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Exciting times for LUHS

The big news in the Chicago hospital market today was the announcement by Loyola University Chicago that they have signed a letter of intent (LOI) to merge the Loyola University Health System (LUHS) into the larger Trinity Health network.  This follows a national trend of hospitals joining larger systems, perhaps due to the regulatory pressures resulting from the upcoming changes to the health care system following health care reforms that will be rolled out over the next three years.   A discussion of the potential effects of hospital mergers is provided in this blog post from economist Austin Frakt from Boston University.

These pressures likely include increased shares of patient volumes from Medicaid, whose reimbursement often falls short of covering costs (when they actually manage to pay, as has sometimes not been the case in many states, including Illinois).  I addressed some of these issues in a recent presentation to employees of the American Cancer Society who were meeting at Loyola.  The slides from my presentation are available here (a .pdf file will be downloaded).  The Affordable Care Act will expand coverage, so that uncompensated care should fall for hospitals (who now lose about 6 percent of expenses due to providing care that is never reimbursed, as seen on the fourth slide of the presentation), but it will also entail more Medicaid patients which will likely strain hospitals’ already weak bottom lines.

So, this is an interesting time for hospitals reacting to the pressures of reform.  Loyola has made a major decision to join a larger network and this may be one of several consolidations in the Chicago area for larger, well-established hospitals.

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