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Multiple Detroit area hospital groups may be considering mergers

According to several anonymous health care industry officials, at least six large hospital groups in the metro Detroit area have begun acquisition talks or are looking for potential merger partners. Trustees Michigan based hospital groups Beaumont Health System and Henry Ford Health System were verified to have met and discussed possible purchase agreements.

A representative for Henry Ford confirmed the two groups meeting, but explained that he could not "confirm any specific details because such board discussions are confidential." Likewise a spokesperson for Beaumont acknowledged that the group's executives are currently "involved in strategic planning discussions" but stressed that the company has yet to make any decisions on possible business deals.

Industry officials say Beaumont has been actively considering mergers for about a year. This could be due to its bond ratings being downgraded after 2008, but two rating agencies recently reported that the groups' financial situation appears secure. According to a July report from Fitch Ratings, the group had approximately 113 days' worth of liquid cash, which Fitch categorized as "adequate". Henry Ford currently operates 30 medical centers and seven hospitals, making it Michigan's second biggest health care insurer next to Blue Cross Blue Shield of Michigan.

Experts have suggested that Michigan hospital groups could be seeking mergers in order to streamline expenses in preparation for the presidential election and the possible repercussions of President Obama's Affordable Care Act. Sources claim that health groups like Vanguard, Spectrum, University of Michigan, McLaren and St. John Providence could all be considering significant regional acquisition deals. Experts have speculated on how a merger between any of these large groups could affect their holdings and relationships with Michigan's medical schools.

Source: Detroit Free Press, "Mega health-system deal in the works, sources say," Tom Walsh, Oct. 27, 2012

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