Crain’s has spoken with sources, including physicians on Oakwood’s medical staff and competing hospital executives, and sources who wish to remain anonymous have said the system is in talks with Dallas-based Tenet Healthcare Corp. and Troy, Mich.-based Beaumont Health System. However, Mr. Connolly said there are no talks in progress with Tenet, according to the report.
Beaumont CEO Gene Michalski has told Crain’s his three-hospital system has started discussions with several other systems about closer relationships, although he wouldn’t specify names or the type of business arrangements they’re considering. Last year, Beaumont and Detroit-based Henry Ford Health System dissolved merger plans that would have created a $6.4 billion, 10-hospital system.
Oakwood’s net income has declined steadily during the past few years, declining from $64.1 million in 2009 to $39.6 million in 2011. The 2011 figure was bolstered by a $29 million payment from the federal government for settling a residency program funding dispute, according to the report. But Mr. Connolly has reported 2013 was a good year for the system, which hit all of its financial targets and brought in more net income than the $39.6 million it reported in 2012.
In July, Detroit filed for Chapter 9 bankruptcy. Executives from Oakwood, Beaumont and other Michigan health systems said they didn’t expect major, direct ramifications in the short-term, although hospitals in the region could be affected if Detroit doesn’t pay its debt to health insurers.
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