Metro Suit Shows CON Importance

December 22, 2003
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Court documents of Metropolitan Hospital’s settlement agreement with the U.S. Department of Justice provide this business community with insight and understanding of the complex issues regarding health care operations in a competitive environment. The agreement also underscores that health care entities do not operate — nor could they operate — in a “free market” environment as defined in the business world. It further serves as a flag of caution for business community leaders who avail themselves in the public, nonprofit sector as health care organization board members, and for whom the first question should be whether they serve the community or the health care operation.

The outline of violations in the previously sealed findings by U.S. District Court, and the amounts paid by Metropolitan Hospital for varied services and contracts, would likely shock and dismay business owners already hard pressed to find profit enough to pay the double digit increases in health care benefits. The latter also may affect hiring even as the economy begins its rebound.

Metropolitan Hospital has for more than three years presented itself to the public as a victim of one or more issues: competitors, state regulation, state and federal reimbursements. Though none find argument with the latter, Metropolitan’s leadership went so far as to create limited state rules changes through the legislative process and defensively postured that State Certificate of Need rules should be eliminated. The documentation in No. 1:02-CV-485 (Judge Richard Enslen) provides ample proof of the necessity for such rules and should wholly galvanize the Michigan Department of Public Health, under whose watch they are enforced.

The Grand Rapids Business Journal fairly and with complete accuracy covered those attempts (though editorialized against them on this page). The Alliance for Health and the Economic Alliance for Michigan worked with Metro to fashion a new standard in regard to a rule preventing hospitals from relocating more than two miles from current facilities (a rule that protects the provision of urban health care even as health care entities would rather be in suburban settings). Both groups wanted to assure such a change could be applied to any hospital in the state that might want to relocate. Metro instead appealed to politicians and then-Gov. John Engler to force new standards that would apply only to Metro. The revised standard was at least given a limited life span to prevent new, unnecessary — and expensive — construction across the state. Even under a new rule, Metropolitan could not justify the move based on the number of beds in use at its facility.

The lawsuit brought by Metropolitan Hospital’s former senior vice president of network development describes the plaintiff’s documentation of how Metro structured business arrangements with physicians that provided financial incentives to steer patients to the hospital and used large sign-on bonuses and other methods to secure patient referrals. And fill those beds.

We suggest the underlying motivation for Metropolitan Hospital to settle these claims with the Justice Department is spurred by the pending public sale of millions in bonds to finance the new health care village development in south Kent County. It would seem the State of Michigan might pursue a course similar to that of the Justice Department in regard to Medicaid claims.

Metro has agreed to a $6.25 million mistake. It is and should be appalling to this business community, to the state legislators made to look fools, and to board members who sought to serve community with expanded health care services.    

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