Sherman Health announced Tuesday its intent to partner with Advocate Health Care and join the largest health system in Illinois. The details of the partnership are still being decided, with the formal transaction expected by next summer.
The Elgin hospital sought out potential partners in 2011, narrowing a field of more than a dozen hospital systems to two in July. Oak Brook-based Advocate Health Care was the final choice over Cadence Health, which formed in the March 2011 merger between Delnor Health System in Geneva and Central DuPage Health System in Winfield.
If all goes as planned, Sherman Health will become Advocate Sherman Hospital sometime between May and July of 2013.
Rick Jakle, chairman of the Sherman Health board of directors, said both Advocate and Cadence are strong systems from which the community would have benefited in a partnership. But he pointed to Advocate’s presence in the region and renown nationally as factors in choosing the larger hospital group.
“They’re just a stellar organization,” Jakle said. “And they’re quite accomplished at integration and facing the brave new world of health care.”
Advocate and Sherman also have similar IT platforms, allowing both parties to avoid major costs if they come together.
Scott Powder, senior vice president of strategy and growth at Advocate, said Sherman Health fits right into Advocate’s system with a similar commitment to serving the health and needs of the community.
“We’ve got a lot of compatibility culturally in terms of what we’re trying to do,” Powder said.
And Sherman Health, in Elgin, serves a market Advocate does not yet have a significant presence in. Its other Illinois hospitals are in Libertyville, Barrington, Park Ridge, Downers Grove, Chicago, Oak Lawn, Normal, Hazel Crest and Eureka.
“It really expands our geographic coverage and ability to provide new access points for the patients that we serve and will serve in the future,” Powder said.
The next several months will be spent in a “due diligence” phase of negotiations where the two parties will decide how the partnership will actually affect their organizations, plan for Sherman’s transition into the Advocate system and file legal paperwork for regulatory approval from the government.
How much money will be exchanged in the deal is still unclear, according to Powder, with tentative details still confidential.
Sherman’s 255-bed hospital near the intersection of Randall and Big Timber roads opened in December 2009 and was named the fifth most beautiful hospital in the country by Soliant Health the following year. Its construction significantly increased the hospital’s debt, but Jakle said Sherman has exceeded its budget expectations since opening the new building. He said the debt load had no bearing on the decision to seek out a partner.
“I think we could have stayed independent for many years — but to what end — when we could aggregate with someone like Advocate and use the strength of their experience, their marvelous structures and outcomes, to provide better patient care to our people?” Jakle said.
Sherman Health President and CEO Rick Floyd said the partnership will help Sherman adapt to changes spurred by national health care reform. He said stand-alone community hospitals are no longer positioned to be as effective in a world where doctors and hospitals must take more responsibility for outcomes and costs.
For Advocate, Powder called growth an important piece of the system’s strategy.
“In this challenging health care environment, we have lots of dialogue going on at any given time with different organizations about ways we can work together to improve quality and safety and reduce costs,” Powder said.
Advocate is a nonprofit, mission-based health system affiliated with the Evangelical Lutheran Church in America and the United Church of Christ. Sherman has been an independent community hospital since its founding in 1888.Copyright © 2013 Paddock Publications, Inc. All rights reserved.