Independent Michigan medical system expands as health care industry struggles
While other hospitals merge as a solution to financial instability, Munson Healthcare is redesigning its health care system.
Since Traverse City-based Munson Healthcare announced a $50 million company redesign last fall, the organization has introduced new primary care offices, streamlined patient records, recruited physicians, expanded access to robotic surgery, and opened a community health hub.
And there’s more to come as northern Michigan’s largest health care system undergoes a planned three-year transformation aimed at keeping up with evolving patient needs and a struggling health care industry.
“Health care is changing, and we need to change as a system to be here for the next 100 years,” Munson Healthcare president and CEO Ed Ness told the Michigan Independent.
Munson, an eight-hospital health care system, has managed to remain independent while many hospitals have merged with larger health care systems in an effort to remain afloat financially and stay open.
In 2022, Spectrum Health acquired Beaumont Health to form Michigan’s largest health care system, which was eventually rebranded as Corewell Health. Henry Ford Health and Ascension Michigan announced in October they would combine to create an organization with 550 sites. University of Michigan Health officially joined with Sparrow Health last year.
“There’s a very clear trend in Michigan towards integration and consolidation. We had well over 200 hospitals, for example, back in the 1980s here in Michigan. Now we have around 130 hospitals,” said Brian Peters, CEO of the Michigan Health and Hospital Association. “So we have seen the closure of a significant number of hospitals. Many of them have joined systems. There’s no question about that.”
Peters said mergers present advantages for hospitals that have gone through periods of economic downturn, such as gaining access to capital and engaging in shared learning. He also said, however, that he’s seen hospitals that have remained independent and continued to provide high-quality care for their patients.
Munson Healthcare was in talks about a possible merger with Spectrum Health in 2010 under Munson’s then-CEO K. Douglas Deck, but those conversations ended shortly after Ness took the reins of the company later that year. Ness said fears linger among community members who feel a merger could take away local control of the hospital system.
“I think where people worry is if Northern Michigan can’t make decisions for what’s best for Northern Michigan, but that’s why we’ve really worked hard at doing things that enhance our services,” Ness said.
Munson does work with outside institutions to help with larger programming and recruitment efforts, however. Examples include a partnership with Mary Free Bed Rehabilitation Hospital to improve inpatient rehabilitation services and a partnership with Corewell Health to provide emergency air transportation.
Rural hospitals typically face economic burdens with staffing and new technologies, unlike those in urban areas, because their patients tend to be older, sicker and lower-income, Peters said, noting that the rural facilities don’t receive adequate reimbursement from government assistance programs such as Medicare.
Munson’s patient demographic is wealthier than that of other rural hospitals. Medicaid payments represented about 14% of company revenues in the 2022 fiscal year, according to Fitch Ratings. Fitch categorized Munson as having a stable financial outlook despite ongoing challenges related to the COVID-19 pandemic.
To ensure the continued well-being of its patients, Munson has five objectives for Regional Care Transformation Plan: invest in new care options for patients; expand outpatient and primary care services; enhance virtual care programs; dedicate its Otsego Memorial and Cadillac hospitals for inpatient services; and upgrade Munson Medical Center in Traverse City to a high-level specialty center so patients don’t have to travel downstate for care.
Representatives of the Traverse City Munson Nurses Association, a local bargaining unit of the Michigan Nurses Association representing nurses in the Munson Healthcare system, did not return requests for comment for this article.
After the plan was announced, ABC-affiliate WPBN reported that the local, together with the Manistee Hospital RN Staff Council, issued a statement saying they had some initial concerns regarding the changes.
“Nursing is facing a crisis as profit-driven decisions drive nurses away from the bedside,” the statement reads according to WPBN. “Virtual appointments are no substitute for in-person care even in the best of circumstances. This is especially true in areas that do not have reliable internet access.”
Ness said that jobs for Munson employees will look different as the company transitions, but he didn’t directly state whether those changes would include any potential layoffs.
“We do everything we can to be flexible with our staff and to have positions for them as our jobs change, but things are different, and we have to adapt, just like any organization, to go into the future,” Ness said.
