4 Chicago hospitals call off $1.1B merger plan
Posted on: Thursday, May 28, 2020 By: KorchekStaff
Four Chicago hospitals announced May 26 that they are ending their plans to merge after government funding for the $1.1 billion project fell through.
Advocate Trinity Hospital, Mercy Hospital and Medical Center, South Shore Hospital and St. Bernard Hospital signed a letter of intent in January to combine into a single health system and build at least one new hospital and several community health centers, according to the Chicago Tribune.
Though the deal was moving forward in recent weeks — the agreements for the transaction and the financial and operational models were finalized — the hospitals ended talks after Illinois lawmakers decided not to approve funding for the deal.
"After carefully evaluating the eleventh-hour shift in the legislation establishing the Hospital Transformation Fund, we have determined that we see no path forward for our project that would transform health care on the South Side and help address disparities in health for the patients we serve," the hospitals wrote in a May 26 letter to the Illinois Department of Healthcare & Family Services. "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."
The hospitals said their financial models were built on the assumption that state funds would be available to the merged system over the next five years. The funds would have been supplemented by other sources, including cash and asset contributions from the hospitals and debt-financing.
Though the hospitals are not moving forward with the merger, they said they hope the strategic business case for the transaction will serve as a future resource for the state.
"Our South Side coalition will do our best to share this expertise and conclusions as the state considers whatever path it will take to address the unacceptable disparity that remains, and the precarious financial situation faced by hospitals in the region," the hospitals wrote. "We recognize that change is hard, and the legislature worked with urgency and compassion to address the devastating issues we are seeing with COVID-19. However, it is clear to our coalition that we can no longer realize the bold vision we outlined for a new future on the South Side."