Michigan health care leaders say a potential merger between Spectrum Health and Southfield-based Beaumont Health could have significant implications for the statewide health care and insurance markets.
The proposal announced this morning would create the largest in-state health system in Michigan and could lead to significant negotiating clout in contracts for reimbursement payments from health insurers, said officials with Blue Cross Blue Shield of Michigan.
“These are two organizations where Blue Cross has deep partnerships and with whom we have worked over many generations on behalf of our members and customers. This proposed arrangement is very complex with potentially significant implications,” Andy Hetzel, Blue Cross Blue Shield of Michigan vice president for corporate communications, wrote in an email to MiBiz. “We will be assessing the impact it may have on our members and the health care market in Michigan.”
A combined health system between Grand Rapids-based Spectrum and Beaumont would have 22 hospitals, 305 outpatient care centers and about $13 billion in operating revenue. The combined company would have more than 7,500 employed, affiliated and independent physicians.
Rob Casalou, president and CEO in Michigan for Trinity Health, the parent corporation for Mercy Health Saint Mary’s in Grand Rapids and Mercy Health Muskegon, said today’s merger announcement came as no surprise.
The proposal “has been in the rumor mill for a while,” Casalou said. Beaumont has pursued mergers in the recent past, most recently with Advocate Aurora Health, a nonprofit 28-hospital system based in Downers Grove, Ill. The two ended merger discussions last fall amid opposition from Beaumont doctors.
Livonia-based Trinity Health competes against Spectrum and Beaumont on both sides of the state. Casalou doubts the creation of a much-larger health system would directly affect Trinity’s eight hospitals in West and Southeast Michigan. Trinity has clinical partnerships with both Spectrum and Beaumont, he added.
“I’m wishing them well. As long as it leads to true integration and standardizing best practices, their clinical practices, lowering costs and (improving) access, then I really think it could be a great benefit to the community,” Casalou said. “We just want to maintain an already good relationship with the new combined system.”
The merger could spur “more serious discussions” at other health systems in the state about consolidating, Casalou said.
Metro Health-University of Michigan Health CEO Peter Hahn noted in a statement to MiBiz that “nationally and regionally, healthcare mergers and consolidations will continue for some time.”
“We are proud to be a part of one of the world’s leading healthcare organizations. Our goal has never been to be the biggest health system serving this community, but to be the best, to provide choice and to advance patient-centered care,” Hahn said.
The Ann Arbor-based Metro Health acquired Metro Health in early 2017.
Mike LaPenna, a health care consultant and the principal of Grand Rapids-based LaPenna Group Inc., sees the merger as providing benefits to the Spectrum-owned health plan Priority Health, which has more than 1 million members statewide.
The connection to Beaumont through the creation of a new health system gives Priority Health a foundation to make further inroads in the Detroit-area health insurance market that’s largely controlled by Blue Cross Blue Shield, LaPenna said. That can create more competition between Priority Health and Blue Cross Blue Shield.
“My impression is this is a great thing for Priority Health,” he said. “Beaumont is now a platform for Priority on the east side of the state.”