McLaren Health Care, a 10-hospital Flint, Mich.-based not-for-profit system, has signed an agreement to acquire the assets of Detroit-based Karmanos Cancer Institute, officials for the two Southeast Michigan healthcare organizations said at a news conference today announcing the transaction.
Karmanos, one of the nation's 41 comprehensive cancer centers, and McLaren are now Michigan's largest cancer-care provider with more than 12,000 patients annually and the fourth largest cancer center in the U.S., said Gerold Bepler, M.D., Karmanos' CEO.
"This is tremendous news for Karmanos Cancer Institute, its patients and the thousands of individuals and families impacted by cancer in Michigan," Bepler said.
"By joining forces with McLaren, this agreement strengthens our ability to provide exceptional cancer care and furthers our commitment to cancer research based right here in Detroit."
Karmanos, officials said, will continue its longstanding relationships with Wayne State University School of Medicine and the Detroit Medical Center
. On Karmanos' medical staff are academic physicians affiliated with WSU School of Medicine and employed by its University Physician Group.
However, Joe Mullany, DMC CEO, said DMC is opposed to the agreement.
"We are very disappointed in the decision of the (Karmanos) board and the way it was handled," Mullany said. "We are aware several board members are opposed. (The affiliation) is detrimental to cancer care in Detroit."
Mullany said DMC will now explore developing additional oncology affiliations with other providers.
Sources have told Crain's Detroit Business
that Wayne State also is opposed and has objected to the agreement. No further information was available at press time.
Bepler said the agreement, which will become effective in several weeks after the boards have amended their governing agreements, will create the largest cancer research and provider network in Michigan and expand access to advanced cancer care in Detroit and communities throughout the state.
Under agreement, McLaren has agreed to provide a "substantial capital investment over a multi-year period" to improve Karmanos facilities, fund clinical trials, basic and translational research programs, Bepler said. Specific dollar figures were unavailable.
The agreement preserves the name of Karmanos Cancer Institute and the Karmanos Cancer Center, the clinical care entity. Karmanos and McLaren will remain separate legal entities, maintaining their assets and reporting to their existing respective boards of directors, said Karmanos in a statement.
The Karmanos statement also confirmed that Bepler will continue as CEO and employees will remain employed by Karmanos at its Detroit, Farmington Hills and Monroe-based locations.
In November 2012, Crain's reported that Karmanos projected $40 million in losses over the next 10 years under healthcare reform because of Medicare reimbursement cuts.
At the time, Bepler said Karmanos could be forced to reduce research and eliminate some money-losing services to avoid having its projected net income of $4 million for 2013 wiped out.
Over the past year, Karmanos has taken a number of steps to reduce costs. It has ended shared services contracts with DMC in a number of areas, including food service, laboratory, security, respiratory care, environmental, cleaning and intensive care.
Last year, Karmanos sold its 20-year-old hospice program to Residential Home Health in Madison Heights for an undisclosed price.
Karmanos' financial situation under health reform is unusual in Michigan because it is the state's only single-specialty cancer hospital with little uncompensated care, Crain's has previously reported.
Karmanos has used its slim profits each year to help fund many of its more than 700 cancer research programs and clinical trials. Karmanos and the University of Michigan Comprehensive Cancer Center are Michigan's only two federally designated comprehensive cancer centers.
McClaren said Karmanos' clout in its specialty areas is valuable.
"McLaren has worked hard to develop Michigan's largest network of cancer centers and providers, and in looking for ways to strengthen cancer care across our communities, we looked to the leader—Karmanos," said Phil Incarnati, McLaren's CEO, in a statement.
"We believe this will become a national model for the delivery of exceptional patient-centered, high quality, evidence-based and cost efficient cancer care," Incarnati said.
Bepler said the agreement with McLaren will extend Karmanos' geographic reach for cancer care treatment.
"This truly integrated model not only allows us to impact more cancer patients across Michigan, it also strengthens our efforts right here at our main campus in Detroit," Bepler said. "This ultimately helps Karmanos achieve its mission of preventing, detecting and eventually eradicating cancer. In short, we're going to save more lives.""Karmanos Cancer Institute to become part of McLaren Health Care" originally appeared in Crain's Detroit Business.