Paul Pawlak has long guarded the independence of Silver Cross Hospital, one of the few stand-alone community hospitals in a market awash in consolidation.
As president and CEO, he's done this through partnering with would-be rivals that have the cachet and deep pockets to poach patients. University of Chicago Medicine on cancer. Northwestern Medicine on neuroscience. Advocate Health Care on coordinating patient care to drive down costs.
But Pawlak is retiring next year after nearly 30 years at the helm, and Silver Cross is a prime target for its hospital partners on the acquisition hunt as the Chicago-area healthcare industry becomes dominated by fewer, bigger players.
Besides having a new modern hospital with a hotel-like feel, southwest suburban Silver Cross is located in an area where the housing market is showing signs of rebounding faster than other parts of metro Chicago, said Tracy Cross, a Schaumburg-based real estate consultant. That means potentially more new patients in far-flung Will County, a boon for a possible buyer looking to expand its footprint or break into the local market.
“Silver Cross is very attractive,” said Jordan Shields, a vice president at Chicago-based Juniper Advisors, which counsels hospitals on mergers. “The question for them is, they'll have to figure out what they're looking for.”
Shields said he expects Silver Cross' leadership team to stick with Pawlak's strategy. But he added that the hospital's operating performance is strong despite being saddled with more than $400 million in debt from building a new hospital in New Lenox in 2012, and patients are filling beds. Births, outpatient surgeries and ER visits are just a few of the services that have seen an uptick from 2012 to 2015, according to a financial statement.
Silver Cross also has partnerships with prominent Ann & Robert H. Lurie Children's Hospital of Chicago and the Rehabilitation Institute of Chicago, another attraction for patients.
Under Obamacare, private and public insurers are paying hospitals to focus on preventive care and curb unnecessary overnight stays and tests. They lose money if they don't. That's prompted systems to go after more patients to spread the financial risk among the sick and the healthy.
Among Silver Cross' potential suitors, U of C Medicine, a Hyde Park-based academic medical center, has been looking to expand relationships with community hospitals. It already has a profitable joint cancer center with Silver Cross.
Streeterville-based Northwestern, another academic medical center, has been on a deal binge, snapping up small community hospitals and health systems in suburbs far from the Loop to capture more patients.
Meanwhile, Downers Grove-based Advocate, the largest health system in the state, forged a unique arrangement with Silver Cross in 2014 that helps control costs.
Representatives for the three health systems did not signal that the networks would pursue Silver Cross.
Pawlak said Silver Cross has no desire to lose its independence. The hospital wouldn't be searching for his replacement if it planned to merge with another system, he said.
Two executives—Executive Vice President Mary Bakken and Senior Vice President Ruth Colby, both of whom have long tenures at Silver Cross—so far are the only candidates, Pawlak said.
He added that the leaders of various health systems, including U of C Medicine, Northwestern and Advocate, reach out to him every year asking if he wants to consolidate.
“I just keep on telling them no,” Pawlak said.
"Will Silver Cross be wooed when longtime CEO departs?" originally appeared in Crain's Chicago Business.