Michigan Medicine and Sparrow inked an affiliation agreement in 2019, with the Ann Arbor health system integrating pediatric services at the Sparrow Children’s Center in Lansing. A full merger was rumored during the negotiations for the affiliation. Michigan Medicine also made a minority investment in Sparrow’s health plan, Physicians Health, in 2019.

It’s unclear what will happen to Sparrow’s existing partnership with Michigan State University’s College of Human Medicine and College of Osteopathic Medicine.

The sale comes as Sparrow Health System announced plans earlier this fall to lay off hundreds of workers after recording a $90 million loss during the first six months of the year, even as it struggles with worker shortages.

The Lansing-based hospital system said in September that rising costs have left it no choice but to part with staff mostly in leadership and non-patient care roles. Some eliminations will be in clinical roles where patient volumes have declined.

The system would not comment beyond its statement and would not define the exact number of job losses.

“Expenses have risen across all categories, including supplies and salaries, wages, and benefits, while patient volumes have declined, and the cost of contracting agency labor has skyrocketed,” the system wrote in the statement at the time. “In effect, the COVID pandemic may be over clinically, but it has caused a financial pandemic for the nation’s healthcare providers. As a result, we are implementing staff reductions that impact several hundred roles at the health system.”

Michigan Medicine employs about 25,000 employees. Sparrow employs more than 7,500. Michigan Medicine operates just one hospital in Ann Arbor and 40 ambulatory facilities, while Sparrow operates six hospitals in Lansing, Carson, Ionia, Charlotte, St. Johns and a specialty hospital inside its main Lansing hospital. It also operates 56 ambulatory facilities.

This story first appeared in Crain’s Detroit Business.