Henry Ford, Beaumont To Merge
Henry Ford Health System and Beaumont Health System have signed letters of intent to merge their organizations and create a powerhouse hospital network in the greater Detroit area.
The combined organization would include 10 hospitals and 200 other sites, such as clinics and medical offices, where patients receive care. The system would have revenues of more than $6.4 billion a year and nearly 40,000 employees.
“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 Ford Chief Executive Officer Nancy M. Schlichting. “It is a bold and exciting vision that will mean easier, more accessible and more integrated care for our patients. Coming together allows us to create a ‘Pure Michigan’ community-based system that will serve as an engine of innovation and economic development.”
Officials with both hospital systems say a merged entity would be able to provide better coordinated care, linked throughout by an electronic medical record system (both parties use the EPIC platform). It is also expected to help cut costs, although officials from both organizations did not discuss specifics at a news conference in Detroit last week. However, Schlichting indicated that some facilities could close at an unspecific date in the future.
A merged system would also allow more bargaining power in negotiating with insurers, according to observers.
A larger hospital entity prevents the managed care plans from driving rates too far down,” hospital merger expert Joshua Nemzoff told Crain’s Detroit Business. Nemzoff added that he didn’t expect a dramatic amount of leverage from a merger.
Although Henry Ford is bringing seven of the 10 hospitals to the deal, the merged system would be governed by a single board with equal representation from both entities. The Detroit-based Henry Ford and and Royal Oak-based Beaumont will still use their brand names, but a single new name for the system will be agreed on in the near future.
The merger, pending regulatory approvals, is expected to be completed by mid-2013.
The two hospitals have created a website, www.futurecareformichigan.com, to discuss the pending transaction in greater detail and answer questions from consumers and other stakeholders.
