A state board has approved Ascension’s plan to sell nine of its Illinois hospitals for more than $370 million to a large California-based health system.
The state Health Facilities and Services Review Board voted unanimously Tuesday morning to greenlight Ascension’s plan to sell the hospitals — more than half of its hospitals in the state — to Prime Healthcare.
The hospitals to be sold to Prime include: Ascension Holy Family in Des Plaines, Ascension Mercy in Aurora, Ascension Resurrection in Chicago, Ascension St. Francis in Evanston, Ascension St. Joseph in Joliet, Ascension St. Joseph in Elgin, Ascension St. Mary in Kankakee, Ascension St. Mary in Chicago and Ascension St. Elizabeth in Chicago.
The deal is expected to close early next year, though it still also needs approval from the Archdiocese of Chicago, because Ascension is a Catholic health system. The Ascension hospitals will be Prime’s first ones in Illinois. Prime has 44 hospitals and more than 300 outpatient locations in 14 states.
David Fox, a member of the Health Facilities and Services Review Board, said while voting Tuesday, of Prime, “My impressession from the leadership team here today is that the committmnet to quality and safety truy seems to be genuine … You do have an excellent record of rescuing distressed hospitals.”
Ascension is a massive not-for-profit health system, whereas Prime includes the for-profit Prime Healthcare Services and an affiliated charity called the Prime Healthcare Foundation, under which 14 of Prime’s hospitals operate.
Under the deal, seven of the Ascension hospitals would become for-profit, while St. Francis in Evanston and St. Mary in Kankakee would keep their not-for-profit statuses.
Prime has said it does hope to close one of the Ascension hospitals after the deal closes, Ascension St. Elizabeth, a hospital on the city’s West Side that it said has 28 beds and treats acute mental illness. In an application to the state board, Ascension and Prime said it makes sense to close the hospital because not many patients use it, and because the nearby Ascension St. Mary-Chicago can take St. Elizabeth’s patients. The board is scheduled to vote on that closure in March. Prime leaders said they want to work with the community to figure out how St. Elizabeth can best serve the community once inpatient services are discontinued there.
Prime has said it will invest $250 million in the Ascension facilities for upgrades, capital improvements, technology and system upgrades. Prime has also said it plans to hire all hospital and care facility staff, though workers will be asked to reapply for their jobs.
The hospitals will keep their current names, but without the “Ascension” branding, a Prime spokeswoman previously said. Ascension is also selling four of its post-acute and senior living facilities and two outpatient surgery centers to Prime.
Ascension Illinois CEO Polly Davenport said at the board meeting Tuesday that Ascension spent nearly two years doing due diligence to make sure Prime was the best buyer for its hospitals. She said Ascension hospitals have faced the same challenges as many others, and Ascension decided selling some of its hospitals “was the most reasonable path to ensuring our care continues to flourish.”
Ascension, which has more than 100 hospitals across the country, posted a $1.8 billion operating loss for the year that ended June 30, though that was an improvement from the organization’s $3 billion operating loss the prior year. Ascension attributed some of the recent loss to a cybersecurity incident earlier this year.
Dr. Sunny Bhatia, prime president and chief medical officer, said Tuesday that Prime has “been uniquely able to save hospitals in financial distress.” He said every hospital that Prime has acquired has been in financial distress at the time of acquisition.
“We’re very confident we can turn around these facilities and maintain them as assets to the communities,” Bhatia said. “We’re here to stay. … This is what we do. We save distressed community hospitals.”
Nurses union National Nurses United has expressed opposition to the sale of the Ascension Illinois hospitals to Prime, citing, in a letter to the board, “Prime Healthcare’s history of putting profits over patients, leading to illegal and unethical practices that risk people’s health, in addition to the elimination of crucial health services in the community.”
Prime and its Chairman and CEO Dr. Prem Reddy agreed in 2018 to pay the government $65 million to settle allegations that 14 Prime hospitals in California knowingly submitted false claims to Medicare by admitting patients to hospitals who weren’t in need inpatient care, and by billing Medicare for more expensive diagnoses than what the patients actually had. In 2021, Prime, Reddy and one of Prime’s doctors agreed to pay $37.5 million to settle allegations that Prime paid the doctor kickbacks for patient referrals, among other allegations. Prime did not admit any liability as part of those agreements.
Ascension is keeping a number of its Illinois hospitals, for now, including Ascension Alexian Brothers in Elk Grove Village, Ascension Alexian Brothers Behavioral Health Hospital in Hoffman Estates, Ascension Alexian Brothers Rehabilitation Hospital in Elk Grove Village, Ascension St. Alexius in Hoffman Estates, Saint Joseph in Chicago and Ascension St. Alexius Women and Children’s in Hoffman Estates.
Once the deal closes, it will be the third time the Ascension hospitals have changed ownership in a decade — which is a lot, even for the Chicago area where hospital mergers and acquisitions are common. The hospitals were once part of Presence Health, and then, in 2018, became part of Amita Health. Ascension and AdventHealth unwound their Amita Health partnership in 2022, and the hospitals were then Ascension Illinois hospitals.
