Beaumont enters merger talks with west Michigan's Spectrum Health
In a bid to extend its influence statewide, Southfield-based Beaumont Health said Thursday it has entered merger talks with the west Michigan health system Spectrum Health.
Leaders of Beaumont and the Grand Rapids-based Spectrum Health system said Thursday they have signed a letter of intent to explore creating a new health system. Priority Health, Spectrum's Michigan-based health insurance plan, would be part of the new entity. It enrolls 1.2 million customers.
The merger would result in a new system temporarily called BHSH System with 22 hospitals, 305 outpatient locations and 64,000 employees, according to the health systems. The new health system would operate dual headquarters in Grand Rapids and Southfield, with the executive leadership team spending time on both sides of the state, according to the announcement.
Beaumont's latest expansion bid seems likely to cause controversy. Michigan's largest hospital system ended talks in October with an Illinois- and Wisconsin-based system after that potential deal was widely contested by a broad coalition of physicians, nurses, hospital staff, community members and lawmakers.
A tie-up with Advocate Aurora Health, based in Milwaukee and Downers Grove, Illinois, would have made the nonprofit Beaumont Health part of a 28-hospital health system across Wisconsin, Illinois and Michigan. Critics argued the merger would result in a loss of local control over the health system.
John Fox, president and chief executive officer of Beaumont Health, has been a lightning rod for critics of Beaumont Health's past merger talks. But Fox plans to leave the organization after the transition to the new health system, according to the press release.
The merged system would be led by Tina Freese Decker, president & CEO of Spectrum Health. The first board chair would be Julie Fream, who now heads the board at Beaumont Health.
"We'll continue to have relationships with Wayne State University, Oakland University and Michigan State University," Decker said in an interview with The Detroit News.
"We're really proud that we have so many residencies and fellowships, at both Beaumont Health and Spectrum Health, and we continue to grow in those, as well as investing in research and in clinical trials."
Beaumont Health's Fream said said physicians will be included in the planning and transition.
"Recently our system added three physicians that are in our system to our Board of Directors, and this has given us a lot of insight into the needs and the future direction the physicians would like to take the organization," Fream said, noting the three new positions bring to six the number of doctors on the board.
Oakland County Executive David Coulter didn't oppose the proposed merger, but said he was awaiting more information.
“As Oakland County’s largest employer, Beaumont Health is vital to the health and well-being of residents throughout Southeast Michigan," Coulter said in a Thursday statement. "...“The long-term financial health of Beaumont is crucial, not only to the people who seek health care at the hospitals, but for more than 18,000 employees of the health system. I appreciate that concerns about a previously proposed Beaumont alliance were considered, and I look forward to hearing more details about the new partnership."
In the proposed merger talks, Beaumont has eight hospitals and about 33,000 employees in Metro Detroit. The Southfield-based system has 3,375 hospital beds and a net revenue of $4.6 billion.
Spectrum Health dominates the west Michigan market with 14 hospitals and 31,000 workers. The Grand Rapids-based system has 2,573 hospital beds and a net revenue of $8.3 billion.
Beaumont Health and Spectrum leaders are arguing the merger would improve the efficiency and affordability of health care because of the increased size and economies of scale, allow it to invest more money into operation and improve care and health coverage because it would include Priority Health. The combined health system would also be better able to attract and retain top health care professionals as well as improve in-home and virtual care, according to the joint press release.
Fream said the health systems are moving forward on regulatory approvals and the proposed merger could be approved as soon as this coming fall.
A merged Beaumont/Spectrum system would include:
305 outpatient locations
64,000 team members
7,500-plus affiliated, independent and employed physicians
3,000-plus affiliated, independent and employed Advanced Practice Providers