GRAND HAVEN — A new strategic affiliation between Mercy Health and North Ottawa Community Health System could further alter the competitive landscape in the Ottawa County health care marketplace.
The two embark on forging closer ties as Mercy Health seeks to become more of a regional player in West Michigan and as Health Pointe Inc. — a joint venture between Spectrum Health and Holland Hospital — prepares to proceed with the development of a $50 million medical campus in Grand Haven.
The Health Pointe project and the Mercy-North Ottawa affiliation could very well bring to northern Ottawa County the same head-to-head competition that’s been going on in Kent County between the two largest health systems in West Michigan.
“I think it’s going to be a war zone,” said Mike LaPenna, principal of the health care consulting firm The LaPenna Group Inc. in Grand Rapids.
“It’ll be two big systems both investing. (It’s) not really what I’d call health care planning, but health care competition,” LaPenna said. “It’ll be good for the consumers. There will be lots of choice.”
Through the new alliance, North Ottawa can fill service gaps with access to Mercy Health’s primary care physicians and specialists. Mercy Health would get a larger presence in the attractive Ottawa County market that has a comparatively low Medicaid population and a low incidence rate of chronic disease.
The alliance comes about six months after Mercy Health opened a primary care practice in Holland as it pursues a broader market presence from its bases in Grand Rapids and Muskegon and tries to become a regional system with greater depth, said Mary Boyd, executive vice president of regional operations at Mercy Health.
“Mercy sees benefits in spreading its services over a broader geography,” Boyd said.
At the local level, the strategic alliance paves the way for the better coordination of care and smoother patient referrals and transfers between North Ottawa in Grand Haven and Mercy Health facilities in Muskegon and Grand Rapids. The arrangement “enhances the normal and existing patterns that exist in how patients seek their care,” Boyd said.
“We’re not trying to intervene in that or redirect that. All we want to do is embrace it and make it even better than what’s been going on in the past,” she said. “We don’t want them to feel as though they exited one organization and entered another. We want it to be about the condition that’s getting treated, not about where they’re getting treated.”
Between the Health Pointe project and North Ottawa’s affiliation, the “highly prized” northwestern Ottawa County market is becoming “the subject of a battle” for market share between Spectrum and Mercy, said Lody Zwarensteyn, the one-time president of the former Alliance for Health in Grand Rapids.
“Grand Haven will be very well served medically,” said Zwarensteyn, who’s been sharply critical of the Health Pointe project as a duplication of medical services in the market.
North Ottawa considers the Health Pointe development, planned for a 12-acre site less than two miles from the 81-bed hospital, as a competitive threat and a costly duplication of services.
Targeted to open by late 2017, the 120,000-square-foot Health Pointe facility will house Spectrum’s local primary-care medical practices, specialty physicians, an urgent care center, laboratory services and medical imaging. It also features a $12.1 million outpatient surgery center that will initially have one operating room and eventually expand to three as volume grows.
Executives at Spectrum Health and Holland Hospital bill the project as accommodating growth in the market and generating convenience for patients by putting all local medical services in one integrated location. Health Pointe last month received local zoning approval, plus state certificate-of-need authorization for the surgery center.
“The argument that ‘there is already a hospital’ (in Grand Haven) misses the true differences that will be offered to patients,” states a letter Health Pointe submitted to Grand Haven Township during the project’s zoning review. “Local residents deserve more options for their care.”
North Ottawa and Mercy Health had been talking well before Health Pointe was proposed last fall, according to executives, who say the project did not drive the affiliation but did accelerate talks between the two organizations.
Mercy Health already serves a “great number” of patients from northern Ottawa County and shares patient electronic medical records with North Ottawa, Boyd said. The health system collaborates with North Ottawa on a primary care practice in Spring Lake that’s doubling in size, and Mercy is planning a $271 million hospital expansion and renovation project in nearby Muskegon that will surely draw from the northern Ottawa County market.
Further penetrating the Ottawa County market with the North Ottawa affiliation will not come easily for Mercy Health, LaPenna said.
Spectrum Health already has a sizeable primary care base in Grand Haven and stands to solidify its position with the Holland Hospital joint venture, LaPenna said.
“The swath of primary care really belongs to Spectrum,” he said.
Spectrum Health claims a base of 20,000 patients in the market and built its presence with the 2009 merger of Michigan Medical PC, the largest group medical practice in West Michigan. MMPC in 2005 had acquired Horizon Medical, a medical practice in the Grand Haven area that included most of the local physicians.
On top of the large primary care base, Spectrum enjoys strong regional brand awareness, while Mercy’s brand is tied to Saint Mary’s hospital in Grand Rapids or to Muskegon, LaPenna said.
“They really haven’t regionalized the brand, I don’t think. So I don’t think of it as a regional player, but I’m sure that’s what they would like to do and emerge as a regional power,” he said. “They’re going to have to collaborate between their two hospitals in West Michigan at a much higher level.”