Centegra Health System, Northwestern Medicine expect to finalize deal by end of year

Centegra Health System likely will join Northwestern Medicine by the end of the year, representatives from both health systems said.

It’s been more than a year since Centegra announced plans to explore an affiliation with Northwestern Medicine, and officials would not yet discuss details of how the deal would affect both health systems.

It took about six months from the time Northwestern’s merger with Cadence Health initially was announced to the time it was finalized in September 2014.

KishHealth joined Northwestern about seven months after talks of a merger started between the two companies.

Both of those deals were finalized after being approved by state regulators. Centegra and Northwestern have not yet applied for approval from the state.

“Discussions continue to progress with Northwestern Medicine,” Centegra spokeswoman Michelle Green said in a statement. “We hope to be part of their health system by the end of the year, pending state and federal approvals. We will continue to provide updates as the process moves forward.”

Both Green and Northwestern Medicine spokesman Christopher King said the parties are in the “due diligence” process. When Centegra announced in April 2016 that it had agreed to a letter of intent to discuss an affiliation with Northwestern Medicine, both parties said it could take “many months” before an agreement was made.

Any agreement would need approval from the Illinois Health Facilities and Services Review Board and the Federal Trade Commission.

Northwestern Medicine expects Centegra will join its system by the fall, King said.

When asked to discuss why the process has taken more than a year to complete, and what the benefits of partnering are, King declined to comment “because the discussions are confidential between us and Centegra.” For the same reason, Green also declined to speak further about details on the affiliation and how it would affect Centegra.

In the hospital system’s annual report for 2016, Centegra Health System CEO Michael Eesley said: “A partnership between Centegra Health System and Northwestern Medicine would increase the depth of Centegra’s clinical capabilities, enhance possibilities for physician collaboration and improve efficiencies to provide the best possible care for patients and their families.”

Centegra operates hospitals in McHenry, Woodstock and Huntley. The health system also includes several immediate care centers, physician care locations, the Centegra Sage Cancer Center, Centegra Health Bridge Fitness centers in Huntley and Crystal Lake, and Centegra Gavers Breast Center in Crystal Lake, according to its website. The top employer in McHenry County, the health system employs more than 4,000 people.

Northwestern Memorial HealthCare is the corporate parent for the Northwestern Medicine health system, which has a staff of more than 30,000 people, including about 4,000 physicians, according to its website. The company oversees Northwestern Memorial Hospital, a highly regarded academic medical center within the industry and the primary teaching hospital to Northwestern University's Feinberg School of Medicine.

The health care system manages seven hospitals – Northwestern Memorial Hospital in Chicago, Northwestern Medicine Central DuPage Hospital in Winfield, Northwestern Medicine Lake Forest Hospital in Lake Forest, Northwestern Medicine Delnor Hospital in Geneva, Northwestern Medicine Kishwaukee Community Hospital in DeKalb, Northwestern Medicine Valley West Hospital in Sandwich and Marianjoy Rehabilitation Hospital in Wheaton.

In 2014, Northwestern merged with Cadence Health, which has hospitals in Winfield and Geneva.

DeKalb-based KishHealth joined the system in December 2015. Northwestern’s acquisition of KishHealth grew out of talks that started in May 2015, according to previous reports from the DeKalb Daily Chronicle. That deal had no acquisition price, according to documents filed with the state.

The system’s most recent merger, with Marianjoy Rehabilitation Hospital in Wheaton, was announced in March 2016. Northwestern Memorial HealthCare and Wheaton Franciscan Healthcare signed a letter of intent to transfer Marianjoy in October 2015. The Illinois Health Facilities and Services Review Board approved the change in ownership in December 2015.

Green has said money will not be exchanged to make the deal happen in the case of Centegra and Northwestern. In business dealings, a merger or acquisition typically involves a money exchange or a corporate governance change. Both health systems are nonprofits.

The total number of employees at Northwestern Medicine health system was corrected in this story.