More than 20 years ago, Beaumont Hospital launched an advertising campaign that resonated with generations of Detroiters. “Do you have a Beaumont doctor?” was wildly successful in building the health care institution’s brand as it turned the market’s preconceived notions into an urgent message that would click with potential patients the next time they needed medical assistance.
But today, in the wake of the $14-billion merger of Beaumont and Spectrum of Grand Rapids in 2021 into Corewell Health, many people might be asking, “Can I afford to have a Beaumont doctor?”
The combination of the two largest health care providers in metro Detroit and on the west side of the state has raised legitimate questions about how Beaumont’s traditional strength of patient care is faring now and how it might endure going forward, as well as whether the merger will lead to higher prices by the bellwether health care provider in all of Michigan.
Trying to provide the right answers to the questions is the job of Tina Freese Decker, the former president and CEO of Spectrum Health who was tapped as president and CEO of Corewell Health. Although the obstacles are many, she says she’s up to the challenge.
“It’s a tremendously tough time right now,” says Decker, an industrial engineer and health care financial expert by training, and a career-long executive at Spectrum who followed Beaumont’s President and CEO John Fox. “I’m focused on leaving behind the status quo and creating something better. We must remain focused on our end goal — a vision where health care is simple, affordable, equitable, and exceptional.”
The merger “checks a lot of important boxes for value-based care,” says Ron Hall, CEO of Detroit-based auto supplier Bridgewater Interiors, who was a member of the Beaumont system board for five years before joining the Corewell board. “Scope and scale are important tools that can enable improving value across a broad spectrum of patient populations. That’s part of what we hope we’ve begun to accomplish.”
Julie Fream, chair of the Corewell Health board and head of the auto industry’s Original Equipment Suppliers Association, or OESA, in Southfield, believes the organization represents the culmination of a process that unfolded over more than a decade, including several unfulfilled attempts at other mergers. “This one really focuses on Michigan and health for Michigan people,” she says.
“Some other strategic deals we looked at certainly had merit, but this was much stronger in terms of a common vision and a shared sense of doing right by the Michigan community,” Fream adds. “That gave it a lot of sense of purpose.”
Some outsiders also hail the combination. “Institutionally, there was a lot of bad blood between the (previous Beaumont) administration and providers,” says Alex Calderone, president of Calderone Advisory Group, a health care business consultancy in Birmingham. “Something needed to be done about that. I think this merger — to a large degree, particularly because John Fox stepped down — may have been a decent first step toward mending some of those relationships.”
A major proof point emphasized by Corewell executives of the continued high regard for their system is the most recent version of U.S. News & World Report’s annual listing of “America’s Best Hospitals.” Beaumont had the most nationally ranked hospitals in Michigan, and Beaumont Royal Oak (now Corewell Health William Beaumont University Hospital) was ranked No. 2 statewide, after the University of Michigan hospital in Ann Arbor.
Few industries are more challenging these days than health care. Even after battling through COVID-19, hospital organizations face stifling regulations, a matrix of political considerations, rising antitrust pressures, and, in the background, all the increasing medical requirements of an aging, obese, and mentally stressed American society. Plus, there are the inflation, supply-chain, and labor challenges that nearly every industry is dealing with these days.
For Corewell, add in the pressures any organization faces in the wake of a merger: cleaning up inadequacies, trying to realize financial efficiencies, and reassuring employees at each constituent company. Meanwhile, in Beaumont’s case, there’s the nearly $100 million in losses in the first half of 2022, thanks largely to the steeply higher costs of paying employees, as well as Corewell’s layoff of about 400 management and other non-patient-facing workers statewide out of its overall staff of 64,000 people.
Nearly every health care provider in the United States was seared by horror stories from the pandemic, and many were much worse than Beaumont’s, including the lows reached by some Michigan nursing homes and big-city hospitals in New York. “We didn’t see changes in our (evaluations) that appeared to be tied to COVID-19,” says Dr. Ben Harder, head of health care analysis for U.S. News.
But Hall admits that “COVID-19 was probably harder for us because we were in the middle of a remodeling, if you will,” several years after Beaumont swallowed up the Oakwood Hospital and Botsford Hospital health systems in metro Detroit in 2014.
The path that led Beaumont to this year’s Corewell Health was at least a decade in the making. As American health care companies struggled with fast-rising costs, the onset of Obamacare, and vast changes in the medical insurance market, Beaumont’s leaders began looking for merger partners to prepare for a more difficult future.
In 2012, Beaumont announced a $6.6-billion mega-merger with Henry Ford Health in Detroit, the other regional dominant provider, but the two parties soon scuttled their arrangement. It was largely nixed by Henry Ford private practice physicians, who were worried about merging with a (Beaumont) system consisting mainly of employer-based physicians.
Beaumont succeeded in consummating a $3.8-billion merger with Oakwood and Botsford hospitals that was designed to produce $134 million in annual cost savings. Around the same time, Fox came from Emory Healthcare in Atlanta to run the enlarged Beaumont. In addition to making three health care systems into one, the board of Beaumont and its new CEO continued looking for even bigger merger partners.
Deals with two new merger partners — Ohio-based Summa Health and the much larger, Chicago-based Advocate Aurora — emerged in 2020. But Fox bowed out of those, amid the financial pressures and confusion of COVID-19.
Another huge factor in Fox’s inability to make Beaumont even bigger was physician resistance. Shortly after news of the Advocate Aurora negotiations broke, someone associated with Beaumont released the results of an internal survey of Beaumont doctors in 2020 that showed nearly 60 percent of them “strongly” lacked confidence in Fox and Beaumont COO Carolyn Wilson, with an additional 20 percent “somewhat” lacking confidence in senior management. Wilson left in 2021.
Fox “wasn’t a very physician-friendly CEO,” says one Beaumont doctor who asked not to be named. “It seems his job was to make Beaumont a good merger candidate by showing that costs were low. So we were asked to do the same clinical activities with less support and fewer people. People started leaving because the work environment changed so much. Our goals and markers for incentives were constantly being changed or not even honored under our contract.”
Beaumont also, this doctor says, “would hide behind” the “corporate-integrity agreement” that the organization signed in 2018. This pledge required the hospital system to pay $84.5 million to settle whistleblower allegations that, over eight years, Beaumont had compensated eight physicians with free or substantially discounted office space and employees, in exchange for patient referrals.
“The compensation wouldn’t be competitive for people, and that was part of the reason people were leaving,” this doctor says. “And they really didn’t care if you left or not. Doctors became widgets. You’d spend 20 years at Beaumont building a practice, but they’d just replace you with someone else. Beaumont was the important brand, not you.”
As a result, several physicians left — and then the coronavirus accelerated their exits. For instance, Beaumont’s two biggest hospitals had to address intentions to leave among 40 percent of their respective anesthesiology departments before and amid the pandemic, according to media reports.
The system also “lost people who work in the operating room, X-ray technicians, and scrub technicians,” the doctor says. In addition, the crucible of COVID-19 stretched Beaumont’s nursing staff to the breaking point and robbed the hospitals of crucial elective procedure revenue for most of two years.
“The prior Beaumont leadership did a lot of good and really hard things that were exactly what the board asked them to do,” Hall says. “Might some of those things have been done differently or communicated better? You can always look back and question decisions at the margins.”
Fox finally helped find Beaumont’s ultimate merger partner in Spectrum and left as the deal closed, having earned as much as $6.7 million a year amid still-growing internal criticism of his leadership.
Enter the new CEO, like a breath of fresh air.
Decker is a Des Moines, Iowa, native with an undergraduate degree from Iowa State University and a joint master’s from the University of Iowa in industrial engineering and health care administration. Fream says Decker “always wants to move faster.”
Hall, who worked with Decker and the State of Michigan during 2020 on COVID-19 health protocols, says “she pulls the board and her team hard. She’s got a strong sense of vision and values about what this combination can be, and how to get various moving parts going in that direction in lockstep. She’s been really impressive and has exceeded my expectations.”
Decker also is “a great communicator” with a “no-nonsense, roll-up-your-sleeves personality,” Hall says. “We’re enjoying a level of buy-in around the Beaumont division that we hadn’t enjoyed consistently with our prior (merger) efforts.”
Decker says her approach is summed up by “collaboration — trying to find those opportunities and make sure we’re moving them forward. And learning from successes and failures.”
The merger into Corewell Health is certainly based, in some ways, on the same logic that Fox applied, if perhaps gracelessly. “Health care in general is a fairly inefficient business and so, certainly, consolidation can make a lot of sense with regard to driving efficiencies and cost savings,” Calderone says. Also, “You can combine specialties and augment them, and one system might have better access than the other to top-notch equipment, imagery machines, and so on.”
Overall, hospital mergers in Michigan and across the country are on the rise, with their numbers accelerated by the pandemic. At the same time, supply-chain snarls are affecting medical products as much as automotive microchips and sunflower oil, and “we’ve never seen human-resources costs rise so dramatically,” says Brian Peters, CEO of the Michigan Health and Hospital Association.
For example, he says, in the face of shortages and defections of their full-time nurses, Michigan hospitals have had to turn more than ever to traveling-nurse staffing outfits, “and they’re incredibly expensive.”
The cost of capital is rising precipitously, he adds, while “many Michigan hospitals were built 50, 60, 70, and 80 years ago. Any time you think about expanding capacity and acquiring new technology and building patient rooms that are private, there’s a capital cost. And sometimes there’s a benefit for a larger organization to have access to that kind of capital.”
But, he notes, “We can’t pass on these added costs to the end consumer like other sectors of the economy can, like for a gallon of gasoline or a gallon of milk. Medicare and Medicaid dictate what they will pay us, and private insurance contracts are negotiated sometimes years in advance.”
Moreover, in health care, “IT has become mission-critical, from electronic medical records to the ability for physicians and hospitals to communicate with one another,” Peters adds. “And it’s incredibly expensive.” Indeed, Corewell’s immediate plans include creating a single “technology platform” to bridge the two previous systems, Decker says.
Calderone believes the analytically minded Decker can wrangle huge cost efficiencies in addition to the few hundred layoffs. “They’ve got their work cut out for them, but there’s great opportunity in fully undertaking systems integration and the consolidation of back-office functions,” the consultant says. “The larger system will have more negotiating power and, in theory, be able to operate more efficiently. It will also have better access to capital, which can also mean state-of-the-art equipment buys and the ability to attract top talent.”
In fact, Decker says, “We’re moving integration faster than we expected to get to synergies, while we’re also starting new programs and services to grow revenues.”
There’s significant skepticism, however, that the only direction Corewell will move the cost needle is down — including worries that the larger entity, with a huge share of the Michigan market, inevitably will raise the cost of care.
“The prices for Spectrum Health were significantly higher than for Beaumont Health in a recent Rand Corp. study of prices for hospitals for self-insured care,” says Bret Jackson, president of the Economic Alliance for Michigan, which represents businesses and unions.
“It stands to reason that the new entity — which is larger and has more negotiating power in the market — will want there to be a more uniform look as a pricing structure than what was there previously. They’re just a gigantic system. They have leverage. They just have the ability to demand prices in the marketplace because, if you don’t have them in your network, you’re missing out on really significantly geographically important hospitals in the state.”
To be sure, Corewell executives note that there’s virtually no geographic overlap in the Spectrum and Beaumont markets, whereas the problem of market concentration is what has raised health care prices in other mergers across the United States. Decker insists the merger has “pro-competitive benefits” and that challenging Corewell on such grounds “wouldn’t be viable.” After an intense examination for anti-competitive potential, the Federal Trade Commission approved the merger.
“When you look at the two organizations, they served completely different markets,” Decker adds. “(They’re) not in any way competing with each other.”
That sounds like arguments Fox used to make. But to some degree, Decker also is trying to unwind Fox’s legacy. To help accomplish that, she lured a physician administrator, Dr. Ben Schwartz, westward to head the Beaumont side of the new company as president.
“My strengths as a leader,” says the former obstetrician and gynecologist who ran the eastern region of Northwell Health in New York, “are in empowering those people who are at the bedside taking care of patients in hospitals and in offices to have a stronger voice, and to figure out how to make care as great as possible.” He likes Decker’s “vision of what health care would be in the future.
“I saw an opportunity to be really innovative here,” Schwartz says. “It’s much easier to be innovative in a space where you’ve got really high-quality care being provided on the doctor, nursing, and administrative sides.”
For instance, Corewell can point to some of the best organ-transplant survival rates in Michigan at its operations on both sides of the state. And Decker is pressing for more clinical leaps forward. “Our tumor board is already sharing examples and case studies from patients,” she says, “which has been really beneficial to patients because (the two sides) have different perspectives.”
Priority Health, the pre-existing medical insurance plan brought to the merger by Spectrum, is another difference-maker with more than 1.2 million members, Decker believes. The health plan “gives us the ability to try innovative rescue programs in the community that help people be healthy, such as caring for the elderly who have significant diseases.”
Beaumont had been “trying to affiliate in some capacity with a health plan for a long time, so (Priority) was a huge appeal” of the merger, Hall says. Meanwhile, according to one Beaumont doctor, “Some physicians are welcoming Priority because they believe it will make Beaumont much more financially sound, much like Henry Ford Health has HAP.”
Corporate culture might be the area where Decker is working hardest of all to leave Beaumont’s recent past behind, beginning wih staffing levels. For example, even after the pandemic, radiology staffs at Beaumont hospitals might be down to two rooms a day instead of the normal three. Cardiac care has chased away some of its best doctors, never to return because they’ve already gone to other systems.
“We must focus on culture first,” Decker says. “It’s important to be authentic and talk about and do the hard thing first, which advances culture (and) figuring out those tough, sticky issues as a team.” Recruiters “talk about compassion, collaboration, clarity, curiosity, and courage. We make sure they believe in them and model them.”
Still, Decker faces a challenge. “How do you bring the two cultures together?” asks Dr. Richard Winters, director of leadership development for the Mayo Clinic Care Network and an adviser on health care mergers. “Culture is the combination of values plus behavior; a screen saver means nothing. There will be efficiencies from bringing larger systems together, but it’ll come from all different perspectives, and good leadership needs to be able to weave in and out and, in complex situations, bring lots of people together to facilitate ideas.”
Actually, Decker notes, post-merger, Corewell conducted an assessment that showed “Spectrum and Beaumont are more alike than different” despite the well-understood differences in the reigning background cultures on opposite sides of the state. “Everyone talks about compassion and collaboration. That’s directly tied to the values that we share,” Decker says. “There were some differences in how we get work done, and that we’ll focus on in the next six months or so.”
From that standpoint, Spectrum’s standards might actually help resurrect the atmosphere of care and concern at Beaumont operations that patients remember. “Spectrum has expanded and taken on other hospitals, and they’ve always improved the quality and delivery of care in those hospitals,” Jackson says. “That will happen” in southeast Michigan, too.
One Beaumont doctor is hopeful. “Spectrum has a good reputation for physicians with better relationships with their administration,” he says. “It’s not as adversarial as what was going on at Beaumont. If they’re going to bring that philosophy of partnering with you rather than dictating to you, it’ll be a great change of culture.”
Decker says this doctor can count on it. “We’re creating an environment where people feel valued and supported (while providing for) a more flexible work environment.”
The cultural change will only build on a foundation that “is really quite strong. And the Beaumont brand is strong. We’re well-positioned to transform health in our communities. There are a lot of complementary strengths of each organization that will propel us. We’ve set a high bar and we need to continue to push that bar.”
Brand Awareness
Few advertising themes have the staying power to be remembered for decades, but at least around Detroit, the “Do you have a Beaumont doctor?” campaign has a shot at marketing immortality.
It’s already been several years since southeast Michigan residents last experienced a series of TV commercials, radio spots, billboards, print ads, and even transit-bus signage that urged them to consider the origins of their health care providers so seriously. Yet today, a word-association game with “Beaumont” likely brings that campaign to mind.
What made the campaign so successful? It might have been the urgency of the operating room scene in a 12-year-old, 30-second TV commercial that helmed the ads, as doctors and nurses masked up, scrubbed down, and checked their instruments.
Or the pulsating music in the background. Or the tremulous voiceover that brought things to a dramatic crescendo by asking, “Do you have a Beaumont doctor?”
The ad was voiced by Peter Thomas, a famed announcer and narrator who also worked on shows such as “Nova” and “Forensic Files.”
Or maybe it was how Beaumont “used a hook that’s been in the playbook for seemingly a hundred years: Ask a question, so that it begs an answer,” says Jeff Stoltman, a business professor at Wayne State University in Detroit and the school’s vice president of marketing during the era when the Beaumont campaign was running.
Sandy Hermanoff believes the campaign “grabbed the ears of people at that time because medicine was so screwed up. It gave them a feeling of peace, and that someone was on their side, and they could find a doctor who’d take care of them or a loved one, and they would be able to relax a little bit,” says the head of Hermanoff Public Relations in Bingham Farms, a veteran marketer in metro Detroit whose own Beaumont doctors successfully treated her for breast cancer.
Whatever the effective elements, the whole thing was developed by the late Paige Curtis and her ad agency in Bloomfield Hills. The campaign ran for several years and was rebooted in 2011 with a female narrator. While cardiac care apparently was the emphasis of the operating-room commercial, Beaumont’s campaign hit other specific specialty areas, as well.
“You could shoot one for heart attacks, one for children, one for cancer, and one for health care in general,” Hermanoff observes. “You could go on and on about every segment of medical. That was the beauty of it.”
Beaumont’s marketing would go on after the end of the “Beaumont Doctor” campaign in 2011, of course, including a regional Super Bowl TV ad in 2017 that touted the system’s “Never Settle” attitude and was voiced by Hollywood actor Courtney B. Vance.
But to this day, nothing else has approached the legendary “Beaumont Doctor” campaign.
Code Blue
Of all the occupational dramas set in motion by COVID-19, none was more compelling than what befell the nursing profession as hospital staffs nationwide struggled to keep up with a deluge of affected patients. But “Heroes Work Here” signs on the front lawns of hospitals during the pandemic have devolved to strikes and threats of strikes by nurses this year, from California to Massachusetts.
Corewell Health, the recently formed merger between the Beaumont and Spectrum systems in Michigan, wants to avoid the same scene unfolding in its operations, and that’s one big reason the organization recently announced an agreement with Oakland University in Rochester Hills to provide more than $20 million over the next five years to the school’s nursing program.
The deal includes about $10 million for student grants, with recipients “on a path” to become Corewell employees for at least two years after graduation, with the other half earmarked for investments in labs, classroom space, and faculty positions.
“You can’t wave a magic wand and create nursing jobs,” says Dr. Ora Pescovitz, president of Oakland University, a board member of Corewell’s Priority Health plan, and former chief of the University of Michigan Health System. “I approached (Corewell) to help solve this problem by working together to address part of the workforce shortage and, in particular, for more nurses.”
Modeled after a similar program that Spectrum Health (Corewell) and Grand Valley State University enjoy on the west side of the state, Beaumont’s program with Oakland University ensures that “500 new nurses will be committed to working for them,” Pescovitz says. “The students win because they get scholarship support. OU gets a win because half of the money goes to our infrastructure for additional students. And patients get a win because Beaumont needs additional labor.”
Tina Freese Decker, the newly-appointed president and CEO of Corewell Health, says the collaboration with Oakland University is “fantastic.”
Says Decker: “This expands the pipeline for nursing, and we’re working with other schools to find other creative, win-win solutions for these real-world problems.”
Pescovitz acknowledges that the challenges for nursing in general include staff shortages and overwork that existed prior to COVID-19 but were intensified by the pandemic, leading to burnout and many departures from the profession.
“But many will come back when conditions improve,” she predicts. “They’ll return because the same things that motivated them to choose health care initially are still motivating factors. People who became nurses or physicians or therapists went into those fields because they love the technology parts of it and the science, and want to take care of people and make them better.”
Retail Rx
The shopping center at the southwest intersection of Woodward Avenue and 13 Mile Road in Royal Oak is about as much of a local institution as the iconic Beaumont Hospital that looms over it from the west.
The joy is palpable in what’s now called Woodward Corners, as consumers head home with their New Order lattes and GrabbaGreen Spring Berry salads after sessions at X-Golf or the European Wax Center, or dart into the navigably sized Meijer market to score some vegetables or a Diet Coke.
But the journey to Woodward Corners from what had been called Northwood Shopping Center since it opened in 1954 wasn’t easy. Beaumont, now Corewell Health William Beaumont University Hospital, acquired the property in 1982 and intended for many years to overhaul it, but only in the post-pandemic era has it become a new shopping community. And it will be another year or so before a promised Hyatt House Hotel opens at Woodward Corners.
“When Beaumont bought this old center, it was the eighth-largest hospital in the country and it had 30,000-plus employees,” says Jim Bieri, president and CEO of Stokas Bieri Real Estate in downtown Detroit, which was Beaumont’s leasing agent for Woodward Corners. “The idea was to enhance the campus in a way that made it a better experience for employees and guests.
“A lot of hospital facilities in the last few years have tried to do something like this, to create synergy with commercial real estate on their campuses, and some have done it. But this is on a main street, and the hospital is set back, so (Woodward Corners) provides a wonderful commercial gateway to the hospital,” he says.
Longtime local residents remember a Northwood strip center that was anchored by a Kroger and a JCPenney, and whose smaller tenants at various times included an Elaine Powers workout room and a Sanders candy store, where elated fathers would buy pink- or blue-foil-covered chocolate cigars to celebrate the birth of their infants at the neighboring hospital.
Beaumont’s plans for the retail center at one point included giving consideration to the idea of selling the property. At another point, Beaumont decided in earnest to redevelop the site into a 16-acre, $33-million new complex, but progress was slow. Then COVID-19 ground things to a halt for a while.
While Bieri says the new center has been an overall success, one eagerly greeted tenant, Wahlburger’s, the fast-food franchise founded by actor Mark Wahlberg, recently closed its doors at Woodward Corners. “Sometimes concepts don’t work in certain spots even though they do in others,” Bieri says, noting that “other restaurants are very successful” there. They include Panera, which moved its local store there from Birmingham, along with Mod Pizza and Bucharest Grill.
The biggest difference between the old Northwood and the new Woodward Corners, however, will be the Hyatt. The coronavirus halted financing, Bieri says, but construction is underway now.
“The hospital will provide a constant amount of occupancy” for the hotel, he says, which is slated as a five-story structure with 128 apartment-style guest rooms. “People come to the hospital for specialties, and so there are reasons for them to have to stay nearby. Having a hotel on campus will be a great addition.”
