A state board in Illinois initially voted towards the deal, however then agreed to think about it later. The 2 programs are in search of approval of a merger that may create a corporation with $27 billion in annual income.
The deliberate merger of Atrium Well being and Advocate Aurora Well being, one of the biggest proposed hospital mergers in years, has run right into a setback in Illinois.
The Illinois Well being Amenities and Companies Overview Board initially voted towards the deal, however then agreed to think about the deliberate merger at a later time, The Chicago Tribune and different Illinois media reported Tuesday. The board mentioned it could permit each programs to submit extra info.
The board’s approval is a mandatory step for the deal to maneuver ahead. Advocate Aurora operates in Illinois – it’s the most important well being system within the state – and Wisconsin.
The 2 organizations initially hoped to finish the deal Sept. 30, the media shops reported, so even when the merger is accepted, it might take longer than anticipated.
Atrium and Advocate Aurora initially introduced their plans to merge in Might and type a system with a mixed $27 billion in annual income. Federal and state regulators should approve the deal.
In an announcement late Tuesday afternoon, Advocate Aurora indicated it was stunned by the board’s motion however nonetheless expects the deal to be accepted this 12 months.
“State statute requires the Overview Board to approve all Certificates of Exemption functions that employees have deemed full,” Advocate Aurora mentioned in an announcement. “Our software was deemed full final month, thus, we have been stunned by at the moment’s delay and can work with the Overview Board to handle their questions. Please know we proceed to work with different applicable regulators and stay assured our mixture remains to be on monitor to shut by the top of the 12 months.”
Atrium Well being mentioned Tuesday the system will proceed to work with regulators.
“There are a selection of regulatory our bodies which have requested for info to overview associated to Atrium Well being’s proposed strategic mixture with Advocate Aurora Well being. The board in Illinois has indicated it needs to see further info, and we’ll proceed to share applicable info,” Atrium Well being mentioned within the assertion
If the deal finally features approval, the merged system would function 67 hospitals with greater than 1,000 ambulatory websites in six states, with greater than 148,000 staff.
The programs mentioned the brand new group can be named Advocate Well being, however the programs would proceed utilizing the Atrium and Advocate Aurora manufacturers of their native markets. The group can be primarily based in Charlotte, N.C., however the programs mentioned the merged system would preserve a robust presence in Chicago and Milwaukee.
The Federal Commerce Fee has moved to block some hospital deals over the last year. Nonetheless, the FTC has usually objected to offers involving well being programs which are working hospitals in the identical markets.
With the Atrium-Advocate Aurora deliberate deal, the 2 programs function in several elements of the corporate, prompting some analysts to mission the merger would win federal approval. Atrium Well being is predicated in Charlotte, N.C. and serves North Carolina, South Carolina, Georgia, and Alabama, whereas Advocate Aurora serves Illinois and Wisconsin.
If the deal wins approval, analysts have said it could spur other health systems to pursue similar mergers. Techniques might search for merger companions in different markets to realize measurement and scale, whereas avoiding the potential regulatory scrutiny involving offers between rivals in the identical markets.
Some critics have objected to the deal, saying it could result in increased prices for sufferers.
SEIU Healthcare, which represents greater than 90,000 union staff within the midwest, mentioned in August it opposed the deal. The union mentioned it needed assurances that hospitals within the Chicago space wouldn’t be shuttered to protect earnings.
“SEIU Healthcare asserts that the proposed Advocate Aurora Well being-Atrium Well being merger dangers entry to reasonably priced healthcare throughout Chicagoland and in medically underserved communities,” the union mentioned in an Aug. 24 letter to the Illinois board.
North Carolina State Treasurer Dale Folwell mentioned in Might that the Atrium-Advocate Aurora the deal is an “ill-advised merger” and urged federal and state officers to have a look at it carefully.
“North Carolina, already house to one of many nation’s high 5 metropolitan markets with the best degree of well being care focus, isn’t any stranger to the ailing results of consolidation,” Folwell mentioned in a statement. “Analysis persistently reveals mergers and acquisitions don’t ship on hospital executives’ guarantees, however as an alternative set off increased prices, decreased entry and the identical or decrease degree of care.”
In saying the merger, Atrium and Advocate Aurora pledged to take a position closely in bettering care to underserved communities. Leaders of the merged system pledged to spend $5 billion to handle well being fairness and different neighborhood wants.
There have been fewer hospital offers nationwide over the previous 12 months. Only 49 hospital consolidations took place in 2021, down from 79 the earlier 12 months. Within the first six months of 2022, 25 hospital offers have been introduced, in response to Kaufman Corridor, the consulting agency.
Whereas there have been fewer offers recently, the transactions have been larger, and Kaufman Corridor has mentioned that may very well be a pattern in the meanwhile.
About two weeks in the past, Trinity Health, based in Michigan, completed the acquisition of MercyOne in Iowa, a system with $3 billion in income. Trinity had collectively operated MercyOne with CommonSpirit Well being, however reached an settlement within the spring to purchase all of MercyOne’s belongings.
Analysts mission the pace of hospital deals to pick up eventually, though the financial downturn and the potential of a recession might complicate deal-making.
Michael Abrams, a managing companion of Numerof & Associates, a consulting agency, is an outspoken critic of hospital mergers. In a July interview with Chief Healthcare Govt, he mentioned he fears that if regulators approve the Atrium and Advocate Aurora deal, it could set off extra mergers amongst giant well being programs. He’s hoping the FTC will oppose the deal, however he’s skeptical that can occur since they programs aren’t in overlapping markets.
“If this doesn’t provoke pushback from the FTC, finally that opens the door to a seamless sequence of mega-mergers which are fastidiously designed to not have overlapping markets,” Abrams mentioned in July.
This story has been up to date with statements from Atrium Well being and Advocate Aurora Well being.
