Two Michigan Nonprofit Hospital Systems in Merger Talks

Two of the largest hospital systems in Michigan, and the , have announced plans to merge.

The proposed merger would create an organization with $6.4 billion in annual revenue, ten hospitals, and two hundred patient care sites. A definitive agreement for the merged entity is expected to be completed in the first half of 2013. While that entity will be governed by a single board and the and Henry Ford Foundation will be combined, the medical staffs of the two systems will remain independent.

Although hospital officials told the that facility closings or widespread layoffs are not anticipated, the announcement is seen as the latest in a series of partnerships, mergers, joint ventures, and other arrangements as hospitals around the country adjust to changes in the healthcare sector. In many ways, Michigan, where a system of well-funded union-negotiated benefits has been eroded and hundreds of thousands of auto industry workers and retirees have lost their employer-provided coverage, is the leading edge of the trend. Indeed, with patients foregoing treatments or relying more heavily on state-subsidized coverage, healthcare providers in the state have seen their market share stagnate, competitive pressures intensify, and the cost of unpaid bills and unfunded charity care rise.

"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," said Steve Howard, board chair of the Beaumont Health System. "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."

Christina Rogers. "." Wall Street Journal 10/31/2012. "." Beaumont Health System Press Release 10/31/2012.