Ascension to acquire Presence Health

Chicago-based Presence Health has signed a letter of intent to merge into Ascension, combining the largest Catholic-sponsored healthcare system in Illinois with the nation's largest Catholic health system, the companies announced Tuesday.

If the deal is completed, 12-hospital Presence will be owned by Ascension but operate in a joint venture called Amita Health that Ascension already has with Adventist Midwest Health.

Only Presence's senior-care unit, Presence Life Connections, will be integrated into Ascension, the companies said in a release Tuesday.

"We believe this will strengthen Catholic healthcare not only in the region but throughout the country as we are all dedicated to delivering personalized, compassionate care," Ascension CEO Tony Tersigni said in a statement.

Presence heads into the deal with a two-year turnaround effort still trying to get traction in the intensely competitive Chicago hospital market.

Presence posted an operating loss of $40 million in 2016, far better than the $186 million operating loss in 2015. But it was still short of system targets, Presence CEO Mike Englehart recently said.

In the first quarter, Presence returned to the black operationally, posting an operating gain of $12.4 million on revenue of $661.4 million.

Its 10% market share will now be combined into Amita Health, a 2-year-old joint venture that encompasses nine hospitals and a large physician network across the western and northwestern suburbs of Chicago.

Amita is an operating tie-up between Hinsdale, Ill.-based Adventist Midwest Health and Ascension's Alexian Brothers Health System, based in Arlington Heights, Ill.

The new deal with Ascension is not expected to affect an agreement that Presence recently inked to divest two downstate hospitals to Peoria-based OSF HealthCare: Presence Covenant Medical Center in Urbana and Presence United Samaritans Medical Center in Danville.

That deal is expected to be completed in early 2018 but is subject to regulatory approvals.

For Ascension, the Presence acquisition is its largest deal since acquiring financially healthy Wheaton Franciscan Healthcare of Milwaukee in March 2016.

Tersigni has in numerous interviews stressed his personal commitment to strengthening and expanding Catholic healthcare wherever Ascension is needed.

Ascension and Presence executives would not comment Tuesday beyond their news release.

Ascension is the nation's largest not-for-profit hospital company, with 141 hospitals and fiscal 2016 revenue of $21.9 billion.

Two other Catholic healthcare giants, Dignity Health and Catholic Health Initiatives, are discussing a merger to see if they can operate more efficiently together than apart.

Presence beat long odds a year ago when, in the face of its large 2015 operating losses, Englehart and his financial staff were able to pull off an outsized $1 billion bond offering that provided the financial flexibility to continue the system's turnaround.