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Published in Health Care
Mary Free Bed Rehabilitation Hospital in Grand Rapids. Mary Free Bed Rehabilitation Hospital in Grand Rapids. COURTESY PHOTO

Mary Free Bed requests approval for nearly $11M expansion to add 20 beds

BY Sunday, April 25, 2021 05:00pm

GRAND RAPIDS — Mary Free Bed Rehabilitation Hospital wants to expand inpatient capacity to keep up with growing patient volumes.

In a certificate-of-need filing with the Michigan Department of Health and Human Services, Mary Free Bed asks for regulatory approval to add 20 beds at its 119-bed Wealthy Street hospital campus. Executives said in the filing that the campus has operated at a high occupancy over the last several years and on some days has had to turn away inpatients and refer them elsewhere.

The $10.8 million project to increase capacity to 139 beds would enable Mary Free Bed to better handle existing demand for inpatient rehab care, which has been growing at high rates for years. The growth follows Mary Free Bed’s creation of a statewide care network a decade ago and comes as the Grand Rapids hospital has added specialized services. Changes in care techniques also have placed greater emphasis on rehabilitation.

“As we’ve been expanding access to patients who haven’t traditionally gone to a rehab hospital who are much sicker than the patients that used to go to a rehab hospital, and as we’ve expanded our referral resources geographically, we’ve found ourselves to be relatively full all the time, especially during COVID, but even prior to that,” CEO Kent Riddle told MiBiz. “Because we’re a destination, we’ve really been able to continue to grow Mary Free Bed and we envision that growth to continue.”

The rehab hospital today operates at more than 90 percent capacity and is sometimes full, Riddle said. In 2019, the hospital recorded an 86.8 percent average daily occupancy rate, according to the most recent state data.

Growth continues

Mary Free Bed plans to finish shelled space on the sixth floor of a patient tower that opened five years ago as part of a major $70 million expansion and renovation of the Wealthy Street hospital campus. The sixth floor would house 18 of the proposed 20 additional beds in private rooms. The two others would go in private rooms on the hospital’s third floor, according to the certificate of need (CON) filing.

Riddle hopes the hospital, after securing CON approval, can begin the project in late 2021 or early next year and have the additional beds available by the end of 2022.

Even with the additional beds, the rehab hospital will still operate at near its capacity.

Mary Free Bed expects to have to expand bed capacity further in the years ahead as patient volumes continue to grow from referrals through a care network that now extends into Indiana, Riddle said. The patient tower that opened in 2016 has space for additional capacity, and further expansion would require construction of an addition at the hospital campus in the future, he said.

“We’re optimistic about continued expansion beyond (the proposed project) because we’re just going to grow the network and continue to grow our partnerships with acute-care hospitals,” said Riddle, who envisions Mary Free Bed becoming “the Mayo Clinic of rehab to the country if we just continue what we’re already doing.”

“We’ll just continue to expand and continue to bring those specialty patients for care here at Mary Free Bed in Grand Rapids,” he said. “I envision that Mary Free Bed will be able to continue to grow over the next 10 to 15 years, beyond even this.”

Changing pathways

In proposing to expand inpatient capacity, Mary Free Bed is responding to growth that partly comes from a greater tendency among acute-care hospitals to refer patients to providers specializing in rehab to regain their strength before they are discharged to go home. For example, Mary Free Bed now provides rehab care to cancer and cardiac patients who were weakened by their conditions, and to organ transplant recipients before and after their surgery to improve their strength and increase chances for recovery.

“The clinical pathways are changing,” Riddle said. “It’s proving that it’s a lower cost from a population health standpoint to have a rehab stay, even a short rehab stay, for patients nobody ever envisioned would go to rehab hospital.”

Formation of the Mary Free Bed Rehabilitation Network a decade ago also has driven strong growth in referrals from hospitals around Michigan for patients with complex conditions — or the “sickest of the sickest,” Riddle said — who require highly specialized care.

Mary Free Bed takes referrals from 100 hospitals, mostly in Michigan, and now runs inpatient and outpatient rehab units through partnerships with 38 hospitals across the state and in Indiana at South Bend and Elkhart. Partnerships include hospitals in Muskegon, Kalamazoo, Lansing and elsewhere.

Through a joint venture with Mary Free Bed, Saginaw-based Covenant HealthCare is building a new $40.7 million rehabilitation hospital that opens this fall. Most recently, Mary Free Bed also expanded a venture with Traverse City-based Munson Health to include outpatient units at its hospitals in Cadillac and Grayling.

Stronger today

As the network continues to grow in the years ahead, more patients with specialty needs will flow to Grand Rapids, Riddle said. Mary Free Bed also hopes  to expand the network further outside of Michigan, he said.

“The network has really worked beyond our expectations,” Riddle said. “We’re already talking with a number of providers in neighboring states.”

Since forming the network 10 years ago, the number of patients Mary Free Bed serves annually has grown from about 12,000 to an expected 85,000 in 2021. The hospital, which had revenues a decade ago of about $45 million, now expects to well exceed $200 million for the 2022 fiscal year that started April 1.

In the 2020 fiscal year, Mary Free Bed recorded $196.4 million in gross patient revenues with net income of $7.8 million, according to American Hospital Directory.

“We’re a much stronger organization today than we were 10 years ago,” Riddle said.

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