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Planned Hospital Merger Quietly Fades As Deadline Approaches

DETROIT (WWJ/AP) - An expansive plan to merge two southeastern Michigan health systems into a single, $6.4 billion nonprofit organization with 10 hospitals has fizzled out.

Detroit-based Henry Ford Health System and Royal Oak-based Beaumont Health System announced last October they were in talks to merge.

But now, Henry Ford CEO Nancy Schlichting told staff Tuesday in an email that the Board has voted to let its letter of intent with Beaumont expire at the end of this week with no further discussions.

"This decision was made because it became apparent that two very different perspectives had emerged for the new organization between Henry Ford and Beaumont," Schlichting wrote. "As a result, many of the foundational elements in the letter of intent, including preserving two academic medical centers in Detroit and Royal Oak, were no longer supported by some leaders at Beaumont."

Beaumont Health System issued this statement Tuesday evening:

"We have benefited greatly from our merger discussions and have great respect for our colleagues at Henry Ford," Beaumont Health System President and CEO Gene Michalski said. "However, we found through our discussions that we are not aligned on how to achieve our vision for a model health system due to differences in our structures and business models."

Henry Ford employs about 24,000 people and operates seven hospitals. It also operates Health Alliance Plan, a health maintenance and insurance organization. Beaumont has 14,000 full-time equivalent employees and operates three hospitals.

Tenets for a model health care system were developed by Beaumont's board and management team, who then started a search 18 months ago for a partner, Beaumont said Tuesday evening in a statement. The letter of intent to merge was signed Oct. 30 with Henry Ford.

When announcing the planned merger in October, the systems said it was driven by big changes to the health care industry, including declining reimbursement for care and a shift away from treatment at traditional hospitals.

Both systems were to have kept their names and medical staffs and would have remained independent. The combined organization would have had a new name, and it would have been led by a single board with equal representation from both systems. Their foundations also would have been combined.

TM and © Copyright 2013 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2013 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.

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