- change ups
Mudler Manages Hackleys Growth
MUSKEGON — Above all else, Gordon Mudler loves to see businesses compete.
Yet in an era where growing financial pressures and a rapidly changing health-care industry in the late 1990s was making it increasingly difficult to compete, Mudler knew Hackley Health could no longer go it alone.
So with the backing of the directors at the Muskegon-based health system, the search began for a partner — one that in Mudler’s view would provide Hackley Health with a greater ability to compete and thrive in the future. That search ultimately led Hackley Health to become part of Grand Rapids-based Spectrum Health.
“Our concern was that perhaps the ability of the stand-alone facility to continue to provide quality health care may be going by,” Mudler said of the affiliation that resulted in Hackley Health’s decision four years ago to seek a partner.
That search came in a era when many hospitals and health systems were beginning to form affiliations or consolidate with another organization to generate efficiencies that would assure their future.
“The day of the mom and pop cottage industry hospital, I believe, has passed us. You just cannot have sufficient expertise, the economic power and the resources to do that,” said Mudler, a veteran health-care administrator who has served as Hackley’s president and CEO for about 20 years.
Among the organizations Hackley first approached were the Mayo Clinic in Rochester, Minn., Trinity Health, one of the nation’s largest health systems and the parent corporation of Mercy General Health Partners in Muskegon, the University of Michigan Hospitals in Ann Arbor, and Northwestern University Hospitals.
When none of those conversations panned out, Mudler went back to a potential partner that he had talked with years earlier. Prior to the 1997 merger of Butterworth Hospital and Blodgett Memorial Medical Center that resulted in Spectrum Health, Mudler and the board leadership of Hackley had conversations with their counterparts at Blodgett.
Those talks ended when Blodgett and Butterworth got together. Six months after that merger was consummated, Mudler went to then-CEO of Spectrum Health Terrence O’Rourke to renew their dialog. They decided to form management teams to look at the potential of a Spectrum-Hackley affiliation — “and the rest is history.”
Hackley and Spectrum in January proceeded with a two-year-old affiliation agreement when federal trade regulators raised no objections to the deal, which stopped just short of an all-out asset merger.
In looking back at the move, Mudler calls Spectrum a natural partner for Hackley. Spectrum’s growth, centers of expertise such as DeVos Children’s Hospital and the planned heart hospital, its teaching programs for medical professionals and involvement in institutions such as the Van Andel Education Institute, were all attractive to Hackley.
“What we saw forming is something that had all the elements to become a major regional medical center,” Mudler said. “With all that potential being 45 minutes or less from Hackley … it felt to us that we wanted to be part of them.”
A driving force behind the affiliation is the potential cost savings Hackley and Spectrum can generate through their joint bargaining power when purchasing medical supplies and equipment and negotiating participating agreements with insurers and HMOs.
Joint purchasing alone will generate $500,000 in savings this year for Hackley, which spends about $15 million a year on medical supplies and equipment. “And we’re only just getting started,” Mudler said.
Medically, Hackley and Spectrum are working to make patient referrals to Spectrum facilities such as DeVos Children’s Hospital “as seamless as possible,” as well as bringing additional services to Muskegon. Hackley has also adopted Spectrum’s clinical protocols for treating patients.
While it’s natural and makes sense for Hackley to refer certain patients to Spectrum facilities that are better suited to handle them — as it has always done — Mudler quickly dismisses suggestions that the affiliation will allow Spectrum to steer patients away from Hackley, or curtail medical services and procedures in Muskegon in deference to Grand Rapids.
The affiliation, he said, is based on mutual benefits for both locations.
“Spectrum’s philosophy of doing business with us and others is not to divert medical procedures out of the communities they’re working with. They just wouldn’t do it,” Mudler said.
Doing so, he said, would cause consumers to rebel and would violate the trust that Hackley has developed within the community in the nearly 100 years since it was founded. Health care is a local service that must be delivered locally, Mudler said, recalling the famous quote from the late U.S. House Speaker Thomas “Tip” O’Neal that “all politics are local.”
“Health care, in a lot of ways, is a business that has to remain local. It’s a one-on-one business,” Mudler said. “The moment you lose that local one-on-one touch is the moment health care is not delivered the way it should be delivered.”