Advocate Aurora Health plans to merge with a North Carolina health system and move its headquarters

Advocate Aurora Health plans to merge with a North Carolina health system and move its headquarters

Advocate Aurora Health and Atrium Health announced plans to merge, creating the fifth-largest health system in the nation, with more than 150,000 employees and combined revenue of more than $27 billion. 

If approved by regulators, the merger would move Advocate Aurora’s headquarters from Chicago and Milwaukee to Charlotte, North Carolina, where Atrium Health is based. 

Advocate Aurora would continue to have a presence in Chicago and Milwaukee, including a new institute for health equity in Milwaukee.

Wake Forest University School of Medicine will become the academic medical center for the health center.

“Together, we can do more, be better and go faster,” said Jim Skogsbergh, president and chief executive officer of Advocate Aurora Health. “This combination harnesses our complementary strengths and expertise of our doctors, nurses and teammates to lead health care’s transformation for those we are so proud to serve.”

Skogsbergh said moving Advocate Aurora’s headquarters will have little effect on existing employees, who either work with patients or have worked remote for the last two years. 

“Our headquarters both in Milwaukee and Chicago have been emptied out and we have learned headquarters is sort of a mailing address,” Skogsbergh said. “Our work is done in the field, and at the bedside and in the laboratory. We don’t think headquarters is significant. Aurora isn’t going away. Aurora is going to be strong in Wisconsin.” 

In Wisconsin, Advocate Aurora hospitals include Aurora St. Luke’s Medical Center, Aurora West Allis Medical Center, Aurora Medical Center-Summit, Aurora Medical Center-Grafton and Aurora Medical Center-Mount Pleasant. In Illinois, hospitals include Advocate Good Samaritan and Advocate Good Shepherd Hospital. 

Advocate Aurora has been wanting to merge

Skogsbergh has made it clear he has wanted to expand Advocate Aurora. In October 2020, the system ended merger talks with Beaumont Health. Had a merger gone through, it would have combined the largest health systems in Wisconsin, Illinois and Michigan.

At the time, Skogsbergh said he wanted to double Advocate Aurora’s size by 2025 and its revenue to $27 billion a year. Skogsbergh approached Atrium Health about a year ago about the merger. 

Advocate Aurora was created by the merger of Advocate Health Network, the largest health system in Illinois, and Aurora Health Care, the largest health system in Wisconsin, in April 2018.

More: Merger of Aurora Health Care and Advocate Health Care is completed

More: Jim Skogsbergh, former CEO of Advocate Health Care, named sole CEO of Advocate Aurora Health

Under the agreement with Atrium Health, Skogsbergh will serve as co-CEO with Eugene A. Woods, president and chief executive officer of Atrium Health, for 18 months. Skogsbergh then plans to retire and Woods will be named sole CEO. 

Skogsbergh was the highest-paid Chicagoland CEO in 2017, taking in a total compensation of $11.7 million, according to Modern Healthcare. Woods was paid more than $9.8 million last year in total compensation, according to the Charlotte Observer. 

Mergers among large health systems across state lines to create regional systems have become more common in recent years and mergers in general between health systems have increased sharply in the past decade. 

There were 778 mergers between 2010 and 2017, according to an analysis by the Kaiser Family Foundation. The analysis also found consolidation often leads to higher prices for patients. 

Matthew Rae, associate director for the Health Care Marketplace at the Kaiser Family Foundation, said fewer health care options in the market allows health care systems to charge higher rates. 

“In cases of hospital system mergers, any health plan offered to employers has to include the biggest system, because off of the big hospitals are there,” Rae said. “This gives the hospital system a lot of power when negotiating prices.” 

Skogsbergh said that hasn’t been the case with Advocate Aurora, where price increases have been between 1% and 2% compared with a national average of 6% to 7%. 

“We know how to bend the cost curve, we’ve expanded access, our mortality has gotten better, and gosh, we’re a great employer so our wages have gone up,” Skogsbergh said. “This coming together of Advocate and Aurora has been a great thing for the communities we serve and we think joining together with Atrium will result in the same thing.” 

Promise of 20,000 new jobs

Woods said the merger will allow the health system to create more jobs and launch new initiatives focused on health equality. 

Both organizations have agreed to spend $2 billion to “disrupt the root causes of health inequities across both rural and urban underserved communities” and achieve a carbon neutrality by 2030. They’ve also committed to creating more than 20,000 new jobs across the communities they serve.  

Those jobs, which will be across the health system, will be created over the next five years, Woods said. 

The new organization will have a footprint across Illinois, Wisconsin, North Carolina, South Carolina, Georgia and Alabama.

It will serve 5.5 million patients at more than 1,000 clinics and 67 hospitals. 

A joint operating agreement will be submitted to the Federal Trade Commission in the coming days. If the health care systems do not hear back from the FTC within 30 days, the merger is approved. 

Corrinne Hess can be reached at chess@gannett.com. Follow her @corrihess

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