Beaumont, Oakwood, Botsford merger approval could come in fall

By: Terry Oparka | Farmington Press | Published July 23, 2014

FARMINGTON HILLS/METRO DETROIT — Top officials at Beaumont, Oakwood and Botsford hospitals said they will merge the three health systems into one $3.8 billion entity that will carry the Beaumont name.

The hospital boards unanimously approved the plan June 23 after signing a letter of intent March 21.

Hospital officials anticipate that the agreement — which must be approved by the Federal Trade Commission, the Michigan State Attorney General and the Michigan Department of Community Health — will take about three months for final approval.

“What is expected ... is to await approval of this agreement with the Federal Trade Commission and the Michigan State Attorney General,” Beaumont-Oakwood-Botsford spokesman Matt Friedman said. “Optimistically, it will happen this fall. At that point, this deal could close and become final and official.”

Friedman said he is optimistic that the deal will be finalized because of initial conversations officials had with regulators.

“At this point, it is a legal agreement that needs to be approved by regulators,” he said. “There aren’t any wheels in motion at this point in the three hospitals.”

Friedman elaborated that it would be premature to speculate on the conversations discussed, but the transition is going “very well” so far.

“Until it is a done deal, so to speak, there is not really a whole lot that can be said at this point.”

The new not-for-profit health system will be called Beaumont Health.

Beaumont President and CEO Gene Michalski, who will serve as initial CEO of the new health system, said the Beaumont name was chosen after market research testing indicated the strength of the Beaumont name carried regional and national recognition.

The new health system will integrate eight hospitals and 153 patient care sites into one health network operating under one executive board.

Beaumont Health System explored combining operations with Henry Ford Health System in October 2012 and signed a letter of intent, but both decided in May 2013 not to go forward with those plans because preserving medical Schools in Detroit and Royal Oak was not included, 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 Michalski.

Michalski said the differences between this plan and the previously proposed plan with Henry Ford Health System are that the geography does not overlap and the physician practice models of the three systems and cultures at the facilities are similar.

Botsford CEO Dr. Paul LaCasse said the new health system will improve service and access to health care. He said it will standardize best clinical practice, and make medical records and diagnostic testing available in one common electronic data base, eliminating unnecessary tests.

Oakwood CEO Brian Connolly noted that the boards approved the plan unanimously.

“There’s a lot of excitement and a lot of enthusiasm,” he said. The plan presents a cost savings opportunity, he said. He explained that this will involve bringing all offices online to the same electronic system, allowing information to be transmitted easier. It’s also an opportunity to consolidate resources and purchasing functions. He added that patients will have broader access to specific programs.

He said they expect to save over $130 million against $1 billion in expenses the first year.

LaCasse, Michalski and Connolly said the hospitals plan to maintain existing medical school relationships, Beaumont Hospitals with the Oakland University William Beaumont School of Medicine, Botsford with the Michigan State University College of Osteopathic Medicine and Oakwood with the Wayne State University School of Medicine.

With regard to layoffs, Michalski said, “We don’t know.” He noted that turnover and attrition will be factors, and any decisions to eliminate positions will be “very deliberate and very thoughtful.”

“We’re not focused on staff reductions at this point in time,” Connolly said. He added that there is no time frame or numbers on staff reductions.

“There is no intent to close any of the eight hospitals in the system,” LaCasse said.

A single board and executive leadership structure will govern the new health system with representation from the three organizations. Michalski, Connolly and LaCasse, will all serve on the CEO council, overseeing the transition and implementation of the new system. Connolly, LaCasse and Michalski will remain as presidents and CEOs of their respective organizations during the period of transition. Connolly is serving as chief transition executive, and LaCasse is serving as clinical transition executive on behalf of the CEO council.

According to the prepared statement, the new Beaumont Health Organization will have eight hospitals with 3,337 beds; 153 outpatient sites; 5,000 physicians; 33,093 employees; and 3,500 volunteers. The hospitals include:

• Beaumont Hospital, Royal Oak; Beaumont Hospital, Troy; and Beaumont Hospital, Grosse Pointe

• Botsford Hospital, Farmington Hills

• Oakwood Hospital-Dearborn; Oakwood Hospital-Southshore; Oakwood Hospital-Taylor; and Oakwood Hospital-Wayne

The names of the eight individual hospitals will be linked with the Beaumont Health name and brand in a manner to be determined over time.

“We recognize and respect the community’s connection with these legacy names and their strength within their markets. So, we will take our time and seek inside and outside counsel in developing a plan for communicating the new brand,” Michalski said in the prepared statement.

Oakwood Board Chairman John Lewis, who will be the future chair of the Beaumont Health board, said in a prepared statement that “while Botsford and Oakwood have outstanding names and brands in their primary communities, we chose the name ‘Beaumont Health’ because of its recognition and strength throughout all of Southeast Michigan and on a national level. The new health system will be a national model, and the name paves the way for an even stronger national voice in the future of health care delivery. And the word ‘health’ represents our combined goal of improving the health of individuals, families and employers in the communities we serve.”

Staff Writer Sherri Kolade contributed to this report.