GRAND RAPIDS — Spectrum Health now holds nearly all the shares in Priority Health, with blessings this month from state officials.
Spectrum Health CFO Mike Freed said the system paid HollandHospital $42 million for its stake of about 19 percent ownership in the health plan. The move gives Spectrum 95 percent of shares in Priority Health, which was established in 1992 when HollandHospital and the former ButterworthHospital united their HMOs.
Michigan's Office of Financial and Insurance Services approved the deal in mid-December, following the OK from the Spectrum Health, HollandHospital and Priority Health boards.
Freed said the move eliminates one financial uncertainty in the future.
"The main focus for us has been predictability," Freed said. "We didn't want to leave a legacy to our successors where … all of a sudden Holland walks in and says, 'We're going to put our Priority Health shares (on the market) and oh, by the way, you owe me $100 million.' This just gave us more financial certainty, by doing this, in predicting where our future was going to be."
Munson HealthCare in Traverse City and Northern Michigan Regional Health System in Petoskey together own 5 percent of Priority Health shares, but Freed said they do not have the option to require Spectrum Health to buy them out.
"Accepting Spectrum's offer to purchase our portion of Priority fits in well with the long-term strategic objectives of both HollandHospital and Priority Health," stated Dale Sowders, Holland's president and CEO.
Sowders said the money from the stock sales will be leveraged for future goals, community health initiatives and collaboration with medical staff.
Through the third quarter ending Sept. 30, Priority Health reported to the state $12.7 million in net income, year-to-date, and 350,098 members — a drop from the 372,107 members it claimed at the end of last year.