Traverse City Record-Eagle

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September 5, 2010

Munson to release merger details

Munson this week will reveal some information on deal

By Bill O'Brien bobrien@record-eagle.com

TRAVERSE CITY — Eight months of negotiations, meetings, data evaluation — and plenty of community speculation — will culminate this week as Munson Healthcare is expected to unveil at least some of its affiliation plans with Grand Rapids-based Spectrum Health.

The Munson Healthcare Board met Sept. 1, and while officials remain tight-lipped as to details, they're ready to release some information about partnership plans and what they've learned through community surveys.

"We'll start the process next week," Munson Healthcare Board Chairman Tom McIntyre said Friday.

Munson's board hasn't finalized all aspects of a deal, and officials will continue to investigate other partnerships with health care providers including the University of Michigan Health System, but Munson is ready to share some insight with the community.

"As far as I know, we're going to cover all the facets of our research and our discussions," McIntyre said. "One thing we've certainly learned is that our constituency wants some transparency."

Munson officials in January confirmed partnership talks with Spectrum that dated to late 2008. The two sides had a 120-day "due diligence" period and originally targeted July 1 as a possible decision date. Munson said it needed Spectrum's financial clout to seek big-ticket upgrades, including a new cancer center, and said Spectrum would help with physician recruitment.

But talks generated strong community reaction, and residents and Munson associates voiced doubts about a Munson-Spectrum merger that would replace Munson's decades-old corporate-ownership model with Spectrum's ownership of Munson.

Other complications followed, including the sudden resignation in May of former Munson Healthcare President and CEO K. Douglas Deck, who had headed up the partnership talks. Other questions surfaced about Munson's financial projections, and it hired a Nashville, Tenn., firm for a second opinion on its financial needs and organizational options.

Munson Healthcare also hired a Lansing-based public relations firm to survey its corporate members and others to get input on partnership talks. Munson is expected to release some of that survey data this week. Munson Healthcare CEO Ed Ness, who replaced Deck in May, was not available for comment Friday.

University of Michigan Health System also approached Munson officials in recent weeks over an expanded relationship short of merging or taking a controlling interest in Munson Healthcare. That further muddied the Spectrum talks but came as a welcome development in some Munson circles.

Larry Miller, of Frankfort, where some in the community are wary of the Spectrum proposal, said word of U-M's interest in Munson excited people with whom he's spoken.

"It's extremely favorable," said Miller, a former board member at Paul Oliver Memorial Hospital in Frankfort and a former corporate member at Munson Healthcare. "The reaction to Spectrum is not favorable."

John Rockwood, a Leelanau County resident and retired CEO of Munson Healthcare, also is pleased that Munson is talking with U-M.

"I think Munson should be flattered," Rockwood said of U-M's interest. "I would take that as a compliment to the Munson organization."

McIntyre said potential partnership options show that Munson is a strong health care system that's drawing overtures from other, larger operations.

"My sense is that Munson is moving in a very good direction," he said. "We really have some wonderful opportunities for the communities we serve."

Others question Munson's approach to partnership talks. Few details have been shared with Munson staff and the public. A. Michael LaPenna, a health care consultant who's worked on hospital partnerships throughout the U.S., said he's spoken with Munson doctors and officials with its affiliate hospitals who remain in the dark about what may emerge with the proposed partnerships.

"It's surprising to me," LaPenna said. "A lot of the information that could be out or should be out there to the constituencies has just not been out there ... even some of the partner hospitals don't really know what's going on."

Spectrum Health officials declined comment Friday. They said they would comment after Munson announced its plans.

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