University of Michigan Health to purchase Sparrow Health System

Following an approval Thursday by the University of Michigan Board of Regents, Lansing-based Sparrow Health System will be bought by University of Michigan Health.

While a purchase price was not disclosed, the addition of the Sparrow Health System would make U-M Health a $7 billion organization, with 200 care sites across Michigan. Of those sites, 115 would come from Sparrow, including its main hospital in Lansing and community hospitals in Carson City, Charlotte, Ionia and St. Johns.

The acquisition, which still requires regulatory approvals, is expected to be completed in the first half of 2023.

The deal, which was previously approved by Sparrow Health System’s board of directors at their meeting on Nov. 28, cements an affiliation that began in 2019 when the two organizations signed a deal for pediatric services.

“This agreement builds upon the successful partnership formed through U-M Health at Sparrow Children’s Center,” said U-M Health President Dr. David Miller. “This established partnership has clarified the strong cultural alignment between U-M Health and Sparrow, while providing incredibly important pediatric care to families throughout Mid-Michigan. Our expanded partnership with Sparrow will further strengthen U-M Health’s ability to provide quality health care in communities beyond southeast Michigan.” 

As part of the agreement, U-M Health has committed to make $800 million in investments to Sparrow Health System, which Joseph Ruth, Sparrow Health System’s executive vice president and chief operating officer, said will be funded through facility projects, operations, and strategic investments over the next eight years.

“We will invest in numerous improvement and growth initiatives based on community need, such as renovations to our Neonatal Intensive Care Unit at E.W. Sparrow Hospital in Lansing and geographic growth across the communities we serve,” said Ruth. “This infusion of investment into Sparrow services will provide job growth and career development opportunities that would not otherwise be available to our caregivers.”

The announcement prompted muted optimism from the union representing Sparrow Health System nurses, pharmacists, therapists, and laboratory scientists.

“We learned of the agreement with Michigan Medicine this evening and will be seeking more information,” read a statement issued Thursday by the executive committee of the Professional Employee Council of Sparrow Hospital (PECSH). “We are hopeful that this will lead to a renewed investment in frontline patient care that will benefit nurses, healthcare professionals, and our community.”

PESCH, a local subset of the Michigan Nurses Association, represents about 2,200 Sparrow workers and undertook contentious contract negotiations last year with the health system before ratifying a deal that boosted wages and provided other benefits.

Meanwhile, Dr. LaKeeya Tucker, Sparrow Hospital’s Medical Chief of Staff, said she is excited about the opportunity to collaborate with her colleagues at U-M Health to improve access to quality care throughout the region.

“We are doing something special here by combining the community care and know-how that Sparrow has long been known for with the clinical expertise and commitment of U-M Health,” said Dr. Tucker.

Dr. Marschall S. Runge is CEO of Michigan Medicine, as well as the dean of the U-M Medical School and executive vice president for medical affairs at the University of Michigan. He said the deal is an important step toward U-M Health’s long-term vision of a statewide system of highly coordinated care, a vision that he says is also embraced by Sparrow.

“Upon closing, U-M Health will create a clinical care network that builds upon the strengths of the world-class U-M academic medical center and a very successful community-based health system,” he said. “Together the two organizations will focus on bringing increased health care innovation to mid-Michigan and beyond.”

Whether or not Sparrow will retain its name has yet to be announced, although U-M Health spokesperson Mary Masson told The Detroit Free Press that over the next year they expect to introduce strategic updates to the Sparrow brand to “appropriately reflect the relationship between our organizations.”

Included in the purchase is Sparrow’s Physicians Health Plan, which provides insurance coverage to more than 70,000 members and 300 employers across the state, along with a Medicare Advantage plan.