Mercy, Rockford Health to forge two-state ACO

Mercy Health System, a three-hospital, not-for-profit based in Janesville, Wis., and Rockford (Ill.) Health System, a two-hospital not-for-profit, will merge to create a new health system serving northern Illinois and southern Wisconsin.

Though the two organizations will keep their respective names, their five combined hospitals, over 550 physicians and 80 other facilities have been folded into a new parent company, yet to be named. Mercy Health President and CEO Javon Bea will become CEO of the new entity while continuing to serve as Mercy's CEO. Gary Kaatz, Rockford's president and CEO, also will retain his current title.

No cash is being exchanged in the deal, which took place Oct. 23 and was announced the following week. Bea told Modern Healthcare that the two systems will complement each other, since Rockford's regional children's hospital has pediatric specialties that Mercy lacks, while Mercy brings a managed-care insurance product and a physician partnership model to the table.

“We actually don't compete for the same patients right now, but we're close enough that we can create one large regional accountable care organization, so that for some specialties we can keep it within the system,” Bea said.

The parent company's board of directors will include Bea, four Rockford representatives and four Mercy representatives.

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