Alex Calderone discusses issues surrounding Beaumont and Advocate Aurora Health merger
Karen Bouffard, The Detroit NewsPublished 10:42 p.m. ET July 24, 2020 | Updated 4:58 p.m. ET July 26, 2020
Correction: The spelling of Beaumont Chief Medical Officer David Wood Jr.’s name was corrected from an earlier version.
Beaumont Health leaders are defending the benefits of a proposed merger with an out-of-state hospital system after critics began circulating opposition petitions among its 5,000 physicians.
The charm offensive includes the argument that the merger would lead to an investment of $100 million in technology among the three health systems — the first time that the Southfield-based Beaumont Health has disclosed this benefit. Metro Detroit patientswould benefit from tens of millions of dollars in medical technology to monitor public health and chronic health conditions, Beaumont leaders said.
John Fox, president and CEO of Beaumont Health, unveils a rendering of the new mental health facility during the press conference. (Photo: Clarence Tabb Jr., The Detroit News)
The development comes as Michigan Attorney General Dana Nessel said Thursday she is reviewing the proposed deal that would make nonprofit eight-hospital Beaumont part of a 28-hospital system based in Illinois and Wisconsin.
Beaumont signed a non-binding letter of intent in mid-June to join with not-for-profit Advocate Aurora Health, based in Downer’s Grove, Illinois, and Milwaukee, Wisconsin. The proposed merger with Beaumont, which is Michigan’s largest health care system, would create a health system spanning three states.
The petition drive, first reported by Deadline Detroit, calls on Beaumont’s 16-member board of directors to fire CEO John Fox and Chief Medical Officer David Wood Jr. Organizers also created an online questionnaire asking doctors if they have confidence in Beaumont’s leadership team, according to Crain’s Detroit Business.
“Over the last five years, we the Medical Staff of Beaumont Health have seen a rapid and progressive deterioration in every aspect of patient care at Beaumont Health,” according to petition language obtained by The Detroit News.
“We no longer have confidence in the administration’s ability to provide a safe place for us to care for our patients. We are requesting the immediate removal of John Fox and David Wood MD from Beaumont Health. We hope to resolve this matter internally.”
The CEO and medical officer have been meeting with Beaumont doctors and medical leaders to address their concerns, including a Zoom meeting earlier this week that was attended by about 400 physicians, Fox and Wood told The News.
“They have legitimate questions, but I would not say that I’m hearing a groundswell of disapproval,” Wood said. “There is a fear of change, there’s no doubt about that, but not a groundswell of disaffection.”
Leadership has been trying to quell physician concerns about quality issues by providing data on the health system’s performance, said Fox, who joined the health system in 2015 after Beaumont’s three-hospital system merged with with four-hospital Oakwood Healthcare and Botsford Hospital to form Beaumont Health.
“There is not a giant swell of negativity,” Fox said. “I think the point we made is if you look at the data, our quality and safety has improved very nicely over the last five years and is considerably better than when started our journey together.
“We have more market share, so the patients seem to like what we’re doing. We had 35,000 employees in 2015, we now have 38,000.”
One Beaumont physician who signed the petition, who asked not to be named out of fear of retaliation by Beaumont, cited the April layoffs of about 2,475 employees and the permanent elimination of about 450 positions as contributing to the discontent.
Fox said at that time that the system was “hemorrhaging” cash because of dried-up surgical revenue due to canceled elective procedures, decreased non-emergency visits to hospitals and increased costs for personal protection equipment during the COVID-19 crisis.
Fox noted this week that more than half of laid-off workers have returned to their jobs. But the physician interviewed by The News said the health system was required to call them back or risk losing part of $321 million in COVID-19 relief funding Beaumont was awarded on May 8 under the federal CARES Act.
It was Beaumont’s pursuit of the three-state merger that pushed physicians “over the edge” and prompted the petition drive, the doctor said, noting that many of the health system’s mid-level managers were sidelined or lost their jobs following the 2015 merger of Beaumont, Oakwood and Botsford.
Southfield-based Beaumont Health is expanding into Ohio with Akron-based Summa Health, which will become a wholly owned subsidiary. (Photo: Beaumont Health)
The discontented doctor said many Beaumont physicians suspect that Fox would supposedly benefit financially if he successfully engineers a merger deal — a contention that Fox has denied.
“All this built up low morale, but the merger is what really set this off,” the doctor said.
According to Fox, the soonest the merger could be completed would be in the fourth quarter of this year.
Advocate Aurora was created with the 2018 merger of Advocate Health Care, Illinois’ largest health system, and Aurora Health Care, with facilities in Wisconsin and northern Illinois. The merger created one of the nation’s 10 largest not-for-profit health systems with more than 70,000 employees.
Under a merged system, Advocate, Aurora and Beaumont each would retain its own board of directors and regional headquarters, Fox said. The proposed three-way partnership would be led by a 15-member board of directors including five members each from the Advocate, Aurora and Beaumont health systems.
“Our goal is to grow in Michigan, Advocate wants to grow in Illinois, and Aurora in Wisconsin,” Fox said. “(T)he hospitals and the clinics are obviously going to stay local, and that’s not going to change, but the feeling is the regions are going to need a fair deal of autonomy to run themselves.”
Fox said each Beaumont hospital would continue to be run by its own physician-led board.
“We’ve told our physicians — and Beaumont, Advocate and Aurora are all in agreement on this — we have eight medical staffs, and those are medical communities, and those will continue,” Fox said.
“Each one’s a little different, they have their own bylaws. It’s an organization run by the physicians, and those will all continue.”
The doctor’s issues are common, said Alex Calderone, a Birmingham-based business turn-around consultant with expertise in health care.
“Having worked with other systems, I can promise you these issues are not unique to Beaumont,” Calderone said, noting that the multiple layers of bureaucracy and red tape that are inherent in the American health care system breed discontent.
“The system is terrible, and there is a lot of inefficiency, and frankly the coronavirus only added to a lot of those inefficiencies,” he said. “While the pressure cooker over at Beaumont has boiled over, the issue of friction between administrators and physicians is a pervasive problem across the United State health care system in general.
Calderone said bigger is not always better for health systems.
“The issues that plague this industry don’t always go away by creating larger businesses,” he said. “This is an industry that fundamentally requires less bureaucracy, and, in my opinion, anytime that a health system merges with another, in many instances you have more complication, more layers of bureaucracy, more people to report to, more red tape. “
Calderone said he’d advise Beaumont to “put the brakes on” the proposed merger until its officials have cleared the air with their physicians.
“These health care systems, they’re not about the bricks and mortar, they’re not about the machines,” he said. “All of those things are a dime a dozen — a hospital facility is a hospital facility.
“People utilize those facilities, patients patronize those facilities, because of the doctors. If you don’t have happy doctors, it’s going to be very, very challenging to run the health care system and maximize its efficacy for all constituencies.”