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Beaumont, Oakwood, Botsford Systems Reach Merger Deal

A new multisystem merger is brewing in Michigan, potentially creating a healthcare network with $3.8 billion in annual revenue.

BeaumontBeaumont Health System in Royal Oak, Mich., Oakwood Healthcare in Dearborn, Mich., and Botsford Health Care in Farmington Hills, Mich., have signed a letter of intent to combine their assets, liabilities and operations under one nonprofit system. The three organizations are now working through due diligence, but a timeline for a definitive merger agreement was not outlined. The deal will require regulatory approval.

OakwoodThe full-asset merger will create an eight-hospital system scattered throughout the northern suburbs of Detroit. Beaumont has three hospitals with 1,778 licensed beds, including its 1,070-bed teaching flagship, Beaumont Hospital, Royal Oak. Oakwood includes four hospitals with 1,243 licensed beds. Botsford is anchored by its one acute-care hospital, 330-bed Botsford Hospital.

BotsfordPrimary goals of the transaction include population health management, physician alignment, health IT integration, cheaper supply costs and other operational efficiencies.

Beaumont CEO Gene Michalski will serve as the initial CEO of the yet-to-be-named system. In addition, Mr. Michalski, Oakwood President and CEO Brian Connolly and Botsford President and CEO Paul LaCasse, DO, will sit on a "CEO Council," which will oversee the transition. Each organization's medical staff will remain independent, but a "Clinical Leadership Council," led by physicians, nurses and other providers, will drive physician integration.

"We are three successful healthcare organizations driven by a shared desire to collectively build upon our success in improving quality, efficiency and value in healthcare delivery," Mr. Michalski said in a news release. "By combining our strengths, resources, experience and capabilities, we'll be well-positioned to meet future healthcare challenges while expanding access to high-quality, high-value care for patients throughout the region."

The announcement comes almost one year after Beaumont and Detroit-based Henry Ford Health System called off their merger. That deal would've created a 10-hospital, $6.4 billion system. Several executives said the merger fell through due to cultural differences.

Leaders said it was "far too early" in the negotiation phase to know whether the change will result in employee layoffs, although each system hopes to streamline labor issues "primarily through attrition."

More Articles on Hospital Transactions:
Northwestern Memorial, Cadence Health to Merge
Duke LifePoint to Acquire Conemaugh Health System
CHS Agrees to $475M Munroe Regional Lease Deal

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