Amid the rapidly changing health care landscape that demands large amounts of cash to provide consumers with the latest bells and whistles, Loyola University Chicago said Friday afternoon that it will get out of the hospital business by selling its medical center complex to a large national Catholic hospital operator.
The market is demanding more from hospital operators to stay competitive. By merging, hospitals can pool capital to buy new computer systems, electronic record-keeping systems and the latest medical technology something that Loyola executives say will be easier as part of a larger entity.
By selling to Michigan-based Trinity Health, Loyola University Health System, the parent of Loyola University Medical Center in west suburban Maywood and a network of health facilities, the university will no longer be the holding company. But the Jesuits who ran the operation for decades will remain involved.
The medical center will also retain its name and be considered a teaching hospital, training residents, fellows and nurses from the medical and nursing schools that will remain owned and operated by Loyola University Chicago on the sprawling 61 acre campus.
Under the proposed arrangement, Loyola Health will remain sponsored by Roman Catholic operators of hospitals and Loyola faculty will continue to provide medical care to patients and research.
Trinity Health, based in Novi, Mich., was founded by two orders of Catholic nuns and owns or manages 46 hospitals in nine states with more than $7 billion in annual revenue and more than $3 billion in cash and investments.
“We are going to be getting scale while we contribute skill,” Rev. Michael Garanzini, Loyola University Chicago president, said in an interview with the Tribune.
The university’s exit from clinical care also puts its children’s facility and the Gottlieb Memorial Hospital in Melrose Park under the Trinity Health, which will have its first access to a teaching and research enterprise in Loyola’s doctors and medical center. Loyola University Chicago will continue to operate its educational and research enterprises such as the medical school, nursing school and a proposed new medical research facility that will be created from proceeds of the Trinity deal.
Financial terms were not disclosed but Garanzini said the consolidation would call for “substantial investments” to advance health sciences and medical research. In the next three years, for example, Trinity will contribute $75 million to a new $150 million medical research center. “There is no way that could happen this quickly” without Trinity’s investment, Garanzini said.
The deal has been in the works for some time. A letter of intent signed this week by the university begins a process that will include drafting a definitive agreement and state and federal regulatory approvals.
Others in Chicago also will be invited to merge into the system, including Mokena-based Provena Health and Chicago-based Resurrection Health Care, which are working on a proposal to merge their dozen community hospitals.
“We have a Chicago vision that would go with this,” said Joseph Swedish, president and chief executive of Trinity Health. “It is natural to look at the landscape and try to engage Catholic providers in the marketplace.”
Like an increasing number of independent community hospitals and smaller providers of medical care across the country, academic medical centers have been hurt financially as patients have had trouble paying medical bills, a byproduct of job losses and other economic woes. So, such hospitals are turning to partnerships aimed at creating economies of scale and looking for ways to create a more streamlined patient experience.
Though Loyola health system has dramatically improved its cash position in recent years to nearly $250 million as of the end of January, that is still several times less than its Chicago area rivals such as Advocate Health Care, which has more than $2 billion in cash and Northwestern Memorial Hospital, which has more than $1 billion and has built two new hospitals in the last 15 years.
The new buildings, which can cost hundreds of millions of dollars, are needed because the health law requires hospitals to operate more efficiently. As one example, hospitals that have high rates of readmissions for patients insured by Medicare might have their government payments reduced.
“The health-care industry is going through accelerated change across the country, and so we believe that now is the right time for (Loyola University Chicago) and Trinity Health to seize the opportunity to strengthen Catholic health care,” Swedish added.
Hospitals are expected to see an influx of business between now and 2014, when more than 30 million uninsured patients will gain access to subsidies to pay for their medical care under the health overhaul law.
Amid the economic downturn, Loyola’s health system has already cut scores of jobs and “taken $100 million out of (its) cost structure,” Loyola health system CEO Dr. Paul Whelton said.
The health system has about 6,800 employees and Whelton was not ruling out additional job cuts but he said the plan is to expand its in the Chicago area. “We are in growth mode,” Whelton said.
bjapsen@tribune.com
That’s BHO’s plan: Consolidate the healthcare field: Fewer choices for the consumer, easier for HHS to regulate.
As a proud Loyola alum I am sorry to hear this news. Catholic hospitals have strong, proud and rich history. This will not be the first disposition. Another industry government believes it can run better. Some day going to the hospital is going to be like taking the “L.”
Thank you, Barry!
At least Loyola did not sell out to a for-profit like Vanguard. I would not go near any of the hospitals that Vanguard took over in the Chicago area.
Had my kidney transplant there almost 10 years ago. What a shame that this is happening. Loyola will never be the same.
thank you obamacare
Hopefully a large bank won’t take it over. If one did, they would probably release every patient out onto the street in order to clear room for brand new clients they can start with. And then add more fees.
Sorry, but health care industry (and it it is a business) is not immune to the same economic forces of consolidation and efficiences that other businesses face. Blaming the government is a short-sighted excuse.
I don’t see how any of this is related to Pres. Obama or the push for affordable healthcare options. Sorry trolls, but the executive branch has no power over the Jesuits or the Catholic church.
Want a scapegoat? The way I see it, you have three options.
Either blame the pope, blame the healthcare industry, or blindly blame at another uninvolved public figure. Me? I’m going to blame Lyndon LaRouche. Why? I do this entirely at random, but with the confidence that my decision is more apt than blaming an ineffectual, weakling of a president.
(Spoken by a democrat & former surgial patient at Loyola)
Tip of the iceberg and a portent of the disasters to come under Obamacare. More doctors will cease taking patients with Medicare or Medicaid. More hospitals will close because of their being forced to take patients under those programs which provide only a fraction of payment or, as in Illinois, almost none at all. The result? The government will be left to operate hospitals. Welcome to Cuba…or Stroger Cook County Hospital for everyone.
.
Good time to bail with
“Obama care nightmare”
creeping ever closer.
“Free healthcare but you
die in the waiting room.”
.
I am so sorry to hear this. LUHS has always been my choice for hospital and physician care. As a former employee, I was always proud to say that I worked with this health system. Hopefully the new owners will continue the Loyola tradition of putting the patient first but still watching the bottom line to ensure survival of the health system. I always hope that the current physicians and nurses will choose to stay through the changes. We need these dedicated physicians and nurses to teach the medical students how care should be provided.
I think the point Jeff and Tom should be making is that transferring hospitals like Loyola from academia into direct ownership of a religious organization that is efficient at running them may be the patient’s best hope of keeping their health decisions between them and their doctor, and leaving the government (or government-controlled insurance companies) out of it.
Expect more consolidation in the Chicago metro market. It is almost impossible to compete effectively against the cash flush Advocate, Northwestern’s and CDH’s in the market. Obama’s Health Reform will force these community hospitals to consolidate because they do not possess the leadership or strategy to innovate….and only the strong will survive…
What’s the big deal? It sounds like all the physicians will still be there. The medical school will still be there. The Jesuits will still be involved. This is reality today in the medical business.
Maybe it will be better for the medical system employees because I know they had to pay really high premiums on their medical insurance, even if they chose Loyola. I mean really high, folks.
I see the usual idiots have found a way to blame Obama. Hosppitals were getting expensive and consolidating long before any of you morons ever heard of Obama.
It sounds to me like all that is changing is the ownership. It says in the article that the name will stay the same, the faculty will stay the same, the Jesuits will still run it. So why is Pres. Obama to blame?
What does all of this come down to? Will the name of the hospital change? Will it still be a teaching hospital? I wonder how much of things the new owner will change? Can’t wait to hear more news about this. Can’t wait to also ask my physician there what she thinks will happen.
Frances, are you waiting to ‘hear’ new about it or do you plan on reading about it. If you READ the above article, it clearly states that it will not change the name and it will remain a teaching hospital and Loyola Med Students will still go there.
Matter of fact, did any of these Obama-bashers READ this?!? This has NOTHING to do with government health plans! The only thing changing about the hospital is the name and the financial control. Good grief!
“The medical center will also retain its name and be considered a teaching hospital, training residents, fellows and nurses from the medical and nursing schools that will remain owned and operated by Loyola University Chicago on the sprawling 61 acre campus.”
…and for the Obama-bashers:
“Though Loyola health system has dramatically improved its cash position in recent YEARS to nearly $250 million as of the end of January, that is still several times less than its Chicago area rivals such as Advocate Health Care, which has more than $2 billion in cash and Northwestern Memorial Hospital, which has more than $1 billion and has built two new hospitals in the last 15 YEARS.”
How does ‘Obama-care’ have anything to do with the last FIFTEEN YEARS?!? Get a grip people…
This is the plan. Make it impossible to operate and then the government will be “forced” to step in. In the mean time, the media will write stories that point out that the CEOs are bing paid and that they are greedy – further increasing resentments. This is what they have been doing to the inner cities for 50 years. As we can see, what happens is things get worse.
Read up on the liberal Cloward-Piven strategy.
Hopefully, Trinity will seriously evaluate the very top heavy administrative staff that was instrumental in some very poor cost saving measures at Loyola. This medical center has been in financial trouble for years largely in part due to a number of its administrators and managers.
To those writers who state that Loyala hospital is going through this process due to the recent healthcare law……have you’ve been living under a rock? They are going through this process because of several large hospital chains that exist in the Chicagoland region, i.e. Advocate Hospitals have 13 hospitals in the Chicagoland region alone and this area with several teaching hospitals is a very competive market. Getting bigger allows them make bulk purchases more advantage to them and enlarge their access pool of medical specialists. So please….get real.
ANY healthcare story in the Tribune, the “Obamacare bashers” are at the ready to spin their crap about how “Obamacare” is at fault.
Go back to drinking your tea!
Hey you Lib morons, this is why we are bashing Obamacare… it says IN THE ARTICLE why these changes are necessary and it is BECAUSE OF OBAMACARE!!!! Seriously, you people don’t even read the words in front of you when your savior is in office
READ WITH ME NOW:
“Hospitals are expected to see an influx of business between now and 2014, when more than 30 million uninsured patients will gain access to subsidies to pay for their medical care under the health overhaul law.”
Thanks to Obamacare-
What a shame that they didn’t make more of an effort to find someone who would run it as a proper medical center instead of as a Catholic medical center. It’s unfortunate how many hospitals in the area and in the USA still refuse to provide basic medical care to woman due to their being run under Catholic guidelines.
Say what you want about any changes in healthcare, but “Amid the rapidly changing health care landscape that demands large amounts of cash to provide consumers with the latest bells and whistles” reminds me of ads promoting a hospital for its wi-fi and computer links. And I guess when someone else can get “gold standard” care, such as single rooms, everyone thinks they deserve the same.
So which union do we bust now ~ all those greedy and lazy sick people who only want the best benes and are driving the whole US into bankruptcy?
I just love reading about the political slant in these remarks. The whole idea behind public health care was to help those without insurance. Kind of like the Christian creed to help those less fortunate. Or is that just political rhetoric, too?
It sounds like the typical merger & acquisition that happens everyday in the business sector, whether it’s Chase taking over BankOne, Macy’s gobbling up Marshall Field’s, or Southwest taking over AirTran…Like it nor not, Healthcare is a unique field, but it is a business. LUHS is smart to sell it’s hospital assets to Trinity Health. Loyola simply does not have the leverage to negotiate contracts with big HMOs, computerize and modernize all its hospitals, enhance its efficiency and and quality of care, and provide affordable health benefits to its thousands of employees. Goodbye Loyola, Hello Trinity Health!!!
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The comments boggle the mind. A few years ago there was serious mismanagement in the entire university. There was even a no confidence vote from the staff. The crisis could have started then, but it sure is a stretch to blame it on the new health care options (and there are options). Change happens. My Mom was once a patient at the Passavant pavilion at Northwestern. Such a luxurious place with such good care. A few years ago it was torn down. Old buildings do not support new technology. That has zero to do with “Obamacare.” We need to accept reality and stop looking for scapegoats when things change.
THIS SHOULDN’T BE UNEXPECTED. LOYOLA HOSPITAL HAS BEEN MISMANAGED FOR YEARS. IT IS AN ORGANIZATION IN WHICH MANAGEMENT HAS GROWN FAT AROUND THE MIDDLE. THEIR LACK OF VISION IN HEALTH CARE MANAGEMENT HAS REDUCED THEIR PATIENT POPULATION TO MAINLY THE SURROUNDING NIEGHBORHOODS OF MAYWOOD, BELLWOOD, MELROSE PARK, CICERO, HILLSIDE AND WESTCHESTER. INSIDE, THE DEPARTMENTS ARE BLOATED WITH TOO MANY SUPEVISORS AND NOT ENOUGH STAFF. ALL THE KINGS HORSES AND ALL THE KINGS MEN, COULDN’T PUT PUT THIS HUMPTY DUMPTY TOGETHER AGAIN
Former doc there. While they have been on the down side for years strugging with bloat this will be helpful. They need to make the tough decisions and haven’t been willing to. I wouldn’t send my family there as much better choices in Shytown. Also, catholic hospital hates women.
Good luck, it’s going to be an enormous task and will need everyone’s support to manage the changes during the journey from Loyola to Trinity.