Letter: Township has fiduciary responsibility to NOCHS

March 18, 2016
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Health Pointe in Grand Haven will have significant impacts on the North Ottawa community. Some may be good, others bad, but decisions on Health Pointe’s request for special consideration by Grand Haven Township should come only after careful consideration.

The proposed building is sized at about 120,000 square feet. This is more than double the size of the large Spectrum facility on the north side of Holland. It is far more than a mere office building to consolidate practices of physicians in the Grand Haven area that are employed by Spectrum Health. It will contain surgical services as well as imaging services like CT and MRI.

In other communities, Spectrum Health has asserted its facilities come under its nonprofit umbrella and qualify for tax exemption. A current case from Grand Rapids Township is before the Michigan Tax Tribunal and is testing this. If Spectrum prevails, other Spectrum facilities throughout West Michigan also will be tax-exempt, providing little return for the municipalities that allow the Spectrum construction.

Procedures like surgery and imaging constitute the bulk of any hospital’s profits, and these profits allow a hospital to provide other services that are revenue losers. Yet the market for procedures has limits, and procedures done at one facility come at the expense of another that provides the same services. By diverting services and revenue away from North Ottawa Community Hospital, Spectrum Health and Holland Hospital have the ability to financially cripple NOCH and threaten its existence

Grand Haven Township, as one of the local entities appointing the majority of the board of NOCH, has a fiduciary responsibility to the hospital that legally requires it to look out for the well-being of the hospital. If it is determined it is in the best interests of the hospital for it to either close or be taken over by another entity, that decision must be made in an open process. Discussing permits and zoning variances is not such a process.

Spectrum Health is a very profitable entity. Since 1972, I have personally witnessed the fact that Butterworth Hospital, Blodgett Hospital and now the merged Spectrum Health system have never had a year without an excess of revenues over expenses (profit). This excess annually adds to the fund balance of the corporation. The excess also comes after fully funding depreciation as well as all other expenses such as self-imposed premiums for its Cayman Islands subsidiary for malpractice self-insurance.

Spectrum’s profits soon will be affected in another sense. It has taken over hospital facilities in Greenville, Lakeview, Fremont, Reed City, Big Rapids, Ludington and Hastings. Several beds from these facilities have been transferred to Butterworth Hospital, allowing it to increase from about 500 beds a few years ago to about 900 beds. Charges at Butterworth are greater than those of the surrounding hospitals. Spectrum Health cannot be in a position of allowing its surrounding subsidiaries, which have had comparably favorable charges, to undercut its own pricing in Grand Rapids. Hence the charges within the system soon will be normalized. That alone is why 49 local corporate executives in the Zeeland area asked Zeeland Community Hospital and Spectrum Health to not merge, since they reasoned their favorable prices would disappear.

I understand Grand Haven Township officials have expressed a view that the state’s Certificate of Need system will assure any services at Health Pointe are needed. Unfortunately, CON does not apply to the office building, and CON review for services such as surgery does not address need; rather, it concerns absolute minimum use. CON currently only addresses the absolute minimum needs to set up a service, and this is far from optimal.

If one looks at the existing use of Spectrum Health hospitals’ surgical facilities, it is impossible to say there is a need for more capacity. Spectrum Heath Zeeland averages two surgical cases per operating room, per day; Holland Hospital averages three; Blodgett Hospital averages two; and Butterworth Hospital averages two. NOCH also averages only two surgical cases per operating room, per day.

A well-run operating room could experience five to nine procedures per day, and that assumes only one shift per day. Generally, more outpatient procedures can be performed than inpatient, and the majority of procedures in today’s hospitals are outpatient. Need certainly does not enter into the Health Pointe picture. Placing surgical and imaging capacity in Health Pointe simply will increase Spectrum’s annual profits at the expense of North Ottawa Community Hospital.

Once established in Grand Haven, Spectrum Health easily can throw its weight around. Its efforts to undermine Mary Free Bed Rehabilitation Hospital in Grand Rapids are well known.

The township’s only time to consider the pros and cons of the Health Pointe project is before it is built. To date, it does not appear such a consideration has been given to this matter.

Lody Zwarensteyn
Former President
Alliance for Health

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