The new network would bring together Alexian's four hospitals in the northwest suburbs with Adventist's five hospitals in the west and southwest suburbs. Combining operations would allow the newly formed system to save on back-office operations and big investments like information technology, as well as compete as the economics of healthcare shift toward models that emphasize good outcomes rather than volume of services.
Such models like accountable care organizations call on hospitals and other providers to be paid based on their ability to manage the health of large populations of patients. Adventist last year became part of Alexian's Medicare ACO, and both systems have similar contracts with commercial insurers.
The CEOs said another focus of the combined system will be to eliminate redundancies and reduce costs. Frey said the operating company will be looking to gain efficiencies in corporate functions, but not immediately in clinical operations.
“We don't have any plans to make any substantive reductions in workforce,” Frey said. “We're pretty much optimized for now.”
In general, joint operating agreements allow hospital systems with separate ownership to collaborate on certain service lines and other business activities. Adventist Health has been involved in such arrangements before. The system in 1996 formed Centura Health with Denver-based Catholic Health Initiatives, and the combined network now operates 15 hospitals in Colorado.
That deal served as a template for the Adventist-Alexian venture, Crane said.
The systems expect to have a final agreement inked by the end of July, said Frey. The arrangement must also pass muster with the Illinois Health Facilities and Services Review Board.
(Note: This story has been corrected to say that the combined Adventist-Alexian system would be the state's third-largest by number of hospitals.)
"Alexian, Adventist agree to form nine-hospital system" originally appeared on the website of Crain's Chicago Business.