Beaumont, Spectrum Health announce start of merged health care system

Beaumont Health and Spectrum Health officials said Monday they are planning to start their merged health care system as planned on Tuesday after federal regulators didn't contest the proposed tie-up.

The Federal Trade Commission had the option to object to the Beaumont-Spectrum combination or launch a full investigation within a specified time frame. The FTC doesn't comment on proposed mergers unless it files a complaint, and "the agency has not filed a complaint in this matter," FTC spokeswoman Betsy Lordan said Monday.

John Fox will serve his last day as Beaumont Health president and CEO on Friday.  A national search is underway for his replacement. Officials wouldn't provide details of Fox's severace agreement, but said it had been review by an outside consultant who found it to be competitive within the industry

The temporarily named BHSH System is expected to have a combined 22 hospitals, 305 outpatient locations and 64,000 employees, according to the health systems. Beaumont has eight hospitals and 33,000 employees in Metro Detroit, while Spectrum dominates the west Michigan market with 14 hospitals and 31,000 workers. 

Beaumont Health Board Chair Julie Fream,  who is the incoming BHSH System board chair, said at a Monday afternoon press conference that federal law prohibits disclosing information about the FTC review process, including information about the time line or when the merger passed any final hurdles with the federal agency. 

"The Beaumont board and the Spectrum Health boards each voted to reaffirm our position to join the organizations together last week," Fream said.

Contracts with employee unions will remain in force under the merged system, officials said.

Patient portals, which allow patients to log into their health system to check medical records, test results and other information, will remain the same, officials added. 

A Monday morning press release said both systems have "provided the applicable regulatory agencies with all requested information and may now proceed to launch their new health system."

Industry experts have said the merger could lead to higher prices for health consumers.

Asked if there are any plans to use the health systems' increased market strength to seek increased reimbursements from health insurers or raise prices for consumers, incoming BHSH Systems President and CEO Tina Freese Decker was noncommittal. 

"Our focus for health care is to be affordable, but we also need to make sure we're competitive, and that's how we look at our pricing," Freese Decker said. "We're also very focused on transparency, and ensuring that information is on our website. 

Most research finds that such mergers, even if the health systems don't overlap geographically, give the new larger health system "more market power that they use to raise prices — which mostly falls on employers and their group plans," said Allan Baumgarten, an independent health care analyst based in Minnesota who follows the Michigan health care market.

But the Beaumont-Spectrum tie-up would help strengthen the new firm in a pandemic-changed health care landscape, experts said, and provide some advantages to customers. 

The distinct footprints with Spectrum on the state’s west side and Beaumont in southeast Michigan likely will avoid consolidations in service lines while creating purchasing clout for the new health system, said Erik Gordon, a professor at the University of Michigan’s Ross Business School.

Southfield-based Beaumont Health and Grand Rapids-based Spectrum Health signed a letter of intent last June to explore creating a new health system that would include Spectrum's Michigan-based health insurance plan, Priority Health, which enrolls 1.2 million customers. 

In September, the systems announced their proposed merger was being delayed by a backlog of filings at the Federal Trade Commission, which needs to approve the partnership. 

In Monday's press release, Beaumont Health and Spectrum Health also announced the board of directors and system leadership team for the new combined health system. The BHSH System board of directors includes seven members appointed from Beaumont Health and seven members appointed from Spectrum Health.

Freese Decker, incoming president & CEO of BHSH System, will also serve on the board, as well as an additional board member who will be named later this year.

“As we launch our new health system, we have a bold goal to transform health and are thrilled to unite our two great organizations," Freese Decker said in a statement. "Together, we will leverage our complementary strengths to innovate and make a positive impact for our communities and their health.

"We look forward to working with our physicians, team members, patients, health plan members and partners across our state to provide health care and coverage that is accessible, affordable, equitable and exceptional.”

Sean Welsh, current Spectrum Health System board chair and incoming BHSH System board vice chair, added: “The tremendous talent within these two organizations will be a beacon for others who share this vision for a new health system and the positive change it will create."

Last year, the phrase "For Michigan, By Michigan" was trademarked as the slogan for the new system, which would operate dual headquarters in Grand Rapids and Southfield, the systems said. Executive leadership teams would spend time on both sides of the state.

Beaumont has long sought to expand its footprint in Michigan and has engaged in merger talks with two other health systems in the past two years that were not finalized. 

Beaumont in May 2020 ended partnership talks with Akron, Ohio-based Summa Health. Beaumont later entered talks with an Illinois- and Wisconsin-based system, Advocate Aurora Health, but those talks ended in October 2020 after the potential deal was widely contested by a broad coalition of physicians, nurses, hospital staff, community members and lawmakers.

A tie-up with Advocate Aurora Health, based in Milwaukee and Downers Grove, Illinois, would have made the nonprofit Beaumont Health part of a 28-hospital health system across Wisconsin, Illinois and Michigan. Critics argued the merger would result in a loss of local control over the health system. 

Come back to detroitnews.com for more on this developing story.

kbouffard@detroitnews.com

Twitter: @kbouffardDN