Cardiology buy not about 'cornering the market'
Amassing West Michigan Heart’s considerable muscle in the cardiology business under Spectrum Health’s roof is a development that Grand Rapids’ medical community has been anticipating for months.
How it will play out in 2010 and beyond is what will make the difference for patients, said Dr. Paul Farr, a gastroenterologist and former president of the Michigan State Medical Society. Farr is chairman of a consolidation effort involving Saint Mary’s Health Care’s physician practice, Advantage Health, and local specialists.
“We want to have area health care that really is able to treat everybody,” Farr said. “If someone has a total monopoly on a given service, then that can be used inappropriately. I don’t think there is any evidence of that so far, and we’re not seeing that. And if this helps them deliver the care better, then I think it’s a benefit to the community.
“West Michigan Heart covers many, many hospitals. It’s been a well-organized group providing valuable services throughout the community. And what we want to see is that they can continue to be able to do that.”
Spectrum Health announced last week that it intended to acquire West Michigan Heart as of Dec. 31, employing its 26 cardiologists in a subsidiary that would become part of the Spectrum Health Medical Group by 2015. The practice has been instrumental in providing services at Spectrum Health’s Meijer Heart Center, which opened in 2004. The center is the only local location for diagnostic and interventional cardiology, such as non-emergency stent placement, as well as open-heart surgery.
Both Saint Mary’s and Metro Health are confined to providing angioplasty on an emergency basis. Hospitals in Kalamazoo and Muskegon have their own cardiology and open-heart surgery programs.
In 2009, a half-dozen doctors left West Michigan Heart to establish Metro Heart & Vascular at Metro Health Hospital. Metro Health now is trying to establish an open-heart surgery program at the Wyoming hospital, and has the backing of Trinity Health, the parent company of Saint Mary. Advantage Health, the 100-plus doctor primary care group partly owned by Saint Mary’s, has agreed to a relationship with Grand River Cardiology for its referrals of heart patients.
Meanwhile, Spectrum Health is seeking Michigan Department of Community Health permission to establish a heart transplant program.
The discussions that led to West Michigan Heart joining Spectrum Health started almost two years ago, West Michigan Heart CEO Suzette Jaskie said.
“Our real motivation to start looking at this was, from our perspective, the writing was on the wall probably beginning three years ago about the changes that were coming to our industry,” Jaskie said.
Among those changes, aimed at “bending the cost curve” in health care, is the use of “bundled” payment or a single payment per “episode of care,” with doctors, hospitals and other providers responsible for divvying up the money among themselves.
Spectrum Health is one of three hospitals in the nation running a pilot program in 2010 based on that payment system, added Matt Van Vranken, executive vice president and president of the Spectrum Health Hospital Group.
Health care reform proposals now in Congress reflect those types of changes, Jaskie said.
“It just seemed to us that the platform for success was really changing to one that was integrated with the hospital partners,” she said. “But that’s a huge change for physician practices, and so we spent a lot of time trying to work out what the model was that would best support us in an integrated fashion.”
Negotiations had their ups and downs, she added, but the terms were hammered out with the help of consultants in mid-2009.
“There is no one single thing that made it happen or made it not happen,” Jaskie said. “It’s not a sweeter deal or a not-sweeter deal. It is coming to grips with how you value a physician practice that’s been in place for 30 years.”
Van Vranken said the merger is a “natural transition” for Spectrum Health and West Michigan Heart, noting that “service agreements” already exist between the two. West Michigan Heart last month opened an office in Spectrum’s West Pavilion in Wyoming.
“They have done a spectacular job of extending their reach into places like Fremont and Gerber, Holland Hospital, across many of the smaller hospitals in West Michigan. It’s really been a benefit for the citizens of those communities,” Van Vranken said. “It’s also a benefit for us, because the high-end complex cardiology cases — and often they turn into cardiac surgery cases — end up at the Meijer Heart Center.”
Van Vranken and Jaskie both dismissed the idea that the deal means Spectrum is trying to shut down competition in cardiology.
“Quite frankly, I think the concentration of physicians is really a benefit to the community,” Van Vranken said. “It allows organizations like West Michigan Heart to recruit the best and brightest from across the country. If you don’t have the critical mass and diversity in your practice, it is really hard to recruit these people. I view it as a very positive aspect of the program, and it’s certainly not at all intended to try to corner the market.”
Jaskie said West Michigan Heart is in talks with four physicians to join the practice in 2010 and talks are ongoing with others for later years.
“I don’t think this is about cornering the market,” she added. “I think it’s about being smart and being prepared for the demands that the reform environment is going to bring. And the demands are different. We are not going to be successful doing business the way we’ve always done business. That doesn’t have anything to do with market share or cornering the market. It has to do with creating a different platform of care.”