Beaumont Health has ended its pursuit of a controversial merger with an out-of-state health system.
CEO John Fox, in a media call Friday, said the Southfield-based system and Advocate Aurora Health mutually agreed to cease discussions after failing to meet in person after signing a letter of intent in June. Advocate Aurora is based in Milwaukee and Downers Grove, Illinois.
Beaumont Hospital (Photo: David Guralnick)
The deal had come under fire from doctors and other health care workers affiliated with the hospital. The Michigan Attorney General’s office also had said it would investigate the tie-up. And on Tuesday, a U.S. congressman and two state legislators called for the merger to be abandoned.
“Over the past few months,” Fox said on the call, “we’ve listened to the perspectives of many physicians, nurses, staff, donors, elected officials and community members about a variety of topics and their concerns about a potential partnership with Advocate Aurora and Beaumont, and we very much appreciate their candid feedback.
“All of that, frankly, was overshadowed by both COVID issues and non-COVID issues,” he added, noting the eight-hospital health system is gearing up for a possible second wave of infections while preparing to administer vaccines as early as the first quarter of next year if they become available.
Fox said the pandemic had hindered face-to-face interactions with Advocate Aurora and didn’t allow community-based organizations to become comfortable with the merger.
“Our boards have never physically met yet,” he said. “We tried to Zoom a couple of times, and other mechanisms, but it’s not really been adequate.”
The deal had been widely contested by a broad coalition of physicians, nurses, hospital staff, community members and lawmakers, who argued the merger would result in a loss of local control over the health system.
U.S. Rep. Andy Levin, D-Bloomfield Township, who represents Royal Oak where the health system’s flagship hospital is located, said he was “relieved and happy” to hear Beaumont would no longer pursue the deal.
Levin sent a memo to Beaumont officials in June noting research studies found costs increased following hospital mergers. On Tuesday, he joined with state Sen. Mallory McMorrow and state Rep. Jim Ellison, both Royal Oak Democrats, to call for Beaumont to abandon the plan.
“We were taking this wonderful community asset, and it’s supposed to be a non-profit that’s here to serve the people, and giving up control — making it a minority part of a multi-state institution,” Levin said.
In July, Michigan Attorney General Dana Nessel said she would review the proposed merger. The Attorney General’s Office is responsible for protecting nonprofit or charitable assets.
The vast majority of 1,555 Beaumont Health physicians who filled out a survey over the summer indicated they were wary of the proposed merger and had lost confidence in the health system’s leadership. The survey respondents represented more than 30% of the approximately 5,000 physicians who work for the health system.
The tie-up would have made the nonprofit Beaumont Health part of a 28-hospital health system across Wisconsin, Illinois and Michigan.
“We have great respect for Beaumont Health and we continue to believe scale will play a critical role in advancing quality, accelerating transformation and reducing cost in the healthcare world of tomorrow,” said Jim Skogsbergh, president and CEO of Advocate Aurora, in a statement Friday.
It’s the second time this year that Beaumont ended partnership talks with an out-of-state system. In late May, Beaumont ended a planned partnership with Akron, Ohio-based Summa Health.
Fox was asked about the dissatisfaction among some physicians, and whether he planned to step down or retire during the coming year.
“I believe we’re addressing all those issues,” he said of the doctors’ complaints. “I’m not going anywhere that I know of.”
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