University of Michigan Health is acquiring Lansing-based Sparrow Health System, the largest hospital system in mid-Michigan with six campuses in Charlotte, Ionia, St. Johns, Carson City and Lansing, along with 500 primary care providers and specialists.
The deal was approved Thursday by the University of Michigan Board of Regents. Sparrow Health System’s board of directors signed off on the agreement in late November.
Pending regulatory approvals, the acquisition is expected to be completed in the first half of 2023.
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U-M Health spending $800 million
“This agreement strengthens U-M Health’s ability to provide quality health care in communities beyond southeast Michigan, expanding our mission as a statewide referral site for the most critically ill,” Paul Brown, chair of the Board of Regents, said in a statement.
As part of the arrangement, Ann Arbor-based U-M Health will spend $800 million over the next eight years in Sparrow’s hospital campuses, funding facility projects, operations, and other “strategic investments.”
Among them are renovations to the neonatal intensive care unit at E.W. Sparrow Hospital in Lansing and upgrades to services in cardiology, oncology, orthopedics and neuroscience, said Joseph Ruth, Sparrow Health System’s executive vice president and COO, in a statement.
“This infusion of investment into Sparrow services will provide job growth and career development opportunities that would not otherwise be available to our caregivers,” Ruth said.
Expanding footprint of U-M Health
The agreement includes Sparrow’s Physicians Health Plan, an insurance plan that provides coverage to more than 70,000 members and 300 employers across the state, as well as a Medicare Advantage plan.
It was unclear Thursday whether Sparrow will keep its name or be renamed as part of the deal.
“In the coming year, we expect to introduce strategic updates to the Sparrow brand to appropriately reflect the relationship between our organizations,” said U-M Health spokesperson Mary Masson.
With the addition of Sparrow, U-M Health will become a $7 billion organization with more than 200 care sites across the state, including its main university hospital, C.S. Mott Children’s Hospital, Von Voigtlander Women’s Hospital, the Frankel Cardiovascular Center, Kellogg Eye Center, U-M Health West and the Rogel Cancer Center.
“For University of Michigan Health, this is an important step toward our long-term vision of a statewide system of highly coordinated care; a vision that Sparrow also embraces and is excited to build toward,” said Dr. Marschall S. Runge, CEO of Michigan Medicine, dean of the U-M Medical School and executive vice president for medical affairs at the University of Michigan.
“Upon closing, U-M Health will create a clinical care network that builds upon the strengths of the world-class U-M academic medical center and a very successful community-based health system. Together the two organizations will focus on bringing increased health care innovation to mid-Michigan and beyond.”
This is the latest in a series of recent acquisitions and mergers among Michigan hospitals in the last year.
In January, the former Beaumont Health and Spectrum Health systems combined in a megamerger to form the new Corewell Health, the state’s largest health system with 22 hospitals and more than 60,000 employees.
And the former North Ottawa Community Health System based in Grand Haven was acquired in October by Trinity Health. It became Livonia-based Trinity’s ninth Michigan hospital.