The University of Michigan Health System in Ann Arbor and Allegiance Health in Jackson, Mich., have signed a letter of intent to affiliate.
Under the agreement, Allegiance Health would become a member of UMHS. Allegiance Health includes two hospitals totaling 480 beds, and UMHS includes three hospitals with 990 beds. The proposed transaction is not a sale or merger, officials said. Allegiance Health would only become an affiliate of UMHS, while UMHS would invest capital and expand clinical programs at Allegiance Health.
Over the next seven years, UMHS would invest $100 million in new strategic initiatives at Allegiance Health, including new technologies, data-driven care models, capital requirements and coordination of care among physicians and clinicians. Allegiance Health would still have some say on governance committees in conjunction with UMHS leaders. Other financial terms were not disclosed. The systems also said there will be no immediate plans to lay off employees or consolidate Allegiance Health facilities.
Executives at Allegiance Health and UMHS will conduct due diligence "over the coming months" before releasing full terms of the proposed affiliation. Pending due diligence and regulatory approvals, the two systems will then sign a definitive agreement.
Ora Hirsch Pescovitz, MD, CEO of UMHS, and Georgia Fojtasek, RN, EdD, president and CEO of Allegiance Health, both said in a news release they expect an affiliation will result in a more "effective and efficient organization" and better local healthcare. Specifically, Dr. Pescovitz said this affiliation will help the goals of the triple aim.
"Through these local partnerships, patients receive higher value, because they receive the right care, at the right time, in the right place, and in the most cost-efficient manner," she said.
Earlier this summer, UMHS signed an affiliation agreement with MidMichigan Health, a four-hospital system based in Midland, Mich. Under that deal, UMHS acquired minority ownership of MidMichigan in exchange for limited branding rights. UMHS will own less than 1 percent of MidMichigan initially, but that share could grow to 20 percent in the future.
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