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Analysis

Beaumont Health, Advocate Aurora Explore 'Partnership'

By John Commins  
   June 17, 2020

The announcement comes three weeks after Michigan-based Beaumont and Ohio's Summa Health called off their merger.

Beaumont Health and Advocate Aurora Health announced Wednesday that they're "exploring a potential partnership" to create one of the largest health systems in the nation with a footprint three states.

If finalized, the merged system would include 35 hospitals, more than 650 care venues, 108,000 employees and $17 billion in annual revenues, with a presence in Michigan, Wisconsin, and Illinois.

The announcement comes three weeks after Southfield, Michigan-based Beaumont called off its proposed merger with Akron, Ohio-based Summa Health, and a little more than two years after Advocate Healthcare and Aurora Healthcare merged, which placed it among the 10 largest not-for-profit health systems in the nation.

Beaumont and Advocate Aurora began merger talks at the end of 2019, but were interrupted during the COVID-19 surge.

"Our discussions were paused by COVID-19, but in no way are they caused by COVID-19," Beaumont CEO John Fox said. "This announcement would have come sooner if we had not gone through the pandemic."

In January 2020, Summa signed a definitive agreement to join Beaumont, but that deal was called off in late April. In a teleconference with reporters on Wednesday, Fox called the simultaneous negotiations with Summa and Advocate Aurora "two unrelated items."

"Both Summa Health and Advocate Aurora emerged in the middle of 2019 as a conversation. Advocate Aurora was fine with Beaumont Health going forward with Summa, and fine if we elected not to do that," Fox said.

"The reason we did not go forward with Summa has nothing to do with Advocate Aurora," Fox said. "We were working with Summa on some changes we needed to make to the agreement between us, particularly related to the pandemic, and the financial realities around the pandemic."

"Ultimately, we could not come to agreement on those and we elected to not proceed with the transaction. The Summa people are great people, but again, this was totally independent of the Advocate Aurora conversation," he said.

Summa Health declined to comment when contacted by HealthLeaders and referred questions to Beaumont Health.

The proposed merger of Advocate Aurora and Beaumont would create equal one-third governance representation of any future partnership between Beaumont and legacy Advocate Health Care and Aurora Health Care organizations.

The health systems notified attorneys general in Michigan, Illinois, and Wisconsin about their merger talks last week, and pledged to work with state regulators through the process, which Fox said they hope to complete by the end of the year.

Jim Skogsbergh, CEO of Downers Grove, Illinois-based Advocate Aurora, said the merger provides a "unique opportunity to explore a partnership with a like-minded, purpose-driven organization."

“Our discussions were paused by COVID-19, but in no way are they caused by COVID-19. This announcement would have come sooner if we had not gone through the pandemic.”

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

The merged system would include 35 hospitals, more than 650 care venues, 108,000 employees and $17 billion in annual revenues, with a presence in three states.

The two health systems began merger talks at the end of 2019, but were interrupted during the COVID-19 surge.


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