NorthShore Reveals Agreement To Acquire Swedish Covenant

EVANSTON, IL — NorthShore University HealthSystem announced plans to acquire Swedish Covenant Hospital by the end of the year. The Evanston-based health system said the Chicago hospital will become the fifth in its network once the merger is approved by regulators.

Swedish Covenant will continue to operate the 312-bed hospital in the Ravenswood neighborhood and maintain its own physician network after the merger. NorthShore, which operates Evanston, Glenbrook, Highland Park and Skokie hospitals, will make its research programs and specialty services available to Swedish Covenant patients, according to a joint statement from both companies.

"In today’s environment, we have an opportunity to transform how we deliver care through creative partnerships that develop best care practices and support long-term growth," said J.P. Gallagher, president and CEO of NorthShore. "Partnering with Swedish Covenant will allow us to build on our respective exemplary physician networks and expand primary, immediate and specialty care access across our communities."

The financial terms of the deal were not disclosed, but NorthShore will make a "significant philanthropic contribution" to Swedish Covenant's foundation.

Anthony Guaccio, the president and CEO of Swedish Covenant, will report to Gallagher should the deal goes though. He said in the statement the partnership will support community-based health care on the North Side with the added benefits of the larger health system's resources and capabilities.

"We have an incredible opportunity to build on the expertise of two experienced institutions with a shared vision and complementary services to create transformative healthcare for the next generation," Guaccio said.

NorthShore will assume the smaller system's pension obligations and also give money to the Evangelical Covenant Church, the Chicago Tribune reported. Swedish Covenant's pension fund is currently only funded at 80 to 90 percent, but NorthShore intends to ensure it is 100 percent funded, the top executives at the companies told the paper.

Swedish Covenant Hospital, at 5140 N. California Ave., was founded 133 years ago and originally called The Home of Mercy. Its parent company's CEO told the Tribune it will continue its policy of refusing to perform elective abortions even though it will no longer be part of the Evangelical Covenant Church.

The combined health networks will include about 1,500 doctors and more than 12,000 employees, according to Crain's Chicago Business. Citing Modern Healthcare Metrics, Crain's said Swedish Covenant brought in $273.5 million in net patient revenue last year compared to $2 billion for NorthShore.

NorthShore has been looking to expand its network since a proposed merger with Advocate Health Care was blocked by regulators in 2017, while Swedish Covenant has been discussing the possible of a sale with at least six possible buyers since last year, Crain's Chicago Business reported. In March, Crain's reported the parent of Rush University Medical Center and Swedish Covenant were in merger talks.

Although the Federal Trade Commission blocked their merger on the grounds it would be bad for consumers, NorthShore and Advocate announced last May they had established a pediatric care partnership. University of Chicago's children's hospital later joined the clinical collaboration.

Last fall, NorthShore announced plans to open up 50 new immediate care centers and reorganize its north suburban hospitals to offer more specialized care. Evanston Hospital will focus on cancer, cardiac issues and complex neurosurgery, Glenbrook Hospital will focus on geriatric care, Skokie Hospital will become a center for spinal and orthopedic care. Highland Park Hospital will remain a full-service facility under the terms of the two-year, $400 million plan.

NorthShore will hold community meetings to address the acquisition in the near future, its CEO told the Chicago Sun-Times. He explained the merger was not aimed at cutting the company's payroll costs and would "probably bring in additional jobs."

Related:

• Advocate, NorthShore Partner With UChicago In Pediatric Care
• NorthShore-Advocate Merger Scrapped After Ruling
• FTC Puts Advocate-NorthShore Merger on Hold
• Four More Women Sue NorthShore Over Abuse Allegations