Beaumont, Henry Ford Sign Letter of Intent to Form a New Health System

DETROIT & ROYAL OAK, Mich.--(BUSINESS WIRE)--To design a national model for health care, Beaumont Health System and Henry Ford Health System have signed a letter of intent to combine their operations into a new $6.4 billion organization.

“Beaumont and Henry Ford are perfect partners because of our shared values, history of innovation and strong leadership in value, quality and safety.”

The boards of the two not-for-profit systems authorized the development of the new organization that will include all of the assets, liabilities and operations of both Beaumont and Henry Ford under unified executive leadership and with integration of their combined 10 hospitals and 200 other patient care sites. The new, combined organization will be one of the most comprehensive health systems in Michigan.

Both partners have entered a period of exclusive negotiations and due diligence. A definitive agreement for the new, not-for-profit organization is expected to be complete in the first half of 2013.

“For nearly 60 years, Beaumont has been a trusted, essential care provider for patients in Oakland County and surrounding areas. We are a strong, profitable and growing organization today, but the world of health care delivery is changing, so we are taking proactive steps to ensure continued growth and success,” says Gene Michalski, CEO of Beaumont Health System. “Beaumont and Henry Ford are perfect partners because of our shared values, history of innovation and strong leadership in value, quality and safety.”

“Our shared vision is to form a new organization that will develop improved approaches to patient care that will lead the nation in quality outcomes, service, access and reliability,” says Nancy M. Schlichting, CEO of Henry Ford Health System. “It is a bold and exciting vision that will mean easier, more accessible and more integrated care for our patients. Coming together allows us to create a ‘Pure Michigan’ community-based system that will serve as an engine of innovation and economic development.”

Today’s announcement follows months of study and deliberation by both organizations on how to continue their nationally recognized industry leadership in the face of the changing health care environment. Because of the industry changes, the number of hospital partnerships, mergers, joint ventures and other arrangements designed to bring like-minded hospitals together is growing more rapidly than at any time since the 1990s. A national survey of health care leaders conducted earlier this year found 75 percent were already pursuing a partnership or considering aligning their organization with another.

“Both systems recognize that the way health care is provided today – where it is offered, how it is paid for, how it is measured – is changing dramatically,” says Steve Howard, chairman of the Beaumont Health System board of directors. “Reimbursement for care is declining, the care itself is shifting to more convenient outpatient settings and more emphasis is being placed on keeping people healthy, not just treating them when they are sick.”

For patients, the new organization means:

• Greater, more convenient access to high quality care through a broad network of medical centers and hospitals throughout Southeastern Michigan.
• Better coordination of patient care.
• Regardless of where patients receive care, patients’ electronic medical record (EMR) will be available because the Beaumont and Henry Ford facilities and physicians will be connected through a state-of-the-art medical record called Epic. Beaumont’s installation of Epic is complete; Henry Ford’s installation will be completed in 2014.
• Better patient outcomes, by combining the expertise of Beaumont and Ford medical specialists.
• The ability to attract the very best national and international talent.

A recognized leader in neurosciences, cancer, transplants and patient quality and safety, Henry Ford has received the 2011 Malcolm Baldrige National Quality Award and the John M. Eisenberg Patient Safety and Quality Award, employs the third largest academic medical group in the country, Henry Ford Medical Group, and has an established health plan, Health Alliance Plan of Michigan, with 648,000 members.

Beaumont is a recognized leader in heart and vascular services, orthopedics and surgery, has earned Magnet status for nursing excellence at two of its hospitals, is a partner in a new medical school and has achieved national recognition for high quality and value as a member of the University HealthSystem Consortium and the High Value Healthcare Collaborative.

“Our combined medical staffs, comprised of private practice, group practice doctors and employed doctors, represent a strong platform for advancing the health of not only each patient we serve, but also the population of the state and country,” says Sandy Pierce, chair of the Henry Ford Health System board.

The details of the letter of intent approved by both organizations include:

Governance: The new organization will be led by a single board with equal representation from both organizations. The new board will include physician and nursing leaders from both organizations, as well as community and business leaders and health experts. A special committee comprised of representatives from both boards will oversee the integration of the two partners into a unified health system.

Name Preservation: The two organizations will continue to use their highly respected brand names. A name for the new organization, which will be used to link the two established names, will be developed by both parties.

A Combined Foundation: The existing Beaumont Foundation and the Henry Ford Foundation will develop a plan to combine into a single foundation. Donors will still be able to designate gifts to the hospital or programs of their choice. The designated uses of prior gifts will be honored and the naming of facilities, chairs and programs maintained.

Medical Staffs: Medical staffs from both entities will remain independent. Physician groups in both health systems are highly respected for providing benchmark quality care. The new organization will embrace the strengths of private practice, group practice and employed physicians in an environment that fosters respect, quality, safety and collaboration.

Research: A collaborative research program will enhance education and discovery, bringing great value to this region by attracting researchers and funding.

Medical Schools: Medical education will remain a primary mission with continued commitment to all existing medical school relationships. Collaborative opportunities will be pursued to maximize value to the organization and the community.

The two organizations will begin an extensive integration process led by committees covering such areas as quality, medical staff, efficiency and information technology, all which will be overseen by a newly formed board integration committee, which will include membership from Henry Ford and Beaumont.

For more information, visit www.FutureCareforMichigan.com.

About Henry Ford Health System

Henry Ford Health System, one of the country's largest and most comprehensive integrated health care systems, is a national leader in clinical care, research and education. The system includes the 1,200-member Henry Ford Medical Group, seven hospitals, Health Alliance Plan (a health insurance and wellness company), Henry Ford Physician Network, a 150-site ambulatory network and many other health-related entities throughout southeast Michigan, providing a full continuum of care. In 2011, Henry Ford provided more than $200 million in uncompensated care. The health system also is a major economic driver in Michigan and employs more than 24,000 employees. Henry Ford is a 2011 Malcolm Baldrige National Quality Award recipient. The health system is led by CEO Nancy Schlichting. To learn more, visit HenryFord.com

About Beaumont Health System

Beaumont Health System is a three-hospital regional health system with 1,726 licensed beds, more than 14,000 full-time equivalent employees and nearly 3,100 physicians, including 500 employed physicians in the Beaumont Medical Group and more than 2,600 private-practice physicians. In addition to its hospitals in Royal Oak, Troy and Grosse Pointe, Beaumont has numerous community-based medical centers in Oakland, Macomb and Wayne counties, family practice and internal medicine practices, five nursing centers, a research institute, home care services and hospice. Beaumont is the exclusive clinical teaching site for the new Oakland University William Beaumont School of Medicine. Visit Beaumont on the web at www.beaumont.edu.