Don't expect the Vanguard-Detroit Medical Center $1.5 billion mega deal to close in October. In an email to Detroit Medical Center's 14,000 employees, CEO Mike Duggan said that the Vanguard deal's closing would be delayed due to state and federal reviews. On Tuesday, the DMC Board voted to push the date for the closing the deal from Oct. 31 to Dec. 31.
"DMC and Vanguard are ready to close now," he wrote. "After the last six months of planning the transition, we are surer than ever that this is the right move for both of us."
The Vanguard Health Systems deal with the eight-hospital medical system will be the largest hospital deal in the U.S. in 10 years, he noted. It's also the first time the state of Michigan has had to review a sale to a for-profit. Government officials are simply being "thorough and diligent" in their review to ensure that the community and patients are protected in the deal, he wrote.
The downside of the delay is that it could make it hard to open the new 100,000 square foot Children's Specialty Center, which is slated to open in January 2012. The project could be delayed for months if DMC doesn't get started on the project before the ground freezes for the winter.
To try to solve that problem, DMC and Vanguard formed a joint venture, and are moving forward with the first phase of the project. DMC and Vanguard each agreed to fund half of the first $1 million of the project. DMC will break ground on Nov. 1 to immediately begin site work.
In a statement, DMC Board Chairman Steve D'Arcy, noted that the size and complexity of the transaction are making the review longer than anticipated. "We are absolutely confident this will be completed by the end of the year," he said.
To learn more:
- read the Detroit Medical Center news release
- check out the Detroit Free Press article
- here's Duggan's email to his employees
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