. Also, hospital officials would not rule out future expansion.