Spectrum Health and Beaumont Health’s announced merger is still plowing ahead, but the Michigan health systems recently acknowledged that the process is taking “longer than originally anticipated” due to regulatory holdups.
In a Sept. 24 update, the systems pointed to the multi-industry “tidal wave” of merger and acquisition filings the Federal Trade Commission (FTC) said in August could delay its standard review process.
The providers also noted that they are responding to the agency’s request for additional information on the merger, “which the organizations understand has become increasingly common,” they wrote.
Spectrum and Beaumont first announced their plans to create a 22-hospital, 64,000-employee system back in June. The merger was originally slated to close in the fall.
The providers said they are now undergoing pre-integration planning that would not be implemented in full until the deal is closed. They said they are also selecting individuals to represent each organization as they plan for the launch of a new combined system, which is temporarily named “BHSH System.”
“Spectrum Health and Beaumont Health remain committed to a shared vision to provide more accessible, affordable, equitable and exceptional health care and coverage for people across our state,” the systems wrote. “They continue to be confident that creating a combined health system is pro-competitive and will benefit the communities they serve.”
Spectrum and Beaumont, two of Michigan’s biggest healthcare providers, said in June that the merger would create new efficiencies that could be reinvested into basic infrastructure needs, additional facilities and novel technologies, among other areas.
Spectrum, the larger of the two systems with 14 hospitals, reported $8.3 billion in total operating revenues in 2020, a gain of more than $1 billion from the year before. Net operating income also improved year over year from $332.1 million to $412.4 million.
Beaumont operates eight hospitals and reported nearly $4.6 billion in operating revenues during 2020, a decrease from the previous year’s $4.7 billion. Net operating income in 2020 was $176.6 million, also a dip from the previous year’s report of $196.3 million.
Beaumont should be particularly interested in seeing one of its proposed M&A deals finally come to fruition.
Last year, the provider called off a potential 36-hospital merger with Advocate Aurora Health when lawmakers and doctors raised concerns about the deal. This had shortly followed a botched acquisition of Summa Health’s four hospitals.
Word of an FTC holdup also comes as much of the provider industry waits to see where exactly the agency will land on its regulation of hospital mergers.
In July, President Joe Biden signed an executive order pressing the FTC and the Justice Department to “review and revise merger guidelines to ensure patients are not harmed by such mergers.” The American Hospital Association has since petitioned the administration for a sit-down to discuss whether provider consolidation is negatively impacting prices or quality.
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