What does this Letter of Intent mean?
The Letter of Intent acknowledges the intent of Munson Healthcare and CHE Trinity Health to pursue Munson Healthcare’s purchase of Mercy Hospital Cadillac and Mercy Hospital Grayling from CHE Trinity Health. Under the Letter of Intent, both organizations agree to exchange all pertinent information, financial records, real estate documents, equipment lists, building and grounds information, human resource information, etc. as part of a due diligence process. The parties also agree to pursue necessary government and corporate approvals.
What is due diligence and how long will it last?
Due diligence is an inspection period, similar to what most people go through when they are purchasing a home. During due diligence, Munson Healthcare and CHE Trinity Health both have an opportunity to review and verify information in order to ensure the proposed sale and purchase will be as intended. This will include a physical inspection of the facilities, review of records and agreements, and analysis of all hospital assets and liabilities, as well as any other items that could affect hospital operations after the proposed sale is completed. Munson Healthcare and CHE Trinity Health will likely be in the current due diligence phase through July, with both sides exchanging and reviewing information necessary to complete the transaction.
Why can’t you be more specific about the details right now?
Munson Healthcare and CHE Trinity Health are still reviewing and verifying all the data they need to finalize the purchase. Transition Team members will be able to respond to specific questions when a final agreement is reached, hopefully around Aug. 1. We consider that conversation with community members to be an important part of the process. We value your questions and feedback.
Why is Munson Healthcare interested in doing this?
Munson Healthcare and CHE Trinity Health have had a successful, long-standing partnership. The Cadillac and Grayling hospitals have been affiliated with Munson Healthcare for the past 15 years, with Munson Healthcare managing both hospitals for 11 of those years. Shared management has helped recruit physicians, helped establish best practices on heart attack and other emergency care, and brought cost-savings through joint efforts on electronic health records and purchasing.
While the current management arrangement works well, this new approach provides better integration, which will help us meet the demands of today’s healthcare environment. Significant changes to our industry during the past four years make it imperative that we work together to ensure northern Michigan patients continue to have access to the very best care, as close to home as possible.
What input will communities have in any talks?
A Transition Task Force, led by retiring Mercy Hospital Cadillac CEO John MacLeod, will be established to ensure community needs are met during the transition. This team will begin its work as soon as data from the due diligence phase is collected and a final agreement is reached – hopefully around Aug. 1. At that point, Transition Team members will be able to respond to specific questions. The task force will involve leaders from both Mercy hospitals and Munson Healthcare. Together, they will identify specific tasks to be completed, including developing various ways to keep the community, physicians, employees, donors, and volunteers updated on the process. Community comments are valued and welcomed via phone or email.
Why was this announced now?
We let our communities know as soon as the Letter of Intent was signed; the due diligence process was started immediately after. But as you know, Munson Healthcare and CHE Trinity Health working together to achieve mutual goals is not new. During our 15-year relationship, we have pursued collaborations, partnerships, and other relationships that make sense to our communities to ensure high quality health care continues. The restructuring of health care is forcing hospitals to look for opportunities that involve collaboration and efficiencies. Bringing the two Mercy hospitals into a full relationship with Munson Healthcare represents a natural progression.
Why is Munson Healthcare interested in buying Mercy Hospital Cadillac and Mercy Grayling?
Munson Healthcare shares the same mission as Mercy Hospital Cadillac and Mercy Hospital Grayling – to deliver the very best care to the people of northern Michigan. Purchasing the hospitals would provide both hospitals with a broader fiscal foundation as part of a regional system. It is in the best interest for all communities involved for both of these hospitals to remain financially strong.
What is CHE Trinity Health’s reasoning for selling these hospitals?
CHE Trinity Health puts the needs of the local community first. CHE Trinity Health and Munson Healthcare have a close working relationship and jointly own the Northern Michigan Supply Alliance. CHE Trinity Health understands that Munson Healthcare has a long tradition of providing excellent health care in northern Michigan from a northern Michigan base of operations.
What are the advantages of being owned by Munson Healthcare instead of managed or affiliated?
For Mercy Hospital Cadillac and Mercy Hospital Grayling, new ownership would eliminate some of the administrative complexity that resulted from being owned by one system and managed by another. Under Munson Healthcare ownership, Mercy Hospital Cadillac and Mercy Hospital Grayling could more effectively – and more efficiently – serve patients in their communities. Ownership offers these hospitals direct access to the resources of our region’s leading health system, while maintaining a local board that approves a local strategic plan, recommends an annual budget, maintains strong local fundraising efforts, as well as an active auxiliary.
What are the challenges facing Mercy Hospital Cadillac and Mercy Hospital Grayling?
Mercy Hospital Cadillac and Mercy Hospital Grayling face the same fiscal challenges confronting all hospitals in this time of unprecedented change in the health care industry. They, and Munson Healthcare, are exploring how to best position themselves to continue delivering the very best health care to the people in their communities. Working together more closely may present the best option for long-term success.
What can we do to make sure local access to quality care continues?
Preserving local access to quality care is exactly why Munson Healthcare and the two Mercy hospitals believe a purchase agreement will ensure continued delivery of great health care to the people of northern Michigan. All hospitals are confronting fiscal challenges. Northern Michigan hospitals are additionally challenged because they serve a large rural population with significant distance between communities. That makes it critical for health care providers in our region to work together.
What assurances does the community have that Cadillac and Grayling will continue to operate as inpatient hospitals?
Our commitment is to make sure northern Michigan patients get the very best care as close to home as possible. We’re proposing this investment because Cadillac and Grayling play key roles in keeping northern Michigan healthy.
Challenges to providing high quality care in northern Michigan (a large rural population and significant geographic distances between communities) make it critical for health care providers to join forces and work together. The people who live, work, and play in northern Michigan deserve excellent, accessible health care. Munson Healthcare’s purchase of Mercy Hospital Cadillac and Mercy Hospital Grayling will help deliver that care to northern Michigan patients.
Will Munson still have a relationship with CHE Trinity Health?
Yes. Munson Healthcare and CHE Trinity Health will continue the system-level partnerships that have helped build a strong regional health care system for the people of northern Michigan. These include collaboration on improving the quality of care provided, information technology enhancements, and the Northern Michigan Supply Alliance, which puts joint purchasing power to work for the benefit of patients.