Metro Health Corp. would affiliate with the University of Michigan Health System in an arrangement that could bring a significant new player into the Grand Rapids-area health care marketplace.
The Wyoming-based Metro Health said today that it signed a letter of intent to merge with the Ann Arbor-based U-M Health System. An affiliation with U-M Health System could bring Metro Health greater access to medical specialists, particularly in cardiac care and oncology.
“It is no secret that U-M has some of the best providers in the state and country,” said Metro Health President and CEO Mike Faas. “By joining the ‘leaders and best,’ we can build on our existing expertise and provide our patients and community with enhanced access to specialized health care services, scientific discovery and advanced technology.”
The signing of the letter of intent initiates a period of due diligence that could take several months to complete.
The arrangement could end months of speculation over who would partner with Metro Health, which last summer abruptly ended talks over a potential joint venture with Franklin, Tenn.-based Community Health Systems Inc. after two years of due diligence.
“U-of-M will be interesting to have in town and see if U-of-M has any kind of programming that can complement what’s going on in Grand Rapids and what’s going on at Metro,” said Mike LaPenna, a health care planning consultant in Grand Rapids. “It will be truly interesting if U-of-M brings over really powerful clinical programs and populates Metro’s hallways with U-of-M physicians.”
U-M Health System and Metro Health already collaborate on a radiation oncology center at the Metro Health Village in Wyoming. U-M could provide Metro Health assistance in elevating its cardiac care, LaPenna said.
Under a final affiliation agreement with Metro Health, U-M would gain a position in Michigan’s second-largest market.
“It’s a good fit for us as we prepare for the future of health care in the state of Michigan,” said Mary Masson, U-M Health System’s director of institutional positioning. “There’s a significant number of people there and we’d like to be able to provide health care in the greater Grand Rapids area.”
Masson called the letter of intent between the two “an important first step to begin laying out the roadmap and it gives both of us a chance to better understand each other’s operations and structure and an affiliation that will maximize our success.”
“We are still working out the operational details, but we are committed to making this agreement successful,” she said.
In addition to additional clinical services, U-M Health System could also provide Metro Heath access to capital.
“It is an affiliation that will contemplate capital commitments by U-M,” Masson said.
The proposed affiliation with U-M Health System comes after a potential joint venture with a for-profit hospital operator Community Health Systems fell apart in August, as MiBiz reported at the time. U-M Health System was among the groups that initially submitted proposals for Metro Health when it decided to seek a partner in 2012. Trinity Health, the parent company of Mercy Health, also submitted a proposal.
U-M Health System in September 2013 proposed a deal to acquire a 75-percent stake in Metro Health and take over 100-percent ownership after five years in exchange for a $25 million payment to the Metro Health Foundation. That’s according to documents submitted last year to the state attorney general’s office as part of a review of proposed Metro-Community Health Systems joint venture.
The Ann Arbor-based health system’s proposal in 2013 also included a commitment of $100 million over five years, according to the documents.
Metro Health is currently the smallest of the three health systems in Grand Rapids. While aligning with U-M Health System could enable Metro Health to better compete, the lead executive for one of its competitors views the potential deal as positive.
“Metro Health and UMHS have both been collaborative partners of Mercy Health in the past and we expect that to continue,” Mercy Health President and CEO Roger Spoelman said in a statement to MiBiz. “We look forward to continue working with both institutions to provide excellent, valuable health care services throughout west Michigan. Their partnership should only strengthen health care in this region of the state.”
Mercy Health’s parent company, Trinity Health, at one time was a partner with Metro Health and U-M Health System in Pennant Health, a coalition that was essentially put on hold when Metro began seeking a partner four years ago.