Beaumont Health is the largest health care system in Michigan, with 145 outpatient facilities and eight hospitals. Advocate Aurora serves over 3 million patients at 500 facilities across Wisconsin and Illinois. Recently, the two companies made an announcement that seemed to hint at a possible merger, stating that they were “exploring a potential partnership.”
The potential merger is still in its very early stages, but Advocate Aurora expressed an interest in partnering with a like-minded organization in the interest of expanding its footprint and facilitating growth.
Both health care systems are not-for-profit organizations. Nevertheless, each generates billions of dollars in revenue. Advocate Aurora is no stranger to mergers, having resulted from the combination of Aurora Health Care in Wisconsin and Advocate Health Care in Illinois. As one of the largest integrated health care systems in the United States, Advocate Aurora reported revenue in excess of $12 billion for the 2019 fiscal year. Beaumont reports $4.7 billion in net patient revenue per year, and a merger between the two would bring over $17 billion in combined annual revenue.
Strength and scale
Meanwhile, rising unemployment and subsequent loss of health insurance could result in a loss of revenue for hospitals and health care systems. A partnership leading to a possible merger with Advocate Aurora could help the relatively smaller Beaumont to absorb the blow. It could also put Beaumont in a better position to negotiate with health insurers, many of which have either become larger through their own mergers in recent years or are actively looking to expand.
A joint statement from the health care systems indicated that they started the exploratory process by notifying the Attorneys General of all three of the states that the merger would affect. Nevertheless, antitrust regulators at the state and federal level are likely to scrutinize the proposal closely to determine whether it would undermine fair competition.