ROCKFORD — Rockford Health System will try for the third time in five years to combine with a neighboring health care organization to expand services and shore up its future during still-uncertain economic times.
RHS on Wednesday announced its plans to research a potential deal with Cadence Health. Cadence formed in 2011 from a merger of Central DuPage Health System in Winfield and Delnor Community Health System in Geneva.
Together, RHS and Cadence would offer services at more than 40 locations, including Central DuPage, Delnor, Rockford Memorial and Van Matre HealthSouth Rehabilitation hospitals.
Leaders of both health systems said they hope to wrap up the research process by February and finalize the deal — which is subject to state and federal approval — later next year.
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RHS President and CEO Gary Kaatz said talks started about a year ago. Last spring, RHS and OSF HealthCare called off talks to join together after the Federal Trade Commission challenged the deal.
Kaatz said health system board members revisited the idea of collaboration last November and worked with a Chicago consulting firm to blindly test the market with requests for proposals.
There was more interest in a potential deal than officials expected, and Kaatz said they narrowed down their choices to nine players and brought them in for half-day presentations.
Two weeks ago, board members approved moving forward with Cadence.
“We think they’re outstanding,” Kaatz said of Cadence. “Our cultures are similar. They are like us in that they’re very performance-focused, and they have one of the strongest balance sheets in the state.”
Rockford Memorial Hospital’s combined outpatient and inpatient revenue was $314.1 million in 2012, according to the Illinois Department of Public Health’s 2012 hospital profiles. Central DuPage Hospital brought in $733.2 million, and Delnor Hospital generated $194.1 million.
Cadence also has affiliations with Ann & Robert H. Lurie Children’s Hospital in Chicago for pediatric specialty care, and Cleveland Clinic for cardiac surgery, adult medical oncology and cardiology services.
Kaatz also cited their well-trained medical staff, community outreach efforts and specialty providers and services in areas such as neuroscience and orthopedics.
No money would exchange hands in the deal, but RHS would become part of Cadence Health, Kaatz said. Officials have discussed creating some type of local governing board, and three of Cadence’s 12 board members would be from Rockford.
Mike Vivoda, president and CEO of Cadence Health, noted that Cadence was one of two finalists wanting to partner with Sherman Health in Elgin. Sherman opted to instead to join Advocate Health Care, which RHS researched talks with back in 2008.
“We’re not a big fan of mergers and acquisitions just for the sake of that,” Vivoda said. “Spending time with Gary and his team and the board of Rockford Health System, it’s clear that they were passionate about raising the bar in the delivery of health care” and making access to care more affordable in the community.
Date: Nov. 20, 2013