After 92 years as an independent community hospital, Ingalls Health System plans to join University of Chicago Medicine.
The deal, which state regulators must approve, would end a search south suburban Ingalls embarked on this year. Based in impoverished Harvey, Ingalls was looking for a partner to help in a number of ways: to get more lucrative contracts with insurers and to cut costs. It needed to have the scale and cachet to recruit physicians to a poor community.
“We look forward to this opportunity,” said Ingalls President and CEO Kurt Johnson. “We were fiercely independent. . . . To continue to be a leading healthcare system in the south suburbs, you have to adapt. You have to evolve. The first step for us was to come to grips with some of the changes in the healthcare environment.”
The two signed a letter of intent for what would be U of C's first full merger with another hospital.
For U of C Medicine, a three-hospital academic medical center in Hyde Park, the deal would help vie against south suburban hospitals as it works to broaden its footprint in the area. The research-focused South Side system is building in Orland Park what will be its biggest outpatient site. Patients who see doctors at the more than 100,000-square-foot outpatient center would be closer to Ingalls rather than U of C if they needed a higher level of care, and they'd be able to stay closer to home.
U of C is among the biggest health systems in Chicago, with $1.44 billion in 2014 operating revenue. That's four times bigger than Ingalls, which had $356 million.
“This partnership between UChicago Medicine and Ingalls underscores our commitment to improving health and access to quality care in our communities,” Dr. Kenneth Polonsky, executive vice president of medical affairs at University of Chicago, said in a statement. “Our collective patients and communities will benefit from the complementary services and greater options.”
This summer, Johnson said he sent a number of letters to possible suitors. The hospital isn't as financially challenged as some of its peers. Ingalls hasn't had an operating loss for at least a dozen years, though it has laid off workers.
But while it remained on its own, competing hospitals were merging and getting stronger. Ingalls reached out to nine “prestigious” healthcare systems, he said. The hospital eventually narrowed the list to two suitors. He declined to say who else responded to Ingalls.
While consolidation gripped the Chicago area, U of C also has stayed away from bulking up through mergers. Instead, it has hatched joint ventures and beefed up its relationships with suburban hospitals to bring U of C specialists there.
In recent years, U of C formed a cancer center with Silver Cross Hospital in south suburban New Lenox. It expanded relationships with Naperville-based Edward-Elmhurst Healthcare and Little Company of Mary Hospital & Health Care Centers in south suburban Evergreen Park to bring more pediatric specialists to their campuses.
U of C recently announced it's building a clinic in the bustling South Loop, an area saturated with people and increasingly with medical clinics.
If approved by state regulators, U of C and Ingalls would merge in late spring or early summer of 2016.
"U of C Medicine to merge with south suburban hospital" originally appeared in Crain's Chicago Business.