Our Take: Henry Ford Health to form joint venture with Ascension Michigan, Aspirus Health advances affiliation plans with St. Luke’s
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.
What else you need to know
As expected, Rite Aid initiated the Chapter 11 bankruptcy protection process, which will allow the company to implement a financial restructuring plan. In a press release, Rite Aid said it has secured $3.45 billion in new financing so it can continue to operate during the restructuring. The company intends to close more of its underperforming stores and sell its pharmacy benefit management company, Elixir Solutions, to MedImpact Healthcare Systems unless it receives a better offer. Another subsidiary, Elixir Insurance, is not included in the Chapter 11 process. In addition, Rite Aid welcomed Jeffrey Stein as the company’s new CEO, chief restructuring officer, and board member. Elizabeth Burr, who served as interim CEO since January, will remain on the board. Healthcare Dive reported that Rite Aid is facing more than 1,600 opioid-related lawsuits, including a civil case the Department of Justice filed in March, as well as litigation pertaining to “contract disputes, other government investigations, and securities matters.”
Walgreens and Alignment Healthcare will offer co-branded Medicare Advantage (MA) plans in four states starting Jan. 1, pending regulatory approval. The $0-premium plans will be available in select markets in Arizona, California, Florida, and Texas, the companies said in a press release. Plan members will be able to use over-the-counter benefits at Walgreens or through an online mail-order service. According to the companies, the plans will provide medical and prescription drug coverage, including a $0 copay on more than 10,000 prescription drugs at Walgreens and other in-network pharmacies. Earlier this month, Orange, Calif.-based Alignment Healthcare announced a partnership with Instacart to offer co-branded MA plans in certain regions of California and Nevada starting in 2024. Those plans are designed to give plan members living in “food deserts” better access to nutritious food.
Pfizer launched a cost realignment program with the goal of saving $3.5 billion by the end of next year. The drugmaker announced the program’s launch along with adjusted revenue and earnings guidance and news of an amended agreement with the federal government for Paxlovid and Comirnaty, the company’s COVID-19 products. Demand for both products has been lower than anticipated, leading Pfizer to record third-quarter write-offs of $4.6 billion for Paxlovid and $900 million for the BioNTech-partnered Comirnaty vaccine. The company lowered its estimated annual revenue for 2023 by $9 billion — $7 billion in connection with lower estimated Paxlovid revenue and $2 billion tied to lower-than-expected Comirnaty vaccination rates. Pfizer expects the cost-cutting initiative to incur approximately $3 billion in one-time costs, mostly for severance packages and implementation. The company did not say how many jobs are likely to be eliminated.
CMS will no longer limit the number of PET beta amyloid imaging to one scan per patient (over a lifetime), according to a decision memo announcing the removal of a national coverage determination (NCD) implemented in 2013. Under the NCD, amyloid PET scans were accessible for use only in a clinical trial, and anyone who had undergone an amyloid PET scan to diagnose Alzheimer’s disease was not eligible for coverage of additional scans. Moving forward, regional Medicare administrative contractors will make coverage decisions for amyloid PET scans. The change should increase patients’ access to Alzheimer’s drugs such as Eisai and Biogen’s Leqembi (lecanemab-irmb), which require a PET scan to show the presence of amyloid plaques in the brain before patients can qualify for treatment.
VillageMD announced the appointment of three top executives among its various lines of service. Dr. Rishi Sikka will be president of Village Medical, Becky Levy has been promoted to president of Summit Health and Starling Physicians, and Dr. Dan Frogel will serve as president of CityMD and chief clinical officer of VillageMD.
Medicare Accountable Care Organizations In 2022: Renewed Growth And Improved Savings Saw Small Rebound From The COVID-19 Pandemic. Health Affairs, 10.19.23
The CMS Strategy to Promote Equity in Quality and Value Programs. JAMA Health Forum, 10.20.23
Type 2 Diabetes — Controlling the Epidemic, Episode 4: Understanding Old and New Therapies for Diabetes. NEJM, 10.29.23 (Fourth video in a 4-part series)
