The proposed merger between Advocate Aurora Health and Atrium Health cleared a key hurdle Monday, getting the OK from a key state body.
The combined organization would have 66 hospitals—40 from Charlotte, North Carolina-based Atrium and 26 from Advocate Aurora, which is jointly headquartered in Downers Grove, Illinois, and Milwaukee—and nearly 150,000 employees in Alabama, Georgia, Illinois, North Carolina, South Carolina and Wisconsin.
The Illinois Health Facilities and Services Review Board signed off on the deal after initially denying it in September, which delayed the companies’ plan to complete the transaction that month. Board members had objected that Advocate Aurora’s application for a required change-of-ownership exemption lacked details about the controlling interests of the merged company. But the panel soon recanted and gave the partners time to provide additional information.
“Securing the Illinois Health Facilities and Services Review Board’s approval brings us one step closer to coming together with Atrium Health, which will allow us to improve the lives of our patients, the health of our communities and the opportunities for our team members. We look forward to closing, which we anticipate before the end of the year,” an Advocate Aurora spokesperson said in a statement.
The companies, though, still can’t move forward with the deal until regulatory reviews from other bodies are complete. The Federal Trade Commission did not respond to requests about the status of its investigations. The office of North Carolina Attorney General Josh Stein (D) said the review is ongoing and did not have information to share. The office of Illinois Attorney General Kwame Raoul (D) declined to comment.
The Illinois board members unanimously voted to approve the exemption that would allow the merger, but some remained skeptical.
“My main concern is who has control over consolidating and eliminating much-needed services in Illinois,” board member Antoinette Hardy-Waller said during the meeting in Bolingbrook, Illinois. “Those are questions and concerns that they were unable to answer,” said Hardy-Waller, a registered nurse and CEO of the Leverage Network, an organization that promotes Black representation on corporate boards.
According to the review board’s staff report, the health systems “attest there is no long term proposed changes to the scope of services currently provided at the 10 facilities that are anticipated to occur within 24 months because of this transaction.”
The merged company’s proposed board would be evenly split between members from the two companies. Atrium Health CEO Eugene Woods and Advocate Aurora CEO Jim Skogsbergh would serve as co-CEOs for the first 18 months, after which Skogsbergh would retire.
Two weeks after announcing the plan to form a $27 billion health system in May, Advocate Aurora was hit with a federal lawsuit alleging its all-or-nothing contract provisions with insurers stymie competition and allow the health system to raise prices. The combined system would span six states and could leverage market share to force insurers and employers to pay inflated prices, which could lead to higher insurance premiums and out-of-pocket costs.
Limited data exists on the effects of mergers between hospitals in different states and federal antitrust law focuses on intrastate mergers, which is partly why the FTC is often hesitant to challenge cross-market mergers.