New hospital makes Elmhurst prime target for Northwestern
(Crain's) — A dazzling new hospital with the right payer mix in a west suburban location is an enticing draw for Northwestern Memorial HealthCare, which is on the hunt to expand its reach beyond its home near downtown Chicago.
Northwestern and Elmhurst Memorial Healthcare on Thursday confirmed an earlier Crain's report that they are in exclusive merger negotiations.
“We are excited about the potential of this affiliation and the opportunity for improving patient access to Northwestern care in the western suburbs,” Dean Harrison, Northwestern's president and CEO, said in an email sent to doctors and employees.
The negotiations are expected to take several months, according to the email, which was obtained by Crain's.
Related story: Northwestern Memorial in merger talks with west suburban hospital
The merger talks come as Elmhurst faces a major challenge to boost revenues following the June opening of its state-of-the-art hospital.
“I think having that new facility is going to be a real challenge for them financially,” says Brian Sanderson, a partner at Oak Brook-based accounting firm Crowe Horwath LLP who specializes in health care. “So they need to be aggressive on many fronts, whether it's physician integration or marketshare expansion. Bringing the Northwestern brand out to the west suburbs is going to help immensely.”
Elmhurst Memorial's net patient revenue rose just 3.3%, to $360.9 million, in the fiscal year ended June 30 from $349.2 million in fiscal 2010.
But revenues need to rise more quickly to pay for the new $450-million hospital building.
The “primary credit concern is Elmhurst's ability to execute on its strategy of top-line revenue growth,” Fitch Ratings said in a February report. The credit ratings agency affirmed its A-minus rating on the bulk of the hospital's nearly $507 million in long-term debt but said it expected inpatient volume to grow by 6%, a strong rate, during the first year after the facility opens.
Blue Cross Health Insurance Rank - News
Northwestern also may be attracted by Elmhurst's high level of insured patients, compared to other hospitals. About 47% of Elmhurst's patients had private health insurance in the fiscal year ended June 30, including 10% from Blue Cross Blue Shield of
NCQA's Private Health Insurance Plan Rankings 2011-12 used NCQA's established rankings methodology, which has been used and widely recognized since 2005. Anthem Blue Cross and Blue Shield ranked 78 nationally in the private insurance plan rankings,
United is the nation's largest health-insurance company, but none of its private plans rank among the top 100, and most occupy the bottom half. ■ Small can be good. For example, Capital Health Plan, a Blue Cross Blue Shield HMO in Tallahassee, Fla.,
In Alabama, BlueCross BlueShield claims 90 percent of all HMO (managed care) and PPO (preferred provider) policies sold, according to the AMA study. In Utah, by comparison, the market leader — Intermountain Healthcare's insurance arm SelectHealth
The city is self-insured, with Blue Cross and Blue Shield being its health insurance administrator for 2011 and 2012. Year-end balances in the city's health insurance fund for employees and retirees have dropped from $7.5 million as recently as 2008 to
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