Spectrum seeks rehab unit; Mary Free Bed eyes reform

December 23, 2010
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Spectrum Health and Mary Free Bed Rehabilitation Hospital have left open the possibility for further discussions as health care and reimbursement reform march forward, hospital executives said last week.

Talks are over for now, however, said Dr. John F. Butzer, Mary Free Bed’s chief medical officer.

“We’ve had talks on a possible merger since June, and at this time we’ve not come to an agreement, but we consider the door to be open for future talks,” Butzer said.

Spectrum Health President and CEO Rick Breon said the health system plans to move forward with opening an acute inpatient rehabilitation unit at Blodgett Hospital by summer 2011.

Breon said Spectrum would continue to refer patients to Mary Free Bed. The Business Journal reported in August that an internal Spectrum document said the health system made more than 900 referrals to Mary Free Bed in fiscal 2009 and provided 56.4 percent of the 80-bed rehabilitation hospital’s inpatient volume.

Breon and Butzer both contended that an acute care inpatient rehabilitation unit at Blodgett would not cut into Mary Free Bed’s volume.

“I think it will have a minimal effect,” Breon said. “We are still going to use Mary Free Bed for adult referrals, for pediatric referrals. I think that will continue.”

Butzer indicated that Mary Free Bed is ready for a market with more patient choice.

“Patients have exercised their right to choose the best care, and we expect that will continue,” he said.

“We’ve been a leader in statewide rehabilitation for years,” Butzer added. “Our referrals come from around the state of Michigan. We’re confident that our reputation and the sophistication of our services will continue to allow us to be a leader in statewide rehabilitation.”

Metro Health Hospital in Wyoming offers an eight-bed rehabilitation unit.

Butzer said that Mary Free Bed is exploring options for preparing for major changes in health care. It has a joint venture with Porter Hills Retirement Communities to provide rehabilitation services at Porter Hills facilities, he said.

The hospital earlier this year formed a subsidiary — the nine-doctor, nonprofit Mary Free Bed Medical Group, Butzer said. Like other hospitals, Mary Free Bed wanted to more closely align with physicians as health care entities create accountable care organizations to share federal payments for patient care, he said.

“A number of people feel there will be a lot of reimbursement reform and a lot of experiments in terms of how everyone is paid,” Butzer said. “I think where rehabilitation fits in the health care reform bill is not entirely clear at this point. We watch that very carefully.”

He said he thinks there is room for expansion of the role that rehabilitation can play in health care.

“We see that the role of rehabilitation in chronic care management is underutilized at this time,” Butzer said. “We think it’s cost effective and it will play a major role in health care reform, and we’re pleased to have a new arrangement with our physicians, as well.”

The Business Journal reported in August that a Spectrum Health business plan called for a $5.3 million investment for 30-bed acute inpatient rehabilitation program on the fourth floor of Blodgett Hospital to open by July 2011.

Spectrum Health spokesman Bruce Rossman said last week that plan has been modified several times, and the hospital system would be unable to share further details until next year.

Breon said last week the unit would house 10 to 20 beds, but that he was unfamiliar with details.

In a memo that was widely circulated via e-mail last summer, Mary Free Bed officials were described as balking at the proposal to merge with Spectrum Health. But Breon and Butzer said last week that the nonprofit hospital organizations issued a joint statement to show they were on good terms.

Based on its latest Internal Revenue Service filing, Mary Free Bed revenues for the tax year ending March 31 were $38.2 million, down from $40 million the previous year. It ended the latest tax year with a positive balance of $1 million, and $44.4 million in assets.

Spectrum Health’s budget for the current 2011 fiscal year, which started July 1, anticipates revenues of $3.8 billion. System-wide, Spectrum Health has 1,881 beds.

Mary Free Bed was founded 120 years ago and is owned by the Mary Free Bed Guild.

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