Advocate Aurora and Beaumont sign partnership letter of intent

Advocate Aurora Health and Beaumont Health are exploring a potential partnership to create a system that spans Michigan, Wisconsin and Illinois, the health systems said Tuesday.

Advocate Aurora and Beaumont signed a letter of intent to deepen their ongoing talks, but noted that the not-for-profit providers are still in early stages of discussions, which started at the end of 2019.

“We are excited to explore this option with an organization as highly regarded as Advocate Aurora Health known for their track record in health outcomes, population health and consumer experience,” said John Fox, president and chief executive officer, Beaumont Health, in a statement. “The potential opportunity to leverage the strength and scale of a regional organization while maintaining a local focus and strong presence in Michigan as a leader and major employer is important to us.”

Similarly, Advocate Aurora president and CEO Jim Skogsbergh said the partnership talks are a “unique opportunity,” complimenting Beaumont’s reputation for clinical excellence and education.

Southfield, Mich.-based Beaumont last month called off its merger plans with Akron, Ohio-based Summa Health, which was slated to close in April. The regional combination would have added four hospitals and a health plan to Beaumont’s eight hospitals, creating a $6.1 billion system.

At the time Beaumont said it anticipated losing $1 billion to $2 billion of its approximately $5 billion in annual revenue as it delayed approximately 80% of non-urgent procedures during the COVID-19 pandemic.

For the quarter ended March 31, Beaumont recorded a $54.1 million operating loss on operating revenue of $1.07 billion, down from an operating income of $37.6 million on operating revenue of $1.15 billion relative the prior year.

Advocate Aurora, which has dual headquarters in Milwaukee and Downers Grove, Ill., formed through a 2018 merger. In January, the not-for-profit system had its eye on growing revenue through acquisitions.

“We do see that there may be other health systems that will be interested in joining Advocate Aurora Health,” said Dominic Nakis, chief financial officer of the health system said at the J.P. Morgan Healthcare Conference in January.

Advocate Aurora reported a $85.7 million operating loss in the quarter ended March 31—a 2.7% loss margin—compared with $112.8 million in operating income in the prior-year period, a 3.7% operating margin.

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Tags: covid-19, pandemic

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