Beaumont to expand to Ohio with Summa Health
Beaumont Health expects to expand into Ohio by partnering with Summa Health later this year, the Southfield-based health system said Tuesday.
The nonprofits have signed a letter of intent and expect to close on the deal, subject to regulatory approval, by the end of the year. The addition of one of Ohio's largest integrated health-care delivery systems as a wholly owned subsidiary of Beaumont would help to bring cost efficiencies at scale as well as provide new opportunities to improve service and care for patients, Beaumont CEO John Fox said.
"In American health care today, there are regional health systems emerging that are crossing state lines and aggregating markets," Fox said. "The pressure we’re all under to get size of scale so we can lower unit costs, become more efficient, more affordable for the consumer is an imperative we take seriously. We’re constantly looking to not only get bigger but also better."
The Summa Health name will continue where it is familiar in Ohio. Akron-based Summa includes four hospitals with a total of 1,300 inpatient beds, community health centers and physician-hospital and multi-specialty physician organizations. The system also runs SummaCare, an individual and commercial insurance program that covers 45,000 people and could expand into Michigan with Beaumont. Summa Health's annual revenues total $1.4 billion, and it employs approximately 7,000 people.
"We got ourselves through a lot of heartaches, we righted the ship, and there's a lot of opportunity to grow in a competitive market," Summa CEO Dr. Cliff Deveny said. "Beaumont is very similar to Summa in its DNA, in how people think. It's focused on the value of care and appropriately providing the care at the right time, right price."
The health systems now will enter into further discussions to create a definitive agreement for the permanent partnership. Fox likened it to when the new Beaumont Health was created in 2014 when Beaumont Health System, Botsford Health Care and Oakwood Healthcare merged.
Summa Health announced in the fall that it was looking for a health system partner with which it could expand its operations. It received responses from multiple health care systems in Michigan as well as several in Ohio and other states.
The health system has made a turnaround in recent years. Summa had posted a $28 million operating loss in 2017 after it switched its emergency medicine contract group, according to its financial statement. That loss also led to it losing its accreditation for its emergency medicine residency program, which it still has yet to regain, though it reapplied last month. Deveny replaced former CEO Thomas Malone in February 2017. Malone previously was an executive at Detroit Medical Center and president of Harper-Hutzel Hospital until 2013.
Summa has "addressed issues operationally" and hopes to earn its accreditation for a new emergency medicine residency program in September, Deveny said.
Beaumont is one of the first Michigan-based hospital systems to venture across state lines. McLaren Healthcare last year completed its acquisition of MDWise, an Indiana-based health maintenance organization.
The partnership with Summa Health is Beaumont's latest expansion announcement. It also is growing its footprint in southeast Michigan with new outpatient campuses in Lenox Township and Livonia, urgent care centers, a Dearborn psychiatric facility and an expansion at its Farmington Hills hospital. It also has applied to build a hospital in Oxford.
Beaumont Health is Michigan’s largest health care system with $4.7 billion in total annual net patient revenue. The organization consists of eight hospitals with 3,429 beds, 145 outpatient sites, nearly 5,000 affiliated physicians and 38,000 employees.