Construction, Government, and Health Care

Certificate of Need perspectives

July 31, 2018
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The state’s Certificate of Need, or CON, program for the health care industry has a 46-year history. The core principle behind CON is simple: Before you begin something new, you should be able to demonstrate the need for it.

“Need” is defined in advance by a panel of expert volunteers appointed by the governor with the ratification of the Michigan Senate. If it’s needed, you go ahead. If not, you complain to your legislators who, being term-limited newbies, don’t have the history or understanding to know what is really driving the complaints.

The CON program was created in recognition of the fact that the laws of a free market do not work in the health care environment. Although we all have been taught to respect free enterprise, we must understand that it simply isn’t operative in the health care arena. Health care is expensive, and unneeded programs and buildings make it even more so.

Everyone experiences these costs — individuals, businesses and the state. The rise in costs has made insurance unaffordable for many and led to pushes for solutions like Obamacare, which addressed insurance coverage but did not contain underlying costs.

Health care is costly for people in need of services. But it is highly lucrative for some providers. We must put into context the desires of would-be developers and practitioners. While buying a CT or MRI scanner might “only” cost millions, those who charge fees to conduct and interpret the scans make many millions more on an ongoing basis. Having too much capacity simply reduces efficiency and raises costs. Remember a simple reality: one person’s cost containment is another’s income containment.

The West Michigan community actively participated in the CON program starting in 1972, making sure that local views could be represented before state decisions were made. In the processes, many local issues and differences of opinion were resolved by community volunteers, who only were interested in the community’s best interests. Many very dedicated volunteers served locally to be sure the West Michigan community got a fair shake. However, the agency designated to conduct CON locally decided to retreat from its prior leadership role and gave up its franchise. The burden of looking out for West Michigan now is left to the state’s Department of Community Health.

In the last two years, $541,600,562 in spending was proposed in West Michigan, most of which was centered in Kent County. Remember, CON covers only a limited list of projects. Much more spending can proceed unchecked. Also remember that the charges of health care providers reflect their costs. So, who pays? You do.

Because these proposals have not been in the public eye in West Michigan, here is a list of CON requests put forth in 2016 and 2017 and broken down by facility, project description and capital cost.

Certificate of Need proposals in West Michigan in 2017 and 2016

Alliance-HNI LLC, replace MRI network, $2,979,523

Bronson Outpatient Surgery, lithotripsy network No. 167, $243,745

East Beltline Imaging PLC, replace fixed CT scanner, $284,000

Hallmark Living Holland, acquire 90-bed nursing home, $2,700,000

Hallmark Living Kalamazoo, acquire 90-bed nursing home, $3,240,000

Heather Hills Care Center, acquire 60-bed nursing home by Trilogy/42-month lease, $1,200,000

Heather Hills Care Center, replace 60-bed nursing home, $31,558,871

Holland Community Hospital, renovate and expand OB, $14,525,020

Laurels of Carson City, change landlord/new two-year lease, $2,496,000

Laurels of Kent, renew one-year lease, $1,522,254

Life Care Center of Plainwell, acquire 119-bed nursing home, $10,000,000

Mercy Health-Lakeshore, replace CT scanner/replace 15 beds in new space (Muskegon), $546,039

Mercy Health Saint Mary’s, MRI No. 88 at Byron Center, $500,000

Mercy Health Saint Mary’s, renovate 9th floor, $9,661,660

Mercy Health Saint Mary’s, MRI No. 64 at Byron Center, $500,000

Mercy Health Saint Mary’s, add 28 medical psych beds, N/A

Mercy Health Saint Mary’s, relocate 88 beds to Pine Rest, N/A

Mercy Health Saint Mary’s, replace MRT unit, $2,832,030

Mercy Health Saint Mary’s, add one fixed CT scanner, $535,000

Metro Health Hospital, replace MRI unit, $17,160,000

Metro Health Hospital, PET network 126 at Southwest Plaza, $459,000

Metron of Belding, new 25-year lease, $35,000,000

Metron of Big Rapids, new 25-year lease, $30,000,000

Metron of Cedar Springs, new 25-year lease, $24,000,000

Metron of Greenville, new 25-year lease, $36,000,000

Metron of Ionia, new 25-year lease, $36,000,000

Metron of Lamont, new 25-year lease, $12,000,000

Pine Rest Mental Health Services, add 20 geriatric psych beds/88 adult psych beds, $495,000

Pine Rest Mental Health Services, add 14 adult psych beds, $490,000

Pine Rest Mental Health Services, temporary use of space, $800,000

Resthaven Care Center, replace 10 beds, $2,181,900

Sheridan Community Hospital, replace fixed CT scanner, $620,281

Southwest Michigan Imaging, replace one fixed CT scanner, $1,940,055

Sparrow Ionia Hospital, replace fixed CT scanner, $643,575

Spectrum Health, upgrade existing MRI South Pavilion, $680,707

Spectrum Health, replace portable CT scanner, $409,498

Spectrum Health Rehab, acquire 250-bed hospital/long term care unit, $51,719,040

Spectrum Health Blodgett, renovate existing space on 5th floor, $7,246,568

Spectrum Health Butterworth, renovate non-clinical space, $1,932,000

Spectrum Health Butterworth, renovate 2nd floor, $6,703,000

Spectrum Health Butterworth, add one CT scanner, $2,300,516

Spectrum Health Kent Community, lease 40-bed acute care hospital for 20 years, $10,607,780

Spectrum Health Lemmen Holton Center, replace fixed MRI, $2,863,540

Spectrum Health Lemmen Holton Center, replace MRT unit, $4,102,656

Spectrum Health Ludington, relocate 14 adult psychiatric beds, N/A

Spectrum Health Special Care, new long-term acute-care hospital with 36 beds, $3,262,508

Spectrum Health Special Care, acquire 36-bed, long-term acute care hospital/20-year lease, $16,320,150

Spectrum Health/Holland Hospital Health Pointe, MRI network No. 21, $4,759,512

Spectrum Health/Holland Hospital Health Pointe, initiate fixed CT scanner, $1,733,559

St. Ann’s Home, replace eight beds in new space, $4,369,855

Tendercare of Ludington, acquire 93-bed nursing home, $17,645,251

West Michigan Air Care, replace air ambulance, $7,190,950

West Michigan Cancer Center, replace MRT unit, $3,283,438

West Michigan Rehabilitation, acquire 65-bed nursing home, $121,388,997

West Michigan Surgical Center, new freestanding outpatient surgical center OR, $5,411,084

Source: Michigan Department of Community Health