Opponents Seek to Stop Fast-Track Bill Allowing New Hospital

NEWS RELEASE

For Immediate Release: Tuesday, Sept. 23, 2014                           

Contact: Kelly Rossman-McKinney 517-749-0529 (c), 517-487-9320 (o)

Opponents seek to derail fast-track bill allowing McLaren to build hospital that state calls unneeded

LANSING, Mich. – Opponents today lined up to testify against legislation that would allow McLaren Health Care to build a hospital tower in Clarkston, even though the state and the courts have denied the project, saying it is not needed.

They included a broad range of representatives from Michigan business, consumer, hospital, payer, union and other groups – all members of Friends of Certificate of Need. The group actively supports the state’s Certificate of Need (CON) review process as an effective tool to avoid unnecessary costs while improving access to quality health services.

Testifying in opposition to the bill was John Karebian, executive director of the Michigan Nurses Association, which joined Friends of Certificate of Need immediately after the Sept. 16 introduction of the carve-out bill, Senate Bill 1073.

“(McLaren) is picking winners and losers among patients,” Karebian said in reference to McLaren moving beds from its hospital in Pontiac to affluent Clarkston.

“McLaren is trying to do an end run around the state’s Certificate of Need (CON) approval process, which has repeatedly rejected McLaren’s plan to build a $300 million, 200-bed hospital tower in northern Oakland County,” said Bret Jackson, president of the Economic Alliance for Michigan, the state’s only business-labor coalition. “No matter that the plan would drive up the cost of health care across the state and undermine the CON process, which was specifically created to minimize health care increases.”

Under its original February 2012 Certificate of Need application, which was denied by the Michigan Department of Community Health, McLaren asked to move 200 unused beds from its McLaren Oakland Hospital in Pontiac to a new hospital in Clarkston. McLaren filed suit in June 2013 to reverse the decision to deny the application, but Oakland County Circuit Court Judge Colleen O’Brien ruled against McLaren in December.

Opponents say rapidly rising health care costs due to unneeded projects such as McLaren’s proposed hospital place increasing pressure on employers to reduce jobs, cut benefits and/or increase costs for workers.

“The trend in health care across the nation is for less hospitalization,” Roger W. Spoelman, regional president and CEO of CHE Trinity Health West Michigan, testified.

Mark Lemoine, director of system government affairs for Spectrum Health, said: “Senate Bill 1073 is not simply an issue limited to a few hospitals in Oakland County. It affects all health systems, businesses and residents across the state.”

The committee adjourned without taking a vote.

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Based on Hospital Bed Vacancies, a New Hospital is Not Needed

There is no need for a new hospital in Northern Oakland County.  Within a thirty minute drive of the proposed McLaren hospital in Clarkston, there are eight hospitals with a total average hospital bed vacancy of 41%.  Even though McLaren is proposing the transferring of beds, a new hospital will create further strain on the current hospitals to meet financial requirements. How can they all run at a capacity to make a budget?  The shift of jobs and patients will cause a financial strain.  Where will the money come from to support the downfall in revenue?  More than likely in the form of higher health care costs to the patient and third-party payer.

Hospital Avg Vacancy

Friends of Certificate of Need Denounce Senate Bill

NEWS RELEASE

For IMMEDIATE RELEASE

Contact: Kelly Rossman-McKinney
(517) 749-0529 (c), 517-487-9320 (o)
Tuesday, Sept. 16, 2014 

Friends of Certificate of Need denounce Senate bill that would ignore health care cost containment

LANSING, Mich. – The Michigan Senate propped up McLaren Healthcare’s last-ditch effort to build a $300 million, 200-bed hospital tower in Independence Township by introducing legislation Tuesday that would circumvent previous state rulings against the unnecessary overbuild of such a facility.

However, Senate Bill 1073 was met by resounding disapproval from a large coalition of Michigan business, labor and health care organizations.
The Friends of Certificate of Need – which includes a broad range of Michigan business, consumer, hospital, payer, union and other associations – actively supports Certificate of Need as an effective tool to avoid unnecessary costs while improving access to quality health services.

“This (legislation) represents a not-so-thinly disguised effort to give McLaren Healthcare something that the state’s Certificate of Need approval process has repeatedly rejected,” said Bret Jackson, president of the Economic Alliance for Michigan. “The end result undermines an essential state process that is specifically designed to keep health care increases to a minimum.”

Judge Colleen O’Brien of Oakland County Circuit Court ruled against McLaren in December after it had filed suit in June 2013 to reverse the original Department of Community Health decision to deny the application – which is now more than two years old. Under its original February 2012 Certificate of Need application, McLaren asked to move 200 unused beds from its McLaren Oakland Hospital in Pontiac to a new hospital it plans to build.

The Economic Alliance for Michigan has focused on the rapid rise in health care costs because it places an increasingly difficult burden on Michigan businesses and generates pressure to reduce jobs, cut benefits, and/or increase costs for workers.

“The Certificate of Need program exists to balance cost, quality and access and it has served Michigan residents and taxpayers well,” said Grand Rapids Chamber of Commerce vice president Andy Johnston. “Like anything, it can always use review and discussion, but with the changes occurring in our health care system, now is not the time to eliminate or weaken CON.”

“The Affordable Care Act is already placing a significant burden on the small business community, many of whom are seeing insurance premiums rise by between 20 percent and 100 percent, or more,” said Scott Lyon, senior vice president of the Small Business Association of Michigan. “Smart decisions about value purchasing, including taking a hard look at quality and costs should be uppermost in the minds of legislators.”

“We need lawmakers to understand that health care costs are still rising, and rising costs force premiums higher,” Lyon added. “As premiums rise, fewer small business owners can afford to offer coverage to their workers. Legislative efforts should be focused on finding ways to contain health care costs for individuals, small and larger businesses alike.”

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Healthcare Economics – Not a Free Market System

In a typical free market economy, the more demand you have for a product the more you supply, or if you supply less, then raise the price (sometimes both).  Consumers have a demand or want for a particular product, then the consumer seeks the best supplier or price for the product.  This is not typical of the healthcare industry.

Healthcare is not usually demanded because it provides fun or personal pleasure.  It’s demanded to sustain life.  The patient (consumer) has to make a choice of supplier: urgent care, emergency room or primary care physician.  The doctor (supplier) then determines (demands) what the patient needs.  The doctor is both supplier and demand-er.

Health Econ 101 graphic

Healthcare is demanded when we need it, not usually when we want it.  How will you possibly fit a doctor’s appointment in today’s schedule?  But yet, you manage to stand in line to grab your favorite cup of coffee or someone does it for you.

In the United States, the majority of health care costs are paid for by third-parties.

Economics 101 pic2

Healthcare is not as tangible.  You can’t legally trade or barter for it.

There is a lack of transparency in healthcare pricing, especially by hospitals and primary care physicians.  Dr. John Doe doesn’t have a billboard that reads, “$24.95 for Physical Exam.” In a true supply and demand market, suppliers boast pricing.  Why do you think competing grocery chains have weekly ads?  Imagine “Day After Thanksgiving” ads for doctors competing with pricing.

In conclusion, the economic law of “Supply and Demand” does not apply to healthcare.  The persons demanding a medical good or service is not able to determine what their need or demand is – the doctor does this for them.  Consumers of medical goods and services are not able to price compare due to lack of pricing transparency.  Also, third-parties mainly pay for costs and consumers are more likely to not “shop” around for services since they tend to stay within the primary care physician’s network.