Four hospitals will transfer to the Indiana-based nonprofit while Ascension persists with its divestitures.
As Ascension continues to pare down its presence in Michigan, Beacon Health System is taking the opportunity to grow in the state.
The two sides reached a definitive agreement for the Indiana-based nonprofit to acquire Ascension's Southwest Michigan Region, which includes four hospitals, 35 outpatient clinics, and an ambulatory surgery center.
The deal, which is expected to close in the summer pending regulatory approval, represents a significant expansion into southwest Michigan for Beacon. Currently, Beacon consists of seven hospitals, 146 care sites, more than 1,175 providers, and more than 8,100 employees. Following the completion of the transaction, the system would swell to 11 hospitals, more than 180 sites of care, more than 1,400 providers, and more than 10,800 employees.
"Expanding our reach deeper into southwest Michigan broadens access to high-quality, affordable care for communities served by Ascension, extends our service area and provides growth opportunity to further strengthen the health system," Kreg Gruber, CEO of Beacon Health System, said in a statement. "This acquisition will create a bright future for these communities by ensuring access to quality healthcare services for generations."
The hospitals in the sale include 422-bed Ascension Borgess Hospital in Kalamazoo, along with Ascension Borgess Allegan Hospital, Ascension Borgess-Lee Hospital, and Ascension Borgess-Pipp Hospital.
"As a regional provider, Beacon Health System is positioned to serve patients through an integrated care delivery system to ensure that southwest Michigan has access to sustainable, quality health care long into the future," Ascension Michigan COO Scott Cihak said. "After an in-depth review, we found that our organizations are well-aligned culturally, which will streamline the integration process. Our communities are in good hands."
Meanwhile, the move allows Ascension to divest more hospitals, particularly in Michigan where it has been active.
The Catholic nonprofit completed a sale of eight hospitals to Prime Healthcare for more than $370 million last month. Though one of the hospitals that was in the original deal, Ascension St. Elizabeth, was shut down in February, Prime also acquired four senior living and post-acute facilities, along with multiple physician practices.
Last year, Ascension completed its divestiture of three hospitals to MyMichigan Health before teaming up with Henry Ford Health in a $10.5 billion joint venture. The organizations underlined that the partnership was not a merger or acquisition, and that no cash was exchanged.
Ascension has been pursuing hospital sales with the aim of turning around its financial performance, which has struggled in recent years.
The system logged a $143 million operating loss in the second quarter of fiscal year 2025, compared to a $38.5 million operating gain in the same period last year. For fiscal year 2024, Ascension suffered a $1.8 billion operating loss and a $1.1 billion net loss.
Jay Asser is the CEO editor for HealthLeaders.
KEY TAKEAWAYS
Ascension has agreed to sell its Michigan southwest region, inclusive of four hospitals, 35 outpatient clinics, and an ambulatory surgery center, to Beacon Health System.
The acquisition will give Beacon 11 hospitals across Indiana and southwest Michigan, allowing it to widen its footprint.
For Ascension, the deal follows other moves to offload hospitals in Michigan and trim down its portfolio in search of profitability.