Hospitals Race To Capture SW Market

August 19, 2005
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BYRON TOWNSHIP — “Convenience” is rarely the first word that springs to mind when people consider a health-care system. Grand Rapids’ three major hospital systems are trying to change that with a race to be the top medical provider to the bottom of the county (geographically speaking). No one would argue that a more convenient health-care system is a good goal, but critics have suggested that relocation and expansion are not necessarily the answer to increased convenience — especially considering the price.

According to Lody Zwarensteyn, president of health planning organization Alliance for Health, the question is not the size of the investment, but the scope and quality of care offered by the hospital. Timing is also an issue.

“It’s a matter of who gets there ‘firstest with the mostest,’” said Zwarensteyn, quoting Civil War general Nathan Bedford Forrest.

This week, Saint Mary’s HealthCenter will become the latest to stake its claim in southern KentCounty. The hospital plans to break ground on its 24-acre ByronTownship site Aug. 25.

In discussing the new outpatient care campus, slated to open at the end of 2006, Saint Mary’s President and CEO Philip H. McCorkle Jr. stresses the importance of convenience. That is, after all, why Saint Mary’s will be dropping more than $35 million to build the new center.

“It’s a direct answer for what our patients want,” he said. “One third of our patients come from that 12-ZIP-code area. This is where our patients are, and they want our brand of medicine.”

According to 2000 census data, that area is home to 286,000 individuals. By 2009, Saint Mary’s estimates that number will grow to nearly 314,000.

To serve that patient base, Saint Mary’s has partnered with Advantage Health physicians to build the 86,000-square-foot, LEED-certified “green” facility at Byron Center Avenue and 64th Street, just south of the M-6 freeway. The campus will feature space for about 30 physicians, including eight to 10 specialists. There will be an ambulatory surgery center (ASC) with four operating rooms, urgent care facilities, diagnostic imaging, lab, pharmacy, rehabilitation services and community education space, according to promotional materials.

Unlike the new MetroHealthVillage hospital venture from Metropolitan Health, Saint Mary’s facility will offer no inpatient beds. According to Advantage Health President and CEO David Blair, that’s the way it should be. He said that 90 percent of his group’s patients don’t require inpatient treatment. Partnering with Saint Mary’s to reach into this geographical market, he said, would “significantly improve the health-care experience.”

For many Grand Rapidians who jet down to Grandville for a little RiverTown Crossings retail therapy, or up to Rockford to catch a movie, the idea of driving 10 or 15 miles for a doctor’s appointment doesn’t seem like much to ask. However, requiring many older residents (or non-driving patients of any age) to come downtown for a doctor’s appointment can be an unnecessary burden.

“People don’t want to drive an extra 15 minutes or come downtown,” said Micki Benz, Saint Mary’s vice president of development. She said that the hospital never considered increasing its marketing efforts to south-county residents without building a new, closer facility.

“The question from the beginning was, ‘Where are the growth areas and where do we take our services?’”

Metropolitan, meanwhile, asked: Where are the growth areas and what are our services? That hospital is moving its entire operation to southern Wyoming. Instead of recreating its current Ottawa Hills-area hospital in a new, more open location, Metro has chosen to build a $150 million “health village,” combining health care with retail, dining, offices and lodging facilities.

The foundation of the 170-acre village will be the 450,000-square-foot, eight-story, 190-bed acute care hospital. However, as detailed in the January 2005 issue of Modern Healthcare, the hospital will be the core of a larger “destination point.”

“There is no doubt that the hospital is like the anchor store,” said Metropolitan President and CEO Michael Faas. “And once it’s there, everybody else starts to get excited.”

He suggested that the hospital will create a new urban center, with health care as only one of its many offerings.

“This is what futurists nationally are talking about being the wave of the future — how community hospitals ought to be positioned,” he said. “That is not just the retail, but the series of medical office buildings and surgery centers and imaging centers and fitness centers and the focus on wellness and prevention that is going to evolve in the coming two or three decades. This is about the future of the way that health care is going to be related and delivered.”

Faas said that the move to a suburban location actually makes Metro more accessible to its existing patients, as 90 percent of them come from the Metro health plazas scattered around West Michigan. Few come from the area where the hospital is currently located.

“We’re leaving a ZIP-code area where we get a very small piece of the market share, probably less than 5 percent,” he said. “And we’re going to a ZIP-code area where we get 20 to 25 percent. So we’re actually relocating to where our patients are. So when you’re talking about risk, we’re actually reducing the risk in terms of location.”

Spectrum Health has not yet released its plans for south-county expansion. However, spokesman Bruce Rossman said that an announcement will be coming shortly. Rossman would not provide many details about the project, saying only that it would be an outpatient facility and that it would provide more capacity than Spectrum’s current clinics in the area. He said that the project would be nowhere near the scale of the Metropolitan village. Even if the price tag for Spectrum’s investment falls below that of Saint Mary’s, that doesn’t necessarily mean that it will have less impact on south county health-care consumers.

Zwarensteyn points out that Spectrum is no stranger to the area, having already invested in its South Pavilion facility on

68th Street
. It is also the largest health-care organization in the area. Returning to his Civil War allusion, he said that Spectrum is arguably already providing the “mostest” in services.

Saint Mary’s will be the first to open its new facility. Even before the December 2006 grand opening, one of the health system’s physicians will be operating out of a temporary office structure. That would make them “firstest” among the new projects.

Great for them, but irrelevant for Metro, said Faas.

“This whole strategy of ours is not about anything to do with Spectrum or Saint Mary’s,” he said. “It’s about taking care of our patients in a better facility and being able to take better care of the people who have already chosen Metro as their hospital of choice.”

Zwarensteyn wouldn’t speculate who would win the day in terms of south-county expansion. Instead, he offered an analysis of the whole idea of constructing new facilities to draw in new patients.

“The idea of ‘If you build it, they will come’ in health care is highly suspect,” said Zwarensteyn, this time quoting from the film “Field of Dreams.” He considered it unlikely that patients would choose to switch hospitals (or secondary providers such as laboratories) based solely on geography. Future changes in the health-care industry could shift the way referrals work, he said, but for now those choices will mainly rest in the hands of the referring physicians.

McCorkle agreed. He said that geography has little to do with patients’ choices in where to turn for health care. Many times, patients decide based upon their health insurance provider’s “network.” People are only apt to change health-care systems, McCorkle said, if the quality of care is drastically better elsewhere — and their insurance will accommodate.

“It has to get really bad before you switch,” he said.

Faas reiterated that Metro’s move has nothing to do with drawing in new patients, or stealing them from the competition.

“Most patients tend to go to the hospitals where their doctors are,” he said. “So we don’t anticipate a huge switch for patients that have already chosen a Saint Mary’s or a Spectrum doctor. And, we only need to keep 70 percent of the volume coming out of our own primary care network and we’ll fill Metro. We don’t need a patient from Spectrum or Saint Mary’s, frankly. So we’re actually making this convenient for the 150,000 people who have already made Metropolitan their hospital of choice.”

So then the argument for the three hospital’s south-reaching expansion and relocation plans returns to convenience — nearly $200 million worth and counting.    

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