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Beaumont Health Clears Key Hurdles in Latest Merger Try

John Commins, for HealthLeaders Media, July 2, 2014

A year after proposed merger talks with Henry Ford Health System collapsed, Beaumont Health System agrees to combine operations with two other Detroit-area providers.

It was little more than a year ago — May 2013— that Detroit's Beaumont Health System and Henry Ford Health System abruptly announced that they had called off talks to form an integrated system.

Senior leaders at both health systems declined to comment on what scotched the $6.4 billion marriage that just seven months prior Henry Ford CEO Nancy Schlichting had described as "the absolute ideal partner for us."

Some observers said the sticking points centered around the disparate populations the two systems serve, and their diametrically opposite physician compensation models. Henry Ford uses salaries and capitated systems and Beaumont relies mostly on independent physicians and fee-for-service.

Others noted cultural hurdles between the two systems that could not be overcome.

Flash forward to June 2014, and the announcement that Beaumont, Botsford Health Care and Oakwood Healthcare had agreed "to combine their operations" into a $3.8 billion healthcare organization that will be called Beaumont Health, with Beaumont President/CEO Gene Michalski serving as its CEO.

Marianne Udow-Phillips, director of the University of Michigan's Center for Healthcare Research & Transformation, says this deal "has a better chance than Henry Ford because the cultures are much more similar and now they have gotten much further down the road. They have the support of their physicians and that is the key."

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