乌鸦传媒

The in Detroit offers a playbook for how local physicians, lawmakers, and other stakeholders can stop consolidations they believe could harm patient care and their careers.

Executives of the eight-hospital, nonprofit Beaumont system encountered substantial resistance to the deal. Physicians and other healthcare workers asked the health system's board to halt the merger, citing fears of losing staff and local control. A powerful ex-board member, donors, and lawmakers opposed the merger, with some demanding that top executives be fired and medical staff's questions be answered.

"Evidence suggests that the proposed merger of these health systems might have led to higher health care costs and, potentially, worse patient outcomes," three local state and federal representatives wrote in a . "As our communities continue to grapple with this devastating pandemic, we believe every health system should remain 100 percent focused on serving patients and protecting the hardworking people who care for them and keep our hospitals running -- not on maximizing revenues."

Interviews, reports, and financial data reveal a soap opera that developed around the proposed merger. Executives argued they were determined to sustain the system financially. An active wrote often that the executives were carpetbaggers leveraging the merger for huge personal paydays while abandoning Detroit-area medicine. and released surveys indicating most of them did not trust the C-suite.

"I think the Advocate transaction [was] a huge distraction," , a local attorney and former board member who , told 乌鸦传媒. "On top of the fact it [didn't] make sense."

Culture Change: Efficiency Vs. Patient Care?

Beaumont Health took its current form in 2014 when it absorbed Oakwood Healthcare and Botsford Health Care. It now has nearly 5,000 physicians, 38,000 employees, 3,375 beds, and 167 outpatient facilities, and it co-runs the Oakland University William Beaumont School of Medicine.

CEO , and COO assumed their roles in 2015 and 2016, respectively. Fox left Emory Healthcare in large part to help merge the three systems and balance budgets, Shaevsky said. "He's a numbers person," Shaevsky said. "Obviously there's a great need for that. ...He did the job he was brought in to do."

Fox "has done a good job making sure we are providing efficient care," said chief medical officer David Wood, MD.

That efficiency has come at a cost.

"The culture has basically changed there. He's basically always focusing on the bottom line," Shaevsky said, noting many Beaumont publications he receives highlight financials as opposed to new research or physicians' achievements. "There's been such an emphasis on profitability that a lot of the mission for hospitals to provide the best service to people has been diminished. There's been a lack of respect for professionals in the organization."

For example, many experienced and more expensive private-practice physicians are being forced out, Shaevsky said, to cut salary expenses and because Beaumont wants to field more of its employed physicians.

Although Beaumont is organized as a nonprofit, Fox aims for an annual 4% operating margin, Shaevsky said.

"He's doing I think what he believes is best for the hospitals," he said. "I think it's a question of philosophy. I think he feels the need to have a strong financial situation, but others feel the first mission is to serve the community and even if you don't achieve a 4% operating margin, so be it as long as you can be financially responsible."

Like Tenet Healthcare and other American hospital systems, Beaumont has cut staff during the pandemic while accepting millions of dollars from the federal government meant to avoid layoffs -- despite sitting on reserves that Shaevsky said exceed $2 billion. (Beaumont did not list reserves in its most recent federal Form 990 tax filing and a spokesperson did not answer questions about them.)

Early in the pandemic, Beaumont cut 6% of its workforce, Wood said, as its revenue fell 40% in two weeks. The system has since accepted a combined $966.9 million in funds, including $363.1 million in grants that do not have to be paid back, according to .

Beaumont has since rehired many healthcare workers; fewer than 1% of furloughed workers remain out, said a Beaumont spokesperson. Clinical volume is still down 10% from pre-pandemic levels, Wood said, and he acknowledged Beaumont is still striving to fill many medical and nursing assistant positions.

Beaumont has increased federal lobbying spending under Fox, from the Center for Responsive Politics. Its $240,000 in spending each year from 2016-2019 was double annual spending between 2007-2011, for example. (In the first half of 2020, the company focused lobbying exclusively on the CARES Act and similar .) Beaumont became a larger system in 2014, a spokesperson told 乌鸦传媒.

Other changes have riled its healthcare workforce. In the spring, Beaumont terminated its affiliation with an independent anesthesiologist group, choosing instead to contract with for anesthesia services. The latter bills itself as "partner[ing] with hospital administrators to provide outsourced anesthesia care as they seek greater operational efficiency, cost savings and better clinical outcomes."

NorthStar agreed to participate in all insurance plans and to be transparent about billing, and promised high-quality coordinated care, Wood said. It was not a perfect solution: "These companies buying up these [anesthesiology] practices is causing issues," he lamented.

Executives also contracted with for medical implant devices primarily for trauma procedures, against the wishes of many physician leaders. Wood said the goal was to reduce variation in order to diminish poor-quality care.

Physicans can request different equipment and management often approves it. "Some people are upset they had to change," he said.

Overall, much of the tension arises from the fact that "we are just having a lot of change," Wood said.

The Last Straw

Perhaps the most internally upsetting leadership decision was the merger agreement with , a 26-hospital system jointly based in Chicago and Milwaukee that has more than 500 outpatient locations and 8,300 physicians. Its leadership is determined to leverage consolidation to more than double the $12-billion system's revenue by 2025, in January.

One month after pulling out of a deal to buy the smaller Akron, Ohio-based , due in large part to COVID-19, Beaumont in June announced its deal with Advocate Aurora. Talks had been ongoing for months, according to reports.

The move would have increased investing capital by more than $100 million annually, allowed its medical school campuses to unite at , and set aside more funding for remote monitoring technology and chronic disease managment, in August.

But Beaumont would retain only a one-third interest in the new consolidated system, according to Shaevsky and reports.

"What does Advocate have that would really be helpful to the citizens of Michigan that own this hospital?" Shaevsky wondered, noting Advocate has been hit hard by the pandemic and does not match Beaumont's medical talent. Beaumont can pay to unite its medical school itself, Shaevsky added, if that is even necessary.

So, he wondered, why sell a $5-billion hospital system for $1 billion and one-third ownership of the resulting system? "Bigger is not necessarily better, I think, in the healthcare industry," he said.

In his Sept. 4 letter to Michigan Attorney General Dana Nessel, Shaevsky said her office "should require or 'suggest' that the Board of Directors terminate the employment status" of Fox, Wilson, and Wood.

Also in September, that more than 20 donors asked the board to tend to Beaumont staff concerns before addressing the merger. "The loss of [medical] staff as well as recent surveys, including those by doctors and nurses, demonstrate something is seriously amiss," their letter reportedly reads. "This situation must be addressed and improved immediately and with an immediate sense of urgency. This must be your primary focus."

Early last week, Rep. Andy Levin (D-Mich.) joined two state lawmakers from Royal Oak to . "As our community's representatives in Washington and Lansing, we believe it is our responsibility to speak out when our constituents' ability to access affordable, quality care might be in jeopardy," they wrote. "We call on the leadership of Beaumont to do what is in the best interest of patients, not earnings, address the issues raised by medical staff concerning their ability to offer excellent care – and promptly reevaluate this proposed merger."

One of their concerns was that local residents would face "higher health care costs without improving -- and, according to some studies, even worsening -- patient outcomes."

Deal Called Off

On Oct. 2 the hospital systems .

Advocate CEO Jim Skogsbergh said in the joint statement, "We continue to believe scale will play a critical role in advancing quality, accelerating transformation and reducing cost in the healthcare world of tomorrow."

On Monday, for the deal's collapse, leaving Advocate But Fox, in a call with reporters, called it "a mutual decision" made primarily to focus on the pandemic. He also cited the many concerns expressed by medical staff and others about the merger, the Detroit Free Press . When asked to clarify the discrepancy with Advocate, a Beaumont spokesperson pointed to "what John Fox said in the news conference and what was said in the mutual statement," in an email to 乌鸦传媒.

Fox deflected a reporter's question about how much influence public pressure had. Asked if Beaumont would address some of the issues that were raised, he replied, "There's general concerns which are very valid, there's some sub-agendas [too]."

He also declined to rule out a new deal with Advocate Aurora, saying "anything's possible."

Fox was also asked if he would consider resigning. He smirked and retorted: "I'm not going anywhere."

"At this time, we want to focus on our local market priorities and the physicians, nurses and staff," Fox said in a about the merger's end.

Leadership in the Hot Seat

The halted merger will not cure all that ails the Beaumont system, sources said. "Merger is relatively minor in terms of imminent threat to the system," an experienced Beaumont physician emailed 乌鸦传媒 Today.

Beaumont's council of physician leaders administered a to its 5,000 physicians in August, showing that 76% of the 1,500 physicians who responded strongly or somewhat disagreed with the statement, "I have confidence in corporate leadership."

All of Beaumont's top leaders remain in place. Executives have been visiting every campus to hold listening sessions, even meeting daily to address concerns at Royal Oak.

Beaumont also agreed to double physician representation on the board; doctors will now hold six of the 19 seats. "I think that's a good representation for physicians. We do have to remember our hospital system is owned by our community," said Wood, who, like Fox, serves on the board.

Executives also participated in videos designed to assuage concerns. Besides the 46-minute Crain's interview with Fox, Beaumont also posted a featuring COO Wilson, titled "We've Heard You. Let's Work Together." The former nurse introduced herself as a "nurse, daughter of elderly parents, mother and grandmother ... roles that I know I share with many of you."

Pictures of her with family were interspersed with more dialogue: "It's all about our patients and family," she said. "You are each important to Beaumont." After her talk, text flashed onto the screen: "Continue the conversation. Please work with your local leaders."

In Fox's August interview with Crain's, he cited the free market system for losing skilled, experienced physicians. He also critiqued the doctors' survey, noting he received 12 copies. (He completed only one, he said.) "That concerned me how the voting booth was being managed," he said. But, he added: "We need to listen."

Critics accused Fox of pursuing the Advocate Aurora merger to enrich executives while healthcare jobs would have been sacrificed. Some predicted he would step aside after the consolidation was completed, with a hefty compensation package. He earned $5.93 million in compensation in 2018, according to Beaumont's . (Its 2019 report should be filed next month, according to a spokesman who said, "We don't release [compensation] until the 990 is filed").

"We're three community-based hospital systems, very similar," Fox had said during the Crain's interview. His original agreement with Beaumont has been extended by two years beyond this year and he has incentives to stick it out.

Others disagreed with Fox's assessments. Beaumont is "a community asset," Shaevsky said. "You want to adhere to what its mission is. It's a nonprofit."

"It's a culture that needs to be changed," he added. "Beaumont had always had a very good esprit de corps; most of that's gone."

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