Henry Ford Health & Ascension Michigan Join Forces in $10.5 Billion Joint Venture

Pending federal and state regulatory approvals, the deal is expected to be finalised in the summer of 2024.

Henry Ford Health and Ascension Michigan has announced a joint venture with an annual operating revenue exceeding $10.5 billion.

Pending federal and state regulatory approvals, the deal is expected to be finalised in the summer of 2024. It includes Henry Ford's acute care hospitals, related facilities, and assets, including its Health Alliance Plan.

On the side of Ascension Michigan, a subsidiary of the national Catholic healthcare giant, eight acute care hospitals and an addiction treatment facility will contribute to this new entity. These include Ascension hospitals and subsidiaries located in southeast Michigan and Ascension Genesys.

According to the joint announcement, seven other Ascension Michigan hospitals and related facilities in the southwest and northern regions of the state will remain under Ascension's national health ministry.

Robert Riney, the president and CEO of Henry Ford Health, who is slated to lead the new organization, discussed the joint venture's potential to expand healthcare services and innovations. He said, "Together, we can expand healthcare services and deliver innovations in care—from prevention and early detection through the treatment of complex conditions—to more people and communities across our state, including those most vulnerable."

Upon completion of the deal, the new healthcare system is expected to employ approximately 50,000 people, including roughly 2,700 employed physicians. It will comprise 13 acute care hospitals and over 550 care sites. The new entity will retain Henry Ford Health's branding and its headquarters in Detroit. The organisation will be governed by a board representing both partners.

Importantly, the organisations clarified that this arrangement is not a merger or acquisition but a joint venture, bringing their assets together without a cash transaction.

The Catholic affiliation of Ascension facilities is still under consideration, with a commitment to maintaining their Catholic identity. Henry Ford locations will continue to operate as before.

Commenting on the same, Carol Schmidt, senior VP at Ascension, said, "Together, we will make significant strides in improving the health of Michigan communities through unparalleled investments in critical community health initiatives, as well as contributing secure, high-paying jobs and other related employment."

The joint venture aims to create an expanded, fully integrated healthcare delivery network that offers exceptional care quality and improved consumer services. It also promises enhanced career pathways, increased opportunities for career development, and improved care coordination.

Adnan Munkarah, M.D., president of the care delivery system and chief clinical officer at Henry Ford Health, said, "The commitment of the new combined organization to clinical excellence, educational partnerships, and research remains unwavering."

He added, "Additionally, the expanded footprint created through this joint venture will allow Henry Ford Health to provide outstanding comprehensive medical care, train more physicians, nurses, and allied health professionals at more sites, and in more specialties across the communities we serve."

Despite financial challenges faced by many in the healthcare provider sector, Henry Ford Health concluded its 2022 fiscal year "narrowly in the black" with a $234 million net loss attributed to investments. By the midyear mark of 2023, it reported a 1.1% operating margin and a $153.7 million net gain.

On the other hand, Ascension recently disclosed a substantial net loss of nearly $2.7 billion for its fiscal year ending on June 30.

The difficulties stemmed from a combination of high expenses, "sustained revenue challenges," and a one-time noncash impairment loss of nearly $1.5 billion.

Earlier this month, Ascension announced a deal to divest its 50% stake in a jointly run Wisconsin health plan to Froedtert Health.