Michigan Medicine at the University of Michigan will acquire Lansing-based Sparrow Health System, the UM Board of Regents announced Thursday, the latest merger in a state that has seen hospital system consolidation.
No purchase price was disclosed, and Michigan Medicine and Sparrow officials said they would hold a news conference Friday in Lansing to discuss further details. UM said the addition of the Sparrow Health System would make it a $7 billion operation, with 200 care sites across Michigan and 115 sites coming from Sparrow.
“This definitive agreement is transformational for Michigan Medicine and, by extension, for the University of Michigan,” President Santa Ono said during the board meeting.
The agreement will build Michigan Medicine’s nationwide network and provide medical services to patients who live in the Lansing area, Ono said. It builds on an affiliation agreement the two systems signed in March 2019, which saw them partner to cover pediatric care at Sparrow’s Children’s Center in Lansing.
Michigan Medicine’s network of hospitals includes its flagship hospital at the University of Michigan Medical Center in Ann Arbor, CS Mott Children’s, and its Metro Health hospitals and outpatient medical facilities in the Grand Rapids area.
Sparrow Health has seven hospitals in the Lansing area, including its flagship hospital just east of downtown Lansing, as well as a network of medical providers in central Michigan. It has community hospitals in Charlotte, Carson City, Ionia and St. Johns.
As part of the agreement, Michigan Medicine now owns the Physicians Health Plan, which provides health care coverage to more than 70,000 members and 300 employers. The UM system had bought a 25% stake in the doctors’ health plan in 2019.
The Michigan Medicine-Sparrow combination follows the merger of the Spectrum Health and Beaumont Health systems in February, forming the largest hospital system in the state. The Priority Health Insurance Plan was part of this merger. In recent years, other mergers have included the combination of St. Joseph and Providence Health Systems in 2016, which is now known as Ascension Health System.
The Michigan Medicine-Sparrow merger will benefit both health care systems, said Allan Baumgarten, a Minneapolis-based analyst who has tracked Michigan’s hospital systems and health plans for a few decades. It also continues the trend of hospital consolidation in Michigan, he said.
UM Health System’s purchase of Sparrow does not appear to be a reaction to the Spectrum-Beaumont merger, but allows Michigan Medicine to add a health system that will feed “patients to its specialists in Ann Arbor (in more Grand Rapids and Jackson),” Baumgarten wrote in an email.
Sparrow struggled financially, faced stiffer competition from the city’s new McLaren Hospital, and “had to partner with a larger system for an injection of capital and for more specialists to practice there.” “, did he declare.
UM Health will become the only corporate member of Sparrow to form an integrated health system. The deal is expected to close in the first half of next year, but must await final regulatory approvals. Michigan Medicine will also invest $800 million over the next eight years in Sparrow Health Systems, according to a statement from UM and Sparrow.
The acquisition will allow Sparrow to continue to support community medical care and partner with UM to form a statewide system of care, Sparrow CEO James Dover told the Detroit News.
Patients will have better local access to wider specialists, and Sparrow caregivers will be able to work with UM physicians on research, Dover said, meaning fewer patients will have to travel to Ann Arbor to receive care.
Sparrow will eventually see its name change later, but current governance, leadership and operations will all continue to be managed locally, with the added benefit of being part of a statewide system, Dover said. . Sparrow has many existing partnerships with medical students at Michigan State University, and those will not be affected.
Marschall Runge, UM’s executive vice president of medical affairs and dean of the medical school, and executive vice president Geoffrey Chatas wrote in a request for action to UM’s board of trustees that this acquisition expand UM’s teaching and research capabilities.
“Together, the parties seek to create a statewide UM health system that is the preeminent health system in the state in terms of quality, service, and clinical care,” Runge and Chatas wrote. . “The benefits to the parties’ respective communities will be tangible through improved access to care, improved quality and brand recognition.
Sparrow’s board voted to approve the acquisition Nov. 28, Dover said, but the deal went into effect Thursday after UM’s regents voted to approve it.
LaKeeya Tucker, chief of medical staff at Sparrow Hospital, said in a press release that she was pleased to work with UM physicians to improve access to healthcare across the region.
“We’re doing something special here by combining the community care and craftsmanship that Sparrow has long been known for with the clinical expertise and commitment of UM Health,” Tucker said.
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