Northwest Community Healthcare inks merger deal with NorthShore

  • Northwest Community Healthcare in Arlington Heights has signed a merger agreement with Evanston-based NorthShore University HealthSystem, which if approved by regulators, would end the former's independent status after 61 years.

      Northwest Community Healthcare in Arlington Heights has signed a merger agreement with Evanston-based NorthShore University HealthSystem, which if approved by regulators, would end the former's independent status after 61 years. Joe Lewnard | Staff Photographer

  • Steve Scogna, CEO of Northwest Community Healthcare in Arlington Heights, pursued merger talks even after initially putting them on hold when he first took the helm in 2013. "This new model in this marketplace we feel fits that whole (community-based) mission and our whole purpose better," Scogna said of a proposed partnership with NorthShore University HealthSystem.

    Steve Scogna, CEO of Northwest Community Healthcare in Arlington Heights, pursued merger talks even after initially putting them on hold when he first took the helm in 2013. "This new model in this marketplace we feel fits that whole (community-based) mission and our whole purpose better," Scogna said of a proposed partnership with NorthShore University HealthSystem. Daily Herald File Photo, 2014

 
 
Updated 7/8/2020 6:40 PM

Long rumored, Arlington Heights-based Northwest Community Healthcare on Wednesday announced it has inked a merger agreement that will end its independent status after 61 years.

One of the few remaining independents in the suburbs, Northwest Community is merging with Evanston-based NorthShore University HealthSystem, which operates Evanston, Glenbrook, Highland Park, Skokie and Swedish hospitals, having acquired the last earlier this year.

                                                                                                                                                                                                                       
 

Each hospital system's board of directors is set to approve the deal this week before it goes before state and federal regulators for their review and approval. Officials hope to close on the transaction by the end of the year. Terms were not disclosed.

The deal follows an 18-month strategic assessment by Northwest Community's board and years of informal discussions between CEO Steve Scogna and NorthShore President and CEO J.P. Gallagher.

Merger talks have swirled around the Arlington Heights hospital for years, amid a local and national trend aimed at cutting costs, increasing buying power, attracting more patients and expanding physician networks.

Northwest Community last publicly called off a merger hunt in April 2013, shortly after Scogna took the helm.

"I don't know that it was a point of pride on independence so much as believing independence was the way from an organizational perspective we could best serve the mission of the organization to take care of the community," Scogna told the Daily Herald. "Most of the models that were out there didn't really seem to have that kind of focus."

by signing up you agree to our terms of service
                                                                                                                                                                                                                       
 

But through ensuing talks with Gallagher and NorthShore brass, Scogna said it became apparent their philosophies on community-based health care aligned.

"This new model in this marketplace we feel fits that whole mission and our whole purpose better," Scogna said.

He said the merger doesn't have anything to do with Northwest Community's finances or the effect of COVID-19 on the bottom line. In fact, last week Standard & Poor's reaffirmed the hospital's A rating and its stable outlook, he said.

Together, the larger hospital network will have six hospitals, nearly 200 outpatient locations and some 17,000 employees.

Scogna said patients will have access to greater and different levels of specialty services than they have today. Behind the scenes, Northwest Community will be able to tap into NorthShore's research and data analytics.

Allan Baumgarten, a Minneapolis-based hospital industry analyst, said what likely appealed to NorthShore was Northwest Community's location, allowing the Evanston-based company to expand its footprint west, in addition to a "favorable payer mix" with a number of patients covered by employer-sponsored insurance in the Northwest suburbs.

                                                                                                                                                                                                                       
 

But Northwest Community's outpatient assets -- 23 doctor's offices, five immediate care centers, seven physical rehabilitation sites and 13 labs -- may be just as important as the 509-bed Arlington Heights hospital itself, Baumgarten said.

"To the extent they can extend their geography, pick up some new and attractive outpatient centers who will feed the more demanding cases into NorthShore inpatient facilities, I think that may have been a significant part of the appeal," Baumgarten said.

As the coronavirus was ramping up in April, NorthShore centralized treatment of those cases at Glenbrook. There aren't plans to send Northwest Community COVID-19 patients there, a spokeswoman said.

Scogna will remain at the helm of Northwest Community and its board will continue to provide oversight, while having a seat at the table of the NorthShore board.

Northwest Community's brand and logo also will remain intact on the face of its facilities, with some new tie-in to the NorthShore system, Scogna said.

"We really want to make sure that this community knows the 60 years that they've invested in is certainly going to be continuing on and we're very proud of that brand."

Arlington Heights Mayor Tom Hayes said he's been in touch with Scogna, who assured him the transition would be seamless and not diminish the services the hospital provides.

"It's very exciting news for them and everyone affiliated with the hospital," said Hayes, who noted the institution's longtime presence in the community. "They of course are looking for ways to continue to provide high-quality care and treatment for the Arlington Heights community and other communities they serve. I'm sure it's in the best interest of all of their customers and patients."

The Illinois Health Facilities and Services Review Board and Federal Trade Commission are expected to consider the proposed merger in the coming months.

0 Comments
                                                                                                                                                                                                                       
 
Article Comments ()
Guidelines: Keep it civil and on topic; no profanity, vulgarity, slurs or personal attacks. People who harass others or joke about tragedies will be blocked. If a comment violates these standards or our terms of service, click the X in the upper right corner of the comment box. To find our more, read our FAQ.