Merger Concerns Lingering

October 8, 2007
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What began in May of 1994 when the Alliance for Health Hillman Commission suggested that area hospitals and physicians consolidate, ended on Sept. 26, 1997, when the Federal Trade Commission dropped its nearly two-year challenge of Butterworth Hospital and Blodgett Memorial Medical Center’s evolution as Spectrum Health.

That announcement came three days after the hospitals signed incorporation papers that created Spectrum Health. Ten years later West Michigan is left to ponder the results of that process, and while general consensus indicates a successful outcome to the events that turned the Grand Rapids’ medical community on its head, there remain pockets of genuine concern to this day.

The Alliance for Health is credited for its mid-1990s effort that produced community oversight that stopped Blodgett officials from construction of a $100 million outpatient building on the East Beltline and put the spotlight on Butterworth’s escalating pricing policy, which was generally viewed as excessive for market conditions.

The 23-member Hillman Commission, a community panel led by Judge Douglas Hillman, a respected jurist who made it essential that all parties check their egos at the door, actually sparked the merger idea by advising hospitals and physicians to integrate and told Blodgett its building plans were unnecessary because the area had enough inpatient beds at the time.

The merger proposal was intriguing and attractive for the possibilities it held: bulk purchasing on the part of the largest health care providers in the community, shared resources and strategies regarding labor contracts and procedures, heightened ability to take advantage of specific physicians’ expertise and, most of all, a reduction and avoidance of an escalating and costly duplication of health care services.

The business community, faced with daunting increases in health care costs and insurance premiums, had the most to gain by a successful merger meeting its stated objectives. Local business operations also have the most to lose when two of the most controversial features of federal Judge David McKeague’s decision that paved the way for the merger are scrutinized. His decision assumed that nonprofit hospitals behave differently in the marketplace than for-profit organizations, which they don’t, making cost controls more of a moving target. And, secondly, he allowed Priority Health, which began as Butterworth’s health maintenance organization, to remain as part of the merged organization.

The onus continues to fall on the business community to monitor, and when essential, be vocal in its prodding of the local health care leaders to shun burdensome duplication of efforts — including a ramping up of several cancer center offerings currently on line and on the drawing board. The community “panel” of 1997 has become the Spectrum Health board and its allegiances are to the merged entity.

The business community needs to be actively involved in the issues that continue to push health care prices and insurance premiums to double-digit increases. The Alliance For Health Business Group, open to all businesses as members, can and should candidly monitor these continuing developments.

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