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e Made 111 Medicine
Market olysts say the merger of Sinai and illeg is a natural.
JULIE EDGAR SENIOR WRITER
0
Compiled by
Mara i?einstein,
Jewish News intern
reat strides in medical
technology, coupled with
radical changes in health
care delivery, have made
inpatient hospitals the
white elephant of the
1990s.
In the past 16 years, nearly
600 hospitals across the nation
have disappeared, either
through closures or mergers
with larger hospital systems, ac-
cording to the American Hospi-
tal Association.
In 1995, a total of 735 hospi-
tals were involved in over 200
mergers or acquisitions. A year
earlier, the AHA reports, 184
deals were made that united
hospitals and other health care
institutions.
"If you're not married, at least
you're dating or dancing,"
quipped Donald Potter, head of
the Southeast Michigan Health
and Hospital Council.
Mergers are a by-product of
both managed care, which has
shifted dollars away from inpa-
tient care, and advancements in
medical savvy that include the
replacement of many invasive
surgeries with medicine and the
use of laparoscopic techniques.
So the recent announcement
of the merger of Sinai Hospital
of Detroit and Detroit Medical
Center came as no surprise
not just because Sinai has been
seeking a partner for the past
decade.
"The situation Sinai faced in
particular was one where with-
in two blocks of each other you
had a critical mass of health-
care resources. As a result, this
move with the DMC was a nat-
ural. If you were a dispassion-
ate observer, you'd say this
makes sense; what took them so
long?" Mr. Potter said.
"In the era of managed care,
in order to be viable, to provide
the full panoply of advanced care
services, you've got to be part of
a hospital system," added Larry
Horwitz, executive vice presi-
dent of the Economic Alliance
for Michigan, a coalition of labor
and business leaders.
And it's imperative that a
hospital have an ownership
stake in a health maintenance
organization (HMO), because
they serve as a wellspring of
patient referrals, Mr. Horwitz
and Mr. Potter agreed. Sinai en-
joyed neither arrangement, al-
though it attempted to become
part owner of Selectcare and University Hospital in Ann Ar-
signed on with Health Alliance bor owns M-Care.
Plan, Henry Ford Hospital
DMC, which does not
System's HMO, in late Lar ry of Horwitz
own an HMO, acquired
the
1994. Sinai CEO Phillip
Mt. Carmel Mercy Hospi-
Economic
Schaengold said the hos- Alliance for tal five years ago and
pital gained about 7,000 Michigan.
moved Grace's operations
new patients through its
into the building, which is
alliance with HAP, but he de- located about two blocks east of
nied that owning an HMO Sinai.
would have helped Sinai remain
Officials at DMC and Sinai
independent.
say they haven't decided
"Because of the size of the whether one or the other build-
competitors in this marketplace, ing will be closed. However, the
Sinai would always be at a dis- merger places a total of 1,149
advantage when competing with licensed beds within a stone's
billion- dollar networks like Hen- throw of each other. Mr. Potter
ry Ford, DMC and Beaumont. It said other hospitals that
might have strengthened Sinai's have merged have transformed
position, but sooner or later you wings into doctors' offices or, like
would have had to join a regional Oakwood, closed down their
health system," he said.
inpatient units and replaced
Selectcare is owned by a con- them with new outpatient facil-
sortium of hospitals that include ities.
William Beaumont, Providence
"That's where the rubber
and Oakwood. Mercy Health meets the road now. As you con-
Services owns Care Choices; and solidate services of one kind or
another so you gain greater
mass and efficiency, and ar-
guably better quality, the at-
tempt on the part of DMC and
Sinai will be to play to the
strengths of both facilities and
move services between the two,"
he said.
Grace and Sinai have been en-
gaged in "an intense public re-
lations competition" for traffic for
their respective cardiac catheter-
ization laboratories, for example,
which get moderate patient vol-
ume at both hospitals, Mr. Hor-
witz pointed out. That may be
one area of consolidation, he spec-
ulated.
Whatever happens, he said,
the merger is a victory for cost
containment, quality of care and
access to high-tech services for
patients and physicians.
In the past 15 years, bed
counts have fallen, as have oc-
cupancy rates, which dropped
statewide from 80 to 55 percent,
Mr. Horwitz said. Today, half of
all hospital admissions are on
an outpatient basis.
Among other things, the Eco-
nomic Alliance for Michigan ar-
gues for greater economies in
health care delivery. The orga-
nization has sided with the state
in an ongoing legal battle
against several hospitals that
want to expand and build in
West Bloomfield, including a
Sinai-Henry Ford Hospital part-
nership. Its petition to build a
200-bed hospital on Maple Road
is still alive, despite unfavorable
rulings by the state's courts. A
Sinai spokesperson said it's pre-
mature to comment on the case.
But with the merger, Sinai
will now have its long sought-af-
ter Oakland County inpatient
hospital. Huron Valley, DMC's
only inpatient hospital in Oak-
land County, may get a kosher
kitchen and a Star of David on
one of its flanks. Mr. Horwitz
said the merger will strengthen
Huron Valley's financial situa-
tion by bolstering its patient and
physician base.
"Sinai has been able to accom-
plish its best possible outcome: it
now has a presence not just in
Oakland County but in the very
portion of Oakland County it's
wanted to be in because of the
Jewish population. They get to
have that presence without ad-
ditional costs," he noted.
In 1988, DMC acquired the
153-bed Huron Valley Hospital,