Loyola, Palos hospital systems to merge

Independent Palos Health has signed a nonbinding letter of intent to join Loyola Medicine, a not-for-profit three-hospital system owned by Catholic giant Trinity Health.

The deal announced today would expand the academic affiliation formed in 2015 by Maywood-based Loyola and the Palos Heights community health care system. The partnership enhanced clinical services at Palos Community Hospital and its affiliate organizations while enabling the system to remain independent.

Before seeking approval from state regulators to merge, the health systems will enter a due diligence process that's expected to wrap up around late spring or early summer, said President and CEO of Loyola Medicine Shawn Vincent.

Terms of the letter of intent are not being disclosed.

Dr. Terrence Moisan, president and CEO of Palos, said the community health system originally intended to remain independent, but the shift toward vertical integration has changed the conversation.

"Vertically integrated models mean that not everybody in close proximity should be doing everything for everybody," Moisan said. "It's not only technically not feasible, it's not right for the patient and it's too expensive."

Palos Community Hospital, with 425 beds, had more than $358 million in net patient revenue in 2017, a mere 1% decrease from 2016 and a 2% increase from 2015, according to data compiled by Modern Healthcare Metrics.

Loyola University Medical Center had $1.1 billion in net patient revenue in 2017, a less than 1 percent increase from 2016, according to data compiled by Crain's Chicago Business. In addition to the 547-bed hospital, Loyola owns 247-bed Gottlieb Memorial Hospital in Melrose Park and 374-bed MacNeal Hospital in Berwyn, which it bought from for-profit Tenet last year. Since 2011, Loyola has been part of Livonia, Mich.-based Trinity Health, one of the largest Catholic hospital networks in the country, with $18.3 billion in revenue for fiscal 2018.

"At the end of the day, this is about enhancing access to care and services," said Vincent, who joined Loyola in November. "Essentially by expanding our relationship, we're going to be able to bring greater academic medicine opportunities, as well as graduate medical education programs, to Palos at a level that we have not been able to do up to this point through our affiliation, and really expand specialty and clinical services for the community."

Most recently, the organizations collaborated on an 83,000-square-foot expansion of the Palos Health South Campus in Orland Park. Its radiation oncology and outpatient surgery centers are jointly owned by Palos and Loyola. Additionally, specialty and primary care exam rooms are staffed by Loyola doctors.

"Private hospitals really cannot compete, I don't mean financially, but they cannot compete in the need for brain power and academic excellence," said Moisan, who completed his residency at Loyola University Medical Center and graduated from the School of Medicine at Loyola University. "So we've realized that in oncology and neurosciences and quaternary cardiovascular, it would be better for us to build out a new system in Chicago, one that has never really been built before, and try to enhance each other's systems so that one plus one, in our case, will equal three."

"Loyola, Palos hospital systems to merge" originally appeared in Crain's Chicago Business.