Physician discontent and cultural differences were cited for the deal's disintegration after six months of discussions.
The proposed tie-up with Oakwood and Botsford still needs to get through the due diligence process and obtain regulatory approval.
The unified organization would be better able to coordinate care for patients, working off a single medical records platform, as well as increase its operational efficiency through group purchasing and other economies of scale, a news release said.
Oakwood's current chairman of the board, John Lewis, will serve as the initial chair of the new board. Beaumont CEO Gene Michalski will lead the new organization, and will also serve on a CEO Council with Oakwood CEO Brian Connolly and Botsford CEO Paul LaCasse that will oversee the transition and integration.
The hospitals will retain separate medical staffs. However, a physician-led Clinical Leadership Council will work on integration efforts among healthcare providers.
Beaumont last month reported $6.7 million in net operating income for fiscal 2013, which ended Dec. 31, on revenue of nearly $2.3 billion, compared with $57.7 million in income on $2.2 billion in revenue for 2012.
Inpatient admissions (PDF) grew 0.4% year-over-year.
Oakwood reported just under $1.2 billion in revenue for 2013, nearly flat year-over-year, as it struggled with a 2.8% decline in discharges and Medicare payment reductions from sequestration and “take-backs” under the Recovery Audit Contractor program.
Its operating income (PDF) increased $2.5 million to $23.8 million.
Follow Beth Kutscher on Twitter: @MHbkutscher