The University of Michigan Health System plans to bring struggling central Michigan provider Allegiance Health into its fold.
Touting the proposed deal as “collaboration” between the two providers rather than an acquisition, leaders of the organizations announced a letter of intent for an affiliation that would make Jackson-based Allegiance part of the Ann Arbor-based health system. The organizations did not provide details on the structure of the proposed deal.
The University of Michigan Health System would commit to investing $100 million in Allegiance over the next seven years. In addition, Allegiance stands to receive another
$25 million upfront “to support Allegiance Health's needs,” according to a joint news release.
Allegiance Health lost $13.2 million on revenue of $420.4 million in the year ended June 30, according to a November filing for bondholders. The not-for-profit organization operates a 285-bed hospital about 40 miles west of Ann Arbor. It is the only acute-care hospital serving Jackson County. In the bond filing, Allegiance leaders cited increased competition for high-margin services such as cardiovascular care, as well as declining admissions and a rise in bad debt and charity care.
“Together, UMHS and Allegiance Health will build on our nonprofit legacies of quality care to provide even greater value to patients and sustainable health improvement for all, including underserved populations,” Allegiance CEO Georgia Fojtasek said in a written statement.
Steven Ross Johnson
Follow Steven Ross Johnson on Twitter: @MHsjohnson