Sparrow Health System, University of Michigan Health close $7B merger

Sparrow Health System and the University of Michigan Health consummated their $7 billion merger April 1 after receiving the all-clear from regulators, the systems announced Monday.

Announced in December, the deal creates a statewide system of more than 200 care sites including the University of Michigan Health academic medical center.

“This is an incredibly proud moment for Sparrow as joining University of Michigan Health enables us to accelerate our expansion of services, build greater breadth and depth of clinical expertise and seamlessly integrate leading-edge technology and other updates into our facilities,” Sparrow Health System President and CEO James F. Dover said in a release.

Sparrow was among Michigan’s largest health systems with 120 care sites, seven of which were acute, community and specialist hospitals. It employed roughly 10,000 staff and 600 employed primary care and specialist physicians.

Michigan Medicine, which had the UM Medical School plus the five hospitals, 125 clinics and other offerings of Michigan Health, has committed $800 million toward investing in Sparrow’s hospital operations and other strategic focuses over the next eight years, according to the announcement.

The two organizations had previously partnered on a 2019 pediatric care joint venture at Sparrow Children’s Center and via an investment into Sparrow’s Physicians Health Plan.

Their combination builds on these successes, offering an opportunity to coordinate high-quality specialty care across the state and bolster existing community care options, the systems said.

“This milestone advances our organization’s long-term vision of a statewide system of highly coordinated care,” Michigan Medicine CEO Marschall Runge, M.D., Ph.D., said in a release. “The completion of this transaction represents a special moment and, as one team, we are well positioned to unlock new opportunities and share best practices while providing our patients with the highest level of care.”

No immediate changes have been made to Sparrow’s branding, though the systems said they “expect to transition Sparrow to a brand aligned with University of Michigan Health” down the road while ensuring Sparrow’s 126-year “legacy is appropriately honored.”

The systems said in an online FAQ that patients of both systems will continue to receive their existing care services. They also wrote that “there are no layoffs anticipated as part of the integration.”  

Of note, the deal comes less than a year after Sparrow laid off “hundreds” of employees due to financial struggles including a $90 million loss during the first six months of 2022.

Sparrow and Michigan Health’s combination is the state’s second recent major health system merger, as early 2021 saw Spectrum Health and Beaumont Health join together to form the 22-hospital Corewell Health.