Advocate Aurora Health and Beaumont Health are exploring a potential merger that would create a dominant health system across Michigan, Wisconsin and Illinois.
Following approval last week by the Boards of Directors, both organizations today signed a non-binding letter of intent that paves the way to deeper discussions. Executive leadership from both said talks are in early stages.
The partnership would be an asset merger rather than a sale that would form a $17-billion nonprofit hospital system in the three states, according to the Detroit Free Press. Beaumont would keep its name, with the new parent organization name still to be decided.
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The systems said the deal under exploration would allow both not-for-profit health providers to strengthen and align their purposes of serving the needs of individuals, families and communities throughout the Upper Midwest.
WHY THIS MATTERS
In 2018, Advocate Health Care and Aurora Health Care merged to create Advocate Aurora Health, the 10th largest integrated system in the country of 27 hospitals.
The partnership with Beaumont Health would continue that integration. Beaumont is among Michigan's largest healthcare systems.
As a first step in their renewed discussions, the organizations agreed to an equal one-third governance representation of any future partnership between Beaumont and legacy Advocate Health Care and Aurora Health Care organizations.
Both systems will work closely with state and regulatory agencies throughout the process, which began with notifications to all three Attorneys General earlier this week.
THE LARGER TREND
Many hospitals and health systems have suffered financially from the effect of cancelled elective care due to COVID-19.
Projections have been that the pandemic would at first hamper mergers and acquisitions and then spur activity for smaller organizations to gain scale.
Advocate Aurora and Beaumont began discussions at the end of 2019, prior to the pandemic's spread through the United States. Partnership talks were paused to allow both organizations to focus on COVID-19, the systems said.
ON THE RECORD
"Beaumont Health has built a strong reputation for clinical excellence, education and research. This is a unique opportunity to explore a partnership with a like-minded, purpose-driven organization," said Jim Skogsbergh, president and CEO, Advocate Aurora Health.
"We are excited to explore this option with an organization as highly regarded as Advocate Aurora Health known for their track record in health outcomes, population health and consumer experience," said John Fox, president and CEO, Beaumont Health. "The potential opportunity to leverage the strength and scale of a regional organization while maintaining a local focus and strong presence in Michigan as a leader and major employer is important to us."
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