Ann Arbor-based Michigan Medicine and Lansing-based Sparrow Health jointly announced a proposed merger agreement Dec. 8 that would take effect in the first half of 2023.
The Sparrow Health board of directors approved the deal Nov. 28, and the University of Michigan Board of Regents, the governing body responsible for the university’s health care system, approved it Dec. 8.
In the corporate-speak that serves to obscure the financial interests driving the deal, a press statement said: “Sparrow Health System will join University of Michigan Health under a proposed agreement that will expand services to mid-Michigan residents, providing maximum access. Improve the level of care, facilities and technology and start a new chapter in Sparrow’s history.”
The press release does not clearly explain, however, that Michigan Medicine is taking over Sparrow Health, a hospital system that has served Lansing and the mid-Michigan region for the past 127 years. Michigan Medicine will spend $800 million to acquire 115 care sites currently operated by Sparrow Health, including six hospitals located between Ionia to the northwest, Charlotte to the southwest and Carson City to the north and Lansing, the Michigan capital. .
In a report Crain’s Detroit businessMarshall Runge, CEO of Michigan Medicine and dean of the UM Medical School, says that “two-thirds of the investment will be in facility improvements, and the last third will go to ‘core’ capital investments, such as new buildings and major technology investments.”
Michigan Medicine CEO Runge is currently the highest paid employee at the University of Michigan, with an annual salary of $1.57 million.
The merger announcement comes nearly 10 weeks after a month-long contract fight by 6,000 nurses at Michigan Medicine by the Michigan Nurses Association (MNA) and its Ann Arbor-affiliate, the University of Michigan Professional Nurses Association (UMPNC).
Michigan Medicine nurses voted overwhelmingly in favor of strike action to win their demands to end mandatory overtime and extend on-call hours, refusing to take union strike action and systematically working behind the scenes to force hospital management through a contract that was resolved. . Nurses have no problem.
Throughout the contract fight, MNA-UMPNC has asked nurses to trust the UM Board of Regents and the Democratic Party to address their intolerable working conditions, instead of relying on their own independent energy in mass action and the support of health care workers, autoworkers in Michigan, the United States and internationally. And other workers fight for their interests.
WSWS Healthcare Newsletter The MNA-UMPNC explained the need for nurses and other Michigan medicine workers to form a rank-and-file committee to take contract negotiations out of the hands of bureaucrats, and to keep workers under control and link their struggles to their struggles. .
Now, it’s clear that Michigan Medicine’s management and board of regents were busy developing their strategy to expand the hospital, increase its market share and improve its financial performance.
The merger of two Michigan hospital systems is part of a process to consolidate the health care services industry into a multibillion-dollar enterprise. With the addition of more than 700 beds from Sparrow in mid-Michigan to nearly 1,200 beds in the southeast region, Michigan Medicine will grow and become the largest health care system in the state. It is expected that the combined revenue of the two merged companies will reach $7 billion annually.
With plans to spend another $1 billion on a new 12-story, 264-bed hospital adjacent to an existing hospital in Ann Arbor, Michigan Medicine is poised to surpass the recently renamed Corewell Health, a merger of Spectrum Health of Grand Rapids with Southfield. Based in Beaumont Health last February, as the largest health care system in the state.
As one worker said World Socialist Web Site, “Michigan Medicine is merging with Sparrow, but they say ‘no money’ for a raise. It was a move against Beaumont, since they bought the spectrum.”
The activist explained that the expansion of Ann Arbor’s health care system was made possible by intensive exploitation of its workers. “Michigan Medicine is a political powerhouse that doesn’t pay its workers. I can get a pension. They talk about a $2 raise.”
He further said, “Health care is used to generate money for institutions. They brought down the bottom line for new employees, but continued mandatory overtime with nurses. Then we get thousands of promotional emails from the administration.”
The activist shared an email that was sent to Michigan Medicine workers, which said that negotiations to create a statewide health system had begun in mid-2021, meaning unionization talks were ongoing throughout the nurses’ contract fight.
The blocking of strike action by nurses and the subsequent sales agreement pushed by the MNA-UMPNC was an important factor in the University of Michigan’s ability to move forward with strategic plans that were kept secret from nurses and employees.
It’s highly unlikely that MNA—which represents nurses at both Sparrow Health and Michigan Medicine—was unaware of the merger talks during the summer and fall, when it was divesting and selling Michigan Medicine nurses.
Michigan Medicine began its relationship with Sparrow Health in 2019 by collaborating to provide pediatric services. Since then, Sparrow Health has been described as “struggling” in the business press. Last September, it cut hundreds of jobs after recording a $90 million deficit for the first half of 2022.
This would be the second acquisition of another hospital by Michigan Medicine, an ostensibly public and nonprofit health care system, in the past two decades. When the Ann Arbor hospital was called UM Health System, in 2009, it signed an affiliation agreement with Metro Health Corp. in Wyoming, near Grand Rapids. In 2016, Metro Health merged with Michigan Medicine and was renamed University of Michigan Health-West with a 208-bed hospital and 30 ambulatory and outpatient centers in West Michigan.
