Senate bill would facilitate Spectrum-Mecosta merger

April 4, 2010
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A bill that would simplify the proposed merger of Spectrum Health and Mecosta County Medical Center was passed by the state Senate last month and has moved on to a state House committee.

The bill would allow a municipal hospital to become part of a nonprofit hospital directly and with approval from the local governing body, Spectrum Health spokesman Bruce Rossman said.

Changing the law would save about $100,000 in legal costs and fees for setting up a new nonprofit legal entity that would hold the municipal hospital, and of which Spectrum Health would become sole shareholder in order to effect the merger, he said.

“It’s not a health care issue. It’s really a corporate structure issue,” added Kelly Bartlett, legislative director for the bill’s sponsor, state Sen. Bill Hardiman, R-Kentwood. 

The bill also asks that the majority of the board of the new health facilities nonprofit would be the same board members as the municipal entity.

Bartlett said the legislation was complicated to develop in keeping with the preferences of the state Department of Energy, Labor and Economic Growth. A tie-barred companion bill would have modified the Nonprofit Corporation Act, but Bartlett said Hardiman was concerned that would open the door to others hoping to amend the law, which hasn’t been changed in many years, he said.

The Senate passed the bill March 25 and sent it to the House, which on the same day referred it to its Health Policy Committee.

A Senate staff analysis noted that, under the bill, a hospital that converted from municipal to nonprofit status would no longer generate federal reimbursement for “certified public expenditure,” or money spent for uncompensated care provided by public hospitals.

Last year, the two hospitals announced an affiliation agreement. Mecosta County Medical Center’s CEO Sam Daugherty became an employee of Spectrum Health, keeping his post and adding CEO of Spectrum’s Reed City Hospital to his duties. Rossman said that due diligence is continuing with MCMC, as well as Gerber Memorial Hospital in Fremont, Northern Michigan Hospital in Petoskey and Munson Health Care in Traverse City.

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