CHICAGO — Two large Chicago-area health care systems announced Wednesday they have finalized a merger that will create the largest Catholic health care network in Illinois.
The merger of Mokena-based Provena Health and Chicago-based Resurrection Health Care is the latest in a wave of health care consolidations across the Midwest.
Nonprofit health care analysts note that mergers are becoming more common in part because the sector tends to favor larger credits and as hospitals begin to prepare to implement the new federal health care law, now two years away.
Michigan-based Trinity Health recently acquired the two-hospital Loyola University Health System in suburban Chicago and is in talks to acquire Chicago-based Mercy Hospital.
A union between St. Louis-based Ascension Health and Arlington Heights, Ill.-based Alexian Brothers Health System is also in the making. Earlier this year, Central DuPage Health and Delnor Health System, both Illinois hospitals, completed a merger.
When they first announced they were exploring a merger last February, officials said they expected a partnership would help them navigate new federal rules that begin in 2014.
Provena and Resurrection are both rated in the triple-B range.
Together the new system — which remained unnamed as of Wednesday — will have revenues of nearly $3 billion. It will operate 12 hospitals as well as 28 long-term care facilities, 50 speciality clinics, and six home health agencies.
Both systems faced challenges with stabilizing operating performance and patient volume in a competitive market as well as with underdeveloped physician alignment strategies, according to credit analysts. The merged system will be in a better position to hire doctors, officials said.
“As a larger health system, we offer advanced technology and expertise,” said Sandra Bruce, who was Resurrection’s chief executive officer and is now CEO of the new system. “And, as the need for more primary care escalates, we are well positioned to attract a greater number of primary care physicians.”
Provena had $637 million of outstanding bonds and operating revenues of $1.29 billion at the end of fiscal 2009. Resurrection had $580 million of bonds and operating revenue of $1.42 billion at the end of fiscal 2010.
Provena has been at the center of a years-long debate over property tax exemptions in Illinois.
Last year, the state Supreme Court ruled that a hospital operated by Provena does not provide enough charity care to warrant a property tax exemption.
The ruling reverberated throughout the state, and set the precedent for the Department of Revenue two months ago to strip a trio of hospitals of their exemptions.
Since then, Gov. Pat Quinn has asked the department to hold off on any further actions while state officials and hospitals engage in talks that could lead to legislation setting minimum charity thresholds.