As mid-size health systems seek growth and meaningful scale, the most effective way to achieve this will be system combinations, and these will include those across state lines. The recently completed combination of Advocate Health Care of Chicago and Aurora Health Care of Milwaukee is an example of this kind of transaction cross-border combination.
Most of the other system mergers to date have arguably been more about size than scale. Size connotes the ability to buy in bulk, to centralize some functions and spread overhead. Scale adds the ability to operate more effectively as well as efficiently, improving an organization’s ability to execute as the industry changes. This might be by combining skills or relevant markets that provide additional strategic or financial value. A number of studies have indicated that there is significant additional value created by the integration of partners over and above that derived from merely combining.
With industry drivers intensifying, and acquisitions by large investor-owned and Catholic systems slowing, health systems poised to grow should consider whether there is a partner a bit further afield that may be able to help vault them to the next level of scale and