MetroBorgess Merger To Back Burner

April 22, 2002
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They're not merging. Not yet and not for a while if there's a better way to work together.

Preferring to examine other methods first to forge closer ties, Metropolitan Health Corp. and Borgess Health Alliance have set aside merger as the primary topic of ongoing discussions.

While the two health systems could still ultimately become one down the road, they plan to focus for now on strengthening their existing business relationship through other means, Metro Health President and Chief Executive Officer Mike Faas said.

"For the moment, we're not talking about a merger. We're going to let this thing evolve how it should evolve," Faas said. "We're proposing Metro stay an independent facility for now."

Metro Health and the Kalamazoo-based Borgess Health formed an alliance two years ago through a shared-services management company that was designed to reduce operating costs by sharing certain administrative functions such as joint purchases of supplies and a fiber-optic information technology link.

That initiative led to talks of a merger between the two. But in the last two months, discussions have moved away from merger as Metro's situation changed.

Metro was seeking a partner so it could access capital to develop a new suburban hospital campus in Wyoming, a project preliminarily estimated to cost upwards of $155 million. The idea was that under a merger, Borgess Health's parent company, St. Louis-based Ascension Health, the largest non-profit health care corporation in the U.S., would provide much of the financing Metro needed for its plan.

Metro is now looking at alternative financing options that gives a merger less importance and allows the health systems to slow down the pace of their talks and concentrate first on areas where they can work together closer in a formal structure less than a merger, Faas said.

"Before we said there's only one result we can accept. Now we don't know what end we're going to have," Faas said. "It's gives us more time to make a reasoned decision."

Metro Health Corp. includes the 238-bed osteopathic Metropolitan Hospital, 13 primary-care health plazas around the region, a Medicaid HMO and a networks of 150 primary-care and specialty physicians.

Borgess Health Alliance includes four hospitals it owns, affiliations with five others, ambulatory care facilities, home health care, physician practices, managed care services, a cancer center and an air ambulance service.

While the focus of their discussions have changed somewhat, Metro and Borgess are not dropping the idea of an eventual merger, said Mike Alfred, executive director of business development and public relations for Borgess.

"The cooperation and togetherness between the two systems is more active than ever," Alfred said. "A merger in the future is still a possibility and we're committee to that."

The discussions with Borgess are one front where Metro is talking about cooperating with others to provide care.

Metro and Borgess are continuing to talk with Saint Mary's Mercy Medical Center in Grand Rapids about possibilities for a "heath care village" Metro envisions developing on the 150-acre of its new a suburban hospital proposed in Wyoming. Those discussions were by overtures Saint Mary's made to Metro in December amid concerns how Metro's would affect its payer mix of indigent patients and long-term finances.

All parties say the talks are progressing.

"Saint Mary's still wants to work together with Metro and we're still having positive conversations," Saint Mary's spokeswoman Jennifer Cammenga said.

The three recently hired an outside consultant to facilitate discussions and analyze possible joint ventures. Among the uses floated for Metro's health care village concept are a nursing home of assisted-living center, a pharmacy, physician offices, a wellness center and other complementary uses.

"Are there things we can do together," Faas said. "There's progress in that I think we understand some of the opportunities we have."

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