RHS has pursued mergers before, most recently with OSF, and Cadence is itself the result of a merger between Central DuPage Health System and Delnor Community Health System, which was based in Geneva.
Efficiency and cost savings are two of several reasons cited for pursuing the merger. “Together, we can build a leading multi-regional health system that meaningfully improves access to care, elevates quality, and lowers cost to deliver the best care and value to the communities we serve," said Mike Vivoda, President and Chief Executive Officer, Cadence Health in a news release.
But the reasons why hospitals are seeking to merge have a lot to do with how the government pays for health care, specifically through Medicare and Medicaid reiumbursements and Obamacare.
Many cash strapped states have cut Medicare and Medicaid reiumbursement rates, forcing hospitals to look for ways to utilize larger economies of scale and cut costs.
The future of medicine under Obamacare is also a major driver of mergers. Obamacare changes the 'fee-for-service' model used in the past to a 'reimbursement-per-condition.' The intent is to provide incentives to keep patients healthier, but the practical impact is to also force hospitals to look for ways to economize. Obamacare also mandates that hospitals use processes such as electronic record keeping which is much easier for larger systems to implement efficiently.