Downers Grove, Ill-based Advocate Health Care and Evanston, Ill.-based NorthShore University HealthSystem plan to join forces and create the largest health system in the state. However, that plan was put on hold in late 2015, when the Federal Trade Commission got involved.
In 2014, the two health systems unveiled plans to come together and create a new health system called Advocate NorthShore Health Partners, which would include more than 4,000 hospital beds and employ more than 45,000 workers. Although Advocate and NorthShore say the merger would lead to cost savings and quality improvements, the FTC disagrees.
In December, the FTC authorized action to block the planned NorthShore-Advocate merger, and the Illinois Attorney General joined the FTC in the matter. The two health systems subsequently agreed to temporarily halt the transaction while the FTC conducts its antitrust review.
Becker's Hospital Review recently caught up with NorthShore President and CEO Mark Neaman to get his insight on the merger and the challenges to the transaction.
Question: What initially sparked partnership discussions between NorthShore and Advocate?
Mark Neaman: We, NorthShore and Advocate, had previously discussed partnership options, but it was seeing the rapid transformation of healthcare that prompted us to put those conversations into action. There are things that both of our systems do really well, and we saw the opportunity to bring our strengths together to improve the health of the communities we serve. Our merger and the creation of Advocate NorthShore Health Partners align with the goals of the Affordable Care Act to deliver better outcomes at lower costs. It creates a merged entity that can absorb risk and support the broad geographic coverage essential for employers and insurers. Maintaining the status quo has driven our healthcare system into its current state, and it will take new delivery models and ways of looking at healthcare to change it.
Q: What are the main goals of the proposed NorthShore-Advocate merger?
MN: We believe that by bringing together our two organizations, we will lower costs and expand access to care throughout the area. ANHP will add to the diversity and competition within the Chicago healthcare market as we introduce a delivery model, in concert with insurers, that will improve outcomes while making care more affordable. At every step, this is a win-win for those who matter most — our patients.
Q: The FTC argued the combination of NorthShore and Advocate would create an entity that controls the majority of general acute care inpatient hospital services in the combined organization's competitive market. In what ways do you disagree with the FTC's analysis and conclusion regarding market share?
MN: First and foremost, the FTC's assumptions regarding the Chicago market are based on an antiquated product model — inpatient admissions and a completely gerrymandered area. They've erased some hospitals just a couple of miles away, while ignoring that people travel across a region populated by 8 million people and 75 hospitals for care. The Chicago healthcare market is diverse, expansive and full of competition. ANHP has a combined 22 percent market share in the Chicago area.
After nearly 15 months and millions of documents handed over, we received a standard complaint from the FTC — a complaint that upholds the status quo and fails to take into account the healthcare environment in which we actually live. ANHP is pro-competition and pro-consumer, and by challenging its creation, we believe the FTC is putting the status quo ahead of what is in the best interests of consumers.
Q: You and Jim Skogsbergh, president and CEO of Advocate, will serve as co-CEOs for a period of time if the deal is finalized. What are the main benefits of the co-CEO arrangement?
MN: For the first two years after the merger is complete, having two CEOs at the helm for a defined period of time makes the most sense in terms of the work that will need to be done. Jim and I both know our organizations, and the marketplace, well. Bringing our collective institutional knowledge to the table will be important in ensuring a smooth transition from two systems to one.