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Loyola Medicine buys Tenet's MacNeal Hospital, lays groundwork for exit from Chicago market

Public healthcare provider plans to offload eight of their 77 U.S. hospitals, an effort expected to yield $900 million to $1 billion.

Beth Jones Sanborn, Managing Editor

Credit: MacNeal HospitalCredit: MacNeal Hospital

Loyola Medicine has signed a deal with a subsidiary of Tenet Healthcare Corp. to buy Chicago-area MacNeal Hospital  along with other affiliated operations including local Tenet-owned physician practices, the Chicago Health System and the associated CHS accountable care organization, Loyola announced Thursday.

MacNeal is a 368-bed community hospital in Berwyn, Illinois, that serves the west, south and southwest suburbs of Chicago. It's medical staff numbers over 500, and the facility includes a 12-bed rehabilitation unit, a 25-bed inpatient skilled nursing facility and 68-bed behavioral health program. CHS is an independent practice association with nearly 1,000 physicians.

[Also: How evaluating risk, physician integration can turn around hospital finances]

The deal is expected to close in the first quarter of 2018, pending regulatory approval. Following the close of the deal, MacNeal's current leadership will maintain management of the hospital, Loyola said.

"Bringing MacNeal into the Loyola system allows us to expand our delivery system, add more providers and deliver exceptional care to a greater number of residents close to their homes. With our organizations' common values, we can support our shared mission of being a transforming and healing presence in our communities," said Larry M. Goldberg, president and CEO of Loyola University Health System.

[Also: Tenet to sell Philadelphia hospitals to Paladin]

Sources close to Tenet said the deal heralds the exit of Tenet  from the Chicago market, where they have three other hospitals they plan to sell: Weiss Memorial Hospital in Chicago, Westlake Hospital in Melrose Park and West Suburban Medical Center in Oak Park. They own no other hospitals in the market, sources said.

According to an article in the Chicago Tribune, their 2.1 percent market share as of 2015 put them behind other giants like Advocate Health Care, Northwestern and Rush.

In 2015, MacNeal and West Suburban Hospital were profitable but Weis and Westlake were not. Their sale, then, comes as no big surprise, given that Tenet is focusing their resources on hospitals that hold the first or second highest market share in their respective areas, the Tribune said. CEO Trevor Fetter told listeners of an August earnings call that they had plans to offload eight of their 77 U.S. hospitals, an effort that was expected to yield $900 million to $1 billion.

Merger and acquisition activity has seen a steady and intense climb over the past couple of years, with struggling stand-alones aligning with bigger systems to ensure their survival, as well as larger systems maneuvering to gain market share and expand their footprints. However, even large systems like Tenet must  streamline their operations and make sure their resources are focused appropriately to maintain solvency and ensure future growth where it is really needed and justified. Pulling out of a market where they are already lagging behind competitors falls in line with this kind of philosophy.

The cornerstone of the organization is Loyola University Medical Center, a 547-bed academic medical center in Maywood, Illinois that includes the Center for Heart and Vascular Medicine, the Cardinal Bernardin Cancer Center, a level 1 trauma center, burn center and children's hospital, among other services. Gottlieb Memorial Hospital, a 247-bed community hospital in Melrose Park, Illinois, and more than 1,200 physicians are also part of the system. The Medical Center campus also houses Loyola's Stritch School of Medicine and Marcella Niehoff School of Nursing.

Loyola is part of the Trinity Health system, a large Catholic health system with 93 hospitals in 22 states.

Twitter: @BethJSanborn
Email the writer: beth.sandborn@himssmedia.com

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