Published in Health Care
The planned 120,000-square-foot Health Pointe medical center in Grand Haven is a joint venture of Spectrum Health and Holland Hospital, one of several transformational health care projects ongoing in western Ottawa County. The planned 120,000-square-foot Health Pointe medical center in Grand Haven is a joint venture of Spectrum Health and Holland Hospital, one of several transformational health care projects ongoing in western Ottawa County. COURTESY RENDERING

Ottawa County health care market adapts to period of intense change

BY Sunday, February 21, 2016 09:59pm

GRAND HAVEN — A large medical center proposed in Grand Haven follows a steady, decade-long transformation of the health care marketplace in communities along the lakeshore in western Ottawa County.

Once the domain of three, small independent health systems controlled locally, the lakeshore market continues to evolve — and not just with the proposed Health Pointe medical center, a joint venture between Grand Rapids-based Spectrum Health and Holland Hospital.

Mercy Health joined the fray by opening a primary care and women’s medical practice on Holland’s north side last fall, and has an ongoing expansion at a primary-care health center in Spring Lake that it shares with  in Grand Haven.

Mercy Health, which includes Mercy Health Saint Mary’s in Grand Rapids and Mercy Health Muskegon, plans to extend its presence further in Ottawa County, a growing market with a comparatively low Medicaid population and incidence rates of chronic disease that are among the lowest in Michigan.

The opening of the Holland-area practice “is an entrée into better serving the Ottawa County market,” said Mary Boyd, executive vice president of regional operations at Mercy Health.

“It’s an attractive market,” she said. “We’re spreading our reach and we have capital plans for additional investments.”

Driving Mercy Health’s strategy to grow, including expanding practices in the Grand Rapids area, is the emergence of accountable care. That’s leading health systems to pursue additional market share by shoring up existing areas and reaching into new markets to mitigate the risk that comes with a changing economic model.

The lakeshore market provides Mercy Health with that opportunity.

“It’s our desire to serve the region, and as you look at our delivery system, we see the economic region as Holland, Muskegon, Grand Rapids and all along the lakeshore. It’s a strategic decision that we should be more broadly distributed across that region,” Boyd said. “(The Ottawa County market) is one that desires strong health care and desires options. The community overall is wanting to see that there will be choice in the market, and that’s the space and the opportunity that Mercy Health views in that market.”

That intent could further transform the lakeshore market and intensify the competition between Mercy Health and Spectrum Health, the two largest health systems in West Michigan, the latter of which signed an agreement with Holland Hospital in 2014 to align clinical operations and together explore potential business ventures.


CHANGING DYNAMICS

Health Pointe, proposed for a 12-acre site at the north end of Grand Haven Township adjacent to a Meijer Inc. store, is the first major project resulting from their collaboration. At 120,000 square feet, Health Pointe will house primary-care medical practices, specialty physicians, urgent care, laboratory services, medical imaging such as MRI and CT, and a $12.1 million outpatient surgical center that is presently undergoing state certificate-of-need review.

The campus, with an estimated cost of $40 million to $45 million, will allow the Spectrum Health Medical Group to consolidate physician practices and medical services in the area into a single, convenient location. It also would give Holland Hospital a physical presence in the northwestern Ottawa County for the first time.

Health Pointe will surely further transform and disrupt the lakeshore market, said Lody Zwarensteyn, the retired president of the former Alliance for Health, a health care planning agency in Grand Rapids that folded last year.

As the dominant care provider in neighboring Kent County, Spectrum Health has been gaining a larger share of the lakeshore market as it continues to grow across the broader region, Zwarensteyn said. The entrance of Mercy Health adds to the lakeshore market’s transformation.

Given the changes occurring in health care and the push by health systems to grow, the transformation of the lakeshore market was inevitable, he said.

“You’re not in the boondocks anymore. You’re part of a larger metro area, like it or not,” Zwarensteyn said. “The lakeshore market has never, never seen this before. The growth of Spectrum Health has changed everything. Spectrum Health has a lot of money and it’s not reluctant to use that money.”


CREATING COSTLY REDUNDANCIES?

The Health Pointe project has been met with some opposition in the Grand Haven area both for its size and the height of the facility, as well as for the competitive threat it can pose to North Ottawa Community Health System. Opponents also worry about the redundant medical services it will offer.

North Ottawa views the project “cautiously,” said Chief Communications Officer Jen VanSkiver. Administrators at the Grand Haven health system worry that local zoning review for Health Pointe is moving too quickly. North Ottawa and residents who oppose the project have urged Grand Haven Township to require an analysis of the project’s potential impact on the local health care market.

“We want to understand what the impact might be. We need some time,” she said.

Mercy Health, which is planning a $271.1 million expansion and renovation at its Mercy Hospital campus in nearby Muskegon, also questions Health Pointe’s service redundancies, which can drive up cost.

“We don’t believe in duplicating health care resources,” Boyd said.

Spectrum Health, which has a sizeable physician base in the Grand Haven-Spring Lake area that serves more than 20,000 patients, and Holland Hospital aim to have Health Pointe open in 2017.

Despite the worries the project creates locally, Holland Hospital Senior Vice President for Quality, Information Technology and Operations Mark Pawlak insists that Health Pointe is not directed against North Ottawa. Holland Hospital now draws about 10 percent of its overall patient volume from northwestern Ottawa County and for some procedures the percentage is much higher, Pawlak said.


SERVING CHANGING PATTERNS

Health Pointe is designed to serve patients in northwestern Ottawa County who already travel to Holland for medical care, as well as patients in southern Muskegon County, said Pawlak, a director for the joint venture. The project reflects changing patient patterns in the market, he said.

“We’re actually already in that market in terms of patient preference,” Pawlak said. “We are seeing a growing interest from patients in that northern Ottawa County market for Holland Hospital services and specialists. And as with any business, if there is an opportunity to move the access point closer to that population, we would choose to do that.

“We’re after that market share that is already making a choice to leave that community. We want to give them a reason to come back to that community for their care.”

Spectrum Health and Holland Hospital are open to collaboration as well, Pawlak said. The two want to continue working with North Ottawa “in various ways,” perhaps on shared medical service lines and access, and their physicians will continue to use the local hospital.

“Our target is not North Ottawa and to take business from North Ottawa,” he said. “We’re not out to hurt North Ottawa.”


COMMITTED TO COLLABORATION

Despite the worries about Health Pointe, North Ottawa wants to work together as well.

As Health Pointe goes through zoning review, North Ottawa President and CEO Shelleye Yaklin at a January public hearing and in an earlier letter to township trustees called for collaboration. 

“We remain committed to creative ways to collaborate,” Yaklin wrote in a Dec. 14 letter. “We do not seek to eliminate competition, but we do seek to illuminate costly duplication. As nonprofit organizations, we should strive to avoid duplication.”

North Ottawa, which seeks to remain independent in an era of consolidation in health care, already has several collaborations with Spectrum Health and others. The health system “wants to open up those gates even further,” VanSkiver said. North Ottawa has not identified any new opportunities to work together but remains open to collaboration, and “open means open,” she said.

“We want to keep the communication open, so if there were to be an approach by Spectrum to collaborate on something, if we were to identify a project or initiative on which we’d like to collaborate, we would do that — just as we have done historically,” VanSkiver said. “It’s in our DNA to collaborate. We cannot be all things to this community. We can be most things, but we cannot be all things.”


CONTINUED CONSOLIDATION

The transformation of the health care marketplace along the lakeshore essentially began in 2005 when the 25-physician Horizon Medical Group in Grand Haven merged into the former Michigan Medical PC in Grand Rapids, commonly known as MMPC. The largest group medical practice in West Michigan, MMPC in 2009 merged into the Spectrum Health Medical Group, giving the Grand Rapids health system a large foothold both in northwestern Ottawa County and in the Holland-Zeeland area to the south.

Spectrum Health upped its footprint along the lakeshore when it picked up Zeeland Community Hospital through a 2010 merger. That deal was opposed by several business leaders in Holland who viewed a merger between Zeeland Community and Holland Hospital as a better option for the local market.

Next came the development of a 55,000-square-foot medical campus in Holland that consolidated Spectrum Health’s local physicians and offered an array of medical services in one location. Spectrum Health used the same model for an integrated care center in northern Kent County, as well as for smaller campuses under development in northern Muskegon County and in Ionia, across from the new Sparrow Ionia Hospital.

Zwarensteyn, who retired in 2014 from the Alliance for Health and continues to keep tabs on the local health care scene, shares the concerns of opponents to the Health Pointe project, particularly about the addition of surgical capacity in the market with the proposed outpatient surgery center.

“It does not lack surgical capacity. It does not lack surgeons,” he said. “What it lacks is a Spectrum surgical capacity.”

Still, given the changes occurring in health care — with Spectrum Health seeking to grow regionally, and with Mercy Health seeking to expand to a lesser degree — the lakeshore market was bound to change, Zwarensteyn said.

“It’s natural,” he said. “You want to build your volume and you do it by having outposts.” 

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