The Illinois Health Facilities and Services Review Board on Dec. 17 unanimously approved Ascension's plan to sell nine hospitals — more than half of its hospitals in the state — and several post-acute facilities to Ontario, Calif.-based Prime Healthcare.
The $375 million transaction now needs approval from the Archdiocese of Chicago since St. Louis-based Ascension is a Catholic health system.
The Ascension hospitals would be Prime's first in Illinois and increase the number of hospitals in its overall portfolio to 53. Four post-acute and senior living facilities and two ambulatory surgery centers are also included in the planned sale.
Prime plans to invest $250 million in facility upgrades, capital improvements, technology investments and system upgrades should the deal close in early 2025. Part of Prime's integration plan involves converting all hospitals to its iteration of the Epic EHR system. The nine hospitals included in the deal are:
- Ascension Holy Family (Des Plaines)
- Ascension Mercy (Aurora)
- Ascension Resurrection (Chicago)
- Ascension Saint Elizabeth (Chicago)
- Ascension Saint Francis (Evanston)
- Ascension Saint Joseph-Elgin
- Ascension Saint Joseph-Joliet
- Ascension Saint Mary-Chicago
- Ascension Saint Mary-Kankakee
Prime includes the for-profit Prime Healthcare Services and its nonprofit arm, Prime Healthcare Foundation, which operates 14 hospitals. Under the deal, seven Ascension hospitals will become for-profit; St. Francis in Evanston and St. Mary-Kankakee will remain nonprofit.
"We are committed and uniquely able to improve, invest and ensure the continued legacy of service of these hospitals, having saved and transformed over 40 hospitals across the country," President and Chief Medical Officer Sunny Bhatia, MD, told Becker's. "While Illinois would be a new market for us, there were a lot of similarities and parallels with other communities we've entered in Los Angeles and the Northeast, and we understand the vulnerable patient populations some of these hospitals serve in the Greater Chicago area."
Prime has a significant track record in turning around financially struggling hospitals, and this transaction checked many of the boxes that align with the health system's acquisition criteria, CFO Steve Aleman told Becker's.
"It had several positive attributes that other opportunities lacked," Mr. Aleman said. "For example, this acquisition aligns with Prime's strategy for entering new markets by providing a market cluster presence. The facilities offer material vertical and horizontal service lines, and all have strong patient volumes throughout the system. While they are turnaround facilities, several already demonstrate positive EBITDA and operating performance and offer a material opportunity to reduce costs in a way that's compatible with Prime's operating playbook."
Ascension Saint Elizabeth, a 40-bed critical access hospital, is expected to transition from acute care if Illinois regulators approve a certificate-of-need application recently filed by Ascension. The decision stems from years of low demand as well as the proximity of services at Ascension St. Mary's, which is less than two blocks away. Ascension and Prime agree that the facility should be repurposed to better serve the community's broader needs.
Ascension currently operates 118-hospitals and would maintain ownership of various facilities in Illinois should the deal close, including:
- Ascension Alexian Brothers (Elk Grove Village)
- Ascension Alexian Brothers Behavioral Health Hospital (Hoffman Estates)
- Ascension Alexian Brothers Rehabilitation Hospital (Elk Grove Village)
- Ascension St. Alexius (Hoffman Estates)
- Ascension Saint Joseph (Chicago)
- Ascension St. Alexius Women and Children’s (Hoffman Estates)
In a Dec. 17 statement shared with Becker's, Prime said it is "honored and humbled" by the Illinois Health Facilities and Services Review Board's unanimous decision to approve the deal.
"We thank the HSFRB for its thoughtful and thorough evaluation of this historic transaction, the largest in Prime's history," the health system said. "Prime's belief is that hospitals are community anchors and that all communities deserve access to high-quality, compassionate care. It is an honor to be selected by Ascension to steward these facilities into the future. We look forward to completing the transaction process and bringing Prime Healthcare's mission of saving and improving hospitals and uplifting communities to Illinois."