To understand why so many big health systems are racing to buy up community hospitals in Chicago's south suburbs, consider what is happening in Evergreen Park.
Little Company of Mary Hospital, an 87-year-old Catholic community facility, confirms that it's looking to join or affiliate with another health system. The reasons are familiar. Independent hospitals, especially old ones, can't afford to keep up with the fast-paced changes demanded by patients and even their own physicians—think modern amenities and technology, like easy-to-use electronic medical record systems.
As the small club of independent hospitals dwindles quickly, this region is one of the last strongholds. Their appeal: They provide a steady referral stream of patients—often privately insured ones—to larger health systems, and they offer less expensive, more routine care, freeing up beds at their bigger, more specialized sister hospitals.
The push to partner has accelerated under federal health reform, which essentially requires hospitals to spend more time and money keeping patients well.
“Size does matter,” says Casey Nolan, Washington, D.C.-based managing director at health care consultancy Navigant. “It's becoming increasingly difficult for the small hospitals to compete against the bigger systems.”
So the big systems are coming to them, notably in the south suburbs. In this region, a turf war is raging. University of Chicago Medicine, an academic medical center on the South Side, in October finalized its first full merger ever, picking up Ingalls Health System in impoverished south suburban Harvey.
And while the big systems could offer their deep pockets and branding cachet to several stand-alone community hospitals on Chicago's South and West sides, those institutions mainly serve poor and uninsured patients. That's less appealing than snapping up hospitals in suburbs with more consumers who have private insurance or Medicare. The latter, a federal health insurance program for elderly patients, typically reimburses hospitals at higher rates than for low-income patients on Medicaid.
Just last month, U of C Medicine opened a multispecialty $67 million outpatient center in Orland Park, encroaching on Palos Community Hospital's territory. The Palos Heights-based hospital, affiliated with Loyola University Medical Center, an academic hospital in west suburban Maywood, is countering with its own project. Palos is shelling out $116.7 million to overhaul and expand its outpatient campus about 2 miles from U of C Medicine's new site. Palos, in collaboration with Loyola, also wants to open a $13.2 million outpatient surgery center there.
Northwestern Memorial HealthCare, in particular, has been aggressively hunting for deals. It's swelled from one to seven hospitals since 2010 and has approached Silver Cross Hospital in southwest suburban New Lenox, that hospital's CEO, Paul Pawlak, told Crain's in October.