Four financially struggling hospitals have agreed to merge in hopes of transforming care for Chicago residents on the South Side.
Advocate Trinity Hospital, Mercy Hospital & Medical Center, South Shore Hospital and St. Bernard Hospital plan to create a single system with one leadership team. Crain's reported late last year that a deal was in the works.
The combination aims to bolster the precarious finances of the safety-net hospitals that treat large numbers of low-income patients on Medicaid, which pays less than Medicare and commercial insurance.
With an estimated $1.1 billion investment—including private donations and government dollars intended for hospital transformation—the plan is to build at least one new hospital and open up to six new community health centers that would expand access to preventive services and address social determinants of health, such as food insecurity, the four hospital leaders said today.
"This is the right thing to do," Mercy CEO Carol Schneider said. "We can't meet the community's needs on our own. Our current state is not sustainable and the people in our communities truly deserve this transformative approach."
The average life expectancy in Englewood—where St. Bernard is located—is about 60 years, about 30 years lower than the average life expectancy in Streeterville, according to a recent analysis by NYU researchers.
The new system's CEO and leadership team, to be announced later this year, will ultimately determine what the entity looks like. But based on current patient volumes and other data, one idea is to build either a 500-bed hospital or two 250-bed hospitals, St. Bernard CEO Charles Holland Jr. said.
Meanwhile, such data will also help identify future care sites and service lines, like behavioral health and violence recovery, the leaders said. They added that the new care sites—along with new job opportunities—are expected to open before any existing facilities are shuttered, noting that it's too early to say which facilities might close.
"Our focus really has been on creating a new healthcare infrastructure for the South Side," Holland said. "We recognize that it doesn't make sense to keep pouring millions of dollars into these aging, outmoded, out-of-date healthcare facilities."
South Shore and St. Bernard are among the last remaining independent hospitals in the Chicago area, while Advocate Trinity and Mercy are owned by Downers Grove-based Advocate Aurora Health and Livonia, Mich.-based Trinity Health, respectively—two of the largest nonprofit hospital chains in the country.
However, all four of the hospitals are operating in the red, with 2018 net losses ranging from $1.3 million at South Shore to $68.3 million at Mercy, according to data compiled by Modern Healthcare Metrics. Coming together could enable the institutions to generate economies of scale, improve bargaining power with insurers and suppliers, eliminate redundant expenses and cut back duplicative or underutilized capabilities.
The combination could mean even more changes for Catholic hospitals St. Bernard and Mercy, which operate under the Ethical & Religious Directives, or ERDs, for Catholic Health Care Services. While the new entity will not be a Catholic system, discussions about the ERDs are ongoing, Holland and Schneider said.
The combination has been supported by the Illinois Department of Healthcare & Family Services, which oversees Medicaid.
"The challenges in our healthcare delivery system require public and private partnership," the department said in an emailed statement. "We are encouraged by this group's goals to address inequities in healthcare access on the South Side of Chicago and look forward to working with them as they continue to engage community members and leaders."
The new system would be open to adding other hospitals that are on board with its goal of transforming healthcare, an Advocate Aurora representative said.
This article was originally published in Crain's Chicago Business.