Beaumont Health and Grand Rapids-based Spectrum Health announced on Monday that they have completed regulatory assessments for their planned megafusion and will launch the new combined health care system ̵[ads1]1; the largest in Michigan – on Tuesday.
The announcement suggests that the plan resisted the Biden administration’s increased scrutiny of mergers and consolidations in the U.S. economy, including in the health care system, which had the potential to reject the deal. The additional investigation probably delayed the merger from happening late last year as originally planned.
Tina Freese Decker, president and CEO of Spectrum Health, will lead the new hospital system, and the current CEO of Beaumont Health, John Fox, will step down on February 4.
“Today is a historic day – the launch of our new beginning,” said Freese Decker.
The new health system will have double headquarters in Grand Rapids and Southfield and will be temporarily called the BHSH system.
During a virtual news conference with reporters on Monday, Freese Decker said Beaumont and Spectrum are now continuing to combine their health systems because they provided all requested information to federal and state regulators, and the Federal Trade Commission’s merger review period has expired.
She declined to say when the review period expired, citing confidentiality requirements in the FTC process.
“We have been working through the whole process with the different dates they have, and these dates have now expired, and therefore we are confident of moving forward with our health system,” said Freese Decker.
An FTC spokesman declined to comment or answer questions about the merger approval process. A representative of Michigan Attorney General Dana Nessel could not be immediately reached for comment.
The two Goliaths in the Michigan health care system announced in June that they had signed a letter of intent to unite and form their new, massive non-profit health care system that would employ 64,000 people and operate 22 hospitals spanning much of the Lower Peninsula.
The agreement includes Priority Health, an insurance plan that registers 1.2 million people under the Spectrum Health umbrella and claims to be the fastest growing and second largest in Michigan.
Leaders in the health system have said they do not plan to close any hospitals as part of the merger.
During Monday’s media coverage, health system officials refused to disclose the financial terms of Beaumont’s departure deal with Fox, the outgoing Beaumont boss.
“He has a contract and we will respect the terms of the contract,” said Julie Fream, chair of Beaumont Health’s board, who will lead the new system’s 16-member board. “The independent consulting service that we use to review contract terms has looked at it, and it’s market-based, and we’ll go ahead with that when he leaves the organization.”
Beaumont and Spectrum are not direct competitors based on their geographic markets, and only one health insurance plan will be involved in establishing the all-new ideal health system in Michigan.
However, the large size of the new system may give it a stronger negotiating effect with Blue Cross Blue Shield from Michigan and other health insurance companies, which could potentially lead to higher health services.
Southfield-based Beaumont brings to the merger eight hospitals and about 33,000 employees in southeast Michigan. It has 3,375 hospital beds, 155 outpatient clinics and a net income of $ 4.6 billion.
Grand Rapids-based Spectrum Health has 31,000 employees and 14 hospitals in western Michigan. It has 2,573 hospital beds, 150 outpatient places and a net income of $ 8.3 billion.
“We are well positioned to transform the health of our communities,” said Freese Decker. “We have learned so much from this pandemic, and the complementary strengths of Beaumont Health and Spectrum Health will propel us forward with innovation, creativity, humility and the courage to make an impact for the people we serve.
“We have a bold goal, and we are excited to unite our two great Michigan City Michigan organizations to improve the health of all of our communities.”
For now, Freese Decker said, there are no plans to consolidate, limit services or lay off workers, and current union contracts will also remain in place.
“Right now we are in a shortage of health care workers,” Freese Decker said. “And so we do everything we can to recruit and retain our talented team members here.”
Asked by journalists about the prospect of higher hospital prices as a result of the merger, Freese Decker said they aim to keep health care affordable.
“We also need to make sure we are competitive, and that’s how we look at our prices,” she said, adding, “We are also very focused on transparency and ensuring that information is on our site.”
Fream was hired to chair the new 16-member board, which will include seven people appointed by Beaumont Health, seven people appointed by Spectrum Health, Freese Decker and one other member.