Ascension To Divest Three Hospitals In Northern Michigan

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Dive Brief:

• Ascension has signed a definitive agreement to divest three hospitals and an ambulatory surgical center in northern Michigan to MyMichigan Health, the health systems said Tuesday. 
• The deal includes Ascension St. Mary’s in Saginaw, Ascension St. Joseph in Tawas City, Ascension St. Mary’s in Standish and ambulatory surgery center and emergency department Ascension St. Mary’s Towne Center in Saginaw. Related care sites and physician practices are also included. 
• Ascension has recently sold other hospitals as the nonprofit expands its ambulatory and telehealth footprint. 

Dive Insight:

St. Louis-based Ascension is coming off a challenging fiscal year 2023. Despite cost containment initiatives, the nonprofit reported a $2.7 billion net loss last year on increased expenses.

Ascension saw some financial recovery during its quarter ended Dec. 31, posting $231 million in operating income compared to a $291 million operating loss during the prior-year period. The operator said it saw “meaningful operational improvement” after it focused on volume growth, rates and pricing and cost initiatives.

MyMichigan last reported finances that were solidly in the black. The health system posted a $13.5 million operating income in the six months ended Dec. 31 on $711.5 million in total operating revenue. It operates in a clinical and business partnership with Michigan Medicine, the University of Michigan’s academic medical center.

Hospital merger and acquisition activity generally increased last year, according to a January report by Kaufman Hall. Nearly a third of announced transactions involved a financial distressed health system, a trend the consultancy predicted could continue in 2024 as providers struggle with high labor and supply costs. 

Ascension’s latest deal comes after the health system has already divested a number of assets in its portfolio.

Ascension announced a deal last month to transfer operations of Ascension Via Christi Hospital in Pittsburg, Kansas, to health system Mercy. In the same month, it completed a deal to sell Our Lady of Lourdes Memorial Hospital​ in Binghamton, New York, to Guthrie Clinic. 

Also in Michigan, Ascension and Detroit-based Henry Ford Health signed an agreement in October to create a joint venture that would include Ascension’s southeast Michigan and Genesys healthcare facilities. The combined organization would operate under the Henry Ford brand and keep its headquarters in Detroit. 

The Catholic health system has also pared back its laboratory services in recent years. In 2022, Ascension sold assets from its outreach laboratory business to Labcorp. 

In a discussion of the health system’s earnings for the six months ended Dec. 31, Ascension said the sale, which outsourced laboratory management, helped reduce its labor costs year over year.