Dive Brief:
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Ascension said it will invest $50 million to improve three mid-Michigan health systems rather than sell them as it had considered earlier.
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Patricia Maryland, executive vice president and CEO of Ascension Healthcare, said in a press release the nonprofit health system reviewed other options, including partnering with other systems, before deciding on the investment.
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Joseph Cacchione, interim ministry market executive for Ascension Michigan and president of the Ascension Medical Group, said the health system will transition the three systems — St. Mary's of Michigan in Saginaw, St. Mary's of Michigan in Standish and St. Joseph Health System in Tawas City — to the unified Ascension identity as part of company’s national branding work.
Dive Insight:
The investment comes days after the largest Catholic health system reported lower year-over-year operating income and revenue for the first nine months of fiscal year 2018. Total admissions dropped 3.1%, while visits to physician offices and clinics increased 3.8%. The losses were connected to the system divesting Saint Joseph Hospital and Door County Hospital.
Ascension, a 151-hospital system that includes 15 hospitals and hundreds of healthcare facilities in Michigan, is in the middle of major restructuring in the form of hospital divestitures, leadership cuts and investments in other businesses and outpatient partnerships. The system hopes the moves will save $500 million in fiscal year 2018 and $61 million in fiscal year 2019.
Part of that restructuring plan is hitting Michigan. Ascension Michigan laid off 500 workers, including 20 management positions, earlier this year.
Also earlier this year, Ascension CEO Anthony Tersigni said the health system planned to focus on outpatient facilities and telemedicine and move away from its hospital and inpatient facilities.
However, rather than divest the three Michigan systems, as company officials discussed, Ascension ultimately decided to keep the facilities and invest millions in them. "We determined that retaining and investing in these health systems will best serve them, their associates and physicians, the communities they serve and our integrated national health ministry,” Maryland said.
Ascension’s decision to keep the systems and invest in them differs from what other hospital operators facing similar financial issues are doing. Tenet Healthcare and Community Health Systems are both divesting hospitals in hopes of cutting debt. Both Ascension and Tenet have also turned to layoffs as a way to reduce costs.