Top officials at Beaumont, Oakwood and Botsford hospitals announced March 21 that they have signed a letter of intent to explore combining the three health care systems into one $3.8 billion new entity.
The new health system would integrate eight hospitals and 153 other patient care sites into one health network operating under one executive board.
Beaumont Health System had explored combining operations with Henry Ford Health System in October 2012 and signed a letter of intent, but officials from both groups decided in May 2013 not to go forward with it, in part because plans to preserve medical schools in Detroit and Royal Oak lacked support, according to Nancy Schlichting, CEO of Henry Ford Health System. Also, there were unresolved differences in the health system structures and business models, according to Gene Michalski, president and CEO of Beaumont Health System.
Botsford, Beaumont and Oakwood officials have begun due diligence discussions, which are expected to take at least 90 days.
Michalski said this plan differs from the one with Henry Ford Health System in that the geography does not overlap and physician practice models of the three systems are very similar. He said this process is “very purposefully including physicians.” He added that they all plan to maintain existing medical school relationships.
“The physicians are very encouraged,” said Dr. Paul La Casse, president and CEO of Botsford Health Care. “It’s early in the process, but we’re excited about the opportunity. It could be transformational. We think we’ll do a better job with safety, efficiency and contributing to affordability.”
“It’s not a merger,” said Brian Connolly, president and CEO of Oakwood Healthcare. “It would be a new company, an entirely new entity and new health care system.”
Connolly added that the “synergies would create significant cost savings in areas such as informational technologies, purchasing opportunities and operational efficiencies. The business case is the strongest part of the opportunity.”
Michalski described the new organization as “a parent with the three current organizations as subsidiaries.” He said the due diligence process would involve reviewing and taking inventory of all facilities.
“It will be a different organization using best practices of all three organizations. It will help all three of us get better than we are today. It’s a great opportunity to improve care and provide the best care at an affordable price.”
Connolly said there are no plans to close any hospitals.
“It’s great news for patients,” he said. “The opportunity to improve health care is tremendous. We’re champing at the bit to begin this new venture together.”
According to the prepared statement, Beaumont Health System is a three-hospital regional health system with 1,778 licensed beds, more than 14,000 full-time equivalent employees and nearly 3,100 physicians, including 500 physicians in the Beaumont Medical Group and more than 2,600 private-practice physicians. In addition to its hospitals in Royal Oak, Troy and Grosse Pointe, Beaumont has numerous community-based medical centers in Oakland, Macomb and Wayne counties, as well as family practice and internal medicine practices, five nursing centers, a research institute, home care services and hospice service. Beaumont is the exclusive clinical teaching site for the new Oakland University William Beaumont School of Medicine.
Botsford Health Care is an integrated health care system including Botsford Hospital, Botsford Commons Senior Community and Community Emergency Medical Service. Botsford Hospital is a 330-bed hospital and verified trauma center in Farmington Hills. Each year, Botsford cares for more than 16,000 inpatients and 60,000 emergency trauma patients with 2,500 employees, 300 volunteers and more than 600 physicians. The hospital is home to a medical education program affiliated with Michigan State University’s College of Osteopathic Medicine. Botsford Commons Senior Community, located in Farmington Hills, provides a variety of residential choices for the elderly: independent living in condominiums and apartments, a senior assisted living center, and a rehabilitation and continuing care center. Community EMS provides ambulance transportation, and emergency and nonemergency treatment, along with educational services to health care organizations, municipalities and communities throughout southeastern Michigan.
Oakwood Healthcare is an independent, not-for-profit health care organization committed to improving the health and well being of the individuals and communities in Wayne County, according to the organization. As one of the largest employers in the county, Oakwood provides acute, specialty, primary and preventative care services. With four acute care hospitals and more than 50 outpatient facilities, Oakwood’s 9,000 employees and 1,300 physicians represent nearly every medical and surgical specialty and subspecialty.