Advocate Aurora Health, Atrium Health to Create Joint Health System

Advocate Aurora Health and Atrium Health have announced plans to merge into a joint health system and combine their clinical knowledge to provide care and improve health equity for patients across six states.

“The world of healthcare as we know it is changing at warp speed – and it is rapidly becoming more digital, personalized, scientific, and complex,” Eugene A. Woods, president and chief executive officer (CEO) of Atrium Health, said in the press release. “This strategic combination will enable us to deepen our commitments to health equity, create more jobs and opportunities for our teammates and communities, launch new, game-changing innovations, and so much more.”

Advocate Aurora Health employs 75,000 staff members and serves nearly 3 million patients each year in Illinois and Wisconsin across over 500 care sites. Charlotte, North Carolina-based Atrium Health operates 40 hospitals and more than 500 care sites in North Carolina, Georgia, and Alabama.

The nonprofit integrated health systems plan to leverage their shared data analytics and digital consumer infrastructure capabilities to improve six areas of healthcare: clinical pre-eminence and safety, health equity, affordability, next-generation workforce, learning and discovery, and environmental sustainability.

The merger agreement includes a $2 billion pledge to disrupt the root causes of health inequities in rural and urban underserved communities. In addition, the health systems have committed to creating more than 20,000 new jobs and achieving carbon neutrality by 2030.

Following the proposed merger, the joint operating company will be called Advocate Health. The Advocate Health and Atrium Health brands will continue to be used in their respective local markets and no assets will be transferred, the announcement noted.

The new organization will serve 5.5 million patients and operate over 1,000 care sites and 67 hospitals throughout Illinois, Wisconsin, North Carolina, South Carolina, Georgia, and Alabama. The merged entity will employ more than 7,600 physicians and 150,000 additional staff, generating a combined revenue of more than $27 billion, according to the press release.

The health system said it will provide nearly $5 billion in annual community benefits to its patient population, including charity care and other uncompensated care.

In addition, the merged entity will provide managed care for 2.2 million individuals through 15 accountable care organizations (ACOs,) four clinically integrated networks, and nearly 60 value-based contracts.

The organization’s headquarters will be in Charlotte, but the parties said they plan to maintain a presence in Illinois and Wisconsin and will open a new institute for health equity in Milwaukee. North Carolina-based Wake Forest University School of Medicine will become the academic core of the combined health system, the press release said.

According to the proposed transaction, neither Advocate Aurora Health nor Atrium Health has agreed to assume any liability for the other organization’s debt. Any refinancing would be dependent on market conditions and management considerations.

The board of directors of Advocate Aurora Health and Atrium Health approved the merger agreement, which is subject to regulatory review.

“We’ve long admired Atrium Health’s nationally recognized clinical excellence and commitment to health equity,” Michele Richardson, chair of Advocate Aurora Health’s board of directors, said in the press release. “Given our combined reach, coupled with our talented physicians, nurses, and staff, we are uniquely positioned to lead healthcare’s transformation and create a platform for innovation.”

A board of directors with members from both entities will manage the new organization. Woods and Jim Skogsbergh, president and CEO of Advocate Aurora Health, will serve as co-CEOs for the first 18 months. Following the 18 months, Skogsbergh will retire, with Woods becoming the sole CEO.

Like all healthcare mergers, the Department of Justice (DOJ) and Federal Trade Commission (FTC) will review the transaction to ensure that it will not hurt market competition or increase healthcare costs.

Recently, hospital groups like the American Hospital Association (AHA) and the Federation of American Hospitals (FAH) have urged the antitrust agencies to consider the quality of care improvements resulting from hospital mergers.