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Our Take: Henry Ford Health to form joint venture with Ascension Michigan, Aspirus Health advances affiliation plans with St. Luke’s

Oct 23, 2023

Detroit-based Henry Ford Health agreed to enter into a joint venture with Ascension Michigan to create a health system with more than $10.5 billion in operating revenue. 

The resulting entity would be a combination of Henry Ford Health, including its Health Alliance Plan, and St. Louis-based Ascension’s southeast Michigan and Genesys health care facilities. Altogether, the new health system would have 13 acute care hospitals and more than 550 sites of care. It would employ an estimated 50,000 individuals. 

Other Ascension Michigan hospitals and facilities located in the southwest and northern regions of Michigan would not be included in the joint venture. 

If state and federal regulators approve the deal between the two nonprofit organizations, the anticipated timeline for closing the transaction is mid-2024. 

Henry Ford Health’s CEO, Robert Riney, would lead the new health system, which would be based in Detroit and operate under the Henry Ford Health name. A board consisting of members from both organizations would govern the combined entity. 

Riney, who has been with Henry Ford Health since 1978, took on the roles of president and CEO a little over a year ago after Wright Lassiter III left to become CEO of Chicago-based CommonSpirit Health. 

“Together we can expand health care services and deliver innovations in care … to more people and communities across our state, including those who are most vulnerable,” Riney said Wednesday in the statement announcing the joint venture. 

Dr. Doug Apple, Ascension Michigan’s chief clinical officer, said the new health system would surround patients with what they need to live healthy lives, with more options closer to home. 

“By focusing on the creation of an integrated, streamlined health care journey, we can improve the consumer experience, improve care coordination, and provide superior value,” Dr. Apple said. 

Carol Schmidt, ministry market executive at Ascension Michigan, noted that the expanded health system would also contribute “secure, high-paying jobs and other related employment.” 

Dr. Adnan Munkarah, Henry Ford Health’s chief clinical officer, said the “expanded footprint” would allow Henry Ford Health to “train more physicians, nurses, and allied health professionals, at more sites, and in more specialties, across the communities we serve.”

The organizations are not calling the agreement a merger or an acquisition, and no cash will exchange hands. 

They said in the announcement they are both “committed to working to maintain the Catholic identity of the Ascension Michigan facilities included in the partnership,” and that discussions regarding the future state of the facilities’ Catholic identity are ongoing.

Earlier last week, Wausau, Wis.-based Aspirus Health and Duluth, Minn.-based St. Luke’s signed a definitive agreement that brings them a step closer to combining. The nonprofits announced in July that they had signed a letter of intent to affiliate. 

According to their agreement, which both boards have approved, Aspirus will invest at least $300 million over the course of eight years to fund St. Luke’s strategic projects. 

In addition, Aspirus will commit to implementing Epic and other systems within two years of the transaction’s closing “to promote integration and efficiency,” and Aspirus Health Plan will expand into St. Luke’s service area within the same time frame. 

“Together, we will continue to evolve the way we care for our patients, especially those in rural areas, who will have the opportunity to access the same high level of care as patients in other parts of the country,” Matt Heywood, president and CEO of Aspirus, said in a press statement

Eric Lohn, co-president and CEO of St. Luke’s, said, “For more than 140 years, we’ve taken great pride in caring for this region. With the challenges facing the health care industry, including St. Luke’s, we believe that now is the time to affiliate. We are confident that Aspirus is the right partner to help us further grow and continue providing the best level of care for the next 140+ years.” 

If the affiliation passes regulatory investigations, the combined organization will operate 19 hospitals and 130 outpatient sites of care. Its headquarters will be in Wausau, with a corporate office in Duluth. 

Aspirus and St. Luke’s said in the announcement they hope to complete their affiliation next spring. The combined health system would serve northeastern Minnesota, northern and central Wisconsin, and Michigan’s Upper Peninsula.

Our Take: Minnesota’s attorney general is planning to hold a community meeting Wednesday to get the public’s input on the affiliation between Aspirus Health and St. Luke’s (as well as the merger between Essentia Health and Marshfield Clinic Health System). 

There’s no reason to believe the Aspirus-St. Luke’s deal will face any significant opposition, but the outcry over the proposed merger between Sioux Falls, S.D.-based Sanford Health and Minneapolis-based Fairview Health Services — which ultimately failed — has spurred closer scrutiny by the AG’s office of other deals between Minnesota health systems and out-of-state suitors. 

The joint venture between Henry Ford Health and Ascension Michigan may face greater challenges in gaining regulatory approval. The announcement not only avoided using the terms “merger” and “acquisition.” It also was light on details about how (or whether) the health systems would be integrated. 

Henry Ford Health and Ascension Michigan may be able to skirt the need for the state attorney general’s approval. Beaumont Health and Spectrum Health managed to do so by structuring their transaction as a member substitution; the health systems continued to operate as separate legal entities with oversight by an organization then called BHSH System. 

We’re not placing any bets on whether the Federal Trade Commission will try to block the joint venture, but patient advocacy groups and others may oppose it based on the very different stances Henry Ford Health and Ascension — the largest nonprofit, Catholic health system in the U.S. — take on reproductive health care and medical treatment for LGBTQ+ patients and employees, as Kristen Jordan Shamus noted in a Detroit Free Press article. 

If the deal is approved, Shamus pointed out that there would still be five “large-scale” competitors in the southeastern part of Michigan — Corewell Health (the system formed when Beaumont and Spectrum merged in February 2022), Detroit Medical Center, McLaren Health Care, Trinity Health, and University of Michigan Health. 

Ascension has been paring down its assets in recent years. In August 2021, Ascension Wisconsin sold seven hospitals, 21 physician clinics, and other facilities to Aspirus Health.

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