HealthLeaders-InterStudy, a leading provider of managed care market intelligence, reports that the Chicago metropolitan statistical area (MSA) is moving toward hospital consolidation in response to the national credit crunch and health systems' focus on merger opportunities. Despite recent multibillion-dollar hospital construction activity, reduced access to capital may mean acquisitions will provide the best opportunity for hospital expansion, according to the latest Chicago Market Overview.
According to the report, consolidation will likely occur around the market's major academic medical centers, which will provide smaller hospitals with access to updated technology, including electronic medical records.
"In recent years, Chicago has been one of the country's most active healthcare markets where many local hospitals have renovated extensively or built new facilities in the outlying areas," said Mark Cherry, analyst with HealthLeaders-InterStudy and author of the report. "With reduced access to capital for such construction projects, we are seeing more acquisition activity. Chicago's North Shore area is a good example of this trend, where multiple acquisition deals have been made or are in progress."
Advocate Health Care, which is the only area health system to occupy hospitals throughout the Chicago region, is expected to complete its acquisition of Lake County's Condell Medical Center later this year. Additionally, in May 2008, Rush North Shore Medical Center agreed to be purchased by Evanston Northwestern.
"As Chicago's hospitals increasing align, they will likely have a greater influence with area insurers," noted Cherry. "Because of its merger with Advocate Health Care, Condell Medical Center is again part of the Blue Cross and Blue Shield of Illinois network, after being dropped from the network in November 2007."
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