Nine Illinois hospitals to be sold

Prime Healthcare has announced the biggest acquisition in its history, just as Ascension continues to slim down.

Prime has reached a deal to buy Ascension Illinois, which includes the health system’s nine hospitals in the state. The organizations announced the deal Thursday.

Under the deal, Prime would also acquire Ascension’s physician practices, post-acute care facilities and senior living facilities in Illinois.

Several of the hospitals are in and around Chicago, and Prime noted that the system is moving into the nation’s third largest market with the acquisition, its largest ever. Prime also has facilities in the New York and Los Angeles areas.

The systems said they hope to complete the deal in the first quarter of 2025. Regulators still must approve the transaction.

As part of the deal, Prime Healthcare has pledged to invest $250 million to upgrade the facilities and improve technology in the properties.

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Prime Healthcare touts its abilities to turn around hospitals that have been experiencing financial difficulties. Ascension said it chose to sell to Prime after an extensive review and analysis to determine they had compatible values.

Sunny Bhatia, MD, president and chief medical officer of Prime Healthcare, said he’s excited about the acquisition of Ascension’s Illinois hospitals and properties.

“Like Ascension, Prime Healthcare has a strong tradition of ensuring health equity and social responsibility,” Bhatia said in a statement. “This transaction will enable a continuation of this tradition and expand our dedication to compassionate care, clinical excellence, and service to patients and the greater Chicago community.”

Under the deal, Prime Healthcare would acquire these Ascension Illinois hospitals: Ascension Holy Family (Des Plaines); Ascension Mercy (Aurora); Ascension Resurrection (Chicago); Ascension Saint Francis (Evanston); Ascension Saint Joseph (Joliet); Ascension Saint Joseph (Elgin); Ascension Saint Mary (Kankakee); and Ascension Saint Mary and Saint Elizabeth (Chicago).

Polly Davenport, president and CEO of Ascension Illinois, said the deal will ensure “that the greater Chicago area has sustainable, quality healthcare access long into the future.”

“We are confident that Prime will continue its record of excellence and look forward to working in partnership through the sale close process,” Davenport said in a statement.

A for-profit health system based in Ontario, California, Prime Healthcare operates 44 hospitals and more than 300 outpatient locations in 14 states.

Ascension, a non-profit Catholic system based in St. Louis, operates 140 hospitals around the country. But Ascension has been striking deals to sell some of its hospital as the system has been looking to reduce costs and improve its finances.

In June, Ascension announced a deal to sell five of its hospitals in Alabama to the University of Alabama Health System in a $450 million deal.

Ascension also announced a deal in the spring to sell three hospitals to MyMichigan Health.

Last year, Ascension agreed to transfer Our Lady of Lourdes Memorial Hospital in Binghamton, N.Y., along with its physician practices, to the Guthrie Clinic of Sayre, Pa.

Ascension reported a $3 billion loss in the 2023 fiscal year, which came after a $900 million loss in 2022. Fitch Ratings gave the system a negative rating outlook in September 2023.

But Ascension has shown improvement in the 2024 fiscal year. For the 9-month period that ended March 31, Ascension reported $15 million in recurring operations, compared to a $1.1 billion loss in the same period of the previous year.

Prime’s deal to acquire Ascension’s hospitals comes as some for-profit hospital systems have slowed down their purchases of other facilities.

In the second quarter of 2024, none of the announced hospital mergers or acquisitions involved a for-profit system purchasing a hospital, according to Kaufman Hall, a healthcare consulting firm. Anu Singh, managing director at Kaufman Hall, told Chief Healthcare Executive® that it may not necessarily reflect a trend, but said it is still “an important data point.”

Hospital analysts see the potential for more hospital deals in the coming months, especially as some struggling hospitals look for partners. In the first half of 2024, there were 31 announced deals, just slightly off the pace of the number of transactions in 2023.