Carle Health reaches deal with UnityPoint Health to take over 3 hospitals

After months of discussion, Carle Health has reached an agreement with UnityPoint health to take over three Illinois hospitals.

With the deal, Carle Health will become the parent organization of UnityPoint Health-Central Illinois, which includes Methodist, Proctor and Pekin Hospitals, along with their affiliated clinics. Carle, UnityPoint and UnityPoint Central Illinois disclosed late last year they had begun discussions of a possible deal involving those institutions.

The three organizations announced this week that they signed what they called a “strategic affiliation agreement.” Assuming regulators approve the deal, officials said they expect to close the transaction by April 1, 2023.

The systems said the deal would help expand healthcare services, including behavioral health and addiction services. Officials also said the partnership would lead to more specialty care options in Peoria and the central Illinois region.

• Read more: These proposed hospital mergers and acquisitions collapsed. Here’s why.

James C. Leonard, president and CEO of Carle Health, expressed enthusiasm for the deal.

“We are thrilled about this opportunity to engage with more individuals and families from our Central Illinois communities to help them achieve their best health,” Leonard said in a statement. “As we work to earn the status of trusted healthcare partner in the greater Peoria region, we will leverage best practices of both teams to enhance the patient experience and bring innovation and individualized care for years to come.”

The systems said the partnership will improve workforce development and strengthen efforts to recruit and retain doctors and other key healthcare workers. Officials also touted improved operational efficiencies in the partnership.

“This strategic partnership is an opportunity to improve the delivery of care for the people of central Illinois,” Clay Holderman, president and CEO of UnityPoint Health, said in a news release. “We look forward to collaborating with Carle Health on ways to advance our shared missions and create clear value for our teams, patients, and the community at large.”

Carle Health, based in Urbana, Ill., operates five hospitals with 806 beds, along with multi-specialty physician group practices with more than 1,000 doctors.

UnityPoint-Central Illinois manages three hospitals with 634 beds and 76 clinics. The system includes more than 850 multi-specialty physicians and nearly 5,000 employees. UnityPoint Health, which operates in Iowa, western Illinois, and southern Wisconsin, runs 20 regional hospitals and 19 community network hospitals. The system employs more than 32,000 people.

Until the deal is closed, patients will continue to see their providers and there are no changes in appointments or procedures, the systems said.

There have been fewer hospital mergers and acquisitions in the COVID-19 pandemic, but a few deals have emerged in the past few months. In September, Trinity Health completed the acquisition of MercyOne, which runs 16 medical centers in Iowa.

Analysts have predicted an uptick in hospital deals in the coming months due to strategic reasons, such as finding a partner to help in areas such as telehealth or outpatient services.

Some hospitals may also need to find partners to stay afloat as financial pressures mount, analysts say. Many hospitals have suffered substantial losses this year, and more than half are expected to finish the year in the red.

• Read more: Hospitals see 9th month of negative margins in ‘very difficult 2022’

The Federal Trade Commission has opposed several hospital mergers and acquisitions due to concerns of reduced competition, causing some health systems to abandon the planned deals. At the behest of President Biden, the FTC has applied more scrutiny to hospital deals, especially proposed mergers and acquisitions involving systems in competing markets.

Federal regulators raised objections to SUNY Upstate Medical University’s planned acquisition of Crouse Health System in Syracuse, N.Y. The FTC objected to a bid for a New York state certificate which regulators said would shield the merger from antitrust laws. But in addition to raising problems with the process, the FTC said it feels the deal would lead to higher healthcare costs and reduced quality for consumers.

Atrium Health and Advocate Aurora Health announced plans to merge earlier this year, and analysts say if that deal is improved, it could spur other hospital consolidations.

The two systems operate in different markets, which could alleviate some concerns from regulators. Advocate Aurora, with corporate offices in Downers Grove, Ill., and Milwaukee, Wisc., operates in Illinois and Wisconsin. Atrium, based in Charlotte, N.C., runs hospitals and care sites in North Carolina, South Carolina, Georgia and Alabama.