Southfield — The view from John Fox’s office window is all freeway, but the CEO of the combined Beaumont Health can see more consolidation coming in the hospital business.
Not necessarily now, and not necessarily for the combination of Royal Oak-based Beaumont, Oakwood Health System and Botsford that he leads. It’ll happen, as it already has among health insurers and Big Pharma, because it has to — the better to navigate a health care landscape being reshaped fundamentally by technology and the controversial Affordable Care Act.
“Yes, I believe” consolidation “is coming, and given that it’s coming we will not turn a blind eye to it,” Fox said in an interview. “We’re not in active discussions with anybody. We’ve got a full plate.
“Our priority is to make sure we have a successful merger. Anybody who’s in my job with an IQ over 80 has to look at who’s in the neighborhood. And I assume others are doing it, too. The next step is where the billion-dollar players are merging with each other. I can’t predict the timing on that.”
The three-way merger of Beaumont, Oakwood and Botsford closed 13 months ago, creating Michigan’s largest hospital system with annual revenue of $4.3 billion and 35,000 employees. It melded three organizations into one with eight hospitals in two counties and 168 sites, including doctors’ offices, outpatient surgery centers, imaging and therapy centers and nursing homes.
Fox arrived last March from Emory Medical Center in Atlanta, an outsider free of the bias and baggage that an insider can bring to running a combined company seeking to create a new corporate culture. The transition, much of it put in motion by his predecessor, resulted in just 11 departures in senior management — some through retirement, a “much smaller fallout than I expected,” Fox says.
Gone is the Beaumont burgundy and the Oakwood green in the system’s livery, replaced by blue-and-white branding that proved to be trusted and reassuring to focus groups. All of the system’s employees are on a single Beaumont email system; financial management and accounting are combined.
The effort to launch common electronic medical records, accessible by all Beaumont hospitals and properly accredited doctors, is nearly complete. Botsford Hospital, the smallest of the three founding entities, is the last to adopt the new system and should be complete by month’s end.
“Overall, we’re doing well,” Fox says, adding that the combination of three health systems is coalescing around the common metrics of quality, safety and other standards for care. “We’re doing a little better than budget. Volumes are up.”
Uncertainty is, too. Rolling implementation of Affordable Care Act continues to reshape the building blocks of American health care. Merger mania is not done for hospitals, or pharmaceutical companies or insurers, giving bigger players in the industry’s co-dependent segments more power to move pricing up and some benefits down.
He predicts mergers and acquisitions among health insurers will produce three mega players — Aetna, Anthem and United Healthcare — theoretically reducing competition in ways the Affordable Care Act’s architects did not intend. That doesn’t mean it isn’t happening.
The Michigan market is not immune, either. A push toward developing a statewide presence, and more scale, could drive more mega-mergers here, where the top nine hospital systems deliver 80 percent of the health care bought by employers for their employees.
Those are trends hospital systems cannot control so much as manage as they look for opportunities. Closer to home, Fox envisions the suburbs-based Beaumont working with competitors to look for ways to become more closely connected to Detroit and its needs.
Should Beaumont be exploring seriously the prospect of opening clinics in the city? Could it work with competitors and perhaps the county mental health authorities to devise a regional mental health care system to address needs “so patients don’t get stuck in the middle,” as he put it?
Not bad ideas for a dynamic health-care sector around here whose leaders have a bias for dictating events instead of the other way around. They’re building and investing, leading as much in redevelopment as they are managing seismic change.
Henry Ford Health System, a would-be partner with Beaumont until their proposed merger fizzled over control, is pressing ahead with a $110 million cancer center, part of its $500 million project in the neighborhood near its flagship hospital. Detroit Medical Center has a new heart hospital and is beginning construction on a new Children’s Hospital of Michigan.
All good, that, evidence that change remains the biggest constant for major health care providers around here, John Fox’s Beaumont included.
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays and can be found at http://detroitnews.com/staff/27151.
Catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.