Michigan’s Beaumont Health System finds new partners

After a deal to merge with the Detroit-based Henry Ford Health System fell through last year, Beaumont Health System wasted no time reaching out to other potential partners and has now gone public with plans to affiliate with Oakwood Healthcare and Botsford Health Care.

On Thursday, the Royal Oak, Mich.-based not-for-profit health system announced that it and fellow not-for-profits Oakwood Healthcare of Dearborn, Mich., and Botsford Health Care of Farmington Hills, Mich., have signed a letter of intent to combine their operations into a single $3.8 billion not-for-profit health system that encompasses eight hospitals and 153 other patient care sites.

In economic terms, the resulting healthcare network will be smaller than that which would have been created had Beaumont merged with Henry Ford — a deal that would have created a $6.4-billion, 10-hospital institution. However, merging with two smaller systems that operate in a similar manner to Beaumont may be easier than trying to merge with a larger entity with a very different physician culture. Beaumont physicians have traditionally operated as independent groups that sign physician services agreements with the hospital network and have privileges at one or more of Beaumont’s three hospitals. Henry Ford physicians are much more likely to be employed by the hospital directly and do not operate as independently.

According to Beaumont the agreement with Botsford and Oakwood is neither a merger nor an acquisition. However, if no deal-breaking problems develop during the due diligence period and they receive regulatory approval, a unified executive and board leadership will be formed to head the combined healthcare network, making the partnership very similar to a traditional merger in practice.

Goals for the deal include coordinating patient care across the network, integrating medical records and improving operational efficiency through group purchasing and reducing duplication in tasks. Beaumont’s website notes that while the due diligence period will include looking at areas where they may be double staffed after the partnership, all three systems are committed to handing staff reductions through attrition when possible. They also do not currently anticipate closing facilities as the three organizations’ services areas are generally complimentary and not overlapping.

Beaumont Health System has hospitals in Royal Oak, Troy and Grosse Pointe that combined total 1,778 licensed beds and employ more than 14,000 staff and nearly 3,100 physicians, including 500 employed physicians in the Beaumont Medical Group and more than 2,600 private-practice physicians. It also has numerous community-based medical centers in Oakland, Macomb and Wayne counties, family practice and internal medicine practices, five nursing centers, a research institute, home care services and hospice. 

Botsford Health Care includes the 330-bed Botsford Hospital and the Botsford Commons Senior Community, both in Farmington Hills, as well as the Community Emergency Medical Service, an ambulance and emergency care provider for Southeastern Michigan communities. It employees 2,500 people and has more than 600 physicians.

Oakwood Healthcare has four acute care hospitals and more than 50 outpatient facilities in Wayne County. It employs 9,000 people and has 1,300 physicians.

Although all three organizations had been looking carefully at how they could make care delivery as efficient as possible, financial pressure from healthcare reform was not the primary motive behind the partnership noted Botsford CEO Paul LaCasse in an interview with the local paper the Dearborn Press and Guide.

Brian Connolly, president and CEO of Oakwood Healthcare, concurred in the official press release. "This is really all about improving patient care for men, women and children in our respective communities,” he stated. "If we join forces, we can and we will use quality data and standardized best-practice treatment protocols across the continuum of care for improved health and greater value for the families we serve."