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updated: 12/4/2017 4:52 PM

Advocate Health Care plans to merge with Aurora Health Care

Parties optimistic deal will happen after FTC tanked Advocate, NorthShore talks this year

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  • Dr. Nick Turkal, president and chief executive officer of Aurora and Jim Skogsbergh, president and chief executive officer of Advocate announced plans for Advocate Health Care and Aurora Health Care to merge.

    Dr. Nick Turkal, president and chief executive officer of Aurora and Jim Skogsbergh, president and chief executive officer of Advocate announced plans for Advocate Health Care and Aurora Health Care to merge.
    Courtesy of Advocate

 
 

Advocate Health Care in Downers Grove and Aurora Health Care, the largest health organization in Wisconsin, plan to merge to create Advocate Aurora Health, the 10th largest nonprofit health system in the U.S.

Expecting to serve nearly 3 million patients a year, the two organizations say the merger will enhance scale, expand access and improve efficiency.

"This merger is about transforming care delivery and re-imagining the possibilities of health as bigger meets better and size meets value to benefit consumers," said Jim Skogsbergh, president and chief executive officer of Advocate. "By joining forces we will be able to expand our network to scale innovation and create a destination in the Midwest for patients and the talented clinicians who care for them."

The announcement comes about nine months after Advocate ended a nearly two-year battle to merge with NorthShore University HealthSystem.

The Federal Trade Commission argued that consumers could face rising health care costs, while the system would have less incentive to upgrade services and improve quality.

That merger would have created an organization composed of 16 hospitals with about 45,000 employees serving more than 3 million patients annually, making it the 11th largest nonprofit health care system in the U.S. The combined organizations' board of directors was to be made up of an equal number of members from both Advocate and NorthShore, and the organizations were consolidating financial statements.

A similar deal is planned with the current proposal, except the merger is taking place over state lines. Advocate officials said this deal is more promising because the two health care systems have contiguous, but not overlapping geography, which is how the federal government defined the Advocate and NorthShore markets.

"For the communities in Illinois and Wisconsin that we serve and for our two organizations, this is an unprecedented opportunity to shape our future and better serve patients," said Nick Turkal, president and chief executive officer of Aurora, the largest health care organization in Wisconsin.

Both the Advocate and Aurora boards of directors approved the plan, which was announced to physicians, nurses, associates and caregivers in both organizations Monday. The merger will build on the 20-year relationship the two health systems have had through the joint ownership and operation of ACL Laboratories.

The new organization will operate 27 hospitals and more than 500 sites of care and employ more than 3,300 physicians and nearly 70,000 associates and caregivers, according to a news release. Its combined annual revenues are about $11 billion.

The agreement includes a plan for a single board of directors made up of an equal number of members from Advocate and Aurora, with Skogsbergh and Turkal serving as co-CEOs. Aurora Board Chair Joanne Disch will chair the Advocate Aurora Health board of directors during the first year of operation, and Advocate Board Chair Michele Richardson will assume leadership for the second year. The plan also outlines a unified vision, along with plans to consolidate balance sheets. The Advocate and Aurora names will continue to be used. Each system will maintain its current headquarters.

The agreement is subject to state and federal regulatory review and approval, including the Federal Trade Commission and agencies within Illinois and Wisconsin. Closing is expected by midyear 2018.