http://ipraudio.interlochen.org/Munson_NMH_Spectrum_Talks.mp3
Munson Heathcare could join up with a Grand Rapids-based health system as early as this spring. This week the Traverse City hospital announced it's in talks with Spectrum Health.
Leaders at Munson say the local system is financially strong, but merging with a much larger organization would help it to recruit doctors, and it would mean more access to money for big, capital improvements.
Northern Michigan Regional Hospital in Petoskey is in similar talks with Spectrum. NMH could sign on by March. The move could make it easier for the hospital to replace its aging building.
President and CEO Reezie DeVet says NMH would like to build a brand new, energy-efficient building in Petoskey within the next five to ten years. Even if the hospital can't build new, it will be doing major renovations.
"And, under the auspices of a system as large as Spectrum Health, your range of people that you can borrow from is broader and the interest rate at which you acquire that money is much less than if you're smaller," DeVet says.
Tightening credit markets, impending physician shortages, and the unknowns implicit in the national healthcare debate have made consolidation with a bigger player very attractive. The larger system, Spectrum Health, would govern big capital decisions like building that new building. But the hospital would also retain its own assets, its identity, and it would still largely be run by its local Board of Trustees.
Munson CEO Doug Deck says the Traverse City hospital is also being lured to Spectrum by its access to money for big future improvements. A decision could come as early as April. Access to capital could further Munson's plans for a regional cancer center. But there's also a more immediate concern:
"Initially, we want to make sure we're in a position to continue to have physicians continue to come to Northern Michigan," Deck says.
Recruiting physicians and specialists can be a challenge for rural hospitals, a problem expected to get worse. Spectrum is in a good position to help with any impending physician shortage. The Grand Rapids group recently managed to lure Michigan State University's Medical School to West Michigan. Through Spectrum, both Munson and NMH want more student doctors to head Up North.
"They will be one of the largest teaching institutions in the State of Michigan," Deck says. "So, combining with them, it will be our collective responsibility to make sure that all the organizations in a new company have the doctors they need, and so that's a huge plus for us."
If the Grand Rapids health system does manage to sign both Munson and NMH, two traditional Northern Michigan competitors would become partners.
DeVet says that could mean some consolidation of services, somewhere down the road, but no one is talking about that today.
"There might be," DeVet says. "Though in talking with Spectrum about this, they said this isn't about consolidation, this is about growth. What type of capital we need to invest in we're not doing at this time, etc. And I like that, the way that they said that. It's really about how we garner serving a population that we can really impact the health and welfare of a population in ways that we can't when we're in silos from one another."
The Federal Trade Commission regulates hospital mergers, and there's debate about how much competition factors into quality of care and prices. But, just as DeVet is not decrying loss of competition, Munson CEO Doug Deck isn't either.
"You can really do more good with collaboration than competition, rather than duplicate resources and people in order to complete - especially in healthcare. That's my opinion," Deck says.