Presence Health has agreed to be acquired in a deal that will make it part of Amita Health, expanding the system to 19 hospitals in the Chicago area.
No money will change hands in the deal that was announced Tuesday, though Ascension will take on Catholic hospital system Presence's liabilities, Presence President and CEO Michael Englehart said Tuesday. Presence has faced financial challenges in recent years.
If the deal goes through, Amita will have the most hospitals of any hospital system in the state. By comparison, Advocate Health Care has 11 hospitals and a two-campus children's hospital, and OSF HealthCare has 10 hospitals in Illinois and one in Michigan.
The deal could close by the end of this year or early next year, pending regulatory and church approval, said Amita President and CEO Mark Frey.
Amita is a joint operating company formed by Adventist Midwest Health and Ascension's Alexian Brothers Health System in 2015.
Amita has nine hospitals in the west and northwest suburbs. Presence has 12 hospitals stretching from Evanston to Urbana, though it recently announced plans to sell its Danville and Urbana hospitals to Peoria-based OSF HealthCare.
The systems don't plan to close any hospitals as a result of the proposed merger, Englehart said. Layoffs and/or job eliminations are possible, particularly when it comes to office functions, though the systems are unsure how many positions might be affected, Frey said.
Over time, the "Presence" name will disappear and be replaced with the "Amita" name, Englehart said. For example, the "Saint Francis" in Presence Saint Francis Hospital in Evanston will stay in place.
"The goal really here is to be able to serve our communities, increase access, make sure we're consistent with our mission to serve the poor," Frey said.
He said the acquisition is an opportunity to "really lower the cost of care by getting efficiencies, and redundancies out of both organizations."
"I don't see this as anything but a win for consumers," Frey said.
In recent years, Presence has worked on a financial turnaround. It returned to profitability during the first quarter of this year after reporting operating losses of about $40 million last year and $185 million for the year before.
Englehart said Presence is now on "much firmer footing than we were two years ago."
He said the deal with Ascension is less about Presence's finances and more about "how do we really strengthen Catholic health care, faith-based health care, and continue to live our mission."
The deal comes as hospital systems across the country consolidate in hopes, they say, of lowering costs and improving quality. The Federal Trade Commission, however, has challenged some of those proposed mergers over concerns they would raise prices.
Advocate Health Care and NorthShore University HealthSystem decided in March to walk away from plans to merge after a federal judge ruled in favor of the FTC, which had challenged the deal.
But Englehart said Presence and Amita are confident their proposed deal will help and not hurt consumers.
Mark Rust, a partner at law firm Barnes & Thornburg in Chicago, said he thinks it's unlikely the FTC will challenge the proposed tie-up between the systems.
Unlike in the Advocate-NorthShore case, Amita and Presence's hospitals are in different geographic locations, and a number of Presence's hospitals are in underserved areas without much competition, he said.
"If you look at the map where these hospitals are, you'll see it's pretty well spread out," Rust said. "There's not a huge concentration in any one area that would cause you to say they've really concentrated the market in one area."
Plus, Presence could likely make a case that a merger wasn't its first choice but necessary to address its financial issues, he said.
"I believe this will be a fairly easy one for the FTC ... that they will look at it as a good merger," Rust said.