A rule change going into effect next month provides a temporary window through the end of the year for the Grand Rapids health system to seek permission to build and relocate to a new suburban hospital campus it envisions developing.
The Michigan Certificate of Need Commission last week gave final approval to a change in standards governing hospital relocations and sent it on for concurrence by the governor and Legislature. The approval ended a lengthy, and at times contentious, two-year process that sought to strike a delicate balance between the narrow interests of Metro Health and statewide perspectives.
Barring any unexpected objections, the new rule takes effect by the end of June, finally giving Metro the opportunity to apply for permission to relocate 10 miles from its present location on Grand Rapids’ southeast side. The present rule prohibits hospitals from relocating to a site more than a 2-mile radius from their existing location.
“We prevailed against great odds and proved the old adage that there is nothing as powerful as an idea whose time has come,” Metro President Mike Faas said.
And that time is coming soon. Metro has less than eight months to complete planning and design and put together a financing package for the new hospital, which previous cost estimates pegged at $155 million.
A provision added to the rule change, designed to accommodate Metro but not open the door for other hospitals in the state to relocate away from urban markets with a poor payer mix, sunsets the measure at the end of the year. That gives Metro until Dec. 31 to file an application with the state and have it deemed complete so it can proceed with a formal review.
Metro, which unveiled its proposal more than a year ago for a new hospital and health care village on a 150-acre site along the Wyoming and Byron Township line, plans to immediately begin final planning for the new hospital and arranging financing, Chief Financial Officer Bob Smedes said. Metro can meet the Dec. 31 deadline to have a complete application filed with the state Department of Community Health, Smedes said.
“We believe that’s very doable,” Smedes said. “We’re very confident.”
The change in the hospital relocation standard was carefully crafted in a way that it opens the door just wide enough for only Metro to go through, while preventing other hospitals in the state from moving and possibly abandoning urban areas for more lucrative markets elsewhere.
To narrow the window, the CON Commission agreed to add the sun-setting provision, as well as new language that was proposed at last week’s meeting that designates the rule change as a pilot project and only allows hospitals to move more than two miles in counties with a population between 500,000 and 750,000.
“This does accommodate the needs that all parties have,” said James Forsman, an attorney with the Detroit law firm Miller Canfield who represents Covenant Medical Center in Saginaw. “It does allow Metro to move forward. At the same time, it does not leave this open to multiple applications throughout the state and the problems for the health care system.”
Forsman proposed the additional provisions as a way to deter a legal challenge to the new standard.
Metro accepted the additional provisions and the final language in the rule change, which as approved “will achieve the objectives Metro has in mind in terms of moving,” Smedes said.
Previous provisions in a proposed rule change that the CON Commission gave preliminary approval to last month may have been subject to a successful lawsuit over violations of the equal-protection clause in the Constitution, Assistant Attorney General Ronald Styka said.
The new relocation standards will allow hospitals to relocate up to 10 miles, provided that they can show a “clear and convincing” case and meet several criteria, including maintaining clinical services in their existing service area for the indigent, lower income persons and disadvantaged — which Metro plans to do by retaining The Breton Health Center that serves a large number of Medicaid recipients. A hospital also would have to prove there is insufficient land available within two miles for a new facility.
At Metro’s request, the CON Commission altered two of the previously acceptable criteria, dropping from 50 percent to 45 percent a hospital’s required occupancy rate and the amount of land surrounding its present site that is unusable because of deed restrictions.