Beaumont Health and Akron, Ohio-based Summa Health have "delayed" their merger plans while both hospital systems navigate the coronavirus pandemic and its financial fallout, Beaumont CEO John Fox said Tuesday.
In early January, two months before the first cases of COVID-19 were discovered in Michigan and Ohio, Summa Health inked a deal with Southfield, Mich.-based Beaumont to merge and become a subsidiary of Beaumont.
"We didn't plan this, but we are deferring that (merger) until we have a little more clarity about the impact of this crisis," Fox said Tuesday after Beaumont announced nearly 2,500 temporary layoffs and 450 job cuts.
Fox said he did not know how long the merger would be "delayed."
"We can't turn a blind eye to the pandemic," Fox said during a videoconference call with reporters. "Going through the merger process and all of those activities we thought was an unnecessary distraction given that we're working seven days a week, 16 hours a day to deal with the pandemic — and so is Summa."
"It's kind of like you had a plan to do something, but the house is now on fire," Fox added. "So we're going to deal with the fire."
For Beaumont, the fire was a $278.4 million loss in the first quarter, most of which occurred in the final two weeks of March when the coronavirus outbreak began overwhelming hospital emergency rooms.
The eight-hospital system in Wayne and Oakland counties announced about 2,475 temporary layoffs, 450 jobs eliminated and pay cuts for top executives as part of a cost-cutting plan while Beaumont is "hemorrhaging" cash in the crisis, Fox said.
Fox said Beaumont leadership talks with Summa's executives "multiple times during the week" about how each system is managing the crisis.
"Both Summa and Beaumont are all-hands-on deck with the COVID-19 crisis," he said.
Summa is an Akron-based four-hospital system that reported $1.4 billion in annual revenue before the COVID-19 crisis reached the Midwest. Summa has a health insurance arm, SummaCare, that was seen as the lynchpin to Beaumont's interest in acquiring the northern Ohio hospital system.
Beaumont Health, which has nearly 5,000 affiliated physicians and 38,000 employees, has reported $4.7 billion in total annual net patient revenue across its eight hospitals with 3,429 beds,145 outpatient sites.
The two health care systems announced their intent to merge last July.
A spokesperson for Summa Health could not be immediately reached for comment Tuesday.
This article was originally published in Crain's Detroit Business.
