Business is unwitting donor to hospital building programs

June 21, 2010
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Recent surveys conducted by The Employers’ Association in Grand Rapids and by McGraw Wentworth show West Michigan business owners will suffer another big round of double-digit health care benefit cost increases, and those same surveys show business owners are taking initiative with increased premium contributions, co-pays and deductibles, as well as additional wellness programs.

The July 1 price increases announced by Spectrum Health do little to assuage the impact in the future, especially at a whopping 8 percent, the fourth consecutive year of such increases from Spectrum.

While Saint Mary’s Health Care also plans increases, they are far less than those proposed by Spectrum. Priority Health, majority owned by Spectrum, will deliver 5 percent increases, also July 1.

Lody Zwarensteyn, president of the Alliance for Health, a broad-based nonprofit West Michigan community coalition, told the Business Journal: “It is disappointing to see price increases that far exceed the general inflation rate, especially when one understands the step of outstripping inflation has come several years in a row.”

Spectrum increases have ranged from 6 percent (in 2009) to 8 percent (2008) each of the past four years.

Spectrum is the largest health care system in the West Michigan region with patient revenues of $1.3 billion and total 2009 revenues of $2.68 billion. Mercy Health Partners in Muskegon is second with $408 million in patient revenue and $470.52 million in total revenue. Kalamazoo’s Borgess is third.

The Business Journal has previously cautioned the business community here in regard to Spectrum’s anticipated losses for its heart program and cost overruns in its building programs. Spectrum reported to the Michigan Department of Health at the end of last year that it anticipated a $2 million loss for its heart transplant program, which expects to serve nine patients in its first year, likely beginning in 2011.

Further, Spectrum’s new Helen DeVos Children’s Hospital facility, which is expected to open in January 2011, saw cost overruns, with construction costs now reported to be $292 million, up from the 2006 estimated cost of $190 million (some of that related to the “flying bridge” that crosses Michigan Street into the new children’s hospital).

The business community has been given no reprieve, and its contributions toward paying those costs on Pill Hill are escalating.

The competitive building program under way in the Holland-Zeeland area also is of concern to a business community pegged with the tab. After Zeeland Community Hospital completed major and necessary improvements, Holland Hospital’s board decided to build a $10.5 million medical facility one mile from the new Zeeland hospital. Such actions defy logic and the costs of those egos will certainly be billed to the business community.

The West Michigan business community has become an unwitting donor to the expanses of health care facilities, some of which are unrelated to quality of patient care or technology improvements. The recent demonstrations are outside the bounds of West Michigan’s culture of partnerships.

It’s unaffordable health “care.”

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