Starkman: The Discredited PR Spin of Beaumont Health CEO John Fox

The writer, a Los Angeles freelancer, is a former Detroit News business reporter who blogs at Starkman Approved.

By Eric Starkman

Beaumont CEO John Fox

While it hardly comes as a surprise, Beaumont Health’s merger talks with Advocate Aurora weren’t terminated by “mutual” agreement, as Beaumont CEO John Fox publicly maintained. Advocate Aurora says the talks were broken off because of Beaumont’s “internal issues” and the Chicago-based company was “disappointed” by the decision.

In a call Friday with reporters picked by Beaumont, Fox said the talks ended because the pandemic made it impossible to conduct face-to-face due diligence meetings. Deadline Detroit wasn’t invited on the call because spokesman Mark Geary has advised us that Beaumont will only deal with “the numerous mainstream media outlets that publish and broadcast objective, fact-based and unbiased coverage.”

The Milwaukee Business Journal, which covers Advocate Aurora because the company has extensive operations in that city and throughout Wisconsin, also wasn’t on the call. But after the trade publication Modern Healthcare reported on Fox’s pandemic excuse for the cancellation of merger talks, senior reporter Rich Kirchen followed an old-fashioned journalism protocol and asked Advocate Aurora for comment.

Kirchen didn’t get the answer he likely expected.

“While our discussions initially progressed well, over the last couple of months Beaumont has had internal issues that have surfaced and thus they are focusing on their local operations,” Advocate Aurora spokesman Adam Mesirow said in a statement. “We are disappointed, but understand their need to turn their attention inward.”

Geary didn’t respond when asked to comment on Mesirow’s statement.

'Obstacles' weren't hidden

As reported by Crain’s Detroit Business, Fox told reporters on a call that “the pandemic gravely injured our normal interpersonal interactions. "(Normally) we'd have a process that are really essential for community based organizations to build relationships, and get to know each other."

"We've tried to Zoom a couple of times and other mechanisms, but it's not really been adequate," Crain’s reported Fox as saying.

Fox announced his plans to merge Beaumont into Advocate Aurora in mid-June when the pandemic was already in full swing and most states, including Michigan, were requiring social distancing and nonessential workers were working from home. He knew about the supposed obstacles when he announced the deal.

Beaumont weeks ago required that administrative employees return to the office, even those with underlying conditions or those with children whose schools were closed. Several administrative employees reached out to me claiming there wasn’t sufficient distancing between staff, and that they felt unsafe. If taken at his word, Fox felt administration staff could work in the office, but top managers involved in merger talks weren’t prepared to put themselves at risk.

Moreover, if hospital company executives cannot safely meet in person, it stands to reason that no companies should be requiring employees to return to the office.

Mutually Agreed? 

The joint Beaumont/Advocate Aurora statement issued Friday announcing the termination of merger talks said both companies “mutually agreed to end partnership discussions.” Asked on Tuesday to explain why Advocate Aurora agreed to say the decision was mutual when in fact it was Beamont’s, Mesirow responded with the same statement he gave the Milwaukee Business Journal.

Headline in the Milwaukee Business Journal

Calling the merger a “partnership,” was also misleading. Under the terms of the deal, Beaumont would have surrendered its independence for a minority interest in the merged Advocate Aurora/Beaumont entity. One doesn’t need Fox’s accounting degree to understand why Advocate Aurora was disappointed talks were called off. The company was gaining control of Beaumont and its $2 billion cash reserve without forking out a penny.

Issuing misleading or deceptive statements isn’t a one-off occurrence with Beaumont. In response to an inquiry in May from Channel 7’s Heather Catalo about a Covid patient at Beaumont Trenton who was listed as “unstable” but was nevertheless transferred to a VA hospital and died en route, spokesman Geary said the hospital “worked with the state of Michigan to transfer patients,” implying the decision wasn’t solely Beaumont’s.

Catalo checked with the governor’s office, which issued this statement: “the state does not authorize patient transfers. Facility-to-facility transfers occur at the agreement of the chief medical officers of both entities.”

According to Catalo, a Beaumont nurse contacted the Wayne County Medical Examiner, categorizing the death under “suspicious or unusual circumstances.”

Questionable Patient Transfers

The patient who died was one of about 50 who were mysteriously transferred from various Beaumont hospitals at the height of the pandemic. Fox denied the transfers were done to save money, but Catalo obtained a memo from a Beaumont Trenton manager saying, “John Fox went to Gretchen Whitmer and said Beaumont health cannot sustain all the COVID patients because financially it will ruin our business… We are bleeding money out of our system.”

Attorney General Dana Nessel

I contacted Attorney General Dana Nessel’s office months ago asking if the state was investigating the incident, but I didn’t receive a response.

Nessel’s office did confirm on Tuesday that it is still reviewing Beaumont’s sale of its nonprofit ambulance subsidiary, Community EMS, to Chicago-based Superior Air-Ground Ambulance Service.

Superior is a for-profit company that already operates in southeastern Michigan and charges considerably more to transport patients. If Nessel approves the sale, Community EMS will disappear, thereby eliminating competition and possibly allowing Superior to jack up its rates further. Community EMS has about 400 employees.

Community EMS once had lucrative stakes in various out-of-state ambulance companies, but Fox sold those interests and kept the sale proceeds for Beaumont instead of reinvesting the proceeds into the ambulance company. The sales weakened Community EMS’s financial condition, possibly allowing Beaumont to argue the company can’t continue to operate as an independent nonprofit.

Asked if Nessel knew or cared about Beaumont keeping the proceeds from selling off Community EMS’ financial stakes in other companies, a spokeswoman said: “As with most transactions of this nature, we cannot comment” beyond saying the Community EMS sale to Superior was under review.

Beaumont spokesman Mark Geary has refused to provide Deadline Detroit with a copy of the company’s latest Community Benefit Report, which outlines activities justifying Beaumont’s not-for-profit status. Nessel’s spokeswoman didn’t address my question as to whether the attorney general was concerned by Geary’s refusal.

For all intents and purposes, Beaumont Health appears to have little regulatory oversight or accountability and Fox can pretty much do and say what he pleases.

Reach Eric Starkman at eric@starkmanapproved.com. Beaumont employees and vendors are encouraged to reach out, with confidentiality assured. 

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