Advocate Aurora Health has announced plans to merge with the Atrium Health Hospital System in North Carolina to create one of the largest healthcare systems in the country.
The new nonprofit will have 67 hospitals and more than 1,000 health care points in Illinois, Wisconsin, North Carolina, South Carolina, Georgia and Alabama. Advocate Aurora now has 27 hospitals in Illinois and Wisconsin after years of trying to grow through mergers and attempts at mergers.
The new organization will be the fifth-largest health care system in the country in terms of total revenue, which is expected to exceed $ 27 billion, said Eugene Woods, president and CEO of Atrium.
“This is the next step in the history of Advocate Aurora – something we could not be happier about,” said Advocate Aurora President and CEO Jim Skogsberg in an interview. “Honestly, we continue to believe that the challenges we face in healthcare – whether it is labor shortages, spending or health equity – are not local issues. These are national problems. They require more space to address. It gives us a bigger footprint to do that. ”
Advocate Aurora and Atrium plan to create a joint operating company called Advocate Health, although Atrium hospitals will retain the name Atrium, Advocate hospitals in Wisconsin – Aurora, and Illinois hospitals will continue to be called Advocate. Within the union, money does not pass from hand to hand, and existing assets will remain in the states where they are now.
The deal is expected to close this year pending regulatory approval, Skogsberg said.
Skogsberg and Woods told the Tribune that their systems share common goals of quality and affordability. Together, the systems will be able to better focus on improving health care and translating medical research into practice, Woods said.
The fact that the two systems are geographically distant will not stop attempts to improve quality and cost, given how digital the world has become, Skogsberg said.
“Bringing together two organizations that, frankly, see the world alike and think that cooperation is the key to better serving our communities and reducing costs and ensuring health equity, that’s what it’s all about, finding like-minded organizations regardless of geography, ”Skogsberg said.
In many cases, researchers are finding this out consolidation of hospitals leads to higher prices for insurance companies, and these costs can be passed on to consumers through higher premiums and other payments.
But Woods said Atrium was able to save about $ 147 million by improving the purchase and use of infrastructure after merging with Wake Forest Baptist Health of North Carolina in 2020. Aurora’s attorney also noted that he has saved taxpayers $ 258 million since the merger of Advocate and Aurora, through the Medicare Shared Savings Program, in which organizations that save Medicare money by providing quality care can share some of those savings.
“We really expect that merging our platforms will lead to significant savings for both organizations, and I think that contributes to more affordable care,” Woods said.
Skogsberg said the new attorney will be headquartered in Charlotte, North Carolina, although staff at the current headquarters in Downers Grove and Milwaukee will not be moving. Many of these workers have already been fired, and no one is expected to be fired because of the deal, Skogsberg said. In fact, leaders expect this combination to result in 20,000 more jobs, though they could not immediately say how many will be in Illinois.
Skogsberg and Woods plan to serve as CEOs for the first 18 months until Skogsberg retires. Then Woods would become the sole CEO.
The new organization will strive to become carbon-neutral by 2030 and plans to allocate $ 2 billion to address the root causes of health inequalities.
The ad came after years of mergers and attempts to merge Advocate. Hospitals in Illinois and across the country are expanding through mergers and acquisitions as they try to gain economies of scale, reach more patients and adapt to changing technologies. Hospitals often state that they hope to improve service and affordability through mergers, although such deals also often increase their ability to trade with insurers.
In early 2017 The lawyer left from a 2-year application to merge with NorthShore University HealthSystem after a federal judge ruled in favor of the Federal Trade Commission, which challenged the deal. Later that year a lawyer announced the merger from Aurora Health Care, Wisconsin, creating Advocate Aurora Health.
In June 2020, Aurora’s lawyer said so in discussions with Michigan’s Beaumont Health health system over a possible combination. Later that year, the system concluded these talks with leader Beaumont, saying the system wants to “focus on our local market priorities and the doctors, nurses and staff who provide charitable, emergency care every day.”
Skogsberg said he first approached Woods about a year ago about a potential alliance with Atrium.
In this case, Skogsberg said he did not expect the Federal Trade Commission to be very concerned about the deal, given how geographically distant Advocate and Atrium are from each other.
“These markets don’t overlap at all,” Skogsberg said. “Geography probably gives the FTC relief … Can they come back and ask additional questions? Maybe, but we are ready to answer them. “