Beaumont Health Signs $6.1B Hospital Merger Deal with Summa Health

January 07, 2020 - Beaumont Health and Summa Health signed a definitive hospital merger agreement to make Summa Health a subsidiary of Beaumont Health after the two organizations signed a letter of intent last July.

“Conversations between leaders and staff at both organizations have been going well. We very much look forward to working even more closely together now that we have a definitive agreement in place," John Fox, CEO of Beaumont said in the press release. "As we grow our presence in Summa's market area, our significant investments in our Michigan employees and operations will continue and be further enabled."

After an extensive review of both organizations’ clinical, regulatory, and financial systems, health system leaders expect the arrangement to strengthen their ability to find new ways to improve care quality and the overall health of their communities. In addition, Beaumont and Summa will work together to fund the health system’s significant capital and operating projects to drive ongoing growth in Northeast Ohio and Michigan.

“The planned addition of Summa will allow us to serve more people and become a regional health care leader,” said John Lewis, Beaumont board chair. “The efficiencies from transactions of this nature enable us to directly support our medical personnel who provide care ultimately to benefit the patients we serve."

The transaction is expected to close by the end of the first quarter of 2020. Beaumont is Michigan’s largest healthcare system with $4.7 billion in total annual net patient revenue. And Summa is one of the largest integrated healthcare delivery systems in Ohio, with annual revenues reaching 1.4 billion. The combined organizations will have $6.1 billion in total revenue and employ more than 45,000 individuals and 6,000 physicians.

Summa’s health insurance operation will continue to be a vital part of Summa and it will retain a local board to support the oversight of clinical operations in Ohio. Beaumont and Summa will work together to drive future expansion.

"Over the past few months, our team has spent a considerable amount of time with the Beaumont team," Anthony Lockhart, board chair of Summa said. "We believe that by becoming part of the Beaumont family, we will be able to gain efficiencies from being part of a larger organization, further invest in delivering high quality, patient centered care and improve local access to the services most needed by our patients and communities."

Although the Beaumont and Summa acquisition expects a positive outcome, many hospitals and health systems believe that quality of care does not see notable benefit from hospital merger deals.

A recent study from researchers at Harvard University showed that there was no significant difference in 30-day readmission rates in hospitals consolidation (-0.10 percentage points) or in 30-day mortality (-0.03 percentage points) two to three years before acquisition compared to three to four years after the hospital changed ownership.

Furthermore, the study also uncovered that worsening patient experience could be due to hospital acquisitions. And was associated with a modest differential decline in performance on the patient-experience measure. The change was analogous to fall from the 50th to the 41st percentile.

An additional Health Affairs study published a few months back showed that acquisition of rural hospitals between 2009 and 2017 improved financial performance but decreased access to care at the acquired facility. And an analysis conducted by economists from Yale, University of Pennsylvania, Carnegie Mellon University, and MIT showed prices at hospitals were 12 percent higher than those in markets with four or more rivals.