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September 11, 2020 09:13 AM

Northwestern Medicine, Palos Health eye merger

Crain's Chicago Business
Stephanie Goldberg
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    Northwestern Memorial Hospital

    Northwestern Medicine and Palos Health are looking to merge, the systems said this morning.

    The two have signed a letter of intent for Palos to join Northwestern Medicine, subject to regulatory approval and both their boards approving a definitive agreement, according to a statement.

    Independent, community-based Palos Health includes 425-bed Palos Hospital in southwest suburban Palos Heights and a South Campus in Orland Park that provides primary and specialty care, advanced diagnostic technology and a surgery center. It has 3,000 employees and 600 medical staffers, the statement says.

    Meanwhile 10-hospital Northwestern Medicine had $5.4 billion in net patient revenue and $233 million in net income in 2018, according to data compiled by Crain’s.

    Palos Health has been operating in the red, with a $16 million net loss in 2018, the most recent financial information available, and a $3 million net loss the year prior.

    As some hospitals struggle with dwindling revenues and rising expenses amid COVID-19, Northwestern recently said patient activity has nearly returned to pre-pandemic levels and coffers are brimming.

    "In this environment there are entities who may not have wanted to align in the past, who may want to align with people in Chicago—whether it be us or others," Chief Financial Officer John Orsini said July 27 on a conference call with bond investors. "We're not going to sit back on our heels, but we're going to continue to look to execute our strategy in the marketplace."

    Last year Palos Health ended merger talks with Maywood-based three-hospital Loyola Medicine. The pair, which formed an academic affiliation in 2015 and collaborated on an 83,000-square-foot expansion of the South Campus in Orland Park, did not comment on the decision to remain separate.

    Last year, when Palos and Loyola announced plans to merge, Palos CEO Dr. Terrence Moisan told Crain's the community health system originally intended to remain independent, but the shift toward vertical integration had changed the conversation.

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

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      • Conferences
        • Digital Health Transformation Summit
        • ESG: The Implementation Imperative Summit
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        • Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Hospital at Home
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        • - Digital Health
        • - Future of Staffing
        • - Hospital of the Future (Fall)
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