Illinois system finds new suitor after earlier run-in with FTC

(Updated with comments at 6 p.m. ET.)

Eighteen months after abandoning a deal rather than fight the Federal Trade Commission, Rockford (Ill.) Health System has an agreement to be acquired by a new partner: Cadence Health, a two-hospital system west of Chicago.

Rockford worked with consulting firm Navigant for the past year and selected Cadence among nine bidders after narrowing a broader field of suitors. “We had a great deal of interest, probably more interest than we anticipated—and we anticipated a lot of interest,” said Gary Kaatz, Rockford's president and CEO. “We loved their culture focused on performance.”

The union would expand Cadence's reach to more than 40 locations in the region, as well as increase its clinical offerings and improve efficiencies in delivering care, according to a news release. Kaatz said that Rockford is seeking a larger footprint to benefit from economies of scale and develop the framework for population health management. Terms were not disclosed.

In April 2012 Rockford walked away from its plans to join OSF Healthcare System, which operates one of two other hospitals in the northern Illinois town. The decision came after a federal judge granted the FTC's request for a preliminary injunction blocking the transaction pending the outcome of the government's antitrust challenge.

The new combination is similarly subject to regulatory approval.

However, Kaatz said, winning antitrust clearance for the deal with Peoria-based OSF was a bigger challenge because both systems operate in the same market. “We are not in that situation with Cadence,” he said.

Rockford Health System includes 292-bed Rockford Memorial Hospital as well as a physicians group, visiting nurse association and rehabilitation hospital. They would join Cadence's 344-bed Central DuPage Hospital in Winfield, and 159-bed Delnor Hospital in Geneva, Ill. The merged system's board would include members from both parties.

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