Beaumont, Henry Ford move to merge health care operations

By: Terry Oparka, Chris Jackett | Royal Oak Review | Published November 7, 2012

ROYAL OAK — Two major providers of health care in metro Detroit announced plans for a merger Oct. 31, but it’s unclear if any existing facilities will close as a result.

Beaumont Health System, the largest employer in Oakland County, and Henry Ford Health System announced that the two systems signed a letter of intent to merge operations into a $6.4 billion organization.

Bob Ortlieb, spokesman for Beaumont Health System, stressed that both Beaumont and Henry Ford have started a period of exclusive negotiation and due diligence. Any agreements for the new organization are not expected to be complete until mid-2013.

Gene Michalski, CEO for Beaumont Health System, said at a press conference held at Beaumont Hospital in Royal Oak that Beaumont and Henry Ford are “perfect partners because of our shared values, history of innovation and strong leadership in value, quality and safety.”

Henry Ford officials echoed the sentiment on a shared vision.

“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,” Nancy M. Schlichting, CEO of Henry Ford Health System, said at the press conference. “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.”

Royal Oak City Manager Don Johnson said that if the merger is successful, it would not affect Beaumont’s relationship with the city much.

“Both Beaumont and Ford are nonprofit, tax-exempt (organizations),” Johnson said, adding that it would make Beaumont even more of a health powerhouse. “It’s supposed to strengthen Beaumont.”

Johnson said he had heard rumor of Beaumont working on a merger, but only knew as much as was reported by the media.

“Based on the previous rumors, we knew they were trying to work on some sort of merger with someone, but we didn’t know who,” Johnson said.

If the merger occurs, it would mean greater access to a broad network of medical centers and hospitals throughout Michigan, electronic medical record-keeping, combined expertise of specialists from both systems and the ability to attract the best national and international talent, officials said.

Beaumont is a recognized leader in heart and vascular services, orthopedics and surgery, and nursing excellence; while Henry Ford is a recognized leader in neurosciences, cancer and transplants, officials said.

Steve Howard, chairman of the Beaumont Health System board of directors, said that both systems recognized that the way health care is provided, where it is offered, how it is paid for and how it is measured are changing drastically.

“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,” Howard said.

Under terms of the merger, both systems would keep their respective brand names, but the hospital foundations would combine into a single foundation. Medical staffs at both systems would be separate. Research programs would be combined, and collaborative opportunities would be pursued at the existing medical schools.

Bob Riney, president and COO of Henry Ford Health system, said that any staff reductions, which would likely be in the administrative area rather than from staff providing direct services to patients, would be made through attrition and retirements.  

The Henry Ford Health System employs more than 24,000 people at seven hospitals and a 150-site ambulatory care network. Beaumont Health System employs more than 14,000 full-time employees at three hospitals and numerous community-based medical centers in the tri-county area. Including part-time employees, the numbers are even larger.

Ortlieb said the full- and part-time staff at the Royal Oak hospital, combined with employees at the Beaumont Health Center on Coolidge, makes the overall Royal Oak campus a total of 10,196 employees, about 6,000 of which are full time.

“Both organizations are very strong. This is an opportunity to take the best out of both organizations and have great influence on a national level,” Riney added. “That’s what excites us.”

“This is a long journey,” he continued. “There will be no change right away.”