Health systems Advocate Aurora Health and Atrium Health unveiled a deal Wednesday to merge their organizations into a six-state, 67-hospital nonprofit juggernaut.
The merger plans have been approved by each system’s board of directors and are now subject to regulatory review, according to a joint announcement.
Should it be approved, the combined organization would become one of the country’s largest health systems with over $27 billion of combined revenues.
Under the new brand of Advocate Health, the joint system would serve about 5.5 million patients, operate over 1,000 care sites, employ 148,000 people and provide $4.8 billion in annual community benefits, the organizations said. It would also manage 2.2 million lives across 15 accountable care organizations, four clinically integrated networks and almost five dozen value-based contracts.
“We’ve long admired Atrium Health’s nationally recognized clinical excellence and commitment to health equity,” Michele Richardson, chair of Advocate Aurora Health’s board of directors, said in a statement. “Given our combined reach, coupled with our talented physicians, nurses and staff, we are uniquely positioned to lead healthcare’s transformation and create a platform for innovation.”
By leaning on each side’s particular expertise and capabilities, the systems said their merger would lead to gains in clinical preeminence and safety, health equity, affordability, learning and discovery, workforce innovations and environmental sustainability.
Further, their announcement highlighted a handful of commitments to local communities and sustainability. These include a $2 billion pledge to target the drivers of both rural and urban health inequities, the generation of over 20,000 new jobs and a promise to become carbon neutral by 2030.
“This strategic combination will enable us to deepen our commitments to health equity, create more jobs and opportunities for our teammates and communities, launch new game-changing innovations and so much more,” Eugene Woods, president and CEO of Atrium Health, said in a statement. “Together, we will manifest a new future that significantly elevates the care we provide to every hand we hold and every life we touch.”
The systems said their new organization would be headquartered in Atrium Health’s hometown of Charlotte, North Carolina, and “maintain a strong organizational presence” in Advocate Aurora Health’s Chicago and Milwaukee markets. While they plan to transition to the parent brand of Advocate Health, the Advocate Aurora and Atrium Health brands would be maintained in local markets.
Woods and Advocate Aurora Health President and CEO Jim Skogsbergh are set to serve as co-CEOs for the first year and a half, after which Skogsbergh plans to retire and allow Woods to become the system’s sole CEO.
Governance will be handled by a new board of directors equally comprised of each organization’s existing boards. Edward Brown III, Atrium Health’s current chair, is slated to chair the new board until the end of 2023, with Richardson set to serve the following two-year term.
The two nonprofits come to the deal as relative equal in terms of size and finances.
Formed from the 2018 merger of Advocate Health Care and Aurora Health Care, Advocate Aurora operates more than 500 ambulatory locations and 27 hospitals. It treats 2.6 million unique patients, employs 75,000 people and logged just under $14.1 billion in total revenue during 2021 and a net income of more than $1.8 billion.
The system was previously in talks to merge with Beaumont Health but put those plans to bed in late 2020.
Atrium Health claims $13 billion in annual revenue from its 40 hospitals and more than 500 ambulatory locations. Thanks to its 2020 merger with Wake Forest Baptist Health, the system also hosts the Wake Forest University School of Medicine, which is slated to remain as the academic core of the pending combined organization.
Atrium employs 73,000 people and treats 2.9 million unique patients, according to the systems’ announcement. The system was reporting an operating gain of $222 million as of its first nine months of 2021 but has yet to provide annual data for 2021.
The newly announced deal is now the largest health system merger on the books for 2022. The announcement comes about a month after Intermountain Healthcare and SCL Health closed on a 33-hospital system in the Rocky Mountain region and Beaumont Health and Spectrum Health locked up a Michigan-based 22-hospital system in February.