Deadline Detroit | Starkman: Good News from Beaumont – Hospital Network to Spend “Significant Dollars” to Expand Private Room Capacity
The writer, a freelancer from Los Angeles, is a former Detroit News business reporter who blogs at Approved by Starkman.
By Eric Starkman
If this says what to expect if Grand Rapids-based Spectrum Health is allowed to save Beaumont Health from further decline, perhaps the takeover isn’t as misguided as I thought.
In a corporate video posted to Vimeo on Thursday, Beaumont CEO John Fox revealed that Beaumont plans to spend “significant dollars” to embark on a three-to-five-year plan to expand private bed capacity. of the health system. He said the expansion would involve “a lot of local planning in terms of where these bed towers go,” apparently indicating that Beaumont is considering expanding its real estate footprint.
Fox did not reveal how much Beaumont will spend to fund its real estate expansion. Private rooms are increasingly critical during the pandemic as shared rooms dramatically increase the number of medical staff and guests entering, increasing the risk to both patients.
Fox said the lack of private rooms at Beaumont is a “big critical area that has haunted us for decades.” He said a “comprehensive” expansion plan would be finalized by the end of the year.
Fox also revealed that Beaumont has earmarked $40 million for the purchase of state-of-the-art beds, some of which are already being delivered.
It seems unlikely that Beaumont will embark on a major expansion without input and approval from Spectrum, which is awaiting regulatory approval to take over the failing Southfield-based hospital system. The expansion is a promising sign that Spectrum is ready to commit money and resources to expand and modernize the Beaumont facility and reverse the decline the hospital system has suffered due to Fox’s sweeping cost cuts over the course of his seven-year reign.
Although Spectrum and Beaumont characterized their merger as a merger, Spectrum effectively takes over Beaumont. Most of Fox’s management team is gone, and he’s expected to leave once the takeover is complete and he’ll receive the millions of dollars likely owed to him under his golden parachute deal.
Despite the pandemic, which forced Spectrum to request military assistance to sustain its flagship hospital, CEO Tina Freese Decker recently revealed that she has been focused on integrating Spectrum and Beaumont, creating the largest hospital system of Michigan as well as the largest employer.
The Spectrum takeover must be approved by Michigan Attorney General Dana Nessel and the Federal Trade Commission. When it comes to health care, Nessel is a do-nothing attorney general who stood idly by while Fox drove Beaumont into the ground and is expected to approve the Spectrum takeover. The FTC has a backlog of merger applications, and it could take months before it rules on the Spectrum/Beaumont deal. FTC approval is uncertain as President Biden has asked the agency to be more critical of mergers. Studies show that when hospitals combine, healthcare prices go up while patient quality goes down.
What’s remarkable about Fox’s disclosure are Spectrum’s apparent priorities over Advocate Aurora, the Chicago-based hospital system to which Fox tried to give Beaumont in June 2020 on terms so obscenely favorable to Advocate Aurora, it couldn’t do it. Among the benefits of the deal announced by Fox was a $1 billion commitment to move Oakland University’s William Beaumont School of Medicine to the flagship Royal Oak campus in Beaumont and a significant increase technology spending.
When the deal with Advocate Aurora was announced, Beaumont had a cash reserve of $2.5 billion, so Advocate Aurora was essentially committing $1 billion, while retaining $1.5 billion.
Financially, the pandemic has been very good for Beaumont, as the hospital system pocketed an additional $1 billion for its $2.5 billion reserve pool while furloughing and laying off hundreds of employees.
In its video, Fox revealed that none of the funds for the planned expansion were being diverted from funds to deal with Beaumont’s chronic staff shortages which have forced the closure of services because there are not enough medical personnel to cover them. Fox revealed that Beaumont had “greatly expanded” its reliance on nurse recruitment agencies, which could exacerbate the already poor morale of its nurses.
Nurses employed by staffing agencies are paid more than staff nurses performing the same duties. Fox blamed the pandemic for Beaumont’s human resources issues, but the issues predate Covid. Beaumont spent nearly $2 million to bust unions when nurses at the Royal Oak Hospital tried to organize in 2019.
Beaumont Dearborn is also receiving military assistance to help the hospital manage its load of Covid patients. Fox said Beaumont plans to request military assistance to support its other facilities.
In his video, Fox wore a pinstripe suit jacket, not his signature blue blazer. He didn’t address the staff as “people” as he has repeatedly done in the past and he looked more relaxed and rested than in previous videos.
A responsible attorney general would have fired Fox, board chairwoman Julie Fream and other Beaumont directors who had been sitting idle long ago. That Fream will serve as chairman of the board overseeing a Spectrum and Beaumont set is a disgrace and underscores Michigan’s weak leadership.
► See the four minutes of Fox employee video