Metro Health 'not for sale' — but it could be acquired
A deal with McLaren Health Care is among the possibilities.
Metro Health, the third largest acute care hospital in the Grand Rapids area, is beginning an “active search” for a “strategic partner” that would allow it to continue to accelerate its growth in view of rapidly changing conditions in the health care industry, due particularly to the Affordable Care Act.
“Make no mistake, Metro is not for sale,” said Mike Faas, president and CEO of Metro Health, in the announcement released abruptly yesterday. “We’re committed to seeking a strategic partner that allows Metro to largely maintain its autonomy and independence.”
However, Faas told the Business Journal that the Metro Health board is “looking at every opportunity, from joint ventures to partial ownership, to the possibility of acquisition.”
Faas said the board will be looking at “a series of three to four” potential partners over the next few months.
When asked if McLaren Health Care was in consideration, Faas said, “they are definitely on our list.”
“One of the things that is attractive about them is they are the largest provider of osteopathic medical education in the state. They are someone that would certainly move to strengthen Metro, not weaken it, because they have no other competitor in the market, and they certainly have a very strong financial position. Those are pluses. Now, certainly, we’re going to take into account our Pennant partners. We care about Pennant Health Alliance very much; we work very hard to make sure that’s successful. But we will consider them — McLaren — our partners in Pennant, and a handful of others, as we go through the process.”
The McLaren system includes 10 hospitals and scores of other patient-care facilities in 54 counties, mainly on the eastern side of Michigan. According to its website, it is a $4.2 billion organization with a sustained revenue growth rate of 20 percent a year for nearly 20 years. It has 16,000 employees and more than 10,000 network physicians, and it also has a wholly owned medical malpractice insurance company.
Metro Health, which opened its new 208 bed, $165-million facility in Wyoming in 2007, is an osteopathic teaching hospital.
Faas said the announcement was the result of a Metro Health board retreat in Petoskey in October, at which they discussed “all the opportunities that were coming forward to Metro, and what became pretty apparent was: There was nothing we didn’t want to do.”
In the announcement, Doyle Hayes, chairman of the Metro Health board, said the organization’s “cash position is the best it’s been in years and our partnerships with other health care institutions have proven to be beneficial endeavors. This is the next step in our work.”
“One issue is the depth of our financial resources. If we’re going to do everything we should do, then we’re going to need a capital partner to get there,” said Faas.
Another issue “is very apparent with the Affordable Care Act,” said Faas, in that “scale, or size,” or a hospital being essential “to the market, is going to be a driving force. And we’re always going to be a hospital in Kent County that’s not the largest.”
The largest, of course, is Spectrum Health System, which has nine hospitals throughout West Michigan and 183 service sites, two physician groups with more than 700 providers and an HMO with 600,000 members. It has 19,000 employees, making it the largest employer in West Michigan, according to the Spectrum website.
Metro Health wants “to craft choice,” said Faas. “Make sure there’s always choice, that there isn’t just one player in a market, for any service line.”
Noting that Metro Health is in the best shape it has been in the last several years, Faas said the board wants the organization “to continue to advance. It appears we need to seriously consider a partner while we’re in a position of strength. Let’s not wait until we find some problem that we have to work out.”
“We don’t have to do it. We’re doing it, because we think it’s the right thing to do,” said Faas.
The search for a strategic partner continues a culture of partnership by Metro Health, according to its announcement. In 2008, Metro Health opened a cancer center in partnership with the University of Michigan Health System. Two years later, Metro Health partnered with the University of Michigan Health System and Trinity Health-West Michigan to form the Pennant Health Alliance, which shares some services.