The evidence against hospital consolidation has been piling up for years, with several studies demonstrating that mergers and acquisitions tend to increase healthcare costs without meaningfully improving quality.
The University of Michigan Health in Ann Arbor set out to challenge that narrative when it merged with Lansing, Mich.-based Sparrow Health System to form a $7 billion health system with 11 hospitals in April 2023.
The academic system — which now includes 12 hospitals and more than 200 care sites — recently published findings in NEJM Catalyst suggesting it has delivered measurable improvements in clinical quality, operational efficiency and care coordination across a geographically integrated system.
Scott Flanders, MD, chief clinical strategy officer for Michigan Medicine, spoke with Becker’s about how the system approached integration differently and what others can learn.
Starting with the odds stacked against you
Dr. Flanders said Michigan Medicine explicitly defined its challenge from the outset.
“We recognized that if you look at the literature out there, most large integrations, consolidations have not shown the benefit that they state they are achieving,” he said. “So we started first with articulating that is our goal — to beat the odds and to build this highly coordinated, well integrated, high quality statewide system of care with an ultimate vision of becoming one of the most consequential academic health systems in the country. That’s the vision we are marching toward.”
That vision was paired with a structured execution strategy. Leadership identified three core workstreams — business integration, clinical integration and cultural integration — and developed specific tactics within each.
“We got very specific about what buckets of work would be needed to actually accomplish that goal,” Dr. Flanders said. “We developed specific tactics within each of those three buckets — that we had a pretty disciplined approach on trying to execute on.”
“Our goal is not growth for growth’s sake,” he said. “Our mission is to advance health to serve Michigan and the world.”
The cultural integration playbook — and why it’s harder than it looks
Culture is where many integrations falter, particularly when acquiring health systems try to impose their identity on newly integrated entities, according to Dr. Flanders.
“Our approach started first with recognizing [that] Sparrow had a deep and long-standing, over 100-year history of supporting that community,” he said. “Our goal wasn’t to completely transform culture.”
Instead, Michigan Medicine focused on preserving local culture while identifying areas suitable for bidirectional alignment. Leaders began with broadly shared priorities — such as delivering high-quality patient care and improving patient and team member experience — before addressing more complex areas.
To navigate performance differences across sites, the system relied on transparency and data.
“We focused on being very transparent using objective data,” Dr. Flanders said. “That can be a challenging thing to navigate — calling out another member for not delivering on patient quality.”
Statewide data registries enabled more neutral, fact-based discussions about performance gaps. Equally important was fostering bidirectional learning across the system.
“It’s also important to have the humility to recognize there’s an immense amount we can learn from our partners at Sparrow,” Dr. Flanders said. “We said we should have a bidirectional approach — not just have this be viewed as everything cascading from the academic medical center.”
One such example: postpartum hemorrhage rates were lower at UMH Sparrow than at the academic medical center, prompting system leaders to evaluate and consider adopting practices from Sparrow.
“I think that approach, as well as having frequent communication between our providers and team members allowed us to achieve success with that cultural integration where I think others have struggled,” Dr. Flanders said.
Regional focus, rural health and the limits of multi-state growth
As consolidation accelerates nationally — with an increasing number of health systems becoming multi-state operators and noncontiguous M&As becoming more common — Dr. Flanders expressed skepticism about the scalability of that model.
“I struggle to see them being able to accomplish some of what we have,” he said. “Part of why we’ve been successful is because we are just focusing on our state, the state of Michigan, and that geographic proximity allows for deep interconnection and collaboration in a way that I don’t see how you do across multiple states. At the end of the day, success is defined by our impact for each and every community we serve.”
That regional focus has particular implications for rural care, an area of growing national concern as critical access hospitals face mounting financial pressure. Dr. Flanders described Michigan Medicine’s rural strategy as one of the more tangible ways a large academic system can justify integration to skeptical communities.
“There’s a big crisis nationally about how we can best support rural communities,” he said. “Some of the large systems do bring a scale — whether you’re academic or not — this creates an opportunity to think hard about some of those critical capabilities and clinical programs in those communities that we don’t want patients to have to leave home for. We can help build those.”
The practical tools include provider recruitment support, telehealth infrastructure and the IT backbone that smaller rural hospitals often cannot finance independently. The pitch to those communities, Dr. Flanders argues, has to be concrete: patients should be able to see, in specific terms, what the integration has made available locally that wasn’t there before.
On the question of further M&A, Michigan Medicine is not ruling it out, but it is not actively pursuing scale for its own sake either.
Near-term growth priorities are organic and geographically targeted, including a new ambulatory surgery and multi-specialty clinic in Troy, in Southeast Michigan, and a sports medicine-oriented institute near Ann Arbor.
“We would be very thoughtful about what any future growth looks like,” Dr. Flanders said. “Our interest has largely been high quality, high-functioning systems where there’s an opportunity to find some win-wins.”
The bottom line from Michigan Medicine’s experience is that the pessimistic consensus on consolidation is not destiny, but beating it requires discipline that most systems never impose on themselves.
“With this focus on keeping care local, building capabilities, taking a disciplined approach to this integration,” he said. “There’s an opportunity to beat the odds and deliver on that vision of elevating care quality and supporting local communities in a cost-effective way.”
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