Munson Healthcare has announced a letter of intent to purchase Mercy Hospital Cadillac and Mercy Hospital Grayling.
The purchase would also include Mercy Manor long-term care facility in Grayling and Mercy Home Care and Hospice services in Cadillac, Grayling and Houghton Lake.
The hospitals in Cadillac and Grayling are currently owned by CHE Trinity Health, but have been affiliated with Munson Healthcare for the past 15 years. The hospitals have also been managed by Munson for 11 of those years.
"As the next practical step in our partnership, we have signed this agreement to ensure we can continue to meet the heath care needs of the people of Cadillac and Grayling long into the future," said Ed Ness, president and CEO of Munson Healthcare. "This purchase will make patient care even more effective and efficient in these communities, and will bring a new level of collaboration and coordination of services across the Munson Healthcare system."
Moving forward, leaders from the health systems will be working together to get government and corporate approvals. They are also planning information meetings with community members.
While hospital officials say the current arrangement has worked well, they say the new agreement would help the hospitals moving forward to eliminate the complex administrative environment that comes from being owned and operated by different companies.
Hospital officials say significant changes to the health care industry during the past four years has required hospitals to be more effective and efficient.
"There are a lot of changes going on at the same time - the Affordable Care Act, the shift from inpatient to outpatient - they're all coming together as a perfect storm," said Ness. "You see these changes happening throughout the country. And so all of those factors come together to make this the right time to make this happen."
A task force has been created to oversee the community needs during the transition. The retiring CEO of Mercy Hospital Cadillac, John MacLeod, will be leading the task force.
"It is important to remain focused on doing what is best for everyone involved - especially our patients," MacLeod said. "All hospitals involved serve a large rural population with significant distances between communities. This makes it critical for health care providers to work together."
Ness said the main goal of the sale is better and more efficient patient care. He also said there is the opportunity for hospital expansion, which would mean job growth.
"Right now, there are a lot of patients going down state for care," said Ness. "If we can keep those patients local, that's an opportunity for growth."
Ness also mentioned that because hospital administrative work had been done in a down state office for the hospitals previously, there may be more administrative opportunities at the hospitals moving forward.
Mercy Hospital Cadillac is facing a $2.5 million budget deficit and has reported a loss every month of the 2014 fiscal year, according to a memo released to employees. The memo also claimed, however, this was the first time in 14 years the hospital had reported a loss from operations.
Hospital officials cited many reasons for the budget deficit, but emphasized in the memo that healthcare reform changes the payment methodology.
"Mercy Hospital Cadillac, like all hospitals across the country, must redesign itself to survive transition from payment based on illness and volume to payment based on wellness, quality, and low cost," the memo read.
Mercy Hospital Grayling was forced to cut 24 full-time positions "in order to respond to changes brought on by healthcare reform."
Officials at the hospital reported experiencing a significant decline in the number of people they were seeing for care in the hospital and their clinics. They also saw decreases in reimbursements.
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