Lakeland Health, a nonprofit health care provider based in St. Joseph, would become a division of Spectrum Health under a proposed merger of the two organizations announced Wednesday.

Leaders of the two health care providers signed a nonbinding, letter of intent to pursue the merger. They will now conduct due diligence with the goal of reaching a final deal by Oct. 1.

"This integration brings benefits to both organizations in terms of improving affordability, quality and access," Richard Breon, Spectrum's president and CEO, said in a statement. "We are confident that with our aligned cultures and a shared focus on caring for our communities, we can achieve significant impact on health improvement."

Lakeland is Berrien County's largest employer, according to the company, with more than 4,000 employees and a network of hospitals and medical facilities throughout Berrien and Cass counties.

If the merger is finalized, Lakeland would retain a local board of directors, local capital improvement considerations and local philanthropic efforts. The merger is not expected to result in any layoffs or job cuts, said Dr. Loren Hamel, Lakeland's president and CEO.

He characterized the move as a way to "optimize value" for the health care provider. He said the cost of drugs, medical supplies and information technology equipment is "escalating at unprecedented rates," and taking advantage of "economies of scale" - through Spectrum's assistance - could help control costs.

It won't necessarily mean lower costs, but it could help "make sure our costs are being well controlled so that we're not passing higher costs onto our patients," Hamel said.

Spectrum, based in Grand Rapids, has 12 hospitals, eight urgent care centers and 47 labs stretching from Ludington to Hastings. If the Lakeland merger goes through, the health system's reach would stretch to Michigan's southwestern border.

Breon said Spectrum, created in 1997 by the merger of Blodgett and Butterworth hospitals, has been discussing a merger with Lakeland for as long as 15 years. He said the move would benefit Spectrum by broadening its geographic reach and better positioning the health system for the future.

"Working together, I think we'll be able to resolve some things better than we might do apart," he said. "I think that's a good motivation for us, probably more so than anything else."

Spectrum has merged with numerous, smaller health systems over the years. It merged with United Memorial Medical Center in Greenville in 2003 and Gerber Memorial Hospital in Fremont in 2010, for example.

Spectrum has 26,000 employees and is West Michigan's largest employer, the health care providers said in a news release.

Hamel, in the event the merger occurs, said he will lead the Lakeland division of Spectrum, and will take a seat as a senior vice president on the Spectrum leadership group. He will report to Breon.

If the merger doesn't occur, Lakeland would still have a strong future as a health care provider, he said.

"This is not a survival strategy," Hamel said. "This is a way to optimize value."

Lakeland has already partnered with Spectrum for specialty services, such as cardiovascular care, and with Helen DeVos Children's Hospital, according to a news release.