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Four Chicago hospitals call off merger due to lack of state help, with service cuts predicted

A lack of funding from the state means the four South Side hospitals will come up short in their plans to establish a new health system.

Jeff Lagasse, Associate Editor

Mercy Hospital and Medical Center, Chicago (Google Earth)Mercy Hospital and Medical Center, Chicago (Google Earth)

In September 2019, four Chicago-based hospitals – Advocate Trinity Hospital, Mercy Hospital and Medical Center, South Shore Hospital and St. Bernard Hospital – began pursuing a merger the entities said would transform healthcare delivery for vulnerable residents. This week, that merger was called off, with the hospitals citing a lack of funding from the Illinois General Assembly.

Executives at the four hospitals formally announced the merger plans in January and pledged to replace aging facilities with a new hospital and community health centers, along with expanded services – an effort that would have cost an estimated $1.1 billion. Collectively, the four hospitals lost about $76 billion in 2019.

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The planned merger was contingent on $520 million in state funding over the next five years, which was meant to ameliorate expected losses as the hospitals established a new healthcare system. Recently, the Illinois General Assembly wrapped up a shortened session without committing the money. The merger was called off on Tuesday.

"We have grave concerns about this development, and we believe this action will force hospital closures, cause further service cuts, and push access to care even further out of reach for the families we serve," said executives from the four hospitals in a letter sent Tuesday to the Illinois Department of Healthcare and Family Services.

The letter was signed by Tim Caveney, president and CEO of South Shore Hospital; Charles Holland, president and CEO of St. Bernard Hospital; Rashard Johnson, president of Advocate Trinity Hospital; and Carol Schneider, president and CEO of Mercy Medical Center.

"There has never been a question that this new, integrated delivery system would need substantial and reliable state funding to have a chance of success," they wrote in the letter. "This funding would specifically address our collective operating deficits while we built the new health system."

The executives expressed frustration that the nixed merger would perpetuate race-related healthcare disparities on Chicago's South Side, especially in light of the COVID-19 coronavirus. The pandemic, according to the letter, has disproportionately affected African Americans, who are dying at a rate six times that of caucasians. Part of the problem, the executive said, is a lack of access to healthcare services, which they said will remain unaddressed now that the merger has been called off.

The cancellation comes after a lengthy preparation process. Representatives from the four hospitals had already conducted online public meetings and virtual town halls. Agreements for the legal transaction, as well as the financial and operational models, had been finalized.

THE LARGER TREND

In making the initial merger announcement, the hospitals cited persistent health inequities in the region despite effort and investment from the State of Illinois and the local community.

Significantly lower life expectancy, higher incidences of chronic disease and other disparities are aggravated by social determinants of health, including food insecurity, housing and trauma. The four providers said addressing these inequities was a key driver for the need to develop a progressive, patient-centered approach and delivery model.

Yet findings published in January in The New England Journal of Medicine found that mergers and acquisitions sometimes offer a patient experience that is moderately worse, on average, with little change in 30-day mortality and readmission rates.

Twitter: @JELagasse

Email the writer: jeff.lagasse@himssmedia.com