Detroit Medical Center and McLaren Health Care Corp. have agreed to collaborate on cancer services in Detroit as part of a settlement over McLaren's 2013 acquisition of Barbara Ann Karmanos Cancer Institute, Crain's has learned.
Under the terms of the settlement approved Thursday, Karmanos would continue to integrate its operations into Flint-based McLaren. DMC will work with McLaren and Karmanos to expand cancer operations in Southeast Michigan at DMC health sites, said a joint statement from the three health organizations.
Officials declined interview requests with Crain's. The companies said they have agreed that specific details of the settlement would remain confidential.
Karmanos also will continue to provide cancer services at DMC's Harper-Hutzel University Hospital and remain on the DMC campus. The agreement also settles all other issues between the parties, the statement said.
“The DMC is pleased to work closely with McLaren and Karmanos to deliver exceptional cancer care at our main campus in Detroit in concert with our other outstanding specialties,” DMC CEO Joe Mullany said in a statement.
“Advancing the future of healthcare requires strong partnerships and we believe our new agreement will greatly enhance the cancer treatment services offered to our community."
In a statement, McLaren CEO Phil Incarnati said: “This agreement creates a very positive and ongoing relationship involving the DMC, McLaren and Karmanos Cancer Center for the delivery of specialized cancer care that will improve the health of patients in downtown Detroit and across the state of Michigan.”
On Oct. 30, 2013, the boards of McLaren and Karmanos entered into an affiliation agreement in which Karmanos joined 11-hospital McLaren. That same day, McLaren filed a preemptive lawsuit against DMC in which it asked the court to declare DMC's 2005 affiliation agreement with Karmanos to be an “unreasonable restrictive covenant” that violates Michigan's antitrust laws. DMC then filed its own lawsuit, charging McLaren with breach of contract and “tortious interference” with the prior contractual agreement it had with Karmanos.
In 2005, when DMC was struggling financially, it sold its cancer business to Karmanos for what officials have told Crain's was the below-market price of $9.9 million. DMC officials said the contract included an exclusive affiliation into perpetuity, a point that McLaren said was unfair and violated state antitrust rules. Karmanos had offered a no-strings $45 million deal for the DMC cancer operations, DMC said.
After more than 18 months of court-supervised negotiations, health system officials said earlier this year that the two organizations could not agree on at least two key points. Unresolved points were: how Karmanos' name could be use outside of Wayne County and how much Karmanos would pay to DMC for support services. Karmanos is based on the DMC campus in downtown Detroit.
Judge Wendy Potts of Oakland County Circuit Court approved the settlement Thursday, according to court documents. Terms of the settlement were not publicly available. Officials declined to provide a copy of the settlement agreement.