Continued collaboration essential to control health cost increases

January 29, 2010
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The stage is set for drama. As this issue is sent to the printer, much of that drama is seeded in the national health care debate in Washington, D.C., and ready to ripple to the states. But local and regional changes already under way are as likely to keep the attention of Grand Rapids Business Journal readers.

Apart from the consequences of national legislation this region will see impacts from the Van Andel Institute expansion into Parkinson's research, from the opening of the Michigan State University College of Human Medicine's Secchia Center in late spring, as well as from advancements at University of Michigan Health System in critical research related to Parkinson's.

But even as the business community considers these milestones, there are other significant concerns. Business owners are again this year suffering through new increases in health benefit plan costs. In this regard, business owners will not find good news in the projected cost overruns related to Spectrum Health's Helen DeVos Children's Hospital under construction on Michigan Street. The Business Journal reported in late November that the project as proposed in 2006 was estimated to cost $190 million. Updates show the new facility is now expected to cost $292 million. The hospital is expected to open one year from now.

The University of Michigan Health System also is building a new facility for the C.S. Mott Children's Hospital and Women's Hospital in Ann Arbor, opening in 2012 at a cost of $754 million. Northwestern University Children's Memorial Hospital in Chicago will open the same year at a cost of $1 billion. If one considers the size of each project (by square feet rather than the varied specialized medicine offered by any of the three), Spectrum's cost is $663 per square foot compared to U-M's cost of $685 and Northwestern's cost of $800.

Spectrum Health also is applying to the Michigan Department of Community Health to launch a heart transplant program it would begin next year. Spectrum acknowledges it would cost $3.78 million to run and would lose an estimated $2 million in its first year.

Those paying for health care and negotiating rates for benefit plans are sure to see resulting increases for the foreseeable future.

Since this is the month of resolutions, the Business Journal/Health Quarterly would resolve that local health care institutions work toward collaborations that save costs in duplicated services and programs. Such collaboration has been fundamental in Grand Rapids, and costs have been among the lowest in the state because of it.

It is interesting to note at this juncture that the national debate on health care costs made poster boys of the Detroit Three automakers for their benefit plan costs, passed to the consumers — a cost that added $1,600 to $1,700 to the price of a vehicle and a cost not borne by their foreign competitors.

—Carole Valade

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