Sherman Hospital in northwest suburban Elgin, which last month rejected an overture to merge with Centegra Health System, has had recent talks to partner with Advocate Health Care, the Chicago area’s largest provider of medical care.

Advocate has been among the most aggressive of the area’s hospital operators in seeking mergers and acquisitions to grow its network of hospitals, clinics and doctor practices across the state. Advocate would not elaborate on the scope of the discussions or when the two parties last met.

Sherman is independent, like many of the facilities Advocate has merged with in recent years. Last year it opened a new 255-bed replacement hospital that has all private rooms. The facility was financed mostly with debt.

Across the country, independent hospitals are looking into partnerships, while others are seeking investors or mergers. The market is demanding economies of scale, and hospitals need large amounts of capital to stay competitive with new computer systems, electronic record-keeping and the latest developments in medical technology.

“We have had conversations with Sherman Hospital,” Advocate said in a statement to the Tribune. “Given the current health care climate, Advocate Health Care has had discussions with multiple organizations. While there has been no recent escalation in any of our discussions, we certainly have the utmost respect for Sherman Hospital and their leaders.”

Last month, Sherman’s talks with Centegra, which owns hospitals in Woodstock and McHenry, broke down. Centegra had approached Sherman about a merger but the parties could not come to an agreement.

“Sherman’s board has made no commitment to merging with another healthcare system and is committed to remaining independent for as long as possible,” Sherman said in a statement to the Tribune. “We will continue to maintain open lines of communication with other healthcare providers as we consider the potential value of joining with other providers in order to strengthen Sherman and to better fulfill our mission.”

Though hospitals are expected to benefit from an influx of more than 30 million uninsured patients who will gain access to subsidies to pay for their medical care under the health overhaul law, money for that coverage does not kick in until 2014.

In the meantime, hospitals continue to feel the effects of a stagnant economy and high unemployment. They are seeing more Americans struggling to pay their medical bills, rising numbers of charity-care patients who have no money to pay for their care and a dip in elective surgeries, such as knee or hip replacements.

Observers have also mentioned another potential partner for Sherman is rival Alexian Brothers Health System, a nearby rival that owns hospitals in Hoffman Estates and Elk Grove Village.
Alexian Brothers, however, told the Tribune that it is “has not been involved in discussions, negotiations or meetings related to joining or partnering with Sherman Hospital.”

bjapsen@tribune