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01-11-2012 | Article

Michigan healthcare systems plan to tie the knot


News release

medwireNews: Two Michigan-based health systems are planning to merge into a single, non-profit entity worth approximately $ 6.4 billion.

Beaumont Health System and Henry Ford Health system have announced they have signed a letter of intent to merge.

The proposed merger was approved by the boards of the two not-for-profit systems. The new, as yet unnamed organization will include all of the assets, liabilities, and operations of both Beaumont and Henry Ford.

The Henry Ford Health System includes a 1200-member medical group, seven hospitals, a health insurance and wellness company, a physician network, a 150-site ambulatory network, and other health-related entities throughout southeastern Michigan.

Beaumont Health System consists of three hospitals in Royal Oak, Troy, and Grosse Pointe, Michigan, with 1726 licensed beds, more than 14,000 full-time equivalent employees, and nearly 3100 physicians. The hospitals are affiliated with the newly chartered Oakland University William Beaumont School of Medicine.

The merger is a response to the growing trend toward consolidation among US healthcare providers, the companies say.

"Both systems recognize that the way health care is provided today ‑ where it is offered, how it is paid for, how it is measured ‑ is changing dramatically," Steve Howard, chairman of the Beaumont Health System board of directors, said in a statement. "Reimbursement for care is declining, the care itself is shifting to more convenient outpatient settings and more emphasis is being placed on keeping people healthy, not just treating them when they are sick."

"Our shared vision is to form a new organization that will develop improved approaches to patient care that will lead the nation in quality outcomes, service, access and reliability," said Henry Ford Chief Executive Officer Nancy M Schlichting.

The hospital networks say that the decision to combine their systems sprang from the realization that there is strength in numbers, and that they could operate more efficiently by reducing competition for patients, and by combining their buying power to purchase equipment and supplies, and negotiate service contracts.

The organizations cite a national survey of healthcare leaders conducted earlier in 2012, which found that three-quarters of US healthcare systems were pursuing or considering some kind of partnership or alliance with another system.

By Neil Osterweil, medwireNews reporter