CHICAGO — Wisconsin's Mercy Health System and Illinois' Rockford Health System plan to join forces as soon as December pending regulatory approval.

The two systems announced their intentions — approved last week by the boards of each system — on Oct. 27.

The new system will be operated under a parent company with a nine member board although both systems will retain their names for the time being and the assets of their charitable foundations will remain separate.

The two currently operate five hospitals and 80 clinics that serve northern Illinois and southern Wisconsin, generating more than $1.4 billion in annual revenues.

Mercy employs 4,000 and operates three hospitals with more than $1 billion in annual revenue while Rockford operates a main hospital and a rehabilitation facility and employs 3,500 with more than $450 million in revenue.

Mercy's president and chief executive officer Javon Bea will serve as head of the new system.

"By thoughtfully aligning our organizations, Mercy Health System and Rockford Health System will create a regional system that honors our existing legacies while strengthening both systems for the future," Bea said in a statement.

'By joining together, we expand our opportunities to innovate, take advantage of synergies, explore economies of scale, recruit excellent providers, improve community health and effectively respond to healthcare reform," Rockford's chief executive officer Gary Kaatz said in the joint statement.

Rockford had previously planned to merge with Cadence Health in Illinois but earlier this year the two cancelled the plans in a mutual decision after the two could not reach a final agreement due to differences in operational strategies.

Rockford issued $67 million of refunding debt in 1997 and $61 million in 2008. Its rating in the single-A category is based on bank support. Janesville-based Mercy has about $200 million of rated debt that carries a single-A-level rating.

The new merger is the latest in an ongoing nationwide trend that has escalated as not-for-profit healthcare providers seek economies of scale to deal with federal healthcare reform and other fiscal challenges.

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