Striking out! Federal enforcers' losing streak in antitrust cases shows need for new game plan. - Modern Healthcare

Federal agencies have been striking out when they step up to the plate to challenge a hospital merger in court.

Like baseball teams that haven't won a pennant in years, the Federal Trade Commission and the U.S. Justice Department are on a four-case losing streak with hospital mergers they have tried to stop for antitrust reasons.

Applying the aging antitrust laws to hospital mergers is a relatively new sport for the federal government. It was only a decade ago that the Justice Department first challenged hospital mergers, contesting deals in Roanoke, Va., and Rockford, Ill. Rockford was a victory that dampened merger activity temporarily. Roanoke, however, was a defeat for the feds--the first of several.

In the last four cases--in Joplin, Mo.; Dubuque, Iowa; Grand Rapids, Mich.; and Long Island, N.Y.--the government has emptied its bench, exhausting financial and human resources to try and brake up potential monopolies.

Theories explaining why the trustbusters can't hit a home rum abound.

Some point to the loss of key players who have signed on with the private sector. Others say the complex economic models introduced in court can throw judges a curve. And some insist that no matter how many cases a judge has tried, there's never been a legal game as complicated and intangible as antitrust litigation.

'In each case you can point to a different reason, a different failure of proof,' says Toby Singer, a former FTC official who now practices antitrust law at Jones Day Reavis & Pogue in Washington.

Home field advantage. When the feds seek to block a merger involving a hospital owned by a national chain, they usually file the antitrust complaint in federal court in Washington.

But when the complaint involves two or more locally owned hospitals, the government must file at the federal district court closes to the hospitals, giving the hospitals a head start on the case.

'The government is at a serious disadvantage by virtue of that fact,' says Mark Horoschak, a former FTC official who now practices antitrust law at Womble Carlyle Sandridge & Rice in Charlotte, N.C. 'The hospitals are playing on their home court. It's an additional burden you have to bear along with the burden of proof.'

Federal judges usually have strong local ties and might have served on hospital boards in the past, as did the judge in the Long Island case.

They could have been born at one of the hospitals, like the judge who presided over the Dubuque case.

They might have peers who recommended the hospital merger, as did the judge in the Grand Rapids case.

Or they might simply want the feds to mind their own business and stay in Washington, as the judge in the Joplin case stated in court.

'I suspect judges already have preconceived notions about the market that can't easily be shaken,' says one antitrust attorney, who asked not to be identified. 'That's not to say it's improper, but it is a reality. And it cuts both ways. It could be good for the defense or good for the government.'

'When you bring cases against not-for-profits where the community supports the merger, you're facing witnesses and a judge who will be affected by the outcome, who live in the community,' Singer says. 'It's difficult to persuade the court that this (deal) is bad.'

Federal judges in the district courts are also less likely to have seen as many antitrust cases as judges in Washington.

'Judges don't think of healthcare providers the same way they think of defense contractors' when it comes to antitrust issues, Singer says.

'You could argue that local judges have more knowledge of the community's needs,' says another antitrust attorney who also sought anonymity. 'Healthcare is one service industry that the judges is already familiar with. They're more likely to be open-minded (in their decisions)if it's an industry they're not familiar with.'

'It's been suggested every now and then that special antitrust courts be set up,' says Jeff Miles, an antitrust attorney with Ober Kaler Grimes & Shriver in Washington. 'It's been recognized for a long time that as areas of law go, antitrust demands a degree of specialization.'

Not-for-profit defense. Most community hospitals are not-for-profit, giving them another edge in the fight taking place on their home turf.

'Not-for-profit status matters more than the government thinks it does and less than most other people think,' says William Kopit, an antitrust attorney with Epstein Becker & Green in Washington. 'Agencies see it as irrelevant, but on the other hand, people assume you can just whisper `not-for-profit' and that does it, and that's wrong.'

Kopit and his team won the Grand Rapids case for their clients, the now-merged Butterworth Health Corp. and Blodgett Medical Center, in part because they argued that not-for-profits are not likely to exercise market power the way for-profits would.

'For the first time, people from the agencies now believe that all things being equal, not-for-profits are less likely to exercise market power than for-profits,' Kopit says. 'But that doesn't mean not-for-profits can get away with things.'

In his opinion in the Grand Rapids case, Judge David McKeague echoed that sentiment: '(The hospitals' commitment to freeze prices and limit profit margins) corroborates other evidence that nonprofit hospitals may be treated differently under the antitrust law and further undermines the predictive value of the FTC's . . . case.'

In the Long Island case, Judge Arthur Spatt noted that while the not-for-profit defense alone may not hold enough water, 'this factor may be considered if supported by other evidence that such status would inhibit anti-competitive effects.'

Robert Bloch, former head of the Justice Department's healthcare antitrust section, agrees.

'There's a basic belief of the courts that the people who sit on these boards will make decisions for the community's benefit, but they're not always aware of the day-to-day decisions that are made,' says Bloch, now an antitrust attorney with Mayer Brown & Platt in Washington. '(That belief) clashes with the competitive world, where not-for-profits do many things that for-profits do to survive.'

At least one federal judge has acknowledged that in his decision. Judge Michael Melloy, who presided over the Dubuque case, wrote: 'There is nothing inherent in the structure of the corporate board on the nonprofit status of the hospitals which would operate to stop any anti-competitive behavior.'

'Economic supermodels. Both government and private defense attorney have started using more complex economic analyses to bolster their arguments in court.

'Defense attorneys have come up with more sophisticated market analysis than in years past,' Horoschak says. 'They have economic models for predicting market size and the likely market dynamic if certain things occur. Judges are more receptive to these models than they were previously.'

Adds Monica Nother, a Boston-based economist and expert witness for the government in the Dubuque case: 'Hospitals may spend more time doing sophisticated studies. From an economic perspective, it's hard to predict what valid arguments will be.'

To further complicate the issues, the two sides in a ease often argue for different definitions of a market when pushing their economic theories. Geographic market is defined by city or county lines, while product market is determined by the kinds of services in question.

'Geographic market is always critical in these cases,' Bloch says. 'The whole issue is the question of market power. Market definition can really determine the outcome of a case.'

It's not that the government's economic models aren't sophisticated, Singer says. The problem is that government attorneys sometimes dismiss certain facts as irrelevant.

'The government has been pioneering the use of econometric data in cases,' he says. 'But the prosecutorial mind-set causes them to discount some evidence.

'Sometimes the government takes an unduly narrow view of the geographic market. They discount the patients who travel into an area. They tend to downplay it too much,' Singer adds. 'But if enough patients who had been traveling from outside start staying home for services, it can make a difference.'

For example, consider the Dubuque case. The hospitals presented evidence that their market area extended to a 100-mile radius around the city, including some fringe areas where patients could have gone to a Dubuque hospital or another hospital.

'If you had a narrow definition of the market, it was clearly a monopoly,' Nother says, echoing her testimony. 'But if you looked at the 100-mile area, there were plenty of hospitals to compete with. My contention was that it would be difficult to convince patients to leave Dubuque if the prices went up. Some patients in the fringe area could have gone either way.'

Depending on elaborate economic theories also can backfire. In Long Island, the Justice Department espoused its 'anchor hospital theory,' which says that managed-care plans build networks of providers to offer employers services in a given area. The employers would be more interested in a plan that includes a nearby hospital with a solid reputation, which would be the anchor hospital the plan is built around.

'While the theory may have been legitimate, the facts (in the Long Island case) made it difficult to win.' Singer says, referring to the geographic market. In that case, the hospitals successfully argued that they competed not only with hospitals on Long Island but also with Manhattan facilities. By that definition, they could not be anchor hospitals.

Judges with little antitrust experience can get confused by the myriad economic outcomes possible.

'Antitrust law depends on relatively sophisticated economic theory,' Miles says. 'It's more economics than law. Judges are trained as attorneys, not economists. Applying economics is more subjective than objective. You never have enough data to provide a conclusive answer. The data suggest this or that. But you can manipulate the data so that both sides can take the same data and reach different conclusions.'

Consider what Judge Spatt wrote in his Long Island opinion: 'The alleged efficiencies are often speculative and vigorously disputed by the testimony of contradicting experts.... The defendants must clearly demonstrate that the proposed merger itself will in fact create a net economic benefit for the healthcare consumer.'

Managed-care allies. When the government wants to prove that a merger would drive up prices for patients, it often calls on local HMOs to testify.

'There's a growing antipathy to managed care,' Horoschak says. 'Relying purely on managed-care views has hurt the government in certain contexts. You've got to bring in other witnesses, like employers.'

Adds Bloch: 'Different courts have varying degrees of hostility toward managed care. Butterworth made the point that managed-care plans are more concerned with profits than patients.

'Payers are credible witnesses in principle and concept,' he says. 'The government looks at who is most likely to be directly affected by this merger, who are the biggest buyers of care.'

If there's any doubt as to how the courts feel about managed care, one need not look much further than the opinion of Judge McKeague in the Grand Rapids case: 'In the real world, hospitals are in the business of saving lives, and managed-care organizations are in the business of saving dollars.'

Critics of the managed-care strategy say cases cannot be won on such testimony alone.

Singer believes government attorneys sometimes give too much weight to managed-care testimony. 'They have to realize plans have their own ax to grind. They would like nothing more than lots of hospitals competing with each other.'

Adds Kopit: 'The government historically has not paid enough attention to what the local community and employers want. The government relies almost entirely on managed care, which is not beloved in this country.'

In his Grand Rapids opinion, fudge McKeague made the same point: 'Despite its diligent efforts, the FTC has turned up remarkably little employer opposition.'

Likewise, in the Joplin case, Judge Dean Whipple wrote: 'Notably, no third-party payers or customers have expressly objected to this consolidation.'

If you're the federal government, it also helps to have the state attorney general in your corner.

'How the state comes out has to affect (the federal government's) success one way or another,' Horoschak says. 'It's an important factor.'

In the Long Island case, for example, New York Attorney General Dennis Vacco endorsed the merger after his office reviewed the deal at length.

'It's a marginal help if (the state attorney general is) on your side, but having him against you is significant,' Miles says. 'The attorney general is more local and has a better knowledge of the people involved.'

Outgunned? Because the government is picky about which cases it takes to court, its attorneys may not be as seasoned in the art of trial as their counterparts on the defense team.

'They don't have the trial experience the hospital attorneys do because the government tends not to litigate many cases,' Miles says. 'The fact that a number of attorneys have left the agencies (for private-sector jobs) has a significant effect. Being a good trial attorney requires certain skills and experience.'

Those skills are in high demand in the private sector, which has led to some thinning in the ranks of government enforcement agencies.

'The reality is that antitrust is hot with a capital H,' Horoschak says. 'And it's not just with healthcare. It's Microsoft, Boeing, Staples. When I was there (at the FTC), it was unusual for attorneys to leave, because no matter how good you were, no one wanted you. Now law firms are wooing attorneys away Even second-tier, third-tier attorneys are getting offers.

'To some extent, it's a talent drain from the agencies. But there are talented people coming into the agencies as well. They're attracting people who can spend a few years there and get some great experience.'

The government's budget for a particular case may know no bounds, and the agencies may put almost all their attorneys on that case. But it still may not be enough, some attorneys say.

'The government has more resources financially speaking because in regard to a case, resources are unlimited,' says Miles, who wasn't involved in any of the cases. 'If you look at the human resources, in most litigation matters private firms have more attorneys and paralegals working on a case. It all boils down to how much a client wants to pay.'

'If you ask the agencies, they devote significant resources to healthcare as far as bodies go,' Kopit says. 'But if you look at their activities now and what they could be doing, they're woefully understaffed.'

Attorneys who have worked for the government disagree.

'In my experience, at the government level, you're never overwhelmed by the other side's resources,' Horoschak says. 'In Dubuque, the Justice Department had an army of lawyers, and so did the FTC in Butterworth. The last time I tried a case (for the FTC) C) was in 1994, and I felt as if the government could meet the opposition toe to toe.'

Extra innings. The government's less-than-stellar batting average may have the teams down, but the series isn't over yet.

For the first time in two years, the five FTC commissioners voted unanimously this month to seek an injunction in federal court to block the proposed merger of the only two acute-care hospitals in Poplar Bluff, Mo. (April 20, p. 2). The agency is hoping for a victory in its case against the merger of for-profits Doctors Regional Medical Center and Lucy Lee Hospital, both financially healthy institutions.

'It hasn't made the feds gun-shy,' Miles says. 'It's caused introspection. They're asking a lot of the same questions (MODERN HEALTHCARE) just asked me.'

'Where they continue to have concerns, you'll surely see more challenges,' Bloch says. 'They're clearly mindful of their track record, and they want to win.'

There is no one pitch that strikes out agency attorneys every time; rather, there are several factors that collectively can sway courts for or against the feds' team.

'It's impossible to say (why they keep losing),' Miles says. 'We can only speculate. Antitrust is so fact-specific that it's dangerous to draw broad conclusions.'

RELATED ARTICLE: Long Island, N.Y.

U.S.A. vs. Long Island Jewish Medical Center and North Shore Health System

Government's case: Using its 'anchor hospital theory,' the government argued that the merger would increase prices for area managed-care plans.

Complaint field: June 10, 1997

Opinion rendered: Oct. 23, 1997

Quotable: '(North Shore and Long Island Jewish) have stipulated with the New York state attorney general not to raise prices for at least two years after the merger is consummated.'--U.S. District Judge Arthur Spatt in his opinion.

RELATED ARTICLE: Grand Rapids, Mich.

FederalTrade Commission vs. Butterworth Health Corp. and Blodgett Memorial Medical Center

Government's case: Since the two hospitals compete primarily with each other, a merger would have substantially anti-competitive effects.

Complaint filed: Jan. 23, 1996

Opinion rendered: Sept. 26, 1996

Quotable: 'Nonprofit hospitals operate differently in highly concentrated markets than do profit-maximizing firms.'--Judge David McKeague in his decision.

RELATED ARTICLE: Dubuque Iowa

U.S.A. vs. Mercy Health Services and Finley Tri-States Health Group

Government's case: Mercy and Finley are the only two-acute care hospitals in Dubuque and the largest hospitals within a 70-mile radius.

Complaint filed: June 9, 1994

Opinion rendered: Oct. 27, 1995

Quotable: 'If the government had been successful in showing anti-competitive effects from the merger, the hospital efficiencies defense must fail.'--U.S. District Judge Michael Melloy in his opinion.

RELATED ARTICLE: Joplin, Mo.

FederalTrade Commission vs. Freeman Hospital and Tri-State Osteopathic Hospital Association

Government's case: The merger of two of the three hospitals in Joplin would substantially reduce competition and increase prices.

Complaint filed: Feb. 21, 1995

Opinion rendered: June 9, 1995

Michigan and Oregon Mayors Receive Top Awards in 2012 Mayors' Climate Protection Awards - Manufacturing Close-Up

Grand Rapids, Michigan Mayor George K. Heartwell and Beaverton,Oregon Mayor Denny Doyle have been selected as the nation's topwinners in the 2012 Mayors' Climate Protection Awards, an initiativesponsored by the U.S. Conference of Mayors and Walmart.

According to a release, the annual awards program is in its sixthyear and recognizes mayors for practices in their cities thatincrease energy efficiency and reduce greenhouse gas emissions. Anindependent panel of judges selected the winners from a pool of morethan 100 applicants.

'Mayor Heartwell and Mayor Doyle have done an outstanding jobdeveloping climate protection programs that will serve as models forthe rest of the country,' said Los Angeles Mayor AntonioVillaraigosa, President of the U.S. Conference of Mayors. 'Theseawards prove that cities large and small are making extra efforts tolaunch innovative programs to protect our environment.'

Officials noted that the City of Grand Rapids has set forth amulti-year Sustainability Plan with over 200 very specific economic,environmental, and social targets. As one of the early signatoriesof the U.S. Conference of Mayors Climate Protection Agreement, GrandRapids' commitment to reducing green house gas emissions has beendemonstrated through multiple projects. These projects include:energy efficiency improvements in city buildings with a 15 percentreduction in electricity consumption, an energy audit program inneighborhoods, solar panel placement on the city's existing LEEDcertified building, a commitment of 22 percent of renewable energyin its electricity portfolio, geothermal projects at fire stations,installation of Electric Vehicle Charging stations at city'sdowntown parking ramps, an increased recycling rate throughcommunity engagement, sustainability planning and a community-wideactive sustainability network involving over 200 private and publicorganizations.

Solar Beaverton is a community, bulk-purchase solar program ledby Beaverton's Sustainability Division.The Solar Beaverton programincreased use of renewable energy in the city, reduced greenhousegas emissions, simplified the process of installing solar, createdjobs that support local contractors and manufacturers, and helpedresidents take advantage of financial incentives. Solar Beaverton ispart of the city's efforts to support low-carbon lifestyles, energyefficiency and security, health and well-being, and eco-systemstewardship. The program is part of a larger city commitment toreduce emissions under its Greenhouse Gas Emissions Program.

The U.S. Conference of Mayors is a nonpartisan organization ofcities with populations of 30,000 or more.

Detroit Free Press Small Business column. - Detroit Free Press (Detroit, MI)

Byline: Carol Cain

May 2--MICHIGAN ORGANIZATION REACHES OUT TO OTHER STATES, CREATING OPPORTUNITIES: Taking a page from the 21,000 Michigan small businesses her organization represents, Jennifer Kluge adopted an entrepreneurial approach in creating a new division for the Michigan Business and Professional Association (MBPA).

An idea four years in the making, the National Association for Business Resources (NABR) was officially christened March 3. Kluge, 33, is serving as its president and overseeing its rollout to other states.

NABR provides SBs and entrepreneurs services, educational seminars and other discounts similar to the ones that MBPA offers Michigan businesses, but in other states. It's initially starting with Ohio, Wisconsin, Illinois, Indiana and Minnesota, and will add other states down the road.

Another advantage of the new division is that it will give Michigan MBPA members the chance to network with companies in other states, Kluge adds.

It's the third SB association that Kluge and her father, Ed Deeb, will run from their office in Warren.

NABR evolved from the Michigan Food and Beverage Association, which Deeb started in 1987. He found other SBs beyond the food industry were also interested in the group, so he added the Michigan Business and Professional Association in 1996. Today, those two groups have grown to 21,000 members across the state employing 160,000 people.

The three trade groups have 24 employees in Warren.

The idea for the new division came after repeated calls from SBs in nearby states that heard about MBPA programs and services and wanted to be part of it.

'But because of our charter, you had to be a Michigan business for us to help,' Kluge explains. 'But we began to think, 'Well, we are already the largest trade association in Michigan: Why not expand into other states?' '

The idea seemed simple enough, but implementing it was a different matter.

It took four years and about $300,000 in legal costs and other fees to set up in the five states.

'We are taking what we are good at, and taking it to another market,' she says.

For example, MBPA will hold its '101 Best and Brightest Firms to Work For' event in Grand Rapids on Wednesday. The same event will be held in Chicago on June 10 for companies there, but will be administered by NABR.

Kluge says her goal is to have as many NABR members in other states cumulatively as they currently have in Michigan within five years.

An NABR membership costs $125 per year. The group also offers discounts on health insurance and training events, which cost extra.

'The beauty of this is we will be able to expose our Michigan members to other states,' Kluge says.

Kluge, who joined MBPA in 1999 as vice president, has learned about the needs and concerns of small businesses from her father. While the idea of working so closely with a parent may not be everyone's cup of tea, Kluge says it's been wonderful.

'I love working with my dad,' she adds.

Contact the National Association for Business Resources, the Michigan Business and Professional Association and Michigan Food and Beverage Association at 586-393-8800.

THE ENVELOPES, PLEASE:

The U.S. Small Business Administration handed out its 2005 Michigan Small Business awards last week during the first annual Michigan Celebrates Small Business awards dinner held in East Lansing.

More than 450 people attended the event, hosted by several groups. Besides the SBA, other supporters included the Small Business Association of Michigan, the Michigan Economic Development Corp., the Michigan Small Business & Technology Development Center and the Edward Lowe Foundation.

The SBA's 2005 winners:

--Small Business Persons of the Year: Michael and Rachel McCormack, chairman and CEO, president and CFO, respectively, MicroMax Inc., Canton.

--Michigan and Midwest Region Small Business Journalists of the Year: Jeff and Rich Sloan, cofounders, StartupNation LLC, Birmingham.

--Michigan and Midwest Region Financial Services Champion of the Year: Herbert (Ted) Doan, chairman, Herbert H. and Grace A. Dow Foundation, Midland.

--Michigan Family-Owned Small Business of the Year: Suk-Kyu Koh, president, Chrysan Industries Inc., Plymouth.

--Michigan Women in Business Champion of the Year: Rita VanderVen, executive director, Grand Rapids Opportunities for Women, Grand Rapids.

--Michigan Minority Small Business Champion of the Year: Enrique Carrillo, vice president of corporate public affairs, Comerica Inc., Detroit.

--Michigan Small Business Counselor of the Year: Vikram Mathur, associate Region 9 director, Michigan Small Business and Technology Development Center, Livonia.

Carol Cain hosts 'Michigan Matters' on WWJ-TV (Channel 62) 11 a.m. Sundays and WKBD-TV (Channel 50) 7:30 a.m. Saturdays. If you have information on your business, please mail it to Small Business, Detroit Free Press, 600 W. Fort St., Detroit 48226, fax it to 313-222-5992 or e-mail it to cain@freepress.com.

To see more of the Detroit Free Press, or to subscribe to the newspaper, go to http://www.freep.com

Copyright (c) 2005, Detroit Free Press

Distributed by Knight Ridder/Tribune Business News.

Inland Imaging, peers join forces to share ideas, goals - Journal of Business

Spokane-based Inland Imaging LLC, the Inland Northwest's largest radiology practice, and 14 other major U.S. radiology groups have formed a consortium to search for ways to reduce costs, to take advantage of opportunities, to improve patient care, and to profit in other ways from working together.

The consortium, Strategic Radiology LLC, doesn't have an office yet, but is close to announcing the hiring of a non-physician administrator after the contract of its first employee expired, says Steve Duvoisin, Inland Imaging's CEO. The 15 groups, which own Strategic Radiology through holding companies they have formed, include more than 890 physicians. Inland Imaging has 63 radiologists and six surgeons on staff.

'For those of us in radiology, as for others in health care, things are evolving,' says Duvoisin.

'For a long time, groups have been relatively small and geographically limited,' he says. Now, he says, 'You're starting to see the consolidation of health care,' with organizations that have both a hospital and a physician component, such as Group Health, the Mayo Clinic, Geisinger Health System, and the Cleveland Clinic, coming to the fore. Also, Duvoisin says, hospital chains, including Providence Health Services and Community Health Systems Inc., which own the major hospitals here, want to have more services either in their medical centers or tightly aligned with them, Duvoisin says.

'From a health-delivery standpoint, it's what needs to happen,' he says of the trend toward consolidation. 'I've been doing a lot of thinking about how patients access the health-delivery system. It should be easier to access than it is.'

It's too early to say whether the radiology practices that own Strategic Radiology might end up as a single group someday, Duvoisin says.

'Part of the reason our organization came about was to address the publicly financed models' efforts,' he says. Those companies, such as Nighthawk Radiology Holdings Inc., which was launched in Coeur d'Alene but now has its offices in Scottsdale, Ariz., provide physician readings of radiology studies on an around-the-clock basis, filling in gaps when the staff members of radiology practices aren't available, such as at night.

Duvoisin claims that the public companies have gone after local radiology groups' contracts.

'Some of the smaller to medium-size groups have had trouble with that,' he says. 'Putting physician services on the stock market is a slippery slope.' Wall Street and the shareholders of publicly traded companies demand returns that come out of local physicians' pockets, and publicly traded companies don't reduce costs, he says.

Strategic Radiology has no plans to go public or to become another Nighthawk, although its members have discussed the issue of whether and how to provide o& hours physician readings of radiology studies that could be sent via telecommunications systems to its members' physicians.

'A question that Strategic Radiology members will have to answers soon is when (and how) to roll out any collective teleradiology or image-sharing capacity between the groups,' the publication Radiology Business Journal reported in a recent article on the consortium. 'Do they want a teleradiology presence only between Strategic Radiology members, or do they want to offer a broader service to nonmembers, too?'

Duvoisin says that Inland Imaging has its own internal night-readings system, with two physicians available to do off-hours readings every night. Outside of its own group, it provides that service mostly in the Northwest and to a small physicians group in Phoenix, he says.

In addition to Inland Imaging, the groups that formed Strategic Radiology include two practices from California, two from Arizona, and one each from Colorado, Connecticut, Georgia, Indiana, Michigan, North Carolina, Ohio, Tennessee, Texas, and Utah. The largest, Advanced Radiology Services, of Grand Rapids, Mich., has 114 radiologists, and Duvoisin says it's the biggest radiologists' group in the U.S.

The radiology groups demanded from the beginning that the consortium be owned and operated by radiologists, as those groups are, Duvoisin says.

Radiology Business Journal reported, 'Indeed, there is no doubt that the consortium's fundamental reason for being is to retain a radiologist's hand on the tiller as the industry is reshaped by health reform, pay for performance, sophisticated utilization management, and the increasing shifting of private physician practices into hospital ownership.'

Thus far, Strategic Radiology has concentrated on expense reduction, group-purchasing agreements for equipment and supplies, and data sharing on malpractice insurance rates, billing practices, and other subjects, Duvoisin says.

He says that when its members compared notes on malpractice insurance, one group decided that the premiums it had been paying for coverage levels of $5 million per occurrence and $9 million per year were excessive. That group followed the lead of Inland Imaging and other members and cut its coverage to $3 million per occurrence and $5 million per year, saving $140,000 a year in premium costs, Duvoisin says.

WORTH READING.(brief industry information)(Brief Article) - Hospital Materials Management

Health Care Strategic Management

The deregulation and restructuring of the energy market is creating major challenges and opportunities for hospitals and other health care organizations that not only could help save a substantial amount of money but could result in new revenue. Now a new online program has been launched to help health care organizations avoid the pitfalls and take advantage of the new opportunities.

The program, jointly launched by ECRI, a worldwide health care research and consulting organization, and SRC Global, an international research and consulting firm specializing in energy issues, is offered by Ecom-Energy, a Plymouth Meeting, Pa., company that describes itself as an 'energy value provider that combines Internet technology with energy market and health care industry expertise.'

Health Industry Today

Medtronic Inc., Minneapolis, received FDA clearance for its BeStent[TM] 2 with Discrete Technology[TM] coronary stent delivery system. Medtronic says the introduction of the BeStent2 makes it the only company to provide physicians with a choice of laser cut or modular coronary stents to comply with individual preference.

BeStent2 is designed for use after coronary arteries have been opened with balloon catheters during percutaneous transluminal coronary angioplasty (PTCS) therapy. Medtronic says the device features an enhanced stent and delivery system that facilitates 'predictable and precise placement.'

BeStent2 is the second generation of the BeStent that was tested in Europe but not released in the U.S.

Profiles in Healthcare Marketing

Twenty-two hospitals captured winners' honors this year in the fourth annual report competition.

The University of Texas M.D. Anderson Cancer Center, Houston, placed first overall, followed by Legacy Health System, Portland, Ore., second place; and Shands HealthCare, Tampa, Fla., third place.

The number and diversity of annual reports entered in this year's competition enabled the judges to increase the number of categories in which awards could be presented. These include:

Specialty hospitals--The Children's Hospital of Philadelphia, first place.

Fund-raising--Hurley Medical Center, Grand Rapids, Mich., first place.

Academic Medical Centers--SUNY Health Science Center at Syracuse, Syracuse, N.Y., first place.

Community hospitals--Providence Hospital & Medical Centers, Southfield, Mich., first place.

Poll: U.S. Security Tops Voter Attention - AP Online

WILL LESTER, Associated Press Writer
AP Online
10-16-2004
Dateline: WASHINGTON

PFC Jason Hagan, of the Scout Platoon, 1st Battalion, 9th Infantry Regiment, 2nd Infantry Division, of Grand Rapids, MI, gets a break in the back of his Humvee at Camp Fallujah, near Fallujah, Iraq, Saturday, Oct. 16, 2004. The Scout Platoon was on a mission to escort other troops into the Ramadi area. (AP Photo/Jim MacMillan)

National security issues such as the war in Iraq and terrorism are dominating voters' attention in the final weeks before Election Day, Associated Press polling found.

Along with security issues like war and terrorism, the economy and health care were near the top of the list of the nation's most important problems in an AP-Ipsos poll.

In a poll by CBS News in October 2000, the most important problems were Social Security, education and health care. National defense and the military were at 2 percent.

National security issues were picked by 55 percent of Americans as the most important problems facing the nation, according to the poll taken in early October _ up from 43 percent who named national security issues in an April poll.

When asked in an open-ended question to identify the most important problems facing the United States, 27 percent mentioned war. That number has tripled since the summer of 2003 in the aftermath of the invasion of Iraq. An additional 18 percent named terrorism. Respondents were allowed to name more than one problem; smaller numbers mentioned other national security issues.

Economic problems _ including the overall economy and unemployment _ were named by four in 10, far behind national security issues. Two in 10 specifically mentioned the economy, and 13 percent said unemployment.

About one-fourth of those questioned mentioned other domestic issues, especially health care, according to the poll conducted for the AP by Ipsos-Public Affairs.

WAR IN IRAQ

Concerns about war have grown steadily since July 2003, tripling since the aftermath of the Iraq invasion. Violence by a strengthening insurgency has been increasing since then.

Strong supporters of Democrat John Kerry were far more likely than strong supporters of President Bush to name 'wars' as a top problem, according to the AP-Ipsos poll. Those who see the Iraq war as a top issue are slightly more inclined to support Kerry, other polls suggest.

'I think we should get out as quick as we can. We never, never should've got in,' said Art Van Moorelehem, a retired farmer from Arlington, S.D.

Still Bush gets more saying they trust him to handle Iraq.

William Alexander, chief executive of a Vermont mental health center, said Bush 'has done about as good a job as anyone could do.'

TERRORISM

Terrorism continues to be a top concern, though it has not increased as a worry in recent months. Nearly two in 10 _ 18 percent _ called it a top problem.

Those who name terrorism as a top problem are far more likely to support Bush. Likely voters are more inclined to trust Bush than Kerry on that issue.

Sue Crawley, a foster care adoption worker from Crestview, Fla., said she's supporting the president because of the terrorist threat: 'I think he's doing the best he can with what he walked into and what he needs to accomplish here. You know sometimes you just can't do it in four years.'

ECONOMY/JOBS

The economy has edged higher in the public's thinking over the last three months. Two in 10 _ 22 percent _ called the economy a top problem and another 13 percent said unemployment. Strong Kerry supporters were more likely to name it as a top issue than strong Bush backers in the AP poll. Kerry has an advantage over the president on which candidate people trust more to handle the economy and jobs.

Anne Flagg, an administrative worker at a college in Emporia, Kan., says her biggest concern is the local economy, which she feels is in trouble after losing two major employers.

'I can see it in a lot of different ways,' she said of the town's economic problems. 'I see the kids in the school, hear about the money they don't get to buy things. As of last week, our Salvation Army had no food left.'

HEALTH CARE

About two in 10 _ 21 percent _ named health care as a top issue, up from 14 percent who said that in April. Bush supporters and Kerry supporters were about equally likely to mention it as a top problem. Those who name health care as the top issue are more likely to support Kerry. And voters generally trust him more to handle it.

Retiree Ronald DeVos, 57, of Franklin Lake, N.J., is leaning toward Kerry because of his talk about health care solutions. DeVos has to cover his own insurance until he becomes eligible for Medicare.

'Millions of people don't have health care,' he said. 'I'm buying my own insurance, it's a thousand dollars a month.'

Anthony Adams, a retiree from Manchester, Ky., has high insurance and medical costs, but he doesn't blame Bush. 'My insurance is $544 a month. It's hard to do anything. Health care is so costly and prescriptions are outrageous, too,' he said.

The poll of 1,000 adults was taken Oct. 4-6 and has a margin of sampling error of plus or minus 3 percentage points. The question about the nation's top problems was asked of 479 adults and has a margin of error of plus or minus 4.5 percentage points.

___

Searching for elusive wellness connection. - Employee Health & Fitness

Searching for elusive wellness connection

The pioneer wellness research team is at it again. Grand Rapids, MI-based Steelcase Inc. and the University of Michigan, Ann Arbor, are out to prove that wellness actually does impact productivity.

We want to measure the impact that health and wellness have on ones effectiveness at work, explains Bob Paige, manager of Steelcase medical facilities and employee wellness. We think theres a correlation, but there arent a lot of studies out there that prove there is.

The pilot program, which began Jan. 1, involves a group of 100 employees. The university will participate in the research through both its wellness and business departments. Were looking to them to help us better measure the productivity side of the house, Paige explains.

Breaking down the barriers

The premise of the study is if the barriers to exercise are eliminated, employees will exercise more, be healthier (i.e. better blood flow and oxygenation), have higher self-esteem, and be more productive as a result. The employees in the study will be empowered to exercise more often, says Paige. For example, if an employee is going to be traveling soon and his or her child is participating in a school play during the regular exercise time, the employee will most likely choose to go to the play because they wont see their child for a couple of days.

We will tell them, yes, by all means get to the event, but be sure to do both. For example, if youre in a job that is flexible and not task-oriented, and your day is open at 9 a.m., schedule that meeting with yourself and go exercise. Just because it is during your typical work hours, you dont need to feel guilty about working out, he says.

For employees whose schedules arent quite as flexible, the researchers will create the opportunity for them to be reimbursed up to $500 a year for activities they do to exercise. Those opportunities, Paige says, will not be limited to traditional ones like fitness center membership reimbursement.

Say youre a runner. Maybe we will reimburse you for running shoes, Paige explains. Or if you purchase a treadmill and document home usage, we could reimburse you for that.

The researchers ask two things of the participants: To participate in a Health Risk Appraisal (HRA) so they can measure biometrics, document their daily nutrition, level of exercise, and how much rest they get. To facilitate this, they created a Web page where the participant can sign on and click the appropriate information box, such as the type of exercise they have done. Its extremely user-friendly, says Paige.

Finally, each of the participants has been assigned a health coach to help them with their exercise programs.

Getting feedback

Their productivity will be measured in part through the Steelcase human resource information system. Well obtain feedback on their performance by identifying the people they work with, says Paige. The participants will give their own perspective and well compare to that with how others see them.

A more scientific measurement will be provided with the help of the University of Michigans Robert Quinn, PhD, of the business college. (The health promotion centers Dee Edington, PhD, will also be participating, as he has on several landmark Steelcase studies).

Bob Quinn wrote the book Beyond Rational Management, notes Paige. In it, he developed an instrument that plots and measures effectiveness. We hope to be able take our own instrument we use to measure effectiveness and communicate the aggregate information.

Quinns system, he explains, plots skill sets such as commitment and morale, or direction and clarity. The skill set findings for each participant will be compared to the mean Steelcase human resource professionals look for in that specific position.

While the HRA will be conducted only once or twice during the two-year study, we may do [the effectiveness measurement] three or four times, says Paige.

He believes the study will help strengthen the bottom line connection for wellness. We think wellness has an equation to productivity, and we definitely think theres a financial advantage as well.

Many patients react enthusiastically.(RX RETAIL PHARMACY: Special Report)(wellness programs for the patients by many drugstores) - Chain Drug Review

NEW YORK -- A number of programs are competing with Wal-Mart Stores Inc.'s $4 generics offering. Among the more distinctive are Meijer Inc.'s generic antibiotics giveaway and Kmart's $15 three-month prescriptions.

Grand Rapids, Mich.-based supercenter retailer Meijer dispensed more than 1 million free prescriptions during the first year of its free antibiotics program. 'When we launched this innovative program, our goal was to help families here in the Midwest as they continue to deal with rising health care costs,' cochairman Hank Meijer said in the fall. 'The Meijer free antibiotics program has been hugely successful, and we are so proud this program has made such a positive impact on our customers.'

Meijer customers throughout the chain's five-state region were quick to take advantage of the program. The retailer filled nearly 200,000 free prescriptions in metropolitan Detroit alone, and more than 150,000 prescriptions in Grand Rapids. Stores in Ohio and northern Kentucky accounted for 200,000 free prescriptions, and Indiana stores filled more than 150,000.

Meijer launched the initiative in October 2006. The program covers leading oral generic antibiotics, with a special focus on the prescriptions most often filled for children. The program includes at least one antibiotic from each of the major antibiotic classifications and more than 70% of the genetic pediatric antibiotic prescriptions filled by Meijer. Among them are amoxicillin, cephalexin, ciprofloxacin, ampicillin and erythromycin.

The no-strings-attached program means that any customer, regardless of insurance or co-payment, can take her prescription to any Meijer pharmacy and receive the designated antibiotic free of charge. There is no card required, no membership to purchase, no minimum charges, no special forms to fill out and no fees to pay. Meijer studies show that 94% of its customers have some form of insurance coverage; however, they still have drug-related co-pays.

'Reaching this milestone in less than 12 months validates that this program is something that truly benefits our customers,' said Hank Meijer. 'Based on this response, as well as the momentum built through the year, I would be surprised if we didn't hit the 2 million milestone by late spring 2008.'

'We are especially proud that we could impact so many families in the states we do business,' said cohairman Doug Meijer. 'Meijer customers in Michigan, Ohio, Indiana, northern Kentucky and northern Illinois now fully understand we are dedicated to helping improve their lives, and we are glad to be able to continue this important program as part of our commitment to our communities.'

Kmart, for its part, last year expanded its $15 90-day generics program to include more than 300 medications. The initiative began in May 2006 in all of the more than 1,100 Kmart pharmacies nationwide.

The expansion added 70 generic medications, including 17 different formulations of popular prenatal vitamins, a larger selection than other programs.

The program also offers sertraline (used to treat depression) and simvastatin (used to treat high cholesterol), which were the fifth and tenth most prescribed brand medications in 2005 before both became available as genetics in 2006.

'At Kmart Pharmacy we strive to provide health care solutions that improve our customers' quality of life at an exceptional value,' said vice president Mark Doerr last year. 'Our exclusive 90-day generics program, which offers a lower out-of-pocket cost than most mail-order prescription coverage, also encourages better patient care through personal pharmacist interaction.'

Also, Publix Super Markets Inc. announced last month that it had filled its millionth antibiotic through its free prescription program and had added doxycycline hyclate capsules to the program.

Publix' program was launched in August to cover amoxicillin, cephalexin, sulfamethoxazole/trimethoprim, ciprofloxacin (excluding ciprofioxacin XR), penicillin VK, ampicillin and erythromycin (excluding Ery-Tab).

'Filling our millionth prescription under our free prescription drug program is a milestone we're proud to accomplish,' says a company spokeswoman. 'Our customers and the medical community have been very pleased with the program.

'Adding doxycycline hyclate capsules to the program will help meet the health and wellness needs of even more of our customers and associates.'

Customers provide their Publix pharmacist with their prescription, up to a 14-day supply, and it will be filled at no charge. The number of prescriptions customers may fill for free is not limited. The free antibiotics are offered to customers regardless of their insurance provider.

And Martin's Super Markets Pharmacies began giving away the same eight generic oral antibiotics as Publix. Customers may receive up to a 21-day supply at normal dosages.

The Martin's Advantage Card--which can he obtained immediately and at no charge at the pharmacy counter or at any customer service desk--activates the free offer.

Blues do get special treatment. - Crain's Detroit Business

Editor:

The question of whether to reform health insurance in Michigan is suspect because it has been raised by the state's largest health insurer, Blue Cross and Blue Shield of Michigan (``Blues to ask state for level playing field for small groups,'' Feb. 4; and ``Blues to Engler: Reform insurance market, not us,'' Jan. 28). The Blues' complaint that they must insure all comers is not substantive, because that was the primary reason for their creation. I strongly suggest that the Legislature be circumspect about creating rules that benefit the Blues and their competition.

Blue Cross fails to mention that it received preferential treatment via very deep discounts from hospitals, physicians and other health care practitioners. These are discounts that other commercial insurers do not have access to. In order for commercial insurers to access competitive discounts from health care providers, they must rely on third-party PPO networks. There are no PPO networks in the state that have a network of participating health care providers as comprehensive as the network that participates with Blue Cross.

Although these PPO networks offer discounts off the standard charges of the participating health care providers, the discounts are typically not nearly as significant as those received by Blue Cross. In addition, these PPOs charge the commercial carriers an access fee that further reduces the net value of the discounts for health care services. Sometimes these PPO network access charges are rather excessive.

The largest PPO in the state of Michigan, PPOM, frequently charges as much as 10 percent of the value of the health care billings they reprice (i.e., the net discounted billing). None other than Blue Cross owns PPOM. The Blues' ownership of PPOM limits the competitiveness of all the commercial insurers.

If the state requires that all commercial insurers must play by the ``Blue rules,'' then they should have access to the same benefits provided to the Blues. This would require that the state create several new mandates for the commercial health insurance marketplace:

1. Hospital charges must be fixed at the state-mandated discount for Blue Cross.

2. All health care providers that agree to participate with Blue Cross could charge no more than the fee paid by Blue Cross for their service.

3. Special tax treatment for all commercial insurers (i.e., Blue Cross is tax-exempt); at minimum, no state premium taxes.

4. Blue Cross should be required to divest itself of ownership in PPOM. Any thoughts about leveling the playing field in the health insurance market must look at all the elements of that marketplace. The Blues already enjoy a considerable tilt in their direction. The ill-considered creation of additional rules that favor the Blues will only tend to drive out what little competition still exists.

If securing funds to offset losses is the real issue, as the Blues contend, then the sale of PPOM and the Accident Fund, Michigan's largest insurer of workers' compensation coverage, should generate more than enough funds to resolve the current crisis. I am confident that the sale of both these assets would fetch a very handsome sum.

I agree with the Blues that the playing field is not level. It has been tilted in their favor for a very long time. Any legislative action that would provide them with even more of an advantage is not good for the employers who conduct business in Michigan. Blue Cross has a virtual monopoly in both the health care insurance and workers' compensation insurance markets in Michigan. If they can't manage this near-monopoly in a manner that results in at least a break-even, then management changes are needed.

Regarding this issue, I ask that the Legislature advocate on the side of business and not on the side of the Blues.

David Silliven

Executive director

Physicians' Organization of Western Michigan Inc.

Increased spending, shakeout seen in IT industry.(Focus) - Crain's Detroit Business

Byline: Andrew Dietderich

A dozen mergers and acquisitions involving Southeast Michigan tech companies have taken place since October, fueled by increased tech spending that industry professionals said will continue.

The result, said Seema Chaturvedi, managing partner of the Troy-based Accelerator Group, will be a further shakeout of companies looking to expand or exit as both buyers and sellers look to take advantage of improving valuations.

'Information-technology spending is picking up, and as revenue is beginning to come in, sellers are viewing now as a good time to prepare their companies to either get a partner that gives them strength or exit the business altogether,'' Chaturvedi said.

Market-research companies such as Stamford, Conn.-based Gartner Inc., Cambridge, Mass.-based Forrester Research Inc. and Framingham, Mass.-based IDC estimate tech spending will increase between 6 percent and 9 percent in 2005.

Consider one of the acquisition targets, Dearborn-based Superior Consultant Holdings Corp.

Superior, which expected revenue to be about $108 million in 2004 and was profitable for the first time since 1999, announced on Dec. 20 it would be acquired by Affiliated Computer Services for $106 million. Richard Helppie, founder and CEO of Superior, said the acquisition made sense because Superior will gain strength by being part of the larger ACS.

'This will give us more and larger opportunities,'' Helppie said. 'And they're opportunities that we might not get if we weren't part of a Fortune 500 company.''

Superior will become part of ACS Healthcare Solutions. Helppie will serve as managing director of ACS Healthcare Solutions.

Sellers aren't the only ones taking advantage of the situation, Chaturvedi said.

'Buyers are able to take advantage of lower valuations,'' she said.

David Morgan, CFO of Southfield-based TechTeam Global Inc., said acquisitions are a significant part of TechTeam's growth strategy.

On Dec. 31, 2003, for example, the company said it had acquired Chantilly, Va.-based Digital Support Corp. for $6.3 million. TechTeam bought Brussels, Belgium-based Advanced Network Engineering last May for about $1.1 million.

TechTeam bought Bethesda, Md.-based Sytel Inc. for $18.5 million Jan. 3.

'This isn't the heyday of the tech boom where companies are being sold for incredible multiples of their actual value,'' Morgan said.

Valuation has evolved since the tech boom of the late '90s, Chaturvedi said.

Whereas valuation used to be based on multiples of revenue, she said, earnings now play a bigger role.

A company that may have been valued at six times to seven times revenue during the 1999 tech frenzy is more likely to be valued at three times to five times earnings today, Chaturvedi said.

That bodes well for companies with cash on hand, such as TechTeam, which had $40 million at the end of last year.

With its purchase of Sytel, for example, TechTeam not only gets a company that had revenue of $21.1 million through the first nine months of 2004, but one that generates nearly all of its business from the federal government.

Detroit-based Huron Capital Partners L.L.C. also plans to make some tech-related acquisitions, said Mike Beauregard, partner at Huron Capital Partners.

Huron announced Dec. 7 that it wants to acquire a company or companies that provide medical devices to the health care industry.

'Many corporations are spinning off their noncore divisions, making them a strong play,'' Beauregard said.

For example, Saline-based Latitude Consulting Group Inc. acquired Novations Learning Technologies from parent Boston-based Novations Group Inc. on Jan. 18. Terms weren't disclosed.

Kurt Crisman, marketing manager at Latitude, said Novations Group wanted to divest Novations Learning Technologies.

'We had worked with them in the past and knew they had some top-notch customers, so it was an opportunity we simply couldn't pass up,'' Crisman said.

Andrew Dietderich: (313) 446-0315, adietderich@crain.com

* * *

M&A mania

Tech-related mergers and acquisitions have been heating up since October. Here are 12 local deals:

* Statprobe Inc., Ann Arbor, acquired by Basking Ridge, N.J.-based i3 Research. Terms undisclosed. Oct. 4.

* Compuware Corp., Detroit, acquired the technology assets of software company DevStream Corp., Colorado Springs, Colo. Terms undisclosed. Oct. 12.

* Arbortext Inc., Ann Arbor, acquired Advent Publishing Systems Ltd., London. Terms undisclosed. Oct. 13.

* NuSoft Solutions Inc., Bloomfield Hills, acquired Sagestone Consulting, Grand Rapids, for $4 million. Nov. 14.

* SunTel Services, Rochester Hills, acquired TES Networks, Grand Blanc. Terms undisclosed. Nov. 15.

* Iserv Technology Group, Grand Rapids, acquired the customers of HTDConnect from Online Technologies Corp., Ann Arbor. Terms undisclosed. Dec. 1.

* Jackson Staffing, Detroit, acquired InfoServices Inc., Madison Heights. Terms undisclosed. Dec. 2.

* Delphi Medical Systems, Troy, subsidiary of Delphi Corp., acquired Peak Industries Inc., Longmont, Colo., for $44 million. Dec. 8.

* Optasite Inc., Worcester, Mass., acquired 49 cell towers in Michigan owned by Communications Capital Tower Holdings L.L.C. Terms undisclosed. Dec. 16.

* Superior Consultant Holdings Corp., Dearborn, was acquired by Affiliated Computer Services, Dallas, for $106 million cash. Dec. 20.

* TechTeam Global Inc., Southfield, acquired Sytel Inc., Bethesda, Md., for $18.5 million. Jan. 3.

* Latitude Consulting Group Inc., Saline, acquired Novations Learning Technologies, Boston. Terms undisclosed. Jan. 18.

CAPTION(S):

Not-for-profit status facilitates hospital merger. - Healthcare Financial Management

Not-for-profit status may become an advantage for hospitals seeking to increase market share through a merger. On July 8, 1997, the Court of Appeals for the Sixth Circuit upheld the District Court's denial of a request by the Federal Trade Commission (FTC) to halt a proposed merger between two not-for-profit hospitals, Butterworth Hospital and Blodgett Memorial Medical Center, both in Grand Rapids, Michigan. The FTC had requested the District Court to enjoin the merger until the agency could determine whether it was in violation of Federal antitrust laws.

The District Court was persuaded that mergers of not-for-profit hospitals do not generally lead to price increases, and may, in fact, lead to price reductions. Moreover, because the Michigan not-for-profit hospitals' boards included community representatives who were purchasers of the hospitals' services, the court found that 'there would be no rational economic Incentive for such an organization to raise its prices.'

Not-for-profit healthcare entities often claim they must operate under more onerous legal restrictions than their for-profit peers and, therefore, are at a relative disadvantage. That perception may change--at least regarding mergers- in the wake of a recent Sixth Circuit Court of Appeal's decision in the case of FTC v. Butterworth Health Corp. (July 8, 1997). The decision unanimously upheld the District Court's denial of a preliminary injunction requested by the Federal Trade Commission (FTC) to halt the proposed merger of Butterworth Hospital and Blodgett Memorial Medical Center, two not-for-profit hospitals in Grand Rapids, Michigan.

Background

The court identified four Grand Rapids hospitals as relevant to its analysis: Butterworth (529 beds), Blodgett (328 beds), St. Mary's Hospital (150 beds), and Metropolitan Hospital (101 beds). Both Butterworth and Blodgett are full-service, tertiary care facilities. St. Mary's offers primary care services and limited secondary and tertiary care services; Metropolitan offers primary care and limited secondary care services.

Because the merger would give the combined Butterworth-Blodgett entity control of up to 65 percent of the general acute care inpatient market and up to 70 percent of the primary care inpatient market, the FTC requested the District Court to enjoin the proposed merger, pending completion of a lengthy FTC administrative proceeding to determine whether the proposed transaction would violate Federal antitrust laws.

The District Court found that the FTC met its initial evidentiary burden to show that the combined entity's market concentration after the merger would be anticompetitive and would violate Section 7 of the Clayton Act, which precludes mergers and acquisitions that substantially reduce competition. Furthermore, the court found that the remaining two hospitals, St. Mary's and Metropolitan, would not be sufficient alternatives to which managed care payers could turn if the merged entity were to raise prices.

Nonetheless, the hospitals were able to convince both the District Court and the Sixth Circuit not to enjoin the merger. Although the FTC showed that the merged entity would have market power, the hospitals were able to show that such power likely would not be exercised to harm consumers and the community.

Factors Supporting the Decision

The District Court's decision turned on several factors. First, the court found that the parties would achieve substantial efficiencies that were largely tied to the capital savings that Blodgett would achieve by realigning its services with those of Butterworth instead of constructing a replacement facility, which Blodgett had determined would have been needed in the immediate future.

Second, the court rejected the FTC's argument that the merger should be enjoined because it could result in price increases to managed care plans. The court found that the discounts previously negotiated by managed care plans actually resulted in cost shifting and increased paces to other payers. Thus, the court was not persuaded that halting the merger for the benefit of managed care plans only (and ultimately giving the plans the potential to secure even lower prices) was necessarily in the best interests of all consumers of health care.

The crux of the court's decision, however, was based on the fact that the merging hospitals were not-for-profit entities. The court was convinced by the hospitals' arguments, based on studies performed in California and Michigan, that mergers of not-for-profit hospitals do not generally result in increased prices and may even result in reduced prices. Thus, the court found that '[not-for-profit] hospitals operate differently in highly concentrated markets than do profit-maximizing firms.' The FTC vigorously disputes this view.

The hospitals also showed the court that their boards were composed of community representatives, many of whom, as employers? were purchasers of the hospitals' services. The court, therefore, concluded that because each hospital was 'controlled by the very people who depend on it for service, there [would be] no rational economic incentive for such an organization to raise its prices... even if it had the right to do so.'

Finally, the court was persuaded of the community benefit of the merger by the hospitals' 'Community Commitment,' a policy statement that was later made binding on the hospitals in the form of a consent decree. The Commitment accomplishes five actions:

* Freezes hospital rates;

* Limits price increases to certain managed care plans and freeze prices to others;

* Limits hospital margins over time to a rolling five-year average of the margins of certain other facilities;

* Triples the hospitals' baseline funding of indigent care; and

* Imposes a permanent community board requirement on the board of directors of the new parent entity that would be created as part of the merger.

Conclusion

Although the not-for-profit status of hospitals involved in a merger was considered a positive factor in the Carillion case (involving a merger in the Roanoke, Virginia, area),(a) the argument that merging not-for-profit hospitals deserve special consideration has been rejected by the Seventh and Eleventh Circuit Courts and by at least one District Court in Iowa.

Yet it is likely that merging not-for-profit hospitals--especially in highly concentrated markets--will attempt to take advantage of the factors found persuasive in the Butterworth case and that, at least in the context of mergers, not-for-profit status may eventually be considered an advantage.

(a.) U.S. v. Carillion Health Systems, 707 F. Supp. 840 (W.D. Va. 1989), aff'd, 892 F.2d 1042 (4th Cir. 1989).

MICHIGAN DEPARTMENT OF HUMAN SERVICES, PARTNERS BUST WELFARE MYTHS - US Fed News Service, Including US State News

LANSING, Mich., May 24 -- The Michigan Department of Humnan Services issued the following news release:

Michigan's troubling economic climate has caused an unprecedented number of families to seek help paying their bills or putting food on their tables. However, that hardship is not just happening to families in poor, urban areas. The economic pain is being felt everywhere, including in the suburbs or wealthier areas of the state. This is just one of the many myths that are tarnishing the purpose of the welfare system, which is why the Michigan Department of Human Services is continuing its statewide campaign in Grand Rapids to bust those myths with facts, Director Ismael Ahmed said today.

'Those myths have caused a stigma that may prevent some people who truly need help, especially families with young children and the elderly, to come forward,' Ahmed said. 'We want to put an end to that because the safety net helps families get back on their feet.'

DHS representatives and partners dispelled myths at the event today as part of the department's 'Welfare 101: busting myths about welfare' campaign. The campaign was launched on April 1 in an effort to reduce widespread negative perceptions and show how valuable the welfare system is for so many Michigan residents, as well as to the state's economy.

The face of hunger shifted since the economic downturn began with people who used to donate to food pantries now receiving help themselves, said Liz Gensler, food security network coordinator for the Kent County Essential Needs Task Force Food Subcommittee.

'Recently, we have seen a leveling off of demand at the pantries, in part due to the still steadily increasing number of households taking advantage of the food assistance program and the expanded food assistance benefits now available,' Gensler said.

'This resource is immensely important to our community, both for the food assistance it provides to households and the economic impact it has on our businesses and farmers. The more we can do to encourage households to utilize food assistance and reduce misconceptions about the program, the better.'

That's important in part because the U.

S. Department of Agriculture estimates that every $5 of food benefits generates about $9.20 in economic activity in communities.

Among the myths busted during today's event:

Myth: Welfare recipients only live in poor, urban areas, not the suburbs or wealthier areas of the state.

Fact: Michigan residents are struggling to put food on their tables and pay their bills in communities statewide. DHS has seen an unprecedented increase in the number of families seeking temporary assistance, including in Michigan's more-affluent suburban communities. For example, Grandville saw a 51 percent increase in the number of people coming to the DHS for food assistance, while Grand Haven saw a 60 percent increase. Also, the communities saw more than 36 percent increases in Medicaid rolls.

Myth: Large numbers of college students are scamming the system to get food assistance they don't qualify for.

Fact: Fewer than 2 percent of the nearly 1.8 million food assistance recipients statewide are possibly dependent college students.

If a student applies for food assistance, a DHS specialist verifies school enrollment and attendance to determine if the applicant is in student status. And students have to meet federal eligibility criteria.

Also, it's important to note that in today's economy, the traditional college student isn't necessarily 18- to 22-year-olds; many people who have lost their jobs are now attending college to retrain so they can meet the new workforce's needs.

The fact is more Michigan residents are struggling today than ever before, said Barbara Anders, DHS' financial and quality service deputy director.

'Today, the need is great but at least DHS' welfare programs can ease the burden on a temporary basis,' Anders said. 'It is more important than ever before to do your part to educate the skeptics. Be vigilant and make sure you don't fall into this trap yourself.'

Deborah J. Nykamp, president and CEO of Catholic Charities West Michigan, reiterated the agency's partnership with the DHS to provide a safety net for those who are struggling.

'We know that without this help, these families would be torn apart by poverty and its effects,' she said. 'Keeping families together is the goal of everyone in our communities, including the DHS and Catholic Charities West Michigan.'

Other partners in attendance included: All County Churches Emergency Support System (ACCESS) of West Michigan; Area Community Services Employment & Training; Arbor Circle; Bethany Christian Services; City of Grand Rapids; Feeding America West Michigan Food Bank; Kent County Friend of the Court; Kent County Health Department's Strong Beginnings Program; Grand Rapids Area Center for Ecumenism; Heart of West Michigan United Way; Hispanic Center of West Michigan; Home Repair Services; Inner City Christian Federation; Lutheran Child and Family Service of Michigan; Network 180; The Salvation Army Booth Family Services; The SOURCE (Southwest Organizations Unifying Resources for our Community & Employees); South End Community Outreach Ministries; and United Methodist Community House.

For more information about Welfare 101: Busting myths about welfare, please visit www.michigan.gov/welfare101. Follow DHS on Twitter http://twitter.com/MichiganDHS or become a fan at www.facebook.com/MichiganDHS .

For more information please contact: Sarabjit Jagirdar, Email:- htsyndication@hindustantimes.com.

Uncomfortable forecast; Flat year predicted for West Michigan furniture makers.(Survey) - Crain's Detroit Business

Byline: MATTHEW GRYCZAN

West Michigan manufacturers of furniture for offices, schools, health care centers and hotels are expected to report respectable gains in revenue as they close their books on 2011. But experts are keeping their fingers crossed that the industry will merely keep steady in the coming year.

Any significant downturn in demand for contract furniture would have a profound effect on a four-county bloc in West Michigan that is home to industry giants and small suppliers alike. At least 15 contract furniture manufacturers operate in Kent, Ottawa, Allegan and Muskegon counties, accounting for more than half of the North American production of office furniture.

Having steady work is crucial to them and the scads of suppliers that together bring an estimated $5 billion of revenue to the region. About 25,000 people locally are employed in the industry.

Tom Reardon, executive director of the Grand Rapids-based Business and Institutional Furniture Manufacturers Association, said his organization concurs with that general assessment. 'We are looking at flat growth this year, a range of minus 1.7 percent to plus 1.3 percent' of 2011 U.S. office furniture consumption.

But even with an industry forecast of lackluster sales, there may be bright spots for smaller and more nimble local suppliers that can use their hometown advantages of shorter lead times, customized manufacturing and creative design to win new work.

'Over the past five or six years, the design taste of the U.S. office furniture industry has changed to adopt a more European style -- typically a lot of 90-degree angles and slimmer designs,' said Lars Reuter, president of OMT-Veyhl USA Corp., a German-owned joint venture that is adding 61,000 square feet of space to its Holland operation. 'That has helped us a lot because we had those products already, and we just had to bring it to market in the U.S.'

Even steady is good

Steelcase Inc. (NYSE: SCS) and Herman Miller Inc. (Nasdaq: MLHR) -- the largest and third-largest contract furniture manufacturers in the world, respectively -- posted solid gains in sales and earnings during 2011, compared with the previous year.

Grand Rapids-based Steelcase reported revenue of about $2.06 billion through the first nine months of its 2012 fiscal year, up 16 percent over the same period last year. Net earnings totaled about $41.8 million for the nine months that ended Nov. 25, compared with net earnings of $10 million for the same period the previous year.

In an earnings report, Steelcase President and CEO James Hackett said he expects the company's momentum to continue for the next three months, based on 'the strength of third-quarter orders and the highest backlog in more than three years.'

Holland-based Herman Miller reported revenue of about $904 million for the first six months of its fiscal year, which ended Dec. 3, up 14 percent from the same period last year. Net earnings for Herman Miller totaled $48.3 million, a 42 percent increase over the same period last year.

Mark Schurman, director of corporate communications for Herman Miller, said one reason the company is competing successfully globally is the relatively low amount of labor needed to produce its products -- an average of about 7 percent of cost across its product lines. And in the lean manufacturing environment of Herman Miller, human workers beat automation because they are constantly looking for ways to improve processes and are more versatile because of cross training among jobs.

'For instance, there are well over 1 million permutations, or ways to make, our Aeron chair,' Schurman said -- everything from the type of casters to the covering material that customers specify. 'Only people can provide that kind of flexibility in manufacturing.'

Dunlap acknowledges that sales were on the upswing in 2011, but his quarterly survey of contract furniture manufacturers and suppliers worldwide indicates that some business that kept the industry busy last year will taper off this year, primarily because of lower activity from health care facilities, educational institutions and the hospitality industry. Those market segments allowed furniture makers to post gains last year even though the industry was buffeted by a soft office furniture market.

Dunlap said he sends surveys every quarter to about 600 individuals in the contract furniture industry internationally, then develops forecasts on 10 business metrics such as revenue. The typical survey response rate ranges from 12 percent to 15 percent.

Large health care providers are wrapping up major construction projects that created demand for furniture used in lobbies and waiting rooms. Health care won't sag entirely because major hospital systems are still building urgent-care facilities. But Dunlap said he doesn't see the same degree of demand as prior years.

Steelcase and Herman Miller have had a stake in the health care field for some time, while Holland-based Haworth Inc. entered the fray this past summer with its acquisition of the Legacy Furniture Group in Conover, N.C.

Also winding down are furniture purchases by colleges and universities, Dunlap said.

'Other than private colleges and universities, educational institutions are starting to slow down with regard to construction,' he said.

'However, there is a bright spot of activity at junior colleges or technical schools -- places where people are being retrained,' Dunlap said.

A slowdown in educational furniture most likely would affect the local giants and other West Michigan manufacturers -- such as American Seating Co. in Grand Rapids, which specializes in K-12 and college-level seating; Irwin Seating in Grand Rapids, which has expanded its basic business of arena and theater seating into auditorium seating; and izzy+ in Spring Lake.

Another segment of contract furniture -- the hospitality industry -- is 'suffering from less business travel, and it may be overbuilt in some markets,' Dunlap said. Hotels and restaurants buy furniture for in-room seating and public seating such as lounges, lobbies and dining areas.

One Holland company, Charter House Innovations, specializes in decor and seating for restaurants, such as booths, settees, stools and dining chairs.

'West Michigan produces more than half of the commercial furniture manufacturing in North America and contributes more than $5 billion into our regional economy,' Dunlap said. 'But sales were much higher a decade ago, and the region has shed more than 25,000 furniture manufacturing jobs in the last decade. This isn't going to reverse.'

He figures that West Michigan is home to at least 15 furniture manufacturers and more than 60 suppliers.

'Wires are so 2005'

Reardon at BIFMA said his organization uses a different approach to develop its forecasts but came to roughly the same conclusion as Dunlap regarding domestic office furniture activity this year. As the most prominent trade association for contract furniture, BIFMA feeds information on U.S. production of office furniture, along with imports and exports, to IHS Global Insight, a Cambridge, Mass., research company. Global Insight uses the data and macroeconomic projections to provide quarterly forecasts on consumption by the U.S. office furniture industry.

Consumption represents the value of all office furniture sold in the U.S. from all sources in the world.

Based on actual data through October, BIFMA expects that U.S. consumption for office furniture probably grew 14.5 percent last year over 2010. The association does not track furniture sold for other segments, such as health care, education and hospitality.

'Consumption in 2012 may actually rise slightly,' Reardon said. 'The trend is a little bit more in the way of imports of office furniture. But there are three sides to this forecast -- U.S. production, imports and exports -- and any one of them can be wrong to throw off the forecast.'

American companies are buying more imported office furniture now than they did 20 years ago, Reardon said. While imports constituted only about 5 percent of U.S. office furniture consumption in 1991, they made up about 22 percent in 2010.

'Imports certainly have had an impact on the amount of U.S. production,' he said. 'A lot of that is driven by cost.'

But trends unrelated to cost may mean it takes years before U.S. office furniture production exceeds its high-water mark of $13 billion in 2000.

Traditional offices are smaller now, and some types of the 51/2-foot-high panels forming cubicles are becoming pass% -- particularly because offices no longer need to hide cables that connect computers with printers and networks.

As one blogger recently put it: 'Wires are so 2005.'

Said Reardon: 'As the walls have come down, there is less fabricated material in the office now. So even if we were selling the same number of work spaces as we were 20 years ago, the cost would be less. Simplicity is taking cost out of the office.'

Companies with traditional offices generally have made them smaller, and businesses are taking new approaches to offices by experimenting with collaborative work spaces, 'in between' spaces for employees working on laptops, and work lounges.

'Thirty years ago, an 8-by-8-foot office was pretty standard,' Reardon said. 'Now they are 6-by-6 or less. And as offices have gotten smaller, the panels have come down. If the footprint is smaller and the panel remained the same height, you would almost be in a silo.'

Keeping it customized

That agile manufacturing has served OMT-Veyhl USA well. The company soon will occupy a 61,000-square-foot addition that will add much-needed space to its current 44,000 square feet. It now employs about 80 people -- a far cry from 2005, when the German joint venture consisted of Reuter, Shaw and a card table.

At that time, Reuter and Shaw had one customer in Indiana that was serviced by imports from Germany. They toured parts of Michigan, Indiana, Illinois and Wisconsin before deciding to locate manufacturing in Holland, drawn by the local expertise in welding steel and manufacturing standards, proximity to future customers and a strong base of raw-material suppliers.

Quick changeovers aside, OMT-Veyhl specializes in the design and manufacture of sit-stand subassemblies for contract furniture that allow office workers to change work positions throughout the day -- theoretically guarding them against the aches and back pain that come from sitting too long at computer screens.

'We make anything underneath the tabletop, and one of our core competencies is our knowledge of ergonomics,' Reuter said. OMT-Veyhl USA sells height-adjustable table systems, ranging from crank to electric actuated mechanisms, to about 40 customers throughout North America.

Consultant Dunlap said a number of suppliers in West Michigan have prospered in recent years as the major contract furniture manufacturers have continued to outsource subassemblies to smaller companies. In addition, suppliers have widened their customer base by also serving the automotive and home appliance industries.

Reardon said that even the major office furniture manufacturers have engaged in a type of diversification into education, health care and hospitality seating and case goods (furniture made of hard materials such as wood, metal, glass or plastic).

'The supply base has always been somewhat diversified,' Reardon said. 'Now our furniture manufacturers are doing that, too. It makes good business sense to spread those eggs around.'

Twitter: @mattgryczan

Oakwood moves up e-records conversion. - Crain's Detroit Business

Byline: JAY GREENE

Oakwood Healthcare, a four-hospital system based in Dearborn, has signed a contract with Epic Systems Corp., a Verona, Wis.-based information technology company, to purchase its suite of electronic health record and financial information systems.

The entire cost of the four-year project, including Epic licensing fees, hardware and employee training, is expected to total $60 million, said Paula Smith, Oakwood's chief information officer.

But Medicare's electronic health record incentive payments to Oakwood, which start in 2012 for hospitals and physicians who comply with federal meaningful use guidelines, are expected to pay for half the project's costs, Smith said.

'We decided to move up our five-year implementation timetable for the upgrades to take advantage of the incentive payments,' Smith said.

Several other hospitals in Southeast Michigan use Epic, including Royal Oak-based William Beaumont Hospitals and the University of Michigan Health Systems in Ann Arbor.

UM Health Systems bought Epic's ambulatory, revenue cycle, financial and emergency department information system last summer. UM Health plans on adding Epic's inpatient, pharmacies and medical record systems in 2013, said Jocelyn DeWitt, its CIO.

'We are right on track to have the full ambulatory system installed by August 2012,' said DeWitt, adding that the entire Epic system will be completed in 2014. Of the $100 million cost of the system, UM expects to receive about $50 million in federal incentive payments.

Most other health systems in Southeast Michigan have installed or are in the process of buying a variety of information systems. They include Henry Ford Health System, St. John Providence Health System, Detroit Medical Center, St. Joseph Mercy Health System and its parent Trinity Health.

'It will be very positive for the organizations because the data they will have to treat patients will be very robust,' DeWitt said. 'You are reporting out on various quality metrics, and this (encourages) you to pay really close attention to quality.'

Some of Oakwood's 300 different programs, purchased from 50 vendors, that run its patient care, finance and clinical information systems were originally installed in the 1980s and updated over time, Smith said.

Because Oakwood bought each system individually, Smith said, they required multiple interfaces to communicate with each other that increased operating costs to maintain. Oakwood's information technology department has grown to 200 people, Smith said.

'With our move to Epic, we can simplify, reduce costs and don't need all those bodies to make it work,' said Smith, adding that it is too early to know how many staff members will be needed when the entire system is installed in 2014.

Joe Diederich, Oakwood's COO, said the new system also will increase the amount of data available to staff, improving quality.

'Right now we don't have all the physician notes in the patient record, and we don't have it in real time,' Smith said. 'Now the information will be available immediately.'

Oakwood selected Epic through a recommendation from its consultants, Santa Rosa Consulting in Southfield.

DeWitt said more hospital systems are buying Epic because the company's full 'enterprise' system allows competing hospitals to share patient data through Epic Everywhere program.

Besides Oakwood, UM and Beaumont, Grand Rapids-based Spectrum Health Systems, and McLaren Health Care and Hurley Medical Center, both in Flint, use Epic, DeWitt said.

Diederich said Oakwood plans to install Epic in three phases over the next four years. During the first phase, from 2011 to 2013, the Epic inpatient clinical and financial systems will be installed at Oakwood's four hospitals, he said.

The ambulatory information systems at physician offices and outpatient centers will be installed in 2013 and 2014. Laboratory and cardiology departments will be installed in 2014.

'Diederich said 80 Oakwood employees, including 40 information technology workers and 40 clinical department staffers, will be trained to operate the Epic system.

Blue Cross Blue Shield of Michigan Renews Commitment to Provide $1 Million in Grants to Free Clinics in Michigan that Deliver Services to Uninsured. - Health & Medicine Week

As part of Blue Cross Blue Shield of Michigan's mission to improve access to health care coverage in the state, the company is renewing its commitment to provide $1 million in grants to Michigan's free clinics that provide health care to the uninsured (see also Blue Cross Blue Shield of Michigan).

Last year BCBSM contributed $391 million to Michigan through an array of initiatives that included $1 million in support to free clinics, $15.5 million in costs from participating in public programs like MIChild, $77.5 million to support hospital charity care and bad debt, $147 million in mandated subsidization of Medicare Supplemental and group conversion health coverage, $133 million in costs due to premiums not covering medical costs for health care products purchased by individuals, and other charitable activities and programs to promote access to quality health care.

'We are proud of the depth and breadth of Blue Cross Blue Shield's unique mission that is returning dividends to the people of Michigan through free clinics grants and many other programs and contributions,' said Lynda Rossi, BCBSM vice president of social mission and public policy. 'These contributions are perhaps far exceeding those delivered in any other state by an independent nonprofit Blues plan.'

BCBSM funding helped prevent one clinic in Jackson from closing its doors, and helped other clinics purchase items from medications to office supplies. In addition, the funding has enabled clinics to expand or develop new dental clinics, move to larger facilities, purchase essential lab equipment and recruit more volunteers.

'The Free Clinics of Michigan are very grateful for the support that Blue Cross has provided in the last four years,' added Joyce Hardy, president of the Free Clinics of Michigan and manager of Essexville's Helen M. Nickless Volunteer Clinic. 'Until there are changes to national policy to provide health care for everyone, there will be no shortage of need. Continued free health care will hopefully keep the many we serve healthy.'

The BCBSM program awards grants after reviewing proposals from free clinics that have 501(c)(3) charitable status. Grant amounts this year will range from $5,000 to $50,000. Community needs, planned objectives and the services the clinic provides are taken into consideration. Special consideration will be given to clinics that offer free dental care. Interested clinics can obtain the grant application at bcbsm.com/freeclinicgrant.

In 2007, BCBSM grants helped 32 clinics in 21 counties provide care. They included eight West Michigan clinics, 10 in southeast Michigan, five in mid- Michigan, three in the Flint/Tri-Cities area, five in northern Michigan and one in the Upper Peninsula. Those 32 free clinics last year made available low or no-cost care to an estimated 78,000 uninsured or underinsured state residents.

Catherine's Care Center of Grand Rapids, one of three clinics in that city to receive grants last year, purchased lab equipment enabling it to speed test results and increase capacity. The grant dollars have played a pivotal role at other clinics. In southeast Michigan, a BCBSM grant will help Detroit's Cabrini Clinic move into expanded space to accept more patients, while another grant helped move a clinic operated by St. John's from a converted trailer into new facilities at Detroit's Cooley High School. In mid-Michigan, Care Free Medical, with locations in Lansing and Mason, used its grant to support operations. Blues employees in the Lansing area now serve as volunteers to staff positions to help with administration.

Blue Cross Blue Shield of Michigan, a nonprofit organization, provides and administers health benefits to more than 4.6 million members residing in Michigan in addition to members of Michigan-headquartered groups who reside outside the state. The company offers a broad variety of plans including: Traditional Blue Cross Blue Shield; Blue Preferred, Community Blue and Healthy Blue Incentives PPOs; Blue Care Network HMO; BCN Healthy Blue Living; Flexible Blue plans compatible with health savings accounts; Medicare Advantage; Part D Prescription Drug plans, and MyBlue products in the under-age-65 individual market. Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. For more company information, visit bcbsm.com.

Keywords: Blue Cross Blue Shield of Michigan, Medicare, Health Policy, Health Insurance.

Dynamic outreach refuses to yield to barriers.(Health Care -- for the uninsured and underinsured) - National Catholic Reporter

Serving health care's needy is both 'exciting and depressing,' said Dr. Doug Edema, president/CEO of Advantage Health and ambulatory services vice president for St. Mary's Mercy Medical Center in Grand Rapids, Mich.

Edema (pronounced, Ee-deema) was one of three speakers at the Catholic Health Assembly tackling issues of 'providing access to care for the uninsured and underinsured while the coverage debate lingers.'

His main points: Collaborate, go to the philanthropists and foundations to beg funds, and don't be put off by any barriers, including the 'mountain of work' and the fact 'you just kind of scratch the surface of the community's needs.'

St. Mary's has been at it for a while. Edema described the imagination and outreach brought to bear in a half-dozen examples:

* In downtown Grand Rapids in 1989, St. Mary's opened Heartside, a medical clinic for the homeless smack in the middle of the homeless population.

* The city's southwest has Clinica Santa Maria to serve the Hispanic population. What started in 1990 in an abandoned fire house is a now a new facility built essentially with foundation grants, not least from St. Mary's Doran Foundation.

* McAuley Health Center for HIV/AIDS patients juggles trying to find the correct cocktail of medicines, and find jobs and more permanent housing for its clients.

* For rural outreach, the Sparta Health Center was developed in the 1970s for the migrant farm workers. It is now so highly regarded that people from the full-time rural population, out as far as 30 miles away, choose today's modern facility for their health care. It began in three trailers.

'We tend to do things with trailers,' said Edema. The Browning Claytor Center, a neighborhood ministerial alliance, began its outreach that way in the black community.

Another neighborhood project, created by St. Mary's Medical, St. Alphonsus Catholic Parish and the Crestwood Neighborhood Association, is Catherine's Care. What began as a neighborhood outreach now has volunteer time from some retired physicians.

Sexual misconduct requires firm stance. - Healthcare Risk Management

Sexual misconduct requires firm stance

Patients may misinterpret touching, comments

Sexual misconduct or harassment of patients in health care can be a major liability risk and probably happens more than you think, say a risk manager and attorney who are experienced in dealing with such issues. Concerns often go unreported until a lawsuit is filed, they say, and many health care workers don't realize how their seemingly innocuous actions can be perceived as misconduct by patients.

Deborah S. Stephens, RN, BSN, JD, CPHRM, risk manager at Spectrum Health in Grand Rapids, MI, and Bridget Tucker Gonder, RN, BSN, JD, CPHRM, associate legal counsel for the health system, say health care workers can get into trouble when they forget that patients are not as familiar with medical procedures as they are and are not used to being touched intimately as a routine matter.

'They're accustomed to doing procedures, even intimate procedures, and not even thinking twice about it,' Gonder says. 'To the clinician, it's nothing at all, but the patient is wondering why he's lifting her gown up.'

For instance, Gonder describes a scenario that happened at Spectrum, in which a male electrocardiogram (EKG) technician entered an emergency department treatment room to perform an EKG on a woman. The man pulled down the sheet covering the woman, opened her gown, and started putting leads on her chest. The woman later complained that she felt sexually violated.

'It was probably the 50th time he had done that, that day. He just saw it as another patient and he was going through his routine,' she says. 'The patient had never been through this and was very much upset that a man just walked in and bared her breasts and started touching her.'

Real risk for health care employers

Stephens and Gonder estimate that they have handled about 20 allegations of sexual misconduct or harassment of patients over the past 10 years, and they sense that the frequency is on the increase. While they cannot discuss individual cases at Spectrum, they note that there is significant potential employer liability from sexual misconduct. The employer can be accused of negligence, malpractice, breach of fiduciary duty, infliction of emotional distress, assault, negligent hiring or retention, battery, and negligent supervision. And of course, there is the risk of terrible publicity if sexual misconduct is reported at your facility.

Gonder cautions risk managers not to assume that your current policies and procedures are sufficient to address sexual misconduct and sexual harassment. Most health care organizations have a policy on sexual harassment, but few have policies that specifically address sexual misconduct involving caregivers and patients.

A policy on sexual misconduct should ensure a consistent approach to handling allegations that protects the patient and the accused employee, Stephens says. Much of Spectrum's policy addresses the manner of notification, how people will be interviewed, and it stresses the importance of allowing the employees do adequately defend themselves.

Some true predators to watch for

While many allegations are grounded in misunderstanding or carelessness by the caregiver, there are instances of true sexual misconduct in health care settings, Stephen and Gonder stress. Risk managers must be on the alert for sexual predators and those professionals who let their own emotional needs and problems lead them into serious misbehavior.

'There is no doubt that people take advantage of the situation to prey on patients,' Stephens says. 'There are some who do it because they have their own problems, such as addictions, and there are some who are just predators and see an opportunity.'

It also is important to know that sexual misconduct - both true misconduct and cases of misunderstanding - is not strictly male on female, Gonder says. 'We've had elderly males wake up and say they were sexually assaulted by a female nurse, and the investigation revealed that she was inserting a Foley catheter. We had another where the nurse was checking a groin dressing and she pulled up his gown and said, 'Things are looking good down there!'' she recalls. 'That was misperceived by both him and his wife - maybe more so by his wife.'

Sources

For more information on preventing and addressing sexual misconduct, contact:

*Deborah S. Stephens and Bridget Tucker Gonder, Spectrum Health, 100 Michigan St. N.E., Grand Rapids, MI 49503. Telephone: (866) 989-7999.