CHE Trinity Health plans to sell two of its Michigan hospitals, Mercy Hospital Cadillac and Mercy Hospital Grayling, to Traverse City, Mich.-based Munson Healthcare. Both systems' leaders say they want to reach an agreement to strengthen the health care system in northern Michigan.
While the hospitals currently are owned by Livonia, Mich.-based CHE Trinity Health, Munson Healthcare has shared in management of both hospitals for 11 years. Roger Spoelman, president and chief executive of the West Michigan Region of CHE Trinity Health said, "I always say geography is destiny, and these hospitals are in the orbit of Munson Healthcare." He said Mercy Hospital Cadillac, which has 97 beds, and Mercy Hospital Grayling, which has 71 beds, have served as community hospitals for more than 100 years each, but Munson Healthcare's facilities in Traverse City have been the region's provider of tertiary care, so selling the hospitals to Munson Healthcare makes sense for the region. Traverse City is about 50 miles west of Grayling and 45 miles northwest of Cadillac.
The systems said in a statement on May 14 that they have signed a nonbinding letter of intent, which also includes the purchase of the Mercy Manor long-term care facility in Grayling and the Mercy Home Care and Hospice services in Cadillac, Grayling and Houghton Lake. All the facilities are in northern Michigan. The facilities will not be Catholic once they become part of Munson Healthcare, which is a nonprofit but is not a Catholic system.
Spoelman said the sale is expected, in some ways, to create additional ties between the systems, which have had a purchasing alliance for several years, and have worked together to recruit physicians to the region and to establish best practices for medical emergencies including heart attacks and strokes. CHE Trinity Health has had one board seat with Munson Healthcare, and it will have two in the future, he said. CHE Trinity Health will have the right of first option if Munson Healthcare chooses to join a larger system.
Spoelman estimates that for fiscal year 2014, Mercy Hospital Cadillac and Mercy Hospital Grayling will book a combined loss of about $6.5 million. He said ownership by one system and shared management by the other had led to the hospitals shouldering corporate overhead from both systems, so the sale should reduce some of those costs.
The Munson Healthcare system includes Munson Medical Center, Charlevoix Area Hospital, Kalkaska Memorial Health Center, Otsego Memorial Hospital, Paul Oliver Memorial Hospital and West Shore Medical Center. Munson Healthcare employs more than 6,500 people and offers health care services in 24 Michigan counties.
CHE Trinity Health, one of the nation's largest Catholic health care systems, owns 11 other hospitals in southeast and western Michigan as well as long-term care and independent living facilities in those regions.
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