“We wanted to give the applicant every opportunity, without re-applying, paying a new fee, and all the time it would take,” Knery said.
While the next scheduled board meeting won’t take place until December 13, Knery said the board is considering options for getting more information from Advocate and approving exceptions related to the change of ownership.
He said they wanted to see if reconvening the board was “absolutely necessary”.
PREVIOUSLY: The Illinois Medical Institutions and Services Board of Supervisors denied a change of ownership request that would have allowed Advocate Aurora Health and Atrium Health merge..
Advocate Aurora and Atrium aimed to complete the ownership change by September 30th. But a motion to change ownership failed today in a 3–2 vote.
Board members said they were not provided with sufficient details about the new venture’s operational matters and controlling interests, the board said at a hearing today.
The ruling calls into question the timing of the Advocate merger, as the next scheduled meeting of the regulatory board will take place on 13 December.
The law requiring healthcare systems to apply for a change of ownership states that “the council must approve this. But it doesn’t seem like there is a mechanism for what will happen if they don’t approve it,” Juan Morado Jr. said. partner at Benesch law firm.
State law dictates that the board “shall establish by regulation the procedures and requirements for issuing exemptions. The exception must be approved when the information required by the Rules Board is submitted.”
The change of ownership is entitled to an exemption, not a permit, the law says.
Morado said he was previously the board’s general counsel.
In a no vote, board member Dr Sanda Martell said she had “serious concerns” that the board had enough information “to ensure an orderly transfer” of ownership.
She said that there are limits, but they are not fully thought out.
Advocate Aurora COO Bill Santulli told the board that healthcare systems will work to get more information about operations and controls after the merger.
Santulli told the regulatory board that if the new collaborative healthcare system wants to add a hospital in Illinois, the local board must first approve it. But, ultimately, such a move had to be approved by the organization’s board of directors in full.
He noted that 50% of the board of the new organization will consist of Advocate Aurora.
Advocate Aurora and Atrium Health first announced their intention to merge in May, a plan that includes the name of the combined company, Advocate Health. Advocate Aurora CEO Jim Skogsberg and Atrium CEO Eugene Woods will serve as co-CEO for the first 18 months, after which Skogsberg will eventually retire, after which Woods, based in Charlotte, will become sole CEO.
Lawyer Aurora previously told Crane she expected the merger with Atrium to save between $100 million and $300 million a year by 2027. A lawyer for Aurora said at the time that it could cut operating costs through group purchasing of medical and pharmacy products and bundling consumer-facing digital infrastructure.
Ahead of today’s State Council decision, industry experts expressed concern with the merger, stating that the combined Advocate Aurora and Atrium may have too much bargaining power in negotiations with insurers and multi-state employers. Payers in both Illinois and North Carolina are dominated by Blue Cross and Blue Shield health plans.
Download the Modern Healthcare app to keep up to date with industry news.
Aurora’s lawyer’s bargaining power has already been questioned in lawsuit filed earlier this year by a Wisconsin self-insurance pharmacy alleging that Advocate Aurora uses its size to negotiate all-or-nothing contracts.
Advocate Aurora reported $14 billion in 2021 revenue and operates 27 hospitals and more than 500 care facilities. With $13 billion in 2021 revenue, Atrium Health operates 40 hospitals and more than 500 healthcare facilities in North Carolina, South Carolina, Georgia and Alabama.