ProMedica Health System could soon extend its reach into another Michigan community with the possible addition of Mercy Memorial, an independent, nonprofit hospital in Monroe.
ProMedica, already the parent company of Bixby Hospital in Adrian and Herrick Hospital in Tecumseh, said Mercy Memorial’s board of trustees signed a letter of intent to join ProMedica on Monday. ProMedica and Mercy Memorial will spend the next three to five months scrutinizing each other’s financial data and other records. At the end of the due-diligence period, the two sides will have the option of signing a definitive agreement making Mercy Memorial part of ProMedica.
ProMedica is the largest health system in the Toledo area and, in addition to its Michigan hospitals, it operates Toledo and Toledo Children’s Hospitals, Wildwood Orthopaedic and Spine Hospital, Flower Hospital in Sylvania, Bay Park Hospital in Oregon, St. Luke’s Hospital in Maumee, Defiance Regional Hospital, Fostoria Regional Hospital, Memorial Hospital in Fremont, and Lima Memorial Health System.
Mercy Memorial is looking to cut costs by becoming part of large health-care system, and its board of directors looked at proposals from several hospitals before choosing to sign the letter of intent with ProMedica, said Kevin Webb, ProMedica’s chief acute care officer.
“Lots of health systems and hospitals across the country are doing the same thing because we are all trying to achieve some economies of scale to help reduce our costs and try to improve quality and safety. We found that as we have added hospitals in the past we have been able to reduce costs because we end up sharing support services,” Mr. Webb said.
He added that the information technology department is expensive for hospitals to maintain and is a key driver behind many hospital acquisitions and mergers nationally.
“Our board, they looked at the long-term assessment of our future back in November and the impact of health-care reform. They looked at whether we could remain independent in the future and be successful in the future,” said Annette Phillips, president and chief executive of Mercy Memorial Hospital System.
Ms. Phillips said the board was concerned about lowered reimbursement rates from the federal government’s Medicaid and Medicare programs and the increased cost the hospital had to absorb to move to the government-mandated electronic-records systems, which cost $15 million to install and another $500,000 per year to maintain.
“Health-care reform was a big driver. There is so much change, and much of it is still being created, and we wanted to do this from a position of strength,” Ms. Phillips said.
Mercy Memorial is also hoping it can stem the tide of people who leave and go to the University of Michigan Health System for their cancer treatments and to Toledo for heart surgeries by adding those specialties in Monroe.
Mercy Memorial Hospital System has nearly 2,000 employees and operates Mercy Memorial Hospital, a nursing center, a hospice center, and HomeCare Connection.
There would be no impact on the staff or the organizational structure of the hospital system if it signs a definitive agreement with ProMedica, Ms. Phillips said.
“We don’t know how the name would change. It will likely change,” she said.
Contact Marlene Harris-Taylor at firstname.lastname@example.org or 419-724-6091.