On Tuesday, Dec. 3, the University of Michigan Health System and Allegiance Health announced a proposed affiliation that would -- if finalized -- make Allegiance part of U-M.
This page provides information about the proposal for patients, staff, physicians and the community.
Scroll down for answers to key questions.
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Questions & Answers
About the Proposed Affiliation between Allegiance Health and the University of Michigan Health System
Q: What are Allegiance Health and U-M proposing?
A: The proposed affiliation between the two institutions would result in Allegiance Health becoming part of the University of Michigan and the U-M Health System network. Representatives from the Jackson community would continue to serve on Allegiance Health’s board. The details of the relationship will be worked out over the coming months.
Q: Is U-M buying Allegiance Health?
A: No. The proposed transaction is not based on an up-front transfer of funds like a typical sale. Rather, Allegiance Health would agree to become part of U-M, in exchange for U-M making commitments to invest in existing and expanded Allegiance Health clinical programs and strategic capital projects at Allegiance Health.
By working together with UMHS, Allegiance Health can become more efficient, generating additional funds from Allegiance Health’s operations that will stay in the Jackson community. These funds, and others that will be made available to Allegiance Health through this affiliation, will enable UMHS to commit to $100 million in new strategic initiatives investment at Allegiance Health over the next seven years, in addition to satisfaction of routine maintenance and replacement capital requirements.
Upon signing an affiliation agreement, the Allegiance Health Foundation would also receive $25 million to support Allegiance Health’s needs.
Q: What happens now?
A: Nothing changes at the moment – this is a proposed affiliation, based on a letter of intent signed by leaders of both health systems on December 2.
Over the coming months, teams from both health systems will work together to agree on details and meet any regulatory requirements. If and when a final affiliation agreement is signed, it would allow Allegiance Health to become part of U-M, and set the framework for shared governance, and continued investment at Allegiance Health.
Q. Why are Allegiance Health and UMHS proposing this affiliation?
A: In today’s challenging health care environment, our systems seek to combine expertise and services to strengthen our ability to provide even higher quality and more cost-effective health care for the greater Jackson community. If our proposed affiliation proceeds, we believe it will create better health and well-being for the patients and community we serve.
Q: Why is this happening now? Is it because of the Affordable Care Act and Obamacare?
A: The U.S. health care environment is rapidly evolving, and Allegiance Health and UMHS must both adapt in order to continue our missions of providing affordable, cost-effective, high quality, locally-delivered health care, including those who are underserved.
Partnering would enhance both health systems’ ability to serve patients, and adapt to value-based payment from all insurers, while providing financial stability and the ability to invest in new clinical initiatives and facilities.
The Affordable Care Act does demand better value for the dollars the federal government spends on the care that Medicare participants receive. It also incentivizes hospitals and doctors to coordinate care better, and to make better use of information technology. But private insurers are demanding much the same cost containment and constant quality improvement.
This is a nationwide trend that has emerged as our society works to spend all health care dollars wisely. It’s definitely not due to just one law.
That said, a large number of uninsured Michiganders will soon have new private insurance or expanded Medicaid coverage made possible by the Affordable Care Act. Both Allegiance Health and UMHS need to be ready to accommodate them – though we have both served many uninsured and under-insured individuals through our respective programs.
Q: What does this mean for patients of Allegiance Health?
A: Nothing changes for now – this is a proposal. You can continue to expect the same care and range of services Allegiance Health is known for.
U-M’s existing collaborations with Allegiance Health – in radiation therapy for cancer, heart surgery, pediatric cardiology and beyond – will continue.
If and when this affiliation takes place, the specific clinical programs and initiatives that Allegiance Health and UMHS will develop are expected to significantly benefit patients. Allegiance Health and UMHS care providers will work even more closely to provide the seamless care patients need and deserve – at the most appropriate time and location.
Q: What does this mean for people who work, and physicians who practice, at Allegiance Health?
A: Because this is still a proposal, nothing changes immediately. Allegiance Health employees and physicians would be critical to the success of this proposed affiliation. Allegiance Health’s executive team and CEO will remain in place; its mission, vision and values will remain the same; and the patients of Allegiance Health and the Jackson community will continue to be Allegiance Health’s most important focus.
No immediate changes to employee roles or positions would be anticipated if Allegiance Health affiliates with UMHS, and there are no plans to change employee compensation or benefits as a result of this proposed affiliation. Allegiance Health staff would continue to be employees of Allegiance Health.
Allegiance Health-affiliated physicians would continue to either be employed by Allegiance Health or maintain their independent practice, and they would maintain their freedom to refer patients to the facility of their choice.
Q: What does this mean for people who work at UMHS?
A: Because this is still a proposal, nothing changes immediately. However, the teams working to define the potential new relationship will be tapping the expertise of physicians, and clinical and administrative staff at UMHS in coming months.
Q: Will Allegiance Health start using the U-M “block M” as its logo?
A: There are no immediate changes planned.
Q: In the past two years, UMHS has formed affiliations with MidMichigan Health, with Trinity Health’s Michigan hospitals including Saint Joseph Mercy Ann Arbor and Chelsea Community Hospital, and with Sparrow Health System and others. Why so many new external ties?
A: UMHS has a long history of collaborating with other institutions and care providers to bring its expertise to the entire state of Michigan and learn from others. It’s part of U-M’s goal of service to the state.
But it’s true that the pace of forming new affiliations has increased in recent years – due to rapid changes in health care as a whole. Different affiliations have taken different forms, but the Allegiance Health proposal is the first that would bring a health system fully into the University.
In all of our linkages with others, UMHS seeks to work with local providers to keep local care local, and ensure that patients receive the right care for them at the right place and right time.
Q: In 2013, UMHS launched POM ACO, an Accountable Care Organization for doctors around Michigan. Will Allegiance Health-affiliated doctors join it?
A: If the UMHS-Allegiance Health affiliation goes forward as proposed, UMHS will certainly evaluate how best to involve Allegiance Health and its physician community in population health efforts, including POM ACO. Allegiance Health also takes part in an existing population health effort, the Jackson Health Network, which has a medical director who is a professor and physician at the U-M Medical School.
It’s important to note that the federal agency that runs the Medicare system has a formal process for approving applications for ACO membership by groups of physicians.
Q: Are there any plans to close or consolidate any Allegiance Health facilities as a result of the affiliation?
A: No. If the affiliation goes through as proposed, a board that includes members from both Allegiance Health and U-M would advise regarding strategic decisions on clinical services and facilities. It’s important to note that the proposed affiliation also includes provisions for expansion of programs and facilities.
Q: Will there be layoffs at Allegiance Health? Will any Allegiance Health staff have the option to transition to work at UMHS?
A: The purpose of this affiliation is to strengthen Allegiance Health, and UMHS – and to expand clinical services to help patients receive the care they need.
No immediate changes to employee roles or positions are anticipated if Allegiance Health affiliates with UMHS, and there are no plans to change employee compensation or benefits as a result of this proposed affiliation. Allegiance Health staff would continue to be employees of Allegiance Health.
Q: Will Allegiance Health be subject to all of the rules and regulations that apply to U-M as a public university?
A: If the proposed affiliation goes forward as planned, Allegiance Health would become part of U-M. The specifics of that structure are still to be worked out, but U-M and Allegiance Health would adhere to any applicable laws and statutes.
Q: Is UMHS financially strong enough to make this kind of commitment?
A: Yes. In fact, UMHS anticipates that by working together with Allegiance Health, it could strengthen the financial health and efficiency of both systems, while providing better care. It’s important to note that the proposed affiliation would involve investment in clinical programs and facilities, but that much of the funding for these efforts could come from reinvestment of funds generated by Allegiance Health operations.
Last updated 12/3/13