Ranks of independent hospitals shrink
Metro Detroit will be down to its last independent hospital after a Rochester hospital said Tuesday it is being sold and a Monroe hospital became part of another health care chain.
Crittenton Hospital Medical Center, a 290-bed acute health care facility in Rochester, signed a letter of intent to join Ascension Health Michigan, a Catholic system that is part of the country’s largest nonprofit health care provider. No financial information was released.
Monroe-based Mercy Memorial Hospital System also said Tuesday it finalized a deal to become part of ProMedica, a health care company serving northwest Ohio and southeast Michigan. The new name for the hospital will be ProMedica Monroe Regional Hospital.
If the Crittenton deal is completed in six months, Doctors’ Hospital in Pontiac would be the four-county region’s last remaining independent hospital.
“With the exception of Doctor’s Hospital in Pontiac, all of the other hospitals are part of a system,” said Laura Wotruba, spokeswoman for the Michigan Health and Hospital Association.
“This is a national trend. It’s something we’ve been seeing around the country.”
Crittenton is among the last of two independently operated hospitals in the region, where health care has been dramatically reshaped since the sale of the Detroit Medical Center to the national for-profit hospital chain Vanguard Health Systems in 2011. Vanguard was acquired by Tenet Healthcare Corp., another for-profit group, in 2013.
In the past year, other independent hospitals such as Botsford Health Care in Farmington Hills and Garden City Hospital have been absorbed into larger health care chains because the federal Affordable Care Act of 2010 puts pressure on hospitals to cut costs and consolidate.
Botsford became part of the Beaumont Health system after it and Oakwood Healthcare merged in September to form Beaumont Health, Michigan’s largest health system. The sale of Garden City Hospital to Prime Healthcare Services closed in July. In November, Saint Joseph Mercy Health System and Livonia-based Trinity Health agreed to sell St. Joseph Mercy Port Huron Hospital to a California-based health care company.
“There’s not much out there after Crittenton that’s independent, not part of a health care system,” said Marianne Udow-Phillips, director of the University of Michigan’s Center for Healthcare Research and Transformation.
“Under the ACA, hospitals in particular are under more financial pressure, so they’re looking for economies of scale. Bigger systems can spread those costs better than a smaller system.”
If the deal is completed, Crittenton will join Ascension’s 1,900 hospitals and clinics nationwide including St. John Providence Health System in southeast Michigan, Borgess Health in Kalamazoo, Genesys in Grand Blanc, St. Mary’s of Michigan in Saginaw and St. Joseph Health System in Tawas.
“Crittenton is joining Ascension Health Michigan in order to create a clinically integrated network of care that best serves our patients,” said Gwen MacKenzie, senior vice president and Michigan market leader for Ascension Health Michigan.
Although the federal health care law has provided a push, the trend of hospital consolidations started well before the law was approved in 2010.
Besides cost cutting, Wotruba said, the loss of independent hospitals has occurred because there has been a shift from hospital care to outpatient care, spurred by advancement in technology that allows physicians to provide more tests and procedures away from big medical facilities.
“The ball was rolling already,” she said. “Care has gotten more specialized, too, so having access to specialists within a larger system also sometimes makes sense.”
Crittenton officials acknowledged Tuesday that financial pressures encouraged the sale.
Crittenton President and CEO Roy Powell said the partnership, if finalized, will “dramatically improve the financial and operating foundation of Crittenton and continue its upward trend of financial stability.”
The deal still needs to be evaluated during the next six months before it is finalized. MacKenzie said “The topic of staff reductions has not been part of the conversation.”
If the deal is completed, Crittenton will expand Ascension’s growing footprint in Michigan. Ascension and Trinity Health aligned in 2014 to form Together Health Network, a physician network positioned to provide statewide access to health care, according to officials. Crittenton’s medical staff includes nearly 500 physicians and serves Oakland, Macomb and Lapeer counties.
But the Rochester hospital wasn’t eager to join a health care system three years ago.
In 2011, Crittenton told the owner of the Detroit Medical Center that it wanted to remain independent when Tennessee-based Vanguard Health Systems officials visited.
“What we’re looking for is partners, not parents,” then-Crittenton President and CEO Lynn C. Orfgen told The Detroit News in February 2012.
But the longtime CEO retired four months later after the Rochester hospital received a lender’s notice that it had fallen below a benchmark on its ability to make debt payments on several bonds. An analyst in 2012 said the hospital had trouble covering its debts.
Minneapolis-based hospital analyst Allen Baumgarten named the need to constantly update information technology systems and facilities as among the pressures that may induce hospitals to join forces.
“Unless an independent hospital has some special advantage, such as dominance of a desirable geographic area,” Baumgarten said, “it will have a very difficult time meeting the challenges facing provider systems.”