LANSING — Michigan Medicine announced Thursday plans to acquire Sparrow Health System.
In a release, Sparrow announced that its board of directors approved the agreement on Nov. 28 and the University of Michigan Board of Regents approved the agreement on Thursday. UM owns Michigan Medicine.
The deal is expected to be completed in the “first half” of 2023, pending regulatory approvals. It was first reported by Crain’s Detroit Business.
“The partnership with the University of Michigan Health provides Sparrow the opportunity to take a greater leadership role in improving the health of the communities we serve,” Sparrow Health System President and CEO James Dover said in a statement.
UM President Santa J. Ono pointed out that an affiliation agreement signed by the two organizations in 2019 for pediatric services paved the way for ongoing collaboration.
“The mission, vision and values of the two organizations are aligned with a common goal to deliver on the promise of nationally renowned clinical excellence in an accessible setting,” he said.
UM said the deal will have a far-reaching impact on Sparrow and the Lansing area, expanding access to clinical care throughout the region and, ultimately, statewide.
UM Health is investing $800 million in Sparrow, funded in part by facility projects, operations and other strategic investments over the next eight years, UM said in a release. Sparrow was already in the middle of a six-year, $800 million investment plan.
The deal will make University of Michigan-Health a $7 billion organization with more than 200 care sites, UM said in its statement.
The deal also includes Sparrow’s Physicians Health Plan, which UM had a minority interest in, according to UM. The health plan provides health care coverage and a Medicare Advantage plan to over 300 employers and 70,000 members in Michigan.
Michigan Medicine and Sparrow partnered with each other in 2019 to further develop pediatric services in Mid-Michigan, which provided Sparrow greater access to specialized medicine.
Dover also confirmed that deal is what led Sparrow to sign an agreement with Michigan Medicine.
“During this year is when we had further discussions to say it’s working so well and we want to be a part of the premiere health system in the hands of all Michiganders.”
Marschall Runge, CEO of Michigan Medicine, dean of the UM Medical School and executive vice president for medical affairs at UM said in a statement, said the deal with strengthen UM.
“Upon closing, UM Health will create a clinical care network that builds upon the strengths of the world-class UM academic medical center and a very successful community-based health system,” he said. “Together the two organizations will focus on bringing increased health care innovation to mid-Michigan and beyond.”
The executive committee of the Professional Employee Council of Sparrow Hospital – Michigan Nurses Association represents employees in more than 50 job classifications, including nurses, therapists and laboratory scientists.
“We learned of the agreement with Michigan Medicine this evening and will be seeking more information,” the union said in a statement. “We are hopeful that this will lead to a renewed investment in frontline patient care that will benefit nurses, healthcare professionals, and our community.”
Sparrow confirmed plans to lay off hundreds of employees in September, but said at the time many of the cuts “were targeted at leadership and non-patient care roles, as we were mindful of minimizing the impact on clinical caregivers and patients.”
Sparrow Spokesperson Corey Alexander said then that the health system had a net loss of $90 million in the first six months of this year as supplies, salaries, wages and benefits rose, but patient volumes declined and “cost of contracting agency labor has skyrocketed.”
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In addition to its main campus in downtown Lansing, Sparrow has a St. Lawrence campus and hospitals in Charlotte, St. Johns, Ionia and Carson City.
Earlier in September, Sparrow opened its new $20 million emergency center in Okemos.
The project was part of Sparrow’s own six-year $800 million investment plan to improve care at facilities, increase the footprint and expand its presence beyond Lansing. Still to be completed is a $40 million outpatient surgery center in downtown Lansing, a $350 million five-story tower with patient rooms at Sparrow Hospital and a $50 million expansion of outpatient offices in Greater Lansing.
Sparrow will retain independent governance in Mid-Michigan, Dover said, allowing the community to provide input on the direction of the health system. The health system’s branding will change over time.
Dover confirmed that there will be no changes to Sparrow’s current partnerships and agreements with Michigan State University for its nursing, College of Human Medicine and College of Osteopathic Medicine programs. He added that UM has encouraged the health system to continue honoring them.
“University of Michigan Health wants us to continue that partnership too so that we can train, grow and keep our physicians and nurses in Michigan.”
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Contact reporter Krystal Nurse at 517-267-1344 or knurse@lsj.com. Follow her on Twitter @KrystalRNurse.