DETROIT — The Detroit Medical Center said Friday it has signed a letter of intent that opens the door for it to be purchased by a private Nashville, Tenn.-based health system.
The nonprofit Detroit health system announced the deal with Vanguard Health Systems in a statement. Terms of the deal include Vanguard agreeing to make $850 million in capital improvements during the next five years.
A Friday morning news conference was scheduled at the Children’s Hospital of Michigan.
Under terms of the letter, Vanguard will buy Detroit Medical Center’s assets for a price that includes $417 million to retire all outstanding DMC bonds and other long-term debts. Vanguard also assumes all other DMC liabilities.
The final purchase price has not been disclosed.
Capital projects Vanguard has agreed to include a new Children’s Hospital tower and expansion and improvements to several other facilities.
The hospitals also said in a release that Vanguard has committed to keep all hospitals open and maintain DMC’s charity care policy for 10 years.
The hospitals will be owned by a Vanguard subsidiary known as VHS Michigan and will continue to operate under the Detroit Medical Center name.
Mike Duggan, the DMC’s president and chief executive, and Stephen R. D’Arcy, DMC board chairman, will be joined at the news conference by Mayor Dave Bing, Wayne County Executive Robert Ficano and board member Roger Penske.
The DMC operates eight hospitals and is affiliated with the Wayne State University School of Medicine and the Barbara Ann Karmanos Cancer Institute. Vanguard operates 15 hospitals in Illinois, Arizona, Texas and Massachusetts.
The letter of intent is contingent upon the approval of a low-tax or tax-free “renaissance zone” approved by the city, county and state for DMC’s central campus. The agreement also must be approved by the two health systems’ boards and the state attorney general.
Detroit City Council President Pro Tem Gary Brown, who said he first learned of the proposed deal Thursday, is concerned about the tax implications for his cash-strapped city.
“The devil is in the details,” he said. “We’re not in a position to give tax breaks unless they have a huge economic impact on Detroit.”
