Rich Bajner via Modern Healthcare
Regulators cleared the merger between Advocate Health Care and Aurora Health Care, paving the way for a 27-hospital system spanning Illinois to Wisconsin with $10.7 billion in combined revenue, the organizations announced Thursday.
The Federal Trade Commission and the chair of the Illinois Health Facilities & Services Review Board signed off on the proposed deal in February. The merger, which would unite comparably sized systems to form the country's 10th largest not-for-profit hospital system, got the nod from Wisconsin regulators Thursday.
While executives claim that scale is needed to thrive in the current healthcare landscape, running a far-flung organization can offset some of those gains. As a result, some systems are keeping their scope of expansion more regional, which will help them cope with waning inpatient volume and government reimbursement paired with rising labor, technology and compliance costs.
Scale will help them negotiate better rates with suppliers and payers and expand patient access through boosting investment in outpatient facilities and telemedicine. Crunching data on regional populations can also reveal the most profitable service lines, clinical quality performance, their current position with payers and the strength of their physician network.
"This circular loop of cutting costs isn't enough to keep up with inflation trends," Rich Bajner, a managing partner at Navigant, told Modern Healthcare when the Advocate-Aurora deal was announced in December. "A lot of organizations are thinking through a service-line approach, connecting the dots with caregivers in a local market. It provides a certain clarity around managing cost and growth."