“The M&A is not a quick appointment,” says the expert as Beaumont Health proposes another merger


Beaumont Health has sought a third merger partner in two years, with Southfield, Michigan-based health systems looking to connect with its nonprofit Michigan Spectrum Health system partners.

U deal with created a $ 12 billion healthcare company that manages 22 hospitals and 305 outpatient facilities with more than 64,000 employees and 7,500 independent physicians. Beaumont turned to Spectrum after the affair Summa Salute and Attorney Aurora Salute fell.

“The M&A isn’t supposed to be a quick appointment,” said Joe Lupica, president of Newpoint Healthcare Advisors. However, the business may be abandoned for a number of reasons, and a succession of failed mergers does not mean the trend will continue, he added.

Priority Health, Spectrum’s integrated provider, will become part of the new system. The health plan’s expansion potential, which generated more than $ 5 billion in revenue last year, has been a major selling point, executives at Crain’s Detroit Business said.

The new system would be managed by a 16-member board of directors spread across the organization, including three doctors. Beaumont CEO John Fox would help the transition and then give way to Spectrum CEO Tina Freese Decker.

Some influential medical leaders in Beaumont have written a petition of confidence regarding Fox and Chief Medical Officer Dr.David Wood, Jr. shortly after Beaumont and Advocate Aurora proposed their merger last year.

The petition warned that Beaumont would lose control of its hospitals and that “changes instituted by the current leadership have been made to increase the financial status of the organization.”

In response, Fox and Wood told Crain’s Detroit Business that they were meeting with the hospital’s medical staff to better understand their concerns.

In addition, the Michigan Attorney General’s office plans to investigate the transaction, said Beth Vessel, a partner at Waller Lansden Dortch & Davis who focuses on antitrust issues.

“The majority of doctors also responded negatively to the transaction in an investigation, although the parties also indicated that the pandemic had hindered face-to-face interactions between the parties,” he said.


As for the Beaumont-Spectrum agreement, eastern and western Michigan “are open worlds with very different cultures,” said someone who knows the business.

Beaumont said in a statement that the organizations share missions, visions and values ​​and that “they will build on complementary clinical strengths, expand access to more Michiganders and make significant investments to improve people’s health and well-being. across the state. ”

Mergers and acquisitions experts have reflected on several other Beaumont companies in recent years:

Beaumont / Summa

  • Beaumont signed one letter of intent in late 2019 to acquire Akron, Ohio-based Summa Health. The regional combination would have added four hospitals and a health plan to Beaumont’s eight hospitals, creating a $ 6.1 billion system. The COVID-19 pandemic first delayed and finally dismantled its plans, executives said. “You’ve had a disaster that no one ever thought would cause an adverse material change,” said someone close to the matter.

Beaumont / Henry Ford

  • Beaumont and Henry Ford Health System of Detroit canceled their proposed merger in 2013, citing “cultural differences.” What was invented as an “equal merger” that would have created a $ 6.4 billion system succumbs to “two very different prospects have emerged for the new organization,” executives say. “That was never going to happen because their cultures were radically different,” said Kevin Holloran, senior director of Fitch Ratings. “Henry Ford was a close model of medical staff with his own insurance plan and Beaumont had been known more as a group of hospitals for doctors operating independently.”

Beaumont / Oakwood / Botsford

  • Beaumont has completed a deal with the following year with Dearborn, Michwood-based Oakwood Healthcare Inc. and Farmington Hills, Mich-based Botsford Hospital. Medical care and practice patterns between Beaumont, Oakwood and Botsford were more similar to the staffing model employed by the Henry Ford Medical Group, experts said.

Commercial real estate company

  • Beaumont built a 117,000-square-foot shopping center adjacent to its Royal Oak Hospital campus in 2019 to diversify its revenue stream. The $ 32.8 million commercial real estate project, which includes a hotel, restaurant, a supermarket and an urgent care center, aims to meet the needs of about 13,000 people who visit Beaumont’s Royal Oak campus every day. , say the leaders.

As for the proposed Beaumont-Spectrum marriage, Alex Calderone, a turnaround expert in Calderone Advisory Group, told Crain’s Detroit Business that Beaumont’s management has given up trying to correct its operations and its culture.

“I don’t know how to say that a lot of patients who go to Beaumont or Spectrum right now are going to receive better care because they have merged the two entities,” Calderone said. “Judging this merger in public opinion court is difficult to do, but the easiest answer to this merger is cost. It never loses a crisis. And after the pandemic, both institutions have suffered.”

Dustin Walsh of Crain’s Detroit Business contributed to this report.

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