Persistence Pays Off

February 28, 2007
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Metro Health CEO Mike Faas won't take no for an answer. The result? A unique, $165 million health care village — a product of his observations of hospitals across the country that are surrounded by doctors' offices and other medical services, retail stores, restaurants and even housing.

Michael Faas dons a white hard hat while touring the $165 million Metro Health Hospital under construction in Wyoming, a suburb southwest of Grand Rapids with a population of 70,122. President of the hospital, Faas chats easily with electricians, plumbers and carpenters, as open ceilings snaked with PVC pipes, copper tubes and power lines tower above their heads. Faas leaves the site with a little drywall dust clinging to the elbow of his houndstooth-check sport coat.

Half his lifetime ago, Faas was named to his first CEO job, leading an 81-bed hospital in his native Iowa. Now, at 54, he is contemplating multiple futures: his own and those of his recently graduated children, the hospital he has headed since 1994, and the former cornfield near M-6 and Byron Center Avenue now arising as the potentially $1 billion Metro Health Village.

"In the not-for-profit world, nobody owns the hospital; the community does," Faas said. "And the board and myself, the administrative team, even the medical executive committee, we all come and we all go. One of the really fascinating things about that, then, is the transition of what the organization was like when you got there and what it will be like when you leave."

When Faas arrived in Grand Rapids, he found a landlocked institution, which, he said, was facing "a slow death" at 1919 Boston St. SE.

Now, Metro Health plans to open a new suburban hospital in September as the anchor of Metro Health Village, kind of an outdoor, health care mall and town square situated on 170 acres on the border of Wyoming and Byron Township. As five of the anticipated 40 buildings — medical services, doctors' offices, stores, restaurants and housing — take shape out of the mud, so, too, do questions: If Faas builds it, will they come? Or will Metro Health Village become Faas' folly?

"It was a damn good idea," said Doyle Hayes, owner of Pyper Products Corp., a Battle Creek supplier for Cascade Engineering, and chairman of Metro Health's board of directors. "What happened? Everybody else started moving that way. It wasn't such a bad idea, was it?"

But while Metro Health Village was gestating, its parent nonprofit corporation writhed with birthing pangs. Among them:

  • A successful effort in the state Legislature during the 2000-2002 period to change a law to allow a long-distance move.

  • In 2002, federal charges of improper Medicare billing and regulation violations, costing Metro Health $6.25 million over four years to settle. That was followed by a whistleblower's lawsuit, which the court dismissed in December 2005. Faas denies that Metro Health's actions were improper.

  • A 10-month construction delay, from June 2004 to April 2005, to wait for financing, leaving the new hospital's steel skeleton exposed on a huge, vacant site.

  • A 2005 name change from Metropolitan Hospital to Metro Health.

Any one of those situations could give a hospital president sleepless nights. "One of the things I was really very proud of was holding the management team together during some very unpredictable times," Faas said.

But Grand Valley State University marketing department chair Professor Ben Rudolph, who once ridiculed the steel frame standing watch over a muddy field, said he thinks it's unlikely those woes will have an impact on the hospital's future. Few who might use the hospital's services pay attention to or remember such travails, he said.

Putting a hospital on what once was a cornfield seems like a natural step for a health care executive from Iowa. Faas said he thought he'd become a dentist like an affable neighbor he knew growing up in Cedar Rapids. But he discovered that he enjoyed business classes more than pre-dentistry work at the University of Iowa, so in 1975 he enrolled for a master's in health administration.

"I got in, and really, really fell in love with the whole concept of running not just hospitals, but being involved in health care issues," said Faas, who lives in Byron Center with his wife, Bev, a part-time employee at Jenison Public Schools.

After graduation and his wedding, Faas moved to Tacoma, Wash., to join St. Joseph's Hospital and Health Center as an administrator and then as vice president. In 1980, he moved back to Iowa to become CEO at Grinnell General Hospital, a small hospital in a small college town.

"At 27, I was offered my first CEO job," Faas said. "(I was) one of the youngest, for sure, and I'll tell you what: It was an eye-opener. I learned as much from the position as I probably brought to it, I'll put it that way. It was a great learning experience and I met some great people there. The good news is that I was very close to my alma mater and I knew friends and peers and allies I could call and say, 'Hey, wait a second, I've got to ask you a question.'"

From there, Faas became president of VHA Iowa/Health Enterprises, a voluntary association of community hospitals aimed at collaborating for purchasing power and services that none could afford to provide alone. The Iowa branch of the national organization, headquartered near Dallas, had become moribund. Faas worked there three years to reorganize the state group and bolster its budget.

Then Faas joined St. Luke's Methodist Hospital, a 560-bed facility in his hometown of Cedar Rapids. There, as senior vice president for operations, he oversaw $25 million in construction projects, introduced a new long-range planning process, and boosted the margin from 1 percent to 3 percent.

Faas said he had "never heard of Grand Rapids" when he was asked to consider the top job at what was then Metropolitan Hospital. Hayes pointed out that today, Faas has been in office longer than the leaders of the two other local hospitals.

Back in 1994, Faas had two job offers to weigh: one from the 238-bed Metropolitan Hospital and another from Poudre Valley Hospital in Fort Collins, Colo., which today has 295 beds and is opening a second, 136-bed hospital in February.

"It was really the medical staff and their attitude toward wanting somebody to come in and lead them to the future that drew me to this direction versus Colorado," said Faas, noting that the drive from Grand Rapids to visit family in Iowa is half as long as the drive from Fort Collins.

From the get-go, it was obvious that Grand Rapids' lone osteopathic hospital, founded in 1942, needed capital improvements, Faas said. "I honestly thought we would expand the hospital on the site. Our full intention was to stay where we were."

In the 1990s, the hospital, city government and neighboring homeowners wrangled over expansion at the Boston site, which opened 50 years ago. Four of 55 homeowners declined to sell to the hospital, blocking the plan. Today, Faas said, he thinks that was for the best.

"The neighbors knew our growth, in their opinion, would destroy their neighborhood, and at the end, we tended to agree," he said. When Metro Health moves to its new, 208-bed, 448,000-square-foot hospital in September, the Boston site will be used for elderly housing. Faas said he's grateful the neighborhood won't be saddled with a boarded-up building.

At the same time, Faas began crafting a business approach. He introduced Metro Health Plazas, which gathered physicians and services into suburban offices that circle Grand Rapids. The plazas also funnel patients to the hospital.

"To build all this and then not have any capacity to take care of the patients would have been crazy," said Faas, who has seen the budget grow from $75 million to about $240 million. With Spectrum Health sitting on a 75 percent share of the local health care market, Metro Health and Saint Mary's Health Care split the rest.

So Metropolitan began looking for places to build within the state-imposed radius of two miles from the current site. There weren't many locations large enough and suitable to hospital traffic.

"That's when the idea struck me: Who says you can't move a hospital more than two miles?" Faas said. "Let's go get that changed. And that was a two-year battle."

No one disagreed that Metro Health needed a venue change for survival, said Lody Zwarensteyn, president of Alliance for Health, a local health planning agency that reviewed the hospital's certificate of need. But the local health community's toes were sore after Metro Health chafed at policies it wanted to include as part of any law change, he said. "They (Metro Health) went to the governor's office to get political support rather than work it out in the community."

Faas said while the idea for Metro Health's move came out of a board of directors' retreat, the village concept is a product of his observations of hospitals across the country while he worked for VHA, and of the small-town courthouse square.

"I had seen places that had some retail around them and said look at how this just feeds on itself. The hospital would be like it was almost like the old county courthouses. … The other thing I started to watch was this whole concept — especially down in the Florida market — of hospitals building nursing homes, visiting nurse associations, medical office plazas and buildings, and ringing themselves with all this medical stuff.

"So, although I had never seen this whole thing done in one location, I'd seen pieces of it everywhere and just borrowed it from 10 or 12 places. And that's the village concept."

Drawn by the M-6 exit at Byron Center Avenue, Metro Health used cash reserves, acquired partly through selling eight of its plazas and a health maintenance organization, to buy the land. Metro Health invested nearly $30 million to acquire property for the health village and sold bonds on a BBB rating to raise $165 million for hospital construction

Realizing it needed development expertise, Metro Health teamed with The Granger Group, a Grand Rapids developer, to market the project and work with contractors.

Several hospitals across the nation are experimenting with retail, according to a 2005 article in Modern Healthcare. Those include Sutter Health in Sacramento, Calif., El Camino Hospital in Mountain View, Calif., and Park Nicollet Health Services in St. Louis Park, Minn. They report that retail adds as much as 3 percent to 5 percent to their bottom lines.

Faas said he expects Metro Health will see a 1 percent to 2 percent boost from building and land ownership, but he made it clear that the hospital would rather attract retailers than become a retailer itself. Ownership of the buildings will be a mix between Metro Health, Granger and outside proprietors.

Faas said that once the hospital move is accomplished, he'll decide whether to stay and enjoy the fruits of his labor or whether to move on to another challenge. His daughter, Kendra, 27, lives in Denver, his son, Gavin, 23, lives in Austin, Texas, and he and his wife have three older parents between them in Iowa. And Faas, who earned $521,792 in base pay in the 2004-05 fiscal year, according to an IRS document, said he has retirement in his crosshairs.

"A lot of people would say I'm an extreme optimist," Faas said. "I think it's more I don't give up easily and I never take no as really no — or if I do, it's because I think there's another opportunity or option. I think it's just being persistent."       HQX

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