FTC approves Advocate-Aurora merger

The proposed merger between Downers Grove, Illinois-based Advocate Health Care and Milwaukee’s Aurora Health Care now has the blessing of the Federal Trade Commission and regulators in Illinois, leaving regulatory approval in Wisconsin as the final hurdle for creating the 10th largest nonprofit health system in the U.S.

The FTC had successfully blocked Advocate’s previous attempt at a merger with Evanston, Illinois-based NorthShore University Health System on the grounds the combined system would have controlled much of the market in the suburbs of Chicago. The $11 billion, 27-hospital system which would be created by combining Advocate and Aurora is even larger, but unlike the previous deal, the two systems don’t have much geographical overlap.

“We are excited to move one step closer to bringing our two great organizations together to reimagine the possibilities of health for those we serve,” the systems said in a statement to the Milwaukee Business Times, adding they “look forward to the final step of receiving approval in Wisconsin before our anticipated closing this spring.”

In addition to the FTC’s approval, the Illinois Health Facilities and Services Review Board gave its OK in a Feb. 5 letter to the change of ownership of 15 Illinois hospitals either fully or partially owned by Advocate, as it had done when evaluating the Advocate-NorthShore merger.

The application to the Illinois board confirmed some details of the transaction, such as:

  • No direct exchange of funds will be included in the deal.
  • The current CEOs of Advocate and Aurora will become co-CEOs of the combined system, called Advocate Aurora Health.
  • The new system’s board will consist of 14 members: six designated by Aurora, six designated by Advocate and the co-CEOs.
  • Beyond the change at the top, each systems’ entities will remain under their respective corporate structures.
  • Advocate isn’t proposing to change its “scope of services or levels of care” as a result of the merger.

The application also said neither system will adopt a “more restrictive” charity care policy for two years after completing the transaction. By Advocate’s own admission, however, the amount of charity care its provided declined at most of its hospitals between 2014 and 2016, with the exceptions of Advocate Lutheran General Hospital in Park Ridge, Illinois and Advocate Christ Medical Center in Oak Lawn, Illinois.