Traverse City Record-Eagle

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May 14, 2014

Munson pursues two rural hospitals

TRAVERSE CITY — Munson Healthcare is expected to announce plans today to purchase hospitals in Cadillac and Grayling, a move officials said will stabilize hospital services and more than 1,000 northern Michigan jobs in those communities over the long-term.

Munson President and Chief Executive Officer Ed Ness said Munson signed a non-binding letter of intent to purchase Mercy Hospital Cadillac and Mercy Hospital Grayling from Livonia-based CHE Trinity Health. The transaction includes purchase of the Mercy Manor long-term care facility in Grayling and affiliated Mercy Home Care and Hospice services in Cadillac, Grayling and Houghton Lake.

Terms of the deal were not disclosed.

Ness said the purchases are driven by Munson’s goal to provide regional health care services.

“Because of the seasonality we have here in care, there is a great deal of volume fluctuations,” Ness said. “One of the ideas we have is to create a regional staffing pool where, if you have staff and it’s really busy in Cadillac, then they work in Cadillac ... but because of anti-trust reasons, you really can’t have shared staffing and shared salary information unless you are under common ownership.

“There are also discussions about how do we best deliver (obstetrics) care, and if you are owned by different entities, it gets complicated,” Ness said.

The hospitals in Grayling and Cadillac employ 1,215 people combined, said Micki Benz, Mercy Health’s vice president of regional communications and advocacy. Mercy Health is part of CHE Trinity.

The Munson purchase comes less than two months after Mercy Hospital Grayling laid off 35 employees. Mercy Hospital Cadillac reported a $2.5 million budget shortfall in its most recent fiscal year.

Roger Spoelman is the west Michigan region’s chief executive officer for CHE Trinity Health. He said the sales make sense because of the hospitals’ proximity to Traverse City. He also said the Affordable Care Act translated into people paying more for health insurance and consumers are becoming increasingly savvy about health care options, meaning providers have to become more efficient from a regional perspective.

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