PORTAGE PARK — For sale: one aging, money-losing hospital that faces an uncertain future in the midst of sweeping changes in the health care industry.
It is unlikely that Our Lady of the Resurrection Medical Center in Portage Park will remain a full-service hospital after it is sold by Presence Health because of waning demand for in-patient services, two health care analysts said this week.
Although Presence Health officials have said a new owner of the hospital will be required to keep Our Lady of the Resurrection open as a general acute care medical center and to retain the hospital's 900 employees, that may not be possible, said Allan Baumgarten, a Minneapolis-based health care analyst who studies the Illinois market.
"I don't think they'll be able to keep all of the promises that they've made," Baumgarten said.
Presence Health CEO Sandra Bruce expressed confidence last week that the hospital would remain open after being sold, despite losing $9.8 million in 2013 and $12.5 million in 2012 even after extensive cost-cutting efforts. Losses for 2014 could reach $20 million, officials said.
There are "many" organizations that may be interested in adding Our Lady of the Resurrection to their portfolios of hospitals, Presence Health officials said in a statement Wednesday.
Kaufman Hall, a financial services firm hired as an adviser by Presence Health, has identified approximately 50 organizations that may be interested in buying Our Lady of the Resurrection. Kaufman Hall has begun contacting the potential buyers to gauge their interest in the Portage Park hospital, officials said.
Despite the confidence of Presence Health officials, there is no longer the demand for a hospital with 269 in-patient beds and a full-service emergency room like Our Lady of the Resurrection because of changes prompted by the Affordable Care Act, or Obamacare, Baumgarten said.
"It is unlikely to operate as a full-service hospital, not at the scale it is currently operating," Baumgarten said. "It failed at doing that."
While Obamacare will allow more people to get health care insurance, that will not translate into more hospital admissions, Baumgarten said. Instead, the law is likely to increase the demand for outpatient services, he added.
Jordan Shields, vice president of Chicago-based Juniper Advisory, an investment bank that counsels hospitals on mergers, acquisitions and financial issues, said Presence Health would have no trouble finding a buyer interested in turning Our Lady of the Resurrection into an outpatient services center, like a long-term care facility.
"To keep it as a general acute care hospital, they will have to sweeten the pot," Shields said.
That could mean Presence Health would offer to cover the hospital's debt, essentially paying the new owner to take the facility off its hands, Shields said.
Firms interested in purchasing the 60-year-old facility at 5645 W. Addison St. could also be interested in reducing the number of inpatient beds while keeping the emergency room open — which is similar to a plan considered earlier this year by Presence Health officials that was ultimately rejected, Baumgarten said.
That plan was roundly criticized by residents and local elected officials, who said it would turn Portage Park into a "health care desert."
Employees and Ald. Tim Cullerton (38th) have welcomed the sale, and said they hoped the hospital's new owner would invest in the facility and expand its services.
Other possibilities include the hospital being turned into a rehabilitation facility, a convalescent home or some other kind of outpatient services center, Baumgarten said.
It was not a surprise that Presence Health, which owns 12 Chicago-area hospitals, chose to sell Our Lady of the Resurrection, Baumgarten said.
"It is emblematic of what is happening throughout the nation in health care," Baumgarten said.
Despite all of the challenges presented by Our Lady of the Resurrection, Dallas-based Tenet Healthcare Corp., which bought Weiss Memorial Hospital in Uptown in August, might be interested, Baumgarten said.
"The geography would be complementary," Baumgarten said.
Donn Walker, a spokesman for Tenet, said it was against company policy to comment on rumor or speculation.
St. Louis-based Ascension Health, which specializes in acquiring troubled Catholic hospitals and converting them to for-profit operations, could also be interested, Baumgarten said.
"It could be an opportunity for an organization looking to break into the Chicago area," Baumgarten said.
A representative for Ascension did not respond to a request for comment.
Bruce said last week a Catholic health system or hospital would be given preference over other potential buyers. In addition, a bid for the hospital from a not-for-profit firm would be preferred to one from a for-profit group, she said.
But, Baumgarten said "they may have no choice to sell to a for-profit operation."
Another potential buyer might be Livonia, Mich.-based CHE Trinity Health, which operates the Loyola University Medical System and Mercy Hospital, Baumgarten said.
Spokeswoman Eve Pidgeon said Trinity routinely explores partnerships with other health care organizations, but said there were no specific plans for the company to bid for Our Lady of the Resurrection.