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U. of C. Medicine finalizes merger with Ingalls, looking for more hospitals

University of Chicago Medicine has officially scooped up its first community hospital, finalizing a merger expected to expand the academic medical center's reach and improve the outlook for a smaller south suburban health system.

U. of C. Medicine announced Tuesday that it has gained all the necessary regulatory and institutional approvals to finalize its merger with Ingalls Health System, which runs a community hospital in Harvey. No money was exchanged under the terms of the deal.

The merger might be just the beginning of a larger quest by U. of C. Medicine to expand into community hospitals.

Kenneth Polonsky, U. of C. Medicine executive vice president for medical affairs, confirmed to the Tribune the health system is in talks with other community hospitals about potential partnerships, though he declined to say which ones.

In Chicago and across the country, health care providers are consolidating to reduce costs, offer more services and, some say, to boost their bargaining power with insurers.

This latest merger will allow the academic medical center to serve a wider geographic area, Polonsky said. U. of C. Medicine also can learn much by partnering with a community hospital, he said.

"We can programmatically learn a lot from having a hospital like this," Polonsky said. "It gives us an opportunity for our physicians to partner with community physicians."

Meanwhile, Ingalls hopes to get a lift by being part of the highly esteemed U. of C. Medicine system. Historically, it's been challenging for Ingalls to compete with other hospitals for doctors, said Kurt Johnson, Ingalls Health System president and CEO.

"With their reputation and clinical stature, I'll be in a much stronger position to recruit stronger, better-trained physicians, all of which benefits our community," said Johnson, who will remain president and CEO at Ingalls.

U. of C. Medicine expects to hire a "significant" number of additional physicians who will be based primarily at Ingalls, as well as add additional services there, Polonsky said. Ingalls has about 450 physicians in 30 medical and surgical specialties and 473 beds. The University of Chicago Medical Center has about 850 physicians, more than 1,100 residents and fellows and 805 licensed beds.

Ingalls had revenue of $298 million, and a surplus of $16 million in 2013, according to the most recent federal tax filings available. U. of C. Medical Center had revenue of $1.5 billion in 2013 and a surplus of nearly $115 million.

Johnson said the merger also will help Ingalls provide higher levels of cancer care in the south suburbs, or refer patients to U. of C. Medicine's Hyde Park campus.

Polonsky said he expects the integration between the two systems to be complete within a year to 18 months. Ingalls will keep a local board and be represented on the U. of C. Medical Center board.

The integrated system includes Ingalls' five outpatient centers, U. of C. Medicine's Hyde Park medical campus and planned ambulatory facilities in Orland Park and the South Loop.

lschencker@chicagotribune.com

Twitter @lschencker

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