Community Health Systems is moving forward on a deal to add its first hospital in Michigan. The Franklin, Tenn.-based chain said Friday it had signed a definitive agreement to buy 208-bed Metro Health in the Grand Rapids suburb of Wyoming.
The parties began exploring a takeover in late 2013 when the proposal included the Cleveland Clinic, which had formed an alliance with Community six months earlier. However, the Cleveland Clinic is no longer involved in the deal.
Now, Community will own 80% of Metro Health, with the hospital retaining a 20% interest. Community also agreed to invest between $100 million to $125 million over five years in the hospital's facilities, services, technology and physician recruitment.
The Michigan Office of the Attorney General must still approve the transaction. The process could take several months. The area is the state's fastest growing market, Community said in a release.
A spokesperson for Community could not be reached for comment at deadline, while a spokeswoman at Metro Health declined to comment.
The alliance between Community and the Cleveland Clinic followed the Duke LifePoint joint venture, bringing together a deep-pocketed, publicly traded chain with an academic medical center. In addition to sharing clinical expertise, the partners planned to pursue joint acquisitions, which has been a successful strategy for Duke LifePoint.
However, the strategy never got off the ground for Community and the Cleveland Clinic. The parties' first deal to buy Akron (Ohio) General Health System fell apart after five months of negotiations. The Cleveland Clinic ultimately entered into its own deal to buy Akron without Community.
In an interview last year, Cleveland Clinic's CEO Dr. Toby Cosgrove said, without elaborating, that the system would not be pursuing acquisitions with Community.
He also downplayed the scope of the alliance. “Community Health Systems came to us and wanted help with their quality,” he said. “They have sent us into some of their locations around cardiac surgery. So we're going to be doing one-offs and helping them with that sort of thing.”
Follow Beth Kutscher on Twitter: @MHbkutscher
