HARVEY — Ingalls Health System and University of Chicago Medicine have officially merged, in a move officials say will improve the quality of health care delivered by both organizations.
The south suburban hospital system and Chicago-based academic medical center announced plans to join forces last November, after Ingalls concluded its search for a strategic partner in the hopes of boosting physician recruitment.
"It became obvious, as we got to know University of Chicago Medical Center better, they were the obvious choice for us," said Ingalls President and CEO Kurt Johnson. "They're a world-class medical center. They had all the attributes of a partner we were looking for in terms of producing well-trained physicians. University of Chicago Medical Center has a center of gravity that's south of the city. We relate to many of the same communities, stretching from Northwest Indiana, all the way west to Naperville."
The merger comes at a time of increasing consolidation in the health care industry, brought on by changes to provider reimbursement in the Affordable Care Act and a growing physician shortage caused by the aging population. In Northwest Indiana, Methodist Hospitals announced in June that it was seeking a strategic partnership. Jasper County sold its hospital in 2015 to Franciscan Alliance. And for-profit hospital behemoth Community Health Systems purchased LaPorte and Starke hospitals earlier this year.
Johnson noted that no money changed hands in the merger, which includes no plans for layoffs or a new hospital, and that Ingalls wasn't seeking the arrangement out of financial desperation. A review of the hospital's IRS 990 filings shows that to be the case, with the health facility having an average operating margin of 7.9 percent from 2011 to 2014.
Johnson said the organizations should be able to save money by having increased purchasing power. Both systems are retaining their names.
University of Chicago Medical Center is now Ingalls' corporate partner, though Ingalls, based in Harvey, will retain a local board of directors and have representation on the University of Chicago hospital board.
The move gives Ingalls access to University of Chicago's prestigious physician education pipeline and widens University of Chicago's footprint in the south suburbs. The university medical group is already building an 108,000-square-foot ambulatory facility in Orland Park, and has outpatient offices in Northwest Indiana. Like many hospital systems not located in big cities or wealthy suburbs, Ingalls has struggled to recruit physicians at a fast enough clip to replace its aging workforce.
"From a philosophical and a values standpoint, we were aligned," said Dr. Kenneth Polonsky, executive vice president of medical affairs for University of Chicago Medicine. "We both live in areas where there is an underserved community around us, and both organizations are committed to serving the surrounding communities."
While less than 1 percent of Ingalls' patients live in Northwest Indiana, about 10 percent of University of Chicago's patient base is from the Region, given that it is the nearest academic medical center. "Northwest Indiana is a very important marketplace for us," Polonsky said. "We have a number of very exciting relationships in Northwest Indiana that we would like to expand. We're thinking very carefully of how best to do that, but it's a little premature to share specifics."
Region residents who travel to Hyde Park may in the future only have to go to the south suburbs because Ingalls may have an easier time recruiting specialists being part of the University of Chicago's recruitment network. The same might be true if the academic hospital decides to locate some specialties further south, closer to its new corporate partner.
Johnson said, of the merger: "I think it will be of long-term benefit to the Southland region and Northwest Indiana."