Evanston Northwestern Healthcare finalizes $160 million deal for Rush North Shore Medical Center

By Bruce Japsen
http://www.chicagotribune.com

North suburban hospital operator Evanston Northwestern Healthcare is acquiring Rush North Shore Medical Center in Skokie, committing more than $160 million in a deal that was finalized Tuesday.

As part of the agreement, which still needs approval of federal regulators, Evanston Northwestern will commit $100 million in capital over the next several years that includes establishing an electronic medical record system at Rush North Shore. In addition, Evanston Northwestern will retire the Skokie hospital’s $54 million in debt and contribute $10 million to a community foundation.

“The merger will provide enormous benefits to the patients and families we serve for generations to come,” said James Frankenbach, president of Rush North Shore.

The Federal Trade Commission, which has taken issue with Evanston Northwestern’s acquisitions in the past, has not asked for additional information from the merging parties in this deal, Rush North Shore executives said. Evanston Northwestern operates hospitals in Evanston, Glenview and Highland Park.

Rush North Shore is affiliated with Rush University Medical Center on the West Side and Rush-Copley Medical Center in Aurora through an “obligated group,” which allows them to cooperate on financing needs. If Rush North Shore issues debt through the group, the other member hospitals would have to sign off on the spending plan.

The obligated group has been focused on funding a huge renovation at Rush University Medical Center on Chicago’s West Side, so the retirement of the Rush North Shore debt will help finance the plan.

Evanston Northwestern and Rush North Shore executives expect the deal to close by the end of the year.

Earlier this year, the FTC made official a decision ordering Evanston Northwestern and Highland Park Hospital to contract separately with managed-care plans. The FTC said that the two parties must allow health insurance companies to “negotiate separately again for those competing hospitals, thus reinjecting competition between them for the business of [managed-care organizations].”

Last year, the FTC affirmed a 2005 ruling that found Evanston Northwestern’s 2000 acquisition of Highland Park to be anti-competitive and in violation of federal law.

The FTC alleged prices at Highland Park rose 50 percent or more in certain instances after the merger, compared with price increases of 4 percent to 6 percent in the several years preceding the combination. Evanston Northwestern argued its rate increases were catching up with poor managed-care contract negotiations in the past and that it invested more than $150 million in the facility.

bjapsen@tribune.com

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