U-M Health preps major metro Detroit expansion with Kmart site buy

• The University of Michigan’s health system is moving into Oakland County
• University leaders approved the $4.2 million purchase Thursday of a portion of the former Kmart headquarters property
• The new metro Detroit facility, which will include ambulatory surgery services, is expected to open in 2027

ANN ARBOR — The state’s second-largest health system is expanding into Oakland County as the University of Michigan buys property in Troy that once housed the corporate headquarters of failed retailer Kmart. 

The expansion by U-M’s Michigan Medicine signals steeper health care competition coming to metro Detroit, the state’s largest population center, as medical center acquisitions, mergers and affiliations continue across Michigan.

The $4.2 million land buy announced Thursday gives the health system a highly visible location in Troy at Big Beaver Road and Coolidge, a busy intersection also home to the Somerset Collection mall. 

“This is a starting point for a broader and deeper U-M Health presence in southeast Michigan,” Dr. Marschall S. Runge, CEO of Michigan Medicine and executive vice president of medical affairs for the University of Michigan, said in a statement.

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The real estate deal is also the latest in a series of U-M moves to increase its health service network across Michigan, including a growing presence in Grand Rapids, Lansing and Midland. 

U-M Health is the clinical division of Michigan Medicine, the university’s academic medical center. The U-M medical system operates 11 hospitals and hundreds of clinics, and it employs 47,000 people.

The system has an operating budget of $7.8 billion, Michigan Medicine spokesperson Mary Masson said. Projected expenses are $7.7 billion. 

“We have a long-term vision for a statewide system of care,” Keith Dickey, chief strategy officer for Michigan Medicine, told reporters Thursday in a media briefing. 

The new center will focus on adult specialties with particular attention to multi-specialty cancer care, said Scott Flanders, chief clinical strategic officer for Michigan Medicine.

About 180,000 patients from Wayne, Oakland and Macomb counties travel to Michigan Medicine in Ann Arbor for treatment each year.

With the new center, Flanders said, the goal is “meeting patients in their community and helping keep care close to home so patients don't have to travel when there isn't a need to do so.”

The new facility, expected to open in 2027, also will allow the center to attract new patients, Dickey said.

Health care landscape

The U-M move is another shift in the rapidly-changing Michigan health landscape  — changes that can send shock waves through the health care community, leave patients unsettled about their care and raise questions about long-term costs.

On Tuesday, Midland-based MyMichigan Health — loosely affiliated with Michigan Medicine, but operating independently — announced it would purchase a 268-bed acute care hospital in Saginaw, a smaller hospital in Tawas and a nursing home in Standish now owned by the national chain Ascension.

U-M Health also is scheduled to open the Ypsilanti Health Center in downtown Ypsilanti this year and a 12-story D. Dan and Betty Kahn Health Care Pavilion in Ann Arbor next year.

Last year, U-M Health absorbed Lansing-based Sparrow Hospital, the teaching site for Michigan State University doctors and nurses, into its system. Those plans were announced in 2022, after behemoths Spectrum and Beaumont merged to become Corewell, the state’s largest system.

Detroit-based Henry Ford Health and Ascension Michigan - part of the St. Louis-based Catholic system - have announced a “joint venture” in which eight Ascension properties in southeast and mid-Michigan will assume the Henry Ford Health name. 

And just last month, Detroit City Council approved nearly $300 million in tax incentives that transform the city's New Center. The $2.5 billion expansion by Henry Ford, in partnership with the Detroit Pistons and Michigan State University, will include a new hospital.

But as new or expanded hospitals reshape the landscape, others struggle to keep doors open or provide acute care and specialized services.

The mid-Michigan Spectrum Health Kelsey Hospital in Lakeview closed late last year — one of 36 rural hospitals that have shuttered since 2020, according to the trade publication Becker's Hospital Review. 

At about the same time, Munson Healthcare in northern Michigan announced it would shift acute care away from its smaller hospitals, bolstering primary care there instead.

Meanwhile, Michigan Medicine’s Oakland County presence so far is represented by a pediatric partnership with Trinity Health in Oakland County, along with a health center in Northville near the border with Wayne County.

The deal in Troy 

U-M’s new facility will be built on about seven acres of the remaining 28 acres of the former Kmart headquarters property at 3100 W. Big Beaver Road.

Kmart — once one of the nation’s leading discount retailers — closed the HQ building in 2006 when the company merged with Sears after its bankruptcy. The combined company then filed for bankruptcy in 2022 after shutting most stores.

At nearly 1 million square feet, the building once housed up to 3,000 corporate workers. It was demolished in late 2023.

The new health center will be built at the back of the property, officials said, leaving room for additional development. The property is owned by the Forbes Co. and Stuart Frankel Development Co. 

Forbes also owns Somerset Mall, located across Coolidge from the new U-M site. 

U-M officials on Thursday said the new health center will be similar to U-M Health’s Brighton Center, which is about 300,000 square feet. It offers ambulatory surgery in addition to radiation and other specialty services.

The U-M Board of Regents approved the deal on Thursday morning, with the investment coming from the general fund budget. The overall investment planned for the medical center development has not been determined.

“We don't have a firm budget yet because we need to go through that next level of detail planning,” U-M’s Dickey said.