Prime to Acquire 9 Hospitals from Ascension Illinois in a $370 Mn Deal

Among the facilities included in the deal is Ascension St Elizabeth, a hospital that Prime intends to shut down within the next six months.

Prime Healthcare is set to acquire nine hospitals from Ascension Illinois in a deal valued at over $370 million, according to recent regulatory filings. 

The transaction, which was initially announced in July 2024, is expected to close in the first quarter of 2025. 

Among the facilities included in the deal is Ascension St Elizabeth, a hospital that Prime intends to shut down within the next six months.

Closure of Ascension St Elizabeth

The decision to close Ascension St Elizabeth comes after Prime Healthcare and Ascension Illinois negotiated a purchase price of $5 million for the hospital. 

According to the filings, the hospital’s only inpatient service—acute mental illness—saw an average daily census of 16.96 patients throughout 2023. 

The hospital is located just a block and a half away from another facility included in the transaction, which also offers acute mental illness inpatient services alongside comprehensive emergency care.

In a letter to state regulators, a consultant hired for the transaction stated, “It is not believed that the proposed discontinuation will hinder the ability of area residents to access hospital services in any appreciable manner.”

The hospital's emergency department, which is currently on "standby," reportedly sees just two to three patients weekly. 

The organizations plan to discontinue Ascension St. Elizabeth’s services in the next six months and are expected to file the required Certificate of Need Application with state regulators soon.

Comprehensive Deal Beyond Hospitals

In addition to the nine hospitals, Prime Healthcare’s acquisition will include two ambulatory surgical centers in which Ascension Illinois held a 51% interest, as well as other facilities and programs outside the jurisdiction of the state regulator. 

These include four long-term care facilities, a home care program, a hospice, and several medical groups and practices affiliated with the hospitals involved in the deal.

Prime Healthcare is one of the largest for-profit health systems in the US, with 44 hospitals and 300 outpatient centers across 14 states. 

Its nonprofit subsidiary, Prime Healthcare Foundation, manages 14 of these hospitals and will oversee one of the nine hospitals in this transaction.

Future Plans

Prime Healthcare has further announced plans to invest $250 million into the acquired facilities, aiming to upgrade systems and technology. The health system also confirmed its intention to retain nearly all employees affected by the acquisition. 

However, despite these commitments, the closure of Ascension St Elizabeth highlights the strategic decisions Prime Healthcare is making to streamline operations and focus on more profitable services.

Dr Sunny Bhatia, president and chief medical officer of Prime Healthcare, emphasized the company’s mission in a joint statement, “Our agreement with Ascension reflects our decades-long mission of saving, improving, and investing in community hospitals.” 

This sentiment was echoed by Polly Davenport, President and CEO of Ascension Illinois, who stated, “Prime Healthcare’s Mission and commitment to clinical excellence and health equity will carry on this legacy, ensuring that the greater Chicago area has sustainable, quality healthcare access long into the future.”

The deal comes as Ascension Illinois has been grappling with financial difficulties. The nonprofit health system ended the 2023 fiscal year with a net loss of $2.66 billion, although there were signs of recovery in the first half of 2024. 

Ascension's operational challenges mirror those faced by other health systems, with rising operating costs and the need for increased revenue driving such transactions.

Under the agreement, eight of the hospitals will transition to for-profit status, while St Francis in Evanston will remain a nonprofit under the Prime Healthcare Foundation. 

This acquisition, the largest in Prime Healthcare’s history, is a significant move in the ongoing consolidation of the US healthcare system, particularly in Illinois.