Wednesday, November 05, 2008

What's a Hospital Cost These Days?

The Illinois Health Facilities Planning Board today approved the merger of Skokie-based Rush North Shore Medical Center (RNS) with NorthShore University HealthSystem (NorthShore). This was the final regulatory requirement in the Certificate of Need process. The Change of Ownership Exemption Request stated:
The fair market value of the facility is $53,734,360. ENH (now NorthShore) will provide approximately $54,000,000 to discharge Rush North Shore Medical Center’s indebtedness. In addition ENH (NorthShore) has committed to fund over $100 million in capital improvements at Rush North Shore Medical Center and will contribute $10 million to the Rush North Shore Foundation. The applicants have attested that all beds and services will not substantially change for at least 12 months following the completion of the proposed Exemption Application transaction, and there will be no change resulting in the restriction of patient admissions or reductions in access to care or a more restrictive charity care policy.
But not to be outdone, earlier this week Northwestern Memorial Healthcare (formerly affiliated with NorthShore) agreed on a whopping $400 million dollar purchase of Lake Forest Hospital only 6.2 miles from NorthShore's Highland Park Hospital:
The 215-bed Lake Forest Hospital has been viewed as a prime acquisition target amid a string of hospital deals in the northern suburbs.

The hospital, though profitable, faces big capital-spending needs in coming years, including an eventual overhaul or replacement of its aging facility for more than $400 million. CEO Thomas McAfee has been seeking a partner to help the 108-year-old hospital access capital.

The deal would mark a major strategic shift for Northwestern Memorial Healthcare, which operates the Streeterville hospital and affiliated physician groups but does not have much of a suburban presence.

Northwestern University’s medical school also was expected to seek another training site for medical students and residents after severing ties earlier this year with NorthShore University HealthSystem (formerly Evanston Northwestern Healthcare).

The statement said that adding Lake Forest to Northwestern Memorial would “accelerate the building of the pre-eminent academic medical center for Chicago, Lake County and the surrounding regions.”
Economic crisis? What economic crisis?

-Wes

4 comments:

Keith Sarpolis said...

Wes,

Mark my words. After the bottom falls out of the credit card market with a tide of banruptcies and we find out which companies are sitting on a pile of debt that they won't find as easy to grow or refinance their way out of, our woderful health care industry with its own MBA driven aristocarcy will be the next folks to lead us to financial ruin for the purposes of fueling their greed. Hate to be such a negative guy, but who is going to be left to pay for their glitzy hospital upgrades and fancy cutting edge equipment?
But on a good note, maybe the willingness of Northwestern to spread its good name up the North Shore means we are entering an age of true competition for health care services in our part of town, rather than what appeared to be big hospitals carving up the market mafia style. Only trouble is that every time we have competition, it drives the price of services up rather than down in the goofy world of health care, as every hospital has to have a cardiac cath and EP lab that is sorely underutilized.

Anonymous said...

Correction: Northwestern Memorial HealthCare, not Northwestern University, has the letter of intent to buy Lake Forest Hospital.

DrWes said...

anony 11:01-

Correction made. Thank you.

Anonymous said...

I worked near this facility a number of years ago. At that time, it was jocularly called 'Death Valley Hospital' - with the explanation being there was a good reason it was located next to a large cemetery.

Seems like hospitals will get to the same point as banks are now, except the feds aren't forcing the purchases...