And Then There Was One

April 8, 2009
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Roger Spoelman was born in Muskegon’s Hackley Hospital.

Now he leads not only Hackley, but Muskegon General and Mercy hospitals as president and CEO of Mercy Health Partners, created one year ago by the merger of the two surviving hospitals.

“When you’re competing, you’re just kind of beating each other up, trying to eke out a very small margin, and it prevents you from doing some of the things you need to do for the community,” Spoelman said, leaning forward on the desk in his first-floor office.

The consolidation of Muskegon’s three hospitals, each with its own long and proud tradition, occurred over the course of 10 years.

The lakeshore’s little-engine-that-could, Muskegon County — like the rest of Michigan — has seen a flight of blue-collar jobs in the new century. The county lost 400 manufacturing jobs in 2008, partially offset by growth in government, health care and education. Unemployment stands at 10 percent, and at nearly 22 percent in the city of Muskegon. The county population expanded by 7 percent between 1990 and 2000, but the U.S. Census Bureau now estimates that growth since 2000 has been just 2.4 percent, to 175,000. The city has lost population, according to bureau estimates.

Manufacturing, with its history of strong paychecks and rich benefits, for years supported three hospitals in the city of 39,000. In 1998, osteopathic hospital Muskegon General merged with Muskegon Mercy to become Mercy General, owned by Novi-based Trinity Health, the nation’s fourth-largest Catholic hospital system.

Now, with manufacturers buffeted and workers idled by the tectonic shift in the state’s economy, three finally became one with last April’s merger of Hackley Hospital and Mercy General to create Mercy Health Partners, Muskegon County’s largest employer with 4,000 on the payroll.

“I think it’s very honest right now to say that had we not consolidated, both of these hospitals — Mercy General and Hackley — would be in serious, serious difficulty trying to maintain operations,” Spoelman said.

Hackley was the biggest hospital until Muskegon General and Mercy merged in 1998 after a three-year joint operating agreement. Today, the Hackley campus has 154 acute care beds and 27 psychiatric beds; the Sherman Boulevard facility has 196 beds, with 31 of them leased to Select Specialty Hospital; and the former Muskegon general campus has 57 beds, 20 of them leased to Lifecare Hospitals of Western Michigan. In Shelby, the lakeshore campus has 24 beds.

After the 1998 merger, market shares began to shift, said Spoelman, who entered the arrangement as president and CEO of Muskegon General.

“In this community, you were either a Hackley person or you were a Mercy person. The community was pretty well split. It was 50/50 — it was right down the middle,” Spoelman said. “Both hospitals had over 100 years of pride and good service to this community, and neither one of them was willing to give that up in deference for coming together.”

For example, Hackley has always prided itself on care for women and provided the only radiation oncology in town for many years. Mercy General had the stronger heart program.

“The market share began to shift in certain areas, like OB, and the emergency volume kind of went toward Hackley, but the inpatient volume share went to Mercy General,” he said.

A few joint ventures did exist. The hospitals shared ownership of ambulance company Professional Med Team Inc. and participated together in a pharmacy program for low-income individuals.

But mostly the competition was so thick that Spoelman and Hackley President and CEO Gordon Mudler avoided each other.

“We laugh about it now — how we would go to the same social functions and try to avoid talking to each other,” Spoelman said. “It’s just part of competition. It’s so much nicer to look back on that and laugh about it than when you’re in the middle of it.”

In the years preceding the merger, Hackley, an independent hospital, saw its bottom line fluctuate in and out of the red, but rarely far from it. In addition, the competing hospitals had split the medical community.

While most doctors had privileges at both hospitals and participated in some joint groups, loyalties were divided among those who practiced exclusively at one hospital and among the primary care doctors employed by each facility, said Dr. F. Remington Sprague, MHP chief medical officer.

“Certainly, there were many physicians who felt for years this was the right thing to do,” Sprague said. “A significant group of physicians felt otherwise — that there should have been other options explored, that losing local competition is a disadvantage.”

A group of business, medical and community leaders started meeting to discuss health care issues. They were concerned that Hackley’s limping financial position, without the backing of a parent organization as Mercy had with Trinity Health, would prevent it from updating equipment, and that three campuses and competition hampered the recruitment of doctors. The group concluded that one hospital would be the best solution for Muskegon. Shortly afterward, Spoelman and Mudler began talking.

The combined hospital is projecting about $500 million in revenue for its first fiscal year, which ends June 30, said CFO Gary Allore. The recession has dampened margin expectations for the current fiscal year from between 3 and 4 percent to between 1 and 2 percent, he said.

“Hackley had some strong years; Mercy had some strong years. Hackley had some bad years; Mercy had some bad years,” Allore said. “But together in this community, I think the two hospitals probably — if you would have put our financials together even though we were separate, we probably would have making about a 1 percent margin.”

As part of the 43-hospital Trinity Health system, which includes Saint Mary’s Health Care in Grand Rapids as well as hospitals in Battle Creek and Cadillac, Mercy Health Partners gains some efficiencies that were not available to Hackley as an independent hospital, Spoelman said.

“There are significant benefits in terms of supply chain, or purchasing power. You can access capital markets, so that you can purchase your pension and retirement benefits together; you can purchase your health insurance for your associate and other benefits together. You can go to the capital markets and get capital to replace plant and equipment at a much, much lower rate,” he said.

He tells the story of a lab manager at the Lakeshore Campus, a former Hackley site, who discovered she could save $89,000 per year on a chemical reagent with the same supplier after the switch to Trinity Health’s purchasing program.

“That’s just one little, tiny thing, one small example. We found over $1 million of things just like that,” Spoelman said.

The consolidation of the city’s two hospitals has allowed for some efficiencies, he said.

“The bottom line is, that’s the best way to serve this community, the very best way to serve our patients,” Spoelman said.

Some clinical programs have been combined: Both hospitals had pediatrics departments with an average census of two; now they are combined at Hackley. Major trauma now is directed to the Hackley Campus, which also now handles all neurosurgery, Sprague said. Occupational health, outpatient services and inpatient rehabilitation are at the Mercy Campus. Hackley’s billing and accounting staffs were moved to the central location in Kentwood that serves Trinity Health hospitals in Grand Rapids, Battle Creek and Muskegon, Allore said.

Still uncertain is the future consolidation of obstetrics. Neither Hackley nor the former Muskegon General facility on Oak Street, which currently handles 60 percent of Muskegon deliveries, is large enough to accommodate a single unit. But the economy now is discouraging capital investment, so the decision is still hanging in the air.

More controversial, cancer treatment was brought together in a new building, the Johnson Family Cancer Care Center, at the Mercy Campus. That prompted the two employee unions, SEIU Healthcare Michigan and the Michigan Nurses Association, to file a complaint with the National Labor Relations Board regarding the transfer of two oncology nurses.

Three months after signing the merger papers, MHP laid off 30 vice presidents, managers and supervisors, mostly from the Hackley side. Another 90 workers were to be laid off by March 31, including 31 licensed practical nurses.

The SEIU contends that Spoelman broke his promise to avoid post-merger layoffs. He claims this second round of layoffs is related not to the merger, but to the economic downturn that has charity care and unpaid billings soaring at hospitals across Michigan. Layoffs have recently been announced by many hospitals in the state as they grapple with an aggregate loss of 2.9 percent through the third quarter of 2008, according to the Michigan Health & Hospital Association.

Three years ago, Hackley and Mercy General received a grant and used it to offer their 50 LPNs free training to become registered nurses. The hospitals have not hired an LPN in seven years, Spoelman said.

“Some even got tutors to keep them in the program,” he said. “They are excellent caregivers, but their license does not allow them to do everything an RN does. We need the efficiency of having a full continuum of skills that an RN legally has the right to provide. I feel sad that 30 chose not to, for whatever reason. They can’t say they were surprised by this. To make an issue of about unfair treatments to LPNs is crazy.”

Now the SEIU, which represents about 2,000 MHP employees, and the hospital are negotiating a new contract and want higher pay. They published Spoelman’s telephone numbers in radio and print ads.

“This is a tactic again of the outside folks from Detroit who are agitating, from the SEIU, claiming that we’re not treating their members with dignity and respect and not paying competitive wages,” Spoelman said.

“Everything changed in September, October, November, December. To bring up things from the past, it’s pretty irrelevant now. We’re talking about survival going forward.”

Spoelman grew up in Muskegon as the middle of three sons of Dessie and Neil Spoelman. After serving in the U.S. Navy during World War II, Neil Spoelman went to work for Baker Auto Trim. Eventually he bought the business, while Dessie Spoelman stayed home to raise their sons.

“My dad passed away a couple years ago, but my mom lives here. She’s a volunteer at the hospital. I see her every Friday morning at the information desk,” Spoelman added.

A graduate of Muskegon High School, Spoelman, 56, was a competitive swimmer and planned to attend college on an athletic scholarship. Those plans were dashed by a car accident in March of his senior year. His friend lost control of the vehicle where Int. 96 curves east after the split with the exit to southbound U.S. 131.

“I ended up in Butterworth’s ER. I had like 10 stitches up here, and broke my back. So I couldn’t take that scholarship,” he said.

Spoelman still went to college, high-tailing it to Trinity Christian College, a Christian Reformed school in suburban Chicago.

“I was 17 years old. I went to college in Chicago and I thought I’d never be back. I was a very independent kid,” Spoelman said.

He met his wife, Jan, a health educator, at Trinity where he earned a degree in sociology and a teaching certificate. They have two children, Abby, who lives in Grand Rapids, and Nate, who is in the financial services business in San Diego, and two grandchildren.

He taught school for a while, and worked for Youth for Christ and the YMCA. Spoelman has two advanced degrees, one in exercise physiology from the University of Wisconsin and an MBA from California Coast University.

“I became an exercise physiologist, and my specialty was adult fitness and cardiac rehabilitation, which is how I got into health care. I started a phase 3 cardiac rehab program at the Y, but the hospitals needed to feed it.  So I worked with the hospitals to create a phase 2 program in the hospitals. That’s just really how I got familiar with the hospitals.”

Spoelman was serving as executive director of a YMCA in New York in 1981 when he received a call from Muskegon General, asking him to work in cardiac rehab there. He took it. Six years later, he was running the place.

In March, the Alliance for Health honored Spoelman, along with former Van Andel Research Institute Director George Vande Woude, with a Hillman Award at the local health planning agency’s annual Once in A Blue Moon fundraiser.

“He has a history of being very progressive and uniting the delivery of health care,” said Lody Zwarensteyn, president of the Alliance for Health. He called the 1998 merger “a highly successful move,” noting that it melded medical staffs from the allopathic and osteopathic traditions.

Sprague said Spoelman’s frequent communication with the medical staff, through meetings, newsletters, online and in person, have helped.

“He’s been just very strongly present. He’s a great leader. He’s not reactive, not judgmental. He’s very open, very reassuring of the medical staff,” which numbers about 325 active physicians, Sprague said.

Spoelman likes to read, write and play guitar. But in his spare time, he is still involved in health care, and often devotes vacation time to the nonprofit health organizations with which he volunteers. He is chair of the International Aid board and the Open Doors Mission, which is devoted to helping people around the world who are persecuted for their faith. He also is a board member of Cure International, which operates a dozen children’s hospitals in Africa, the Middle East, Central America and the Domincan Republic. Recently, he traveled to Uganda on behalf of the organization.

“We are the largest provider of children’s surgical services outside the U.S.,” Spoelman said. “I just love that.”

Faith is an important cornerstone for Spoelman, who said he was raised in the Christian Reformed Church. “I’m not Catholic … yet I’m so thrilled to be part of an organization that not only tolerates but actually encourages me to lead in such a way and allows me to apply my faith to work that I do,” he said.

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