Editorial

Metro’s search for partner could help employers

October 20, 2012
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Metro Health is a specialty hospital in Michigan as a provider of osteopathic medical education, and it is once again convening a comparatively public search for yet another “strategic partner” to broaden its services while maintaining its specialty.

It is in fact what all hospitals (aka health care facilities) are fiercely attempting to accomplish as the Patient Protection and Affordable Care Act regulations loom, but Metro may be among the most vulnerable in this region, more because of its outstanding liabilities than current assets. Metro’s current courting in response to both issues is a positive sign that costs can be further contained in such an alliance.

To be sure, Metro has been faced time and again with “perfect storms” that have impaired its progress. Its move from a land-locked Grand Rapids location to Byron Center was blocked in the late 1990s by state regulations that cost time to amend. Its ability to finance construction of the new site with a conventional bond sale was impaired by a 2002 multi-million dollar whistleblower lawsuit regarding business practices, which was ultimately dismissed years later. Instead of Federal Housing Administration financing, the hospital board moved to pursue a conventional bond sale.

During that time, Metro was financing construction at the new site with cash reserves, including proceeds generated from the sale of its Medicaid HMO, Community Care Plan and sale of eight health plazas on the new campus for $14 million to a private investment group that leases them back to Metro. It sold $135 million worth of fixed-rate bonds in late March of 2005, but the bond rating was BBB. The Metro facility finally opened in 2007.

Metro has, since 2008, orchestrated partnerships: with University of Michigan Health System for a cancer center and with Trinity Health-West Michigan for shared services.

Its current search for a partner is strategic rather than defensive, and could otherwise mean West Michigan would lose the choice of osteopathic care. Metro is currently in “high-level” talks with the state’s largest osteopathic provider, McLaren Health Care, which has 10 hospitals and medical facilities in 54 counties in eastern and northeastern Michigan.

The prospects of expanded services without double-digit cost increases are promising for regional employers.

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