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Hospital Mergers Outlook Bright for 2011

John Commins, for HealthLeaders Media, January 10, 2011

Like many observers, Steevers says he was surprised that a private, for-profit hospital company from Nashville, TN, right-to-work state, would want to buy a unionized safety net public hospital system in a rust belt state.

"That is one that has a lot of people scratching their heads," says Steever, who offered three theories for the deal. "It may be, particularly in the rust belt, the demographics are starting to shift whereby that part of Michigan isn't losing population anymore."

"Also they are getting a system. Vanguard likes to go to urban areas. That is where they are most comfortable. If they were buying a single hospital in Detroit I would question their sanity. But they are going for a system so they have a chance of making it go," he says.

"Also, these facilities have been financially distressed coming out of the Great Recession, so they may have been able to get it at a fairly decent price," he says.

Steever says the concerns of some patients' advocates in Detroit that Vanguard would disrupt DMC's safety net operations are most likely unfounded. "Whether the management is from outside I don't think that makes a difference," he says. "There are a lot of for-profit hospitals that do a good job coming in and taking over hospitals and increasing the numbers of services and preventing health migration."  

"The notion that Vanguard is going to come in and strip assets, it sounds good, but the reality is operating a hospital, especially a not-for-profits, the state would step in if they thought it would seriously threaten the delivery system in Detroit," he says. "Just because it's for-profit doesn't mean they don't do a good job running a hospital."

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