A South Dakota-based hospital system is looking to enter the Chicago area — with its eye on at least one local player, according to reports.
Sanford Health, which has 45 hospitals and 289 clinics in nine states, is in talks to merge with a Chicago-area health system, its CEO told digital news organization SiouxFalls.Business earlier this week.
Shawn Neisteadt, a spokesman for Sanford, declined to comment Thursday.
But observers say it’s possible Sanford is looking to acquire west suburban hospital system Edward-Elmhurst Health. Sanford CEO Kelby Krabbenhoft described the system Sanford is in talks with as a $1 billion health care organization on the area’s “west side,” according to SiouxFalls.Business. Krabbenhoft said a Chicago-area merger is on track for a board vote before the end of the year.
Edward-Elmhurst, headquartered in Naperville, had revenue of $1.4 billion for the year ended June 30, according to an unaudited financial statement. Representatives for Rush, Sinai Health System and Loyola Medicine, which have hospitals on the city’s West Side or in the western suburbs, told the Tribune they are not in talks with Sanford.
Edward-Elmhurst has no “immediate plans” to partner with another organization but “we continue to look at options that might benefit our community and strengthen our health system,” said spokesman Keith Hartenberger, in a statement.
“It has always been and continues to be our position that we, like many health care providers, should evaluate strategic opportunities on an ongoing basis,” he said.
Edward-Elmhurst has three hospitals including Edward Hospital in Naperville, Elmhurst Hospital in Elmhurst and Linden Oaks Behavioral Health in Naperville. The system has had a fair share of challenges in recent years. In an accounting misstep, it overestimated by $92 million the revenue it expected to receive from insurance companies and patients for the fiscal year that ended June 30, 2017.
The system also laid off 84 employees last year as part of plans to cut $50 million after falling short of its budget for operating income.
The financial picture has recently started to improve. Edward-Elmhurst recently reported annual operating income of nearly $41 million, compared with a $15 million loss the previous year, according to unaudited financial statements.
Edward-Elmhurst’s recent financial struggles, coupled with increased competition from Northwestern Medicine’s recently acquired Centegra Health System hospitals in the northwest suburbs, may be making the system more open to a merger or acquisition, said Allan Baumgarten, an independent health care financial analyst.
Sanford is a fast-growing system. It has announced plans to acquire The Evangelical Lutheran Good Samaritan Society, a South Dakota-based provider of senior housing and services with more than 200 locations in 24 states, including Illinois.
“They have big ambitions and they have big pockets,” Baumgarten said of Sanford. “I think they still want more acquisitions and want their system to grow and want to have a presence in major metropolitan areas in the United States.”
Hospitals in the Chicago area and across the country have been merging in recent years as they face ongoing competition and financial pressure from insurers, government programs and unpaid medical bills, among other things.
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