Loyola University Chicago and Trinity Health of Novi, Mich. have signed a letter of intent that could lead to Loyola selling its medical center to  Trinity, it was announced Friday.

Loyola joins a growing number of health care organizations across metropolitan Chicago have either completed acquisitions, announced intentions to merge, or have stated they are seeking to partner with other health care organizations.

Consumers, insurance companies and the new health care reform law are presenting hospitals with the challenge to deliver higher-quality care at a lower cost. To accomplish this goal, hospitals believe that bigger is better, as larger health care organizations can create economies of scale to reduce expenses, combine revenues to invest in new technology, increase negotiating power with insurance companies, and attract a larger pool of doctors to offer better care.

Larger health care organizations also can cut  back office operations, such as accounting, supply purchases, food services.  But there is no word on whether the merger would result in layoffs.

Here is a press release from the university about Friday’s merger plan:

Loyola University Chicago (LUC) and Trinity Health (Novi, Mich.) have signed a Letter of Intent (LOI) that could lead to the consolidation of Trinity Health and the Loyola University Health System (LUHS), a wholly owned subsidiary of the University. The LOI provides a framework for the partnership and begins the formal process of creating the operating model for consolidating the two organizations.

Together, LUC, Trinity Health, and LUHS (Maywood, Ill.) would strive to become one of the nation’s leading providers of Catholic health care, research, and medical education and a model for physician, provider, and community collaboration.

“After a number of conversations with both local and national Catholic health-care systems, LUC determined a partnership with Trinity Health provides the greatest opportunity to invest in and grow the Loyola University Health System while securing the future of the University’s Stritch School of Medicine and Marcella Niehoff School of Nursing,” said Michael J. Garanzini, S.J., president of Loyola University Chicago. “The consolidation would call for substantial investments to advance the future of health sciences and medical research, including $150 million for a state-of-the-art medical research enterprise on the medical center campus in Maywood.”

With the LOI in place, leaders representing the three organizations are further evaluating the potential for consolidation and are completing a number of necessary steps, including filing for regulatory approvals, drafting a Definitive Agreement, planning for transition, and obtaining LUC and Trinity Health board approval.

“The health-care industry is going through accelerated change across the country, and so we believe that now is the right time for LUC and Trinity Health to seize the opportunity to strengthen Catholic health care,” said Joseph R. Swedish, president and CEO of Trinity Health. “While there is much work ahead during this transition period, I am confident that together, Trinity Health, in collaboration with LUC and LUHS, will become a catalyst for Catholic collaboration in Chicago and across the nation.”

The consolidation will allow LUHS to accelerate progress on its strategic goals.

“This is a natural collaboration that is occurring at a pivotal point in our history. When Trinity Health’s resources are combined with Loyola’s renowned physicians and intellectual capital, our plan for growth in patient care, education, and research take a giant leap forward,” said Paul K. Whelton, MB, MD, MSc, president and CEO of LUHS and senior vice president for health sciences at LUC.

The two health-care systems would complement each other and leverage their collective talent and size:

• Trinity Health, based in Novi, Mich., is the fourth-largest Catholic health system in the United States with operating revenue of more than $7.1 billion and 48,000 employees. It has one of the nation’s most extensive electronic medical record systems and has been recognized by several national organizations for top quality and patient safety. Trinity Health’s strong operating results and AA bond rating allow favorable access to financing and the ability to make needed capital, research, and medical education investments.
• LUHS is a leading Jesuit academic medical center with a multidisciplinary focus on delivering outstanding patient care, leading-edge research and rigorous medical, nursing, and graduate education. The system has one of the largest networks of practice sites in the region with a total of 28 facilities. LUHS serves as the training ground for students at Loyola University Chicago’s Stritch School of Medicine and Marcella Niehoff School of Nursing. The Medical Center campus in Maywood includes the Cardinal Bernardin Cancer Center, the Ronald McDonald Children’s Hospital of Loyola, a leading Burn/Trauma Center, and the Center for Heart & Vascular Medicine. LUHS has a second medical campus in Melrose Park, Ill., which is the home of Gottlieb Memorial Hospital. Trinity Health, LUC, and LUHS expect the consolidation to result in the implementation of new, innovative, and efficient health-care delivery models both regionally and nationally. Leaders of both organizations will collaborate to better serve people in our local communities, including those who are underserved and uninsured, and to strengthen and preserve both research and education.