Beaumont Health, Botsford, Oakwood complete merger

A merger between three health systems in the greater Detroit region—Beaumont Health System, Botsford Health Care and Oakwood Healthcare—has closed, creating a $3.8 billion not-for-profit health system now called Beaumont Health.

The new system already has identified $100 million in cost-savings opportunities focused on using the combined organizations' purchasing power to negotiate better prices and streamline what executives are calling backroom operations. No layoffs are planned. Botsford Health Care is a 306-bed hospital in Farmington Hills, Mich. Oakwood owns four hospitals and is based in Dearborn, Mich.

The move from fee-for-service to value-based healthcare is one of the main drivers behind the merger, officials said. That shift is driving hospitals to reduce costs. Larger health systems, such as the new Beaumont, can often demand lower prices on medical devices, supplies and purchased services than individual or smaller hospital systems.

Beaumont, a three-hospital system based in Royal Oak, Mich., previously attempted to merge with Detroit-based Henry Ford Health System. The proposed deal failed after six months of negotiations.

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