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October 11, 2017 12:00 AM

Tenet eyes Chicago exit, sells MacNeal Hospital to Loyola

Kristen Schorsch
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    MacNeal Hospital in Berwyn, Ill.

    Loyola Medicine has a deal to acquire MacNeal Hospital in Berwyn, Ill., a community facility owned by for-profit giant Tenet Healthcare Corp. And Dallas-based Tenet is looking to sell its other three hospitals here and exit the Chicago market entirely, just four years after it arrived, a source close to the company said.

    Tenet, with nearly 80 hospitals nationwide, also owns Weiss Memorial Hospital in the Uptown neighborhood, Westlake Hospital in Melrose Park and West Suburban Medical Center in Oak Park. Dallas-based Tenet has been busy shopping around its hospitals nationwide.

    In addition to MacNeal, Loyola, a not-for-profit two-hospital academic medical system that's part of Trinity Health, will buy local Tenet-owned physician groups, the Chicago Health System (an independent practice of nearly 1,000 doctors), and CHS' accountable care organization. ACOs aim to lower healthcare costs by focusing on prevention and coordinating patients' treatment.

    Neither Loyola or Tenet would disclose terms of the agreement.

    The deal comes as Chicago-area hospitals and health systems bulk up to woo more patients and doctors alike amid big financial pressures, like patients with high-deductible health plans skipping out on bills they can't afford.

    Adding MacNeal boosts the reach of Loyola, which has about 70 affiliations and has been busy teaming up with Palos Community Hospital to expand its southwest suburban campus.

    "Bringing MacNeal into the Loyola system allows us to expand our delivery system, add more providers and deliver exceptional care to a greater number of residents close to their homes," Larry Goldberg, Loyola president and CEO, said in a statement.

    MOST PROFITABLE

    MacNeal was the most profitable of its sister hospitals by far, with $48.2 million in net income in 2015, according to an analysis by independent Minneapolis-based consultant Allan Baumgarten. Weiss and Westlake were money-losers, with losses of $2.8 million and $4.3 million, respectively, he says.

    Tenet is among few for-profit health systems in the Chicago region, and each has failed to gain steam in a notoriously fragmented and competitive market dominated by nonprofit hospital networks with more cachet and branding power.

    Tenet captured a roughly 2% marketshare in the Chicago area in 2015, Baumgarten's analysis shows. By comparison, the market leader was Advocate Health Care, the largest hospital network in Illinois, with 16.8%, followed by Streeterville-based Northwestern Memorial HealthCare (11.6%) and Rush on the Near West Side (8.4%).

    By joining Loyola Medicine, 368-bed MacNeal's new sister hospitals would be close by. With 547 beds, Loyola University Medical Center is an academic hospital about four miles west in Maywood. Gottlieb Memorial Hospital is a 247-bed community hospital about eight miles north in Melrose Park. The regional system also includes more than 1,200 doctors, Loyola University Chicago Stritch School of Medicine and the Marcella Niehoff School of Nursing.

    In an interview, Loyola's Goldberg said adding MacNeal provides an opportunity to "rationalize services among our hospitals in the region and perhaps coordinate care better. A lot of this, too, positions us for the future."

    Hospitals are striking deals to scale up fast. The thinking is, by having more patients and doctors to treat them, hospitals can better spread the financial risk of taking on the sickest people. That's because insurers are increasingly paying hospitals for the quality rather than the amount of care they provide. In other words, they can make money if they do well, and lose money if they don't.

    MacNeal and Loyola have ties in other ways. Loyola estimates that about 25% of doctors at MacNeal either trained at Loyola University Medical Center, or graduated from Loyola's medical school. MacNeal refers patients who need more specialized care to Loyola, too.

    Added MacNeal CEO M.E. Cleary: "Like MacNeal, Loyola has significant roots in Chicagoland, and we are confident that becoming part of this well-respected system will produce additional benefits for patients and the local community."

    Pending state regulators' approval, the agreement is expected to be completed in first-quarter 2018. MacNeal's management team would continue to run the hospital. MacNeal also would join Trinity, one of the nation's largest health systems with 93 hospitals in 22 states.

    "Loyola to acquire MacNeal Hospital, parent Tenet eyes Chicago exit" originally appeared in Crain's Chicago Business.

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