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JUNE 19 - 25, 2017

Clark Alibaba sees


looks to Detroit as
next act at ideal place
Hudson- for Gateway
Webber. President on new
Page 3 small-biz push. Page 3

Workforce Health Care


SPECIAL REPORT

Union rules on DETROIT 1917 / 1967 / 2017


Individual
teacher pay Prelude to ’67 rates jump;
contribute
to shortages
employers
By Mike Wilkinson
Bridge Magazine
insulated
In Detroit, as many as 260 class- By Jay Greene
jgreene@crain.com
room teacher positions are unfilled in
the state’s largest district, prompting a Uncertainty over the future of
shortage so severe that substitutes last Obamacare, along with high use of
year were the full-time solution in health care services and sky-high
more than 100 classrooms. drugs prices, led last week to re-
And with fewer new teachers quests for huge rate increases for in-
graduating from college every year, dividual health insurance in Michi-
pressure is mounting to find quali- gan — but the volatility is unlikely to
fied teachers. The situation has left extend to the group coverage most
teachers working harder in over- employers offer.
crowded classrooms for under- Michigan’s nine insurers submit-
whelming pay — they’ve seen their ted two sets of individual market
pay frozen and cut repeatedly in a rates last week to the state Depart-
district that’s beset with problems ment of Insurance and Financial
both financial and academic. Services that showed some eye-pop-
Yet in the face of a supply and de- ping price hikes. One set — includ-
mand problem, the Detroit teach- ing the controversial federal subsidy
ers, like their peers in numerous designed to hold down premiums
Michigan school districts, have bar- — requests rate increases from in-
gained for contracts that severely surers that range from 8 percent to
restrict the pay of the folks who 27 percent. The second set, without
could help alleviate the shortage. the subsidies, range from 19 percent
In Detroit, Dearborn and Rose- to 60 percent.
ville, new teachers can only get cred- Individual policies account for
it for two years’ experience they ac- about 6 percent of those with health
crued working in other school insurance in Michigan, about
districts. In Grand Rapids it’s five 560,000 people. Among those are
years, in Lansing it’s eight. WILLIAM VANDIVERT, THE LIFE PICTURE COLLECTION VIA GETTY IMAGES small business owners who don’t
It’s difficult to gauge whether the Paradise Valley, 1942. Once a Detroit neighborhood where African-American businesses thrived, Paradise Valley was destroyed in carry group coverage and many of
restrictions affect teacher recruitment the name of urban renewal in the early 1960s. their employees. For the majority of
because they may scare away poten- employers that carry group insur-
tial applicants. But for those consider-
ing a move, the impact is huge.
The economic roots that contributed ance, the increases are expected to
be much smaller.
Say you’re a teacher with 10 years’
experience at Utica schools, which had to Detroit’s worst summer Congressional Republicans’
moves to repeal key provisions of the
First in a series: To recognize the 50-year anniversary of the 1967
layoffs last year. To work in Detroit, Affordable Care Act and uncertainty
you’d have to accept nearly $36,000 over whether the Trump administra-
less, going from more than $78,500 to uprising, Crain’s looks back 50 years before that summer and the 50 years tion will pay “cost sharing” subsidies
just under $43,000 because eight years are the reason for the spread for
of experience wouldn’t count.
since to explore its impact on Detroit’s business community. Michigan’s nine insurers participat-
Detroit already pays less, with ing on the health care exchanges.
teachers topping out at $65,265 after 10
Part 1, pages 14-17 Opinion Part 2, June 26 The spread between the two sets of
years, compared with well over $78,000 How urban renewal projects J Ron Fournier: The business impacts of a riot that rate requests amounts to 10 percent
in most districts. But the restriction put uprooted a thriving African- Language is a tore through many of Detroit’s to 50 percent above what the normal
in place by the teachers — and agreed American business district. matter of commercial districts, and how increase would be based on project-
upon by the administration — makes Read and comment: viewpoint. that damage hobbled the city ed rising drug prices and medical
that cut even more steep. crainsdetroit/Detroit1967 Page 6 through decades of decline. service use.
SEE TEACHERS, PAGE 19 SEE INSURE, PAGE 22
© Entire contents copyright 2017
by Crain Communications Inc. All rights reserved
crainsdetroit.com Vol. 33 No 25 $2 a copy. $59 a year.
EACH WEEK DON’T MISS
17
S I N E S S // J U N E 1 9 , 2 0
CRAIN’S DETROIT BU
8

CARE
SPECIAL REPORT: HEALTH

OUT ON CRAIN’S Medical mergers and Botsford was one of the


biggest in Southeast

SPECIAL REPORT!
Health System, Oakwood Healthcare hospital merger mistakes?
The 2013 merger between Beaumont remains is the new Beaumont
able to overcome traditional Henry Ford Health
Michigan in years. The key question has created a broader and deeper
Health and HealthPlus of Michigan
NEWSPAPER

Meanwhile, the addition of Allegiancefar?


gone so
System. How has the merger

Henry Ford
expands with
HEALTH CARE – Medical mergers, Page 8 Jackson, Flint
acquisitions
By Jay Greene
jgreene@crain.com

BROUGHT TO YOU BY:


year in
Henry Ford Health System had a big
Allegiance
2016 when it added Jackson-based
of
Health in April and Flint-based HealthPlus
acquisi-
Michigan earlier in February. The two
reve-
tions added about $800 million in annual
expand-
nue to the now $5.7 billion system and
to the west
ed its geographic reach by 75 miles
from five
and 70 miles to the northwest and
counties to eight.
history
So, how has Henry Ford, with its rich
with a
as a Detroit-based integrated system
group and
1,200-physician employed medical
company,
a 662,000-member health insurance
fared since then?
Ford
By all accounts, if you talk with Henry
the implementation of
officials and physicians,
says it
the merger has gone well. But experts
of fail-
takes years before determining success
or merg-
ure with a major business acquisition
er.
man-
Robert Burns, chair of the health care BEAUMONT HEALTH
School at
agement department at the Wharton was part of a merger in 2014.
Hills, the former Botsford Hospital that
the University of Pennsylvania, said
research tower at Beaumont Hospital, Farmington
Construction is underway on a new patient
hi d f all corporate mergers,
l
2 C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 9 , 2 0 1 7

MICHIGAN BRIEFS INSIDE


CALENDAR 18
CLASSIFIED ADS 19
Officials charged in death percent employer contribution plus KEITH CRAIN 6
during Flint water crisis another 3 percent if they kick in at least
OPINION 6
3 percent of their pay. They could still
Attorney General Bill Schuette filed pick a pension, but it would cost them OTHER VOICES 7
an involuntary manslaughter felony an unspecified amount more than PEOPLE 18
charge against state health director what teachers now pay: 6.4 percent of
Nick Lyon and four other state and their salary. RON FOURNIER 6
Flint officials over the death of a man In the new hybrid plan, workers RUMBLINGS 23
who contracted Legionnaires’ disease would be responsible for half of the
CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS WEEK ON THE WEB 23
during Flint’s water crisis. cost-sharing, including any new un-
Genesee County District Court Special Prosecutor Todd Flood (left), Attorney General Bill Schuette, Genesee funded liabilities. If the funding falls COMPANY INDEX:
Judge G. David Guinn allowed the County Prosecutor David Leyton and Andy Arena, chief investigator for Schuette’s below 85 percent for two straight years, SEE PAGE 22
charges to be filed Wednesday morn- Flint water crisis investigation. the plan would be closed to new en-
ing, making Lyon the highest ranking trants.
state official in Gov. Rick Snyder’s ad- during Flint’s water crisis. legislative leaders reached a budget It was not immediately clear just
ministration to be charged criminally Earley, Croft, Busch and Shekter deal that would automatically enroll how unappetizing the pension option publican you know or see or heard of
over Flint’s tainted water. Smith were previously charged by newly hired school employees in a would be for new teachers, but Repub- kids and others who have faced this
Schuette’s involuntary manslaugh- Schuette for a variety of criminal alle- 401(k)-only retirement plan unless licans expect opposition from labor and have real struggles and have died
ter charge against Lyon and the four gations of misconduct for their han- they opt into a costlier pension benefit unions. as a result,” Lansing Democratic state
others blames them for indirectly dling of Flint’s tainted water problems. within 75 days, The Associated Press Rep. Andy Schor said on the House
causing the Dec. 13, 2015, death of Schuette’s office also filed criminal reported. House OKs bills to combat floor before last Tuesday’s vote on
85-year-old Robert Skidmore of charges of obstruction of justice and The change would apply to teach- opioid addiction his bill dealing with Medicaid pay-
Mount Morris. lying to a police officer against Dr. ers and other school workers hired ments.
“Defendant Lyon’s acts and failure Eden Wells, the state’s chief medical next Feb. 1 or later and may cost the The Michigan House approved leg-
to act resulted in the death of at least executive. state much less than an earlier version islation that would create an opioid Correction
one person, Robert Skidmore,” Special The Attorney General’s office al- of legislation introduced last month, prescription abuse program for school
Agent Jeff Seipenko said in Genesee leges Wells obstructed Wayne State according to a summary of the agree- districts and to let Medicaid pay for An article published in the
County court. University researchers who have been ment circulated to GOP senators at a patient detoxification and rehabilita- March 23, 2015, edition of Crain’s
Schuette also said he’s filing invol- trying to find a link between the corro- caucus meeting and obtained by The tion services for people with addic- under the headline “Sun Com-
untary manslaughter charges against sive Flint River water and the Legion- Associated Press. tions, The Associated Press reported. munities buys Green Courte
former Flint emergency manager Dar- naires’ outbreak. New hires now qualify for a pension The bills also would prevent doc- Partners” should have stated that
nell Earley, former Flint public work- and a small 401(k). tors from giving prescriptions without Southfield-based Sun Communi-
ers director Howard Croft and Stephen Snyder, legislators Under bills that could begin ad- written parental consent and let phar- ties Inc. purchased Green Courte
Busch and Liane Shekter Smith, two strike budget deal vancing Wednesday, they would de- macists refuse filling prescriptions Partners’ subsidiary American
top water regulators at the Michigan fault into a better 401(k)-only plan like suspected of being fake. Land Lease Inc.
Department of Environmental Quality Gov. Rick Snyder and Republican what state employees receive — a 4 “Whether you’re Democrat or Re-

THANK
YOU
for helping us find 8,000 Detroit youth
a rewarding summer job! www.gdyt.org

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C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 9 , 2 0 1 7 3

Sports Business
Little Caesars Arena to
CRUNCH TIME open in three months
Three months to the day from
when Kid Rock will christen Little
Caesars Arena with the first of four
shows, Olympia Entertainment’s
Tom Wilson took local journalists
on a walking tour of the sprawling
building Monday afternoon.
He showed off the 20,000-seat fu-
ture home of the Detroit Pistons and
Red Wings by highlighting its mas-
sive scoreboard beginning to take
shape, the unique gondola seating
that looks nearly directly down over
the floor, and the Via concourse that
has a wide transparent roof encir-
Little cling much of the bowl.
Caesars More than 1,000 workers are on
Arena’s site daily to get the 20,000-seat ven-
20,000 ue and surrounding 12-acre site fin-
seats are ished on time. Much of the seating
still being is installed, and crews are working
installed. to wrap up the interior fixtures and
infrastructure.
The arena project including
nearby developments is now tabbed
PHOTOS BY BILL SHEA/CRAIN’S DETROIT BUSINESS at $862.9 million, including an adja-
Olympia Entertainment President Tom cent parking garage and commer-
Wilson explains Little Caesars Arena’s cial buildings flanking the venue
progress to reporters during a media tour along Woodward Avenue and Hen-
last week. ry Street.

Q&A Nonprofits

Gateway ’17 looks to About Gateway ’17


in Detroit
“I’d like to see us lean into
investments that support
connect MI biz to China What: Gateway ’17 is the inaugural
the policy work that can
move the needle.”
By Dustin Walsh The answer starts with Alibaba’s national event put on by the Melanca Clark,
dwalsh@crain.com
business strategy in the United Chinese e-commerce company to Hudson-Webber Foundation
Alibaba is States, which is focused on helping find new U.S. vendors who are
coming to De- the U.S. businesses sell to the China interested in

Clark brings political,


troit this week. market. exporting to
The Chinese On a practical level, there are China.
e-commerce gi- two main focuses of Gateway ’17:

social background
Who:
ant is hosting its first is educating U.S. brands, small Featured
inaugural Gate- businesses and agricultural provid- speakers

to Hudson-Webber
way event, in- ers (including farmers and cooper- include
tended as a way atives) about the opportunity to sell Alibaba CEO
for businesses to the more than 500 million Chi- Jack Ma,
J. Michael Evans: to learn about nese consumers on our platforms. Martha
Alibaba president exporting to And second is equipping those Jack Ma By Sherri Welch ground to bear in developing a new
Stewart
says Detroit China and, in brands, small businesses and agri- swelch@crain.com
strategic plan for the funder, one that
Living
offers access turn, help Aliba- cultural providers with the tools When Melanca Clark first ex- could see it taking a new advocacy
Omnimedia
ba find products to sell. and understanding they need to founder pressed interest in leading the Hud- role on policy issues that impact the
Alibaba, though it sells little in the begin the process of getting on our Martha son-Webber Foundation, there was quality of life in Detroit and funding,
U.S., is growing quickly. It has fore- platforms and selling to Chinese Stewart, UPS some question of whether she’d be among other things, new approaches
cast revenue next year of up to near- consumers who have a high de- CEO David able to get an interview, given her to crime intervention in the city.
ly $35 billion, an increase of 45 per- mand for products from the United Abney and TV non-traditional background. The strategic plan is expected to be
cent to 49 percent over 2017. States. anchor Unlike the heads of most private done later this summer.
Crain's Dustin Walsh talked with J. Agriculture is important because Charlie Rose. foundations, Clark hadn’t come up “Given our scale and scope ... we’re
Michael Evans, Alibaba Group’s pres- our consumers in China are looking through nonprofit channels. not going to program our way out of
When:
ident and director, about why the for safe, high-quality fresh produce Martha Stewart Instead, she’d turned her Har- some of these issues that we’re trying
Tuesday-
company picked Detroit, and what and agriculture products. The U.S. is vard Law School degree to social to take on,” Clark said.
Wednesday.
Alibaba might do for local businesses. a net exporter of a wide range of justice and political work, a path The foundation grants $6 mil-
these products and so we can help Where: Cobo Center, Detroit. that took her all the way to the lion-$7 million annually to efforts
Agriculture seems to be the focus, this supply connect with strong and Tickets: Sold out. White House. supporting physical revitalization, the
though not the entirety, of the first Others include fashion and appar- Now, just under a year after joining arts, economic development and safe
Gateway event. Why is ag el, mother and baby products, More: Gateway17.com Hudson-Webber, she’s bringing her communities in the city.
important to Alibaba and China? SEE GATEWAY, PAGE 21 political and social justice back- SEE CLARK, PAGE 20

MUST READS OF THE WEEK Office space


Hayman buys Troy
Many dollars, not so many wins Officentre for $55
million, plans $10 million
The Tigers’ return on their payroll investment puts them in renovations. Page 5
near the bottom of Major League Baseball, Page 4
4 C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 9 , 2 0 1 7

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The average MLB roster spending this season is $139.3 million. The Tigers are spending $201.1 million.

Tigers remain one of Major League


"My children
Baseball’s inefficient spenders
and I deserve By Bill Shea World Series more often that cheap- per innings pitched — also was 28th
“I can’t afford genuine love.” bshea@crain.com
to leave.”
er teams. at 1.47.
It’s June, so summer is basically The best team in baseball right Oh, and that bullpen, ever a
“ Nobody else I AM A
Survivor!
here, the weather is nice, and the now is the Houston Astros with a 44- source of angst. So far this season,
will love me.” kids are getting out of school. And 22 record. Their payroll is $125.3 mil- the Tigers’ bullpen had blown 12 of
that other annual midyear phenom- lion, which is $14 million below the 26 save opportunities, third worst in
enon is in full swing: Detroit Tigers league average. Detroit spending 44 baseball, and the group’s 5.01 ERA
”we have no where to go.” “There is HOPE for
a better future!” fans are complaining. percent more than the league aver- was 27th in MLB.
Are the beefs legit? Has the team age hasn’t resulted in much beyond A more technical measure of the
"my children and been effective or inept with its talent a .500 club that’s in third place with- team’s performance so far is an ad-
“I have to keep my family together.” i are worthy of so far this season? in American League Central Divi- vanced analytical metric that’s be-
support and The Tigers, going into Wednesday, sion. come popular over the past decade:
encouragement!” were 30-33. After 63 games a year The Philadelphia Phillies are the wins above replacement, or WAR.
ago, they were 32-31, and would go worst MLB club at 21-42. If they keep The measurement is for individual
on to chase a playoff spot until the up with .333 winning percentage players, and gives an idea of how
Create opportunities to succeed and join us in final weekend of the season. In 2012, and win just 54 games, their $113.2 many victories a player is worth to
our commitment to serving families affected by when the Tigers last reached the million roster translates into $2 mil- his team compared to a replace-
World Series, they were 30-33 after lion spent per victory. ment-level player. The higher the
domestic violence. 63 games. At the other end of the spectrum, WAR, the better the player.
Across Major League Baseball the L.A. Dodgers have MLB’s largest Through Wednesday, ESPN’s ver-
Visit www.cotsdetroit.org right now, the average team sits at payroll at $246.3 million, and their sion of WAR showed just four Tigers
HOPE HELP HOUSING
for more information. 26 Peterboro | Detroit, MI 32-32. What separates the Tigers .615 wining percentage projects out players in the top 100: Outfielder Jus-
313-831-3777 from the rest of the middle of the to 100 wins. The math suggests $2.46 tin Upton with a 2.1 WAR came in at
pack is payroll. million for every Dodgers victory. No. 52, pitcher Michael Fulmer tied
Average MLB roster spending this Or, in other words, they’ll spend less for No. 73 with a 1.89 WAR, and back-
season is $139.3 million. The Tigers per game for each victory than De- up catcher Alex Avila’s 1.74 WAR was
are spending $201.1 million. troit. tied for 85th. Avila was starting while
More than a third of the season is Spending efficiency, of course, is everyday catcher James McCann was
in the books, and if the Tigers main- meaningless to fans and billionaire out with an injury.
tain their .476 winning percentage owners if their team wins the World Last year, the Tigers had several

STAY IN THE
pace, they’ll finish 77-85. Cocktail Series. For the Tigers, the math so far players in the top 50 WAR rankings:
napkin math suggests they’ll have paints a muddied picture with a lot pitcher Justin Verlander finished
spent $2.61 million for each victory. of baseball left to be played. ninth in baseball with a 6.61 WAR.

KNOW
A 77-85 team spending the league Detroit, which was 3.0 games out Second baseman Ian Kinsler was
average on players will have doled of the division lead on Wednesday, 17th with a 6.13 WAR and Miguel
out $1.8 million per victory this sea- was 13th among MLB’s 30 clubs Cabrera was 45th with a 4.9 WAR.
son. when it comes to team batting aver- Fulmer with 46th at 4.87 WAR.
Last season, it cost the Tigers an age (.255) and home runs (79) but A WAR rating increases with

with Crain’s average of $2.39 million for each of


the team’s 86 victories. At their 2017
it’s in the upper tier for on-base per-
centage (.333, 7th), slugging per-
games played.
Baseball salary tracking site Spo-

Email pace, they’ll win nine fewer games


and spend more to do it.
centage (.431, 10th), on-base plus
slugging (.764, 8th), and the Tigers
trac.com has a metric called True
Value Statistic (TVS) used to value

Newsletters
The flaw in such math is that it’s were sixth in baseball with 235 walks. teams by payroll, victories, and ac-
much harder to be efficient when a They had the 12th-most strikeouts cumulated player production. De-
team spends more. Big payrolls with 534, so the team is a confound- troit’s 19.47 TVS ranked 25th in
don’t automatically equal winning ing mix of patient at the plate, hitting baseball, with the Astros as the best
or a World Series, but being cheap for extra bases, but still striking out at 98.14 and San Francisco Giants
doesn’t win many games, either. The more than most teams. worst at 1.74. The average TVS was
elusive grail for front offices is to find Pitching has been the team’s bug- 48.3 as of Wednesday.
Subscribe for FREE by visiting the right collection of players for the aboo. The staff has a combined 4.78 Note: The statistics, rankings, and
crainsdetroit.com/crainsemails right price. The only teams to win a ERA, which ranks 24th in MLB, and salary information in this story come
championship while having the opposing teams were hitting .273 from MLB, ESPN.com, Fangraphs.
most expensive roster were the New against Detroit, which ranks 28th. com, and Spotrac.com.
York Yankees in 2000 and 2009. That The pitching staff’s WHIP — a mea- Bill Shea: 313 (446-1626)
said, higher spenders got to the surement of baserunners allowed Twitter: @Bill_Shea19
C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 9 , 2 0 1 7 5

Visit us at SHRM17,
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COSTAR GROUP INC.

Reap the
s
About $10 million in capital improvements are expected at the five-building Troy

a r d
Officentre complex along East Big Beaver following a sale to Southfield-based

e w
Hayman Co.

Hayman buys Troy


Officentre for $55M
ultig
r
 enerational
m
of a workforce
By Kirk Pinho ally good price per square foot,” Hay-
kpinho@crain.com
man said.
Hayman Co. has paid $55 million The complex, most of which was
for the Troy Officentre complex. built in the mid-1980s, is about 83
The deal that closed earlier this percent occupied, with large tenants
month for the 732,000-square-foot including J.D. Power & Associates
property along East Big Beaver Road (43,000 square feet), St. John Provi-
just north of I-75 amounts to $75.14 dence (30,000 square feet), Urban
Maturity. Judgment. Work ethic. This is the value
per square foot. Fulfillment Services (30,000 square experienced workers can bring to your workforce.
Andrew Hayman, president of feet), General Physics Corp. (60,000 When younger and older employees work together,
Southfield-based Hayman Co., said square feet) and Dialog Direct
about $10 million will be spent up- (60,000 square feet), Hayman said.
everyone is more productive.
dating and renovating the five-build- Hayman Co. will manage and Learn more at AARP.org/employers
ing property. lease the building to tenants, and
Improvements include new ele- serve as construction manager on
vators, some roof replacements, the renovations.
parking lot and parking deck repairs, The previous owner was a subsid-
and landscaping and signage up- iary of Osprey S.A. Ltd.
grades. Common areas are also ex- Anne Galbraith Kohn, senior vice
pected to be improved, Hayman president in the Capital Markets
said. According to CoStar Group Group in the Southfield office of Los
Inc., the average asking rent is $17.95 Angeles-based CBRE Inc., brokered
per square foot per year, and Hay- the deal.
man said he and New York City- Hayman Co. has an office portfo-
based Torchlight Investments, an lio of about 4 million square feet un-
investment partner in the deal, hope der ownership and management,
to increase rents over approximately plus more than 10,000 apartment
a five-year ownership period to units spread across about 40 proper-
more than $20 per square foot. ties, Hayman said.
“We see a tremendous value op- Kirk Pinho: (313) 446-0412
Twitter: @kirkpinhoCDB

DOING
portunity, but at what we feel is a re-

Mobility center awards $24M


contract for proving grounds
By Kurt Nagl
knagl@crain.com

The American Center for Mobility


In January, the American Center
for Mobility, a nonprofit self-driving
vehicle test bed at the Ypsilanti air-
THE UNDOABLE
IS IN OUR
has awarded Warren-based Angelo port, was named by the U.S. Depart-
Iafrate Construction a $24 million ment of Transportation an official
contract to begin phase one of the au- proving ground for the development
tomated vehicle proving ground at of driverless cars.

DNA.
Willow Run. Construction of the proving
Phase one includes construction of grounds — at the site of a former Gen-
a 2.5-mile highway loop with on and eral Motors plant that closed in 1992
off ramps, a 700-degree curved tun- — is expected to cost $110 million.
nel, customer garage and operations The mobility center has secured about
center, the mobility center announced half those funds with more private in-
in a news release. vestment on the way, according to
Completion of the project’s first GM Authority, a forum for news relat-
phase is expected by December, when ed to the automaker.
the grounds will open for testing, the The Michigan Department of Grand Rapids We believe our attorneys have the passion,
news release said. Transportation has also started work Southfield
“The American Center for Mobility on a 1.5-mile section of US-12 be- talent and tenacity to do the undoable. Named
Macomb
is attracting worldwide interest from tween Ecorse Road and Airport In- one of the nation’s best law firms by U.S. News
Midland
private and public entities that have a dustrial Drive, where plans are to re- & World Report for seven years running, and
Muskegon
need for developing and testing ad- purpose the westbound lanes of the Kalamazoo also a top 50 “Most Feared Law Firm” in BTI
vanced connected and driverless ve- divided road for part of the proving Holland Litigation Outlook 2015 and 2016, we think you
hicle technologies,” John Maddox, ground’s closed track, while the east- Lansing might agree. For more about what we’ve done, A BETTER PARTNERSHIP‰
president and CEO of the mobility bound lanes will be converted into do and could do for you, visit wnj.com.
center, said in a written statement. two-way traffic for the public.
6 C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 9 , 2 0 1 7

OPINION
What do you call
the summer of ’67?
I
call what happened in Detroit in
1967 a riot because my father
called it a riot, and my father
called it a riot because he was a De-
troit riot cop.
It’s a matter of perspective.
It’s trite to open a column with a dic-
tionary definition, but words matter, so
we have to start with Merriam-Web- RON FOURNIER
ster: A riot is “a tumultuous distur- Publisher and Editor
bance of the public peace by three or
more persons assembled together and
acting with common intent.” Ron Fournier is publisher and editor of
The word vaguely applies to what Crain’s Detroit Business. Catch his
happened here 50 years ago this sum- take on business news at 6:10 a.m.
mer: 43 dead (33 blacks and 10 whites), Mondays on the Paul W. Smith show
1,189 injured, more than 7,200 arrests, on WJR AM 760.
and 2,509 businesses burned, looted or
otherwise destroyed. the linguistics of 1967 and attack the
But “riot” also lacks context. It as- root causes of whatever we call it.
sumes “common intent” when the For this issue’s coverage of the 50th
violence of 1967 had many inten- anniversary, Crain’s staff didn’t settle
tions, many reasons and justifica- on one word to describe what hap-
tions, and not all of them pure. pened, because no single set of letters
Much of it was fueled by anger. conveys the full breadth of that bloody
Anger over policy brutality. Anger summer, and each word reflects a dif- CRAIN’S DETROIT BUSINESS
over red-lined neighborhoods. An- ferent perspective. We recognize that The QLine runs up and down Woodward in downtown Detroit.
ger over systemic racism that, among our readers come from all walks of life.
other things, led to the destruction of
a vibrant black business community
called Paradise Valley (See Kirk Pin-
We chose to write about the sum-
mer of ’67 because Crain’s is a busi-
ness publication, and what hap-
Let’s keep it within reason
ho’s story on Page 14). pened that summer was an I happen to think that the new are cool but very expensive and
For many black Detroiters, anger economic cataclysm. The financial streetcars are great. My only sug- don’t have the flexibility to move
defined the words their parents used. pain lingers today. Detroit’s future gestion, as given to me by a friend, as population moves.
Rebellion: “opposition to one in depends upon how well the business is that they need to put more cars Unless you are certain that pop-
authority or dominance.” community and other civic leaders on the system. A 10- or 15-minute ulation will stay put for decades,
Revolt: “to renounce allegiance or learn from the lessons of the past. wait is about the tolerable maxi- buses seem to be a better choice.
subjection (as to a government).” “If we fail again,” Mayor Mike Dug- mum, and now it’s about double. Right now we have isolated transit
Uprising: “a usually localized act gan warned at the Mackinac Policy There is no doubt that the proj- systems that don’t seem to be con-
of popular violence in defiance usu- Conference, “I don't know if the city ect has been a hit, and if they can KEITH CRAIN nected. Our trolley up and down
ally of established government.” can come back.” find the money to keep it running, Editor-in-chief Woodward is going to be a business
Insurrection: “an act of instance of La June Montgomery Tabron, then we have a home run. bonanza. I hope everyone watches
revolting against a civil authority or president of the W.K. Kellogg Foun- The problem has always been, revenue, we would all like to see as businesses sprout up all along
an established government.” dation, was traveling to Mackinac Is- everywhere, if there is a deficit, an expanded system serving all of the system, whether they are
I’ve heard people use the word land when Duggan was tracing the they raise the price, fewer people Southeast Michigan. But the cost restaurants, apartments or offices. I
“unrest” rather than riot or rebellion. I history of institutionalized racism in ride, and it becomes a spiral down- would simply be prohibitive. am sure we will see lots of new eco-
looked it up: Unrest means “a dis- Detroit. But by the next morning, ward. Just about every mass transit And let’s be equally careful that nomic growth along the route.
turbed or uneasy state,” which might when she joined me for breakfast at system needs a government subsi- we don’t fall too in love with a Even in the Motor City, mass
make it more of a euphemism than a the Grand Hotel, everyone was dy, so don’t be surprised when tax- fixed rail system. I always remem- transit will build business, some-
synonym. Same for “civil disturbance.” talking about the mayor’s speech. payers are asked for one. bered watching the system in Chi- thing long overdue. But to be really
Frank Joyce, a prominent New “Good for him,” she murmured. Meanwhile, we are hearing a lot cago, called the “Loop,” become powerful we have to watch it ex-
Left activist in Detroit in the 1960s, Then we compared notes: We’re of crying for more trolleys going obsolete when, over a few decades, pand all over our region.
read a lot into word choices. “The in- roughly the same age. We grew up on out to the suburbs. It would be the downtown moved, leaving the The People Mover was a begin-
vestment that a lot of white people the city’s east side. Her neighborhood hard not to want an expansion of system today in the wrong place. ning, followed now by the street-
have in calling this a riot is precisely was diverse, mine was not. She is black. our system after seeing it in opera- Buses, whether they are pow- cars. Over a period of time, when
because they don’t want to concede I am white. My father wore riot gear. Her tion. Like the People Mover, it does ered by fuel, electricity or even hy- we have the tax revenues, we must
that black people had anything to father wore a grim look of resolve when not do as much good as possible drogen, have the simple ability to see an expansion of our system. It
rebel about …,” he said in 2016. neighbors and friends filled his base- without being expanded. move as population shifts, a real will add substantially to our eco-
Among those who fiercely dis- ment, taking shelter from violence. In a perfect world with lots of advantage. Trolleys or streetcars nomic prosperity.
agreed was Roman Gribbs, who “Suddenly, a guy showed up car-
served as Detroit mayor from 1970 to rying a TV under his arm. My father
1974. “How can you say a rebellion stood in the door to our house and TALK ON THE WEB
when you have 43 murders, $50 mil- said, ‘Oh, no you don’t! Get that TV
lion (of) damages — blocks and out of here!’” Re: UM to offer free you consider the average debt, that Since this is funded by out-of-
blocks of fires,” he said in 2015. She took a bite of breakfast and tuition for students could add years to the loan repay- state tuition and university cost con-
“That’s not a rebellion, that’s a riot.” continued: “What I remember is lead- with family incomes ment. Nice thought, poor imple- tainment won't it simply raise the
(Gribbs died in 2016.) ership — somebody, my father, giving under $65,000 mentation. tuition for those who are paying? I
Both Joyce and Gribbs were inter- shelter to people who needed it and How about cutting the salaries of don't see this as the long-term solu-
viewed by the Detroit Historical Soci- helping us process right from wrong.” Another reason not to send my the professors and charging a fee to tion for the ever-rising costs of col-
ety for its 1967 oral history project. I didn’t ask her what she calls the kids to U of M. Now they have to sub- the board of regents to subsidize all lege education. Additionally, if UM is
The DHS collected hundreds of inter- events of 1967. I suspect it matters sidize these free students through the students! They certainly make the trendsetter here it could poten-
views and built a Midtown exhibit, much less to her than what Kellogg is their own student loans. The in- more than $65k and should be hap- tially dissuade students from elect-
“Detroit 67: Perspectives,” to encour- doing for Detroit’s neighborhoods crease U of M is proposing may not py to take a 3 percent cut. ing to attend the school.
age metro Detroiters to move beyond under her leadership. sound a lot as a percentage but when MarkYTH BFureigh
C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 9 , 2 0 1 7 7

Retiring educator said yes to career-minded young people


As debates continue within the
business community about how to
Too often, the
support education, there is a lesson word we hear the
we can learn from an educator who most in business
is worthy of celebration.
Pete Bowers is retiring after 41 is negative — “no.”
years as a teacher and, as he is well-
known in local broadcasting circles, tional media figures on a talk show,
the station manager of WBFH-FM OTHER VOICES he said “yes.” Two of many exam-
in Bloomfield Hills, a community Matt Friedman ples of experiences then that built
radio station staffed primarily by skills used now.
Friedman is co-founder of Tanner
the students he has mentored since Pete Bowers saw his role not just
the “The Biff” first signed on the air Friedman Strategic Communications in to manage, not just to teach, but
in 1976. “Bitten by the broadcasting Farmington Hills and an alumnus of also to empower. If we can all figure
bug” as a college student, Bowers WBFH-FM. out ways to say “yes” to ca-
channeled that passion into a ca- reer-minded young people, his leg- Pete Bowers is retiring after 41 years as a teacher and as the station manager of
reer, in his hometown, filled with acy will long outlast his retirement. WBFH-FM in Bloomfield Hills.
indelible influence.
One of the unusual aspects of the
communications business is the
lack of barriers to entry. There is no
state certification, no licensing ex-
ams. Would-be entrants just need
someone to open the door to a ca-
reer. For me, that was Bowers.
When I was just 11 years old, as a
sixth-grader fascinated by media,
he gave me a radio show he named
“Middle School Spotlight.” As a se-
nior in high school, he named me
the station’s operations manager,
overseeing a staff of 30. In between,
I learned how to DJ, anchor news,
report sports and call play-by-play.
In more than four decades, he FALL REGISTRATION NOW OPEN
gave similar career head starts to
WXYZ-TV’s Heather Catallo and Jo-

READY. SET.
Anne Purtan, WXYT-FM’s Scott
“The Gator” Anderson and WDET-
FM’s Jake Neher, among dozens of
others. Sure, we all grew up in and
around Bloomfield Hills, which
provided us with multiple advan-
tages. But it was Bowers who creat-
ed an environment that encouraged

GR W.
teamwork and fresh thinking, in-
valuable lessons for communica-
tors and others who have enjoyed
success in a wide range of profes-
sions.
At a retirement luncheon June 3,
administrators, colleagues and
alumni thanked Bowers for all he
has sent into the lives of his stu-
dents. In a mix of laughter and tears,
we spoke on how experiences as a
teenager have shaped our lives as
adults. All of the comments had
something in common — we talked LAUNCH YOUR CAREER TO THE NEXT LEVEL
of intangibles, not anything that can
be measured by standardized tests.
One former student, now an FBI
agent, drove 500 miles from Virginia
Crain’s Leadership Academy is a unique
“An unparalleled opportunity to learn
to be there. Another, an internet en- multisession development experience,
trepreneur, flew in from Atlanta. A deeply about yourself as a leader while
third, a teacher and debate coach in designed for the next generation of leaders.
Florida, flew in to say, “The three
expanding your professional network
This 3-month program guides participants on a
biggest positive influences in my
life have been my mother, my father journey of personal discovery and cross-sector
with other like-minded leaders from a
and Pete Bowers.”
perspectives, through interactive activities wide variety of industries”
Too often, the word we hear the
most in business is negative — “no.” and thought-provoking discussions. – C1: Spring 2017 Crain's Leadership Academy Graduate
Forget about creativity. Just hit your
numbers. Make the boss happy.
Keep your head down. Don’t cause
trouble.
But with Pete Bowers, the answer EARLY BIRD NOMINATIONS START NOW.
to students was always “yes.” When – END SEPTEMBER 1 –
I, at 14, wanted to be the first broad-
caster, perhaps nationally, to call a
middle school basketball game on For more information and to nominate, visit crainsdetroit.com/leadershipacademy
the radio, he said “yes.” Three years
later, when I wanted to rack up long
distance charges interviewing na-
8 C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 9 , 2 0 1 7

SPECIAL REPORT: HEALTH CARE SP

Medical mergers
H
FRO

hos
vati
In
rese
the
The 2013 merger between Beaumont Health System, Oakwood Healthcare and Botsford was one of the biggest in Southeast deli
Michigan in years. The key question remains is the new Beaumont able to overcome traditional hospital merger mistakes? they
Meanwhile, the addition of Allegiance Health and HealthPlus of Michigan has created a broader and deeper Henry Ford Health gan
System. How has the merger gone so far? trac
nan
ther

Henry Ford ers


duc

expands with

den
grat

Jackson, Flint hos


cal
Nat

acquisitions anc
inte
tion
By Jay Greene not
jgreene@crain.com
effic
Henry Ford Health System had a big year in fina
2016 when it added Jackson-based Allegiance per
Health in April and Flint-based HealthPlus of Th
Michigan earlier in February. The two acquisi- Hen
tions added about $800 million in annual reve- Hea
nue to the now $5.7 billion system and expand- vers
ed its geographic reach by 75 miles to the west thre
and 70 miles to the northwest and from five nize
counties to eight. B
So, how has Henry Ford, with its rich history sho
as a Detroit-based integrated system with a tion
1,200-physician employed medical group and such
a 662,000-member health insurance company, orga
fared since then? the
By all accounts, if you talk with Henry Ford veys
officials and physicians, the implementation of liev
the merger has gone well. But experts says it but
takes years before determining success of fail-
ure with a major business acquisition or merg-
er.
Robert Burns, chair of the health care man-
agement department at the Wharton School at
the University of Pennsylvania, said research BEAUMONT HEALTH
shows two-thirds of all corporate mergers, Construction is underway on a new patient tower at Beaumont Hospital, Farmington Hills, the former Botsford Hospital that was part of a merger in 2014.
which includes hospitals and insurers, fail to
achieve success as defined by the public: pro-
viding better coordinated care that leads to im- Beaumont’s financials, patient volume Bob

stats up three years into union of hospitals


proved quality, lower costs and enhanced cus-
tomer service. App
“A successful merger is defined by what the mer
hospital says it is, not what society is looking
for,” said Burns, a national expert who has By Jay Greene definition, our slice of the pie is getting bigger.” They include combining administrative staffs sion
jgreene@crain.com
studied hospital and physician mergers for It’s paying off. and back-office support services; issuing a was
more than 30 years. Hospital mergers like the one that formed For fiscal 2016 that ended Dec. 31, Beau- consolidated bond for $398.4 million that one
“Reduced costs are what the public wants in a eight-hospital Beaumont Health in September mont Health enjoyed an saved the new system $23.5 million; consoli- syst
merger,” he said. “Systems seek market power, 2014 often take five years or more to ultimately operating income increase dating electronic medical record systems with adv
market share, to weed out competitors” and to be judged a success or failure. of 43 percent to $200.6 mil- Epic Corp.’s electronic medical record; forming gati
protect their pricing scheme against insurers, But three years into the merger that brought lion for a 4.6 percent mar- 900-physician Beaumont Medical Group and plag
managed care organizations and employers. together four-hospital Oakwood Healthcare, gin, compared with $140.7 launching Beaumont Care Partners to negoti- cou
Burns says hospital executives will never pub- Botsford Hospital and Beaumont Health Sys- million the prior year. Net ate managed care contracts. W
licly acknowledge these goals, but the former tem, progress toward that end has been un- revenue grew 6.7 percent Cost savings last year from the merger, esti- med
SEE HENRY FORD, PAGE 9 mistakable, according to top executives and to $4.4 billion. Beaumont mated at $77 million, allowed Beaumont to istra
physicians interviewed by Crain’s. Beaumont’s has projected net savings reward employees with pay raises, company iden
A 59,000 square-foot inpatient tower board chair, John Lewis, declined interview re- from the merger over three 403(b) retirement plan matches and new edu- syst
at Henry Ford Allegiance Health in quests. John Fox: years to be more than $134 cational assistance and benefit plans. Beau- solid
Jackson will create 66 private rooms. “From an operating standpoint, we have got Beaumont is million. mont employs 35,000 workers and has nearly effic
a beat and rhythm and are doing well,” CEO exceeding targets. Beaumont is metro De- 5,000 physicians on its medical staffs. said
John Fox said of the merger. “We are exceeding troit’s second-largest sys- Many smaller improvement projects are fly- 75 p
our targets, getting higher volumes, our hospi- tem by revenue at $4.4 billion, somewhat be- ing under the public radar. But prominent prod
tals are growing with better asset utilization. hind $5.7 billion Henry Ford Health System, changes included the January launching of a ning
Part of that reason is that people understand a which includes $2.4 billion in health premium new Beaumont branding campaign during the A
HENRY FORD HEALTH SYSTEM

lot better than a couple years ago what Beau- revenue. Comparing just net patient revenue, Super Bowl. Its “No Quit in Us, No Quit in You” the
mont Health is.” Beaumont is ahead of six-hospital Henry Ford, print, radio, TV and billboard campaign so far mer
“Patients and doctors are trying us who have $4.1 billion to $3 billion. is getting good reviews, Fox said. This summer, Hea
not done so before. All boats are rising. With Over the two years Fox has been CEO, Beau- executives will analyze data to determine if pa- now
that, our market share is growing. We see it in mont has moved the needle on integrating the tients responded to the campaign by visiting a of 6
all the math. The (Southeast Michigan) market eight hospitals with 3,337 beds and 168 outpa- Beaumont hospital or doctor. mer
has grown by X, but we are growing by 2X. By tient sites into one entity in a number of ways. SEE BEAUMONT, PAGE 12 PPO
C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 9 , 2 0 1 7 9

SPECIAL REPORT: HEALTH CARE

HENRY FORD
FROM PAGE 8
Chelsea had nothing to do with blunt-
ing Henry Ford’s move into Jackson.
He said UMHS simply needs addition-
hospital executive said private moti- al beds to serve its patients and is strik-
vations never change. ing deals with health care organiza-
In a 2015 study, Burns and fellow tions like St. Joseph’s across the state.
researcher Jeff Goldsmith looked at Spahlinger confirmed that HAP
the performance of 15 “integrated plans to roll out a tiered provider net-
delivery networks” in the U.S. as work insurance product in the Jackson
they added hospitals, physician or- market sometime this year. He said he
ganizations and managed care con- was informed by Henry Ford that UM
tracts where they assumed some fi- will become a “tier 2” provider that will
nancial risk. The research concluded charge patients using UM higher out
there is little evidence that the merg- of pocket costs under the new product
ers help to promote quality or re- HENRY FORD HEALTH SYSTEM plan.
duce costs. A renovated Henry Ford Allegiance Health Center on Spring Arbor Road in Jackson will consolidate services under one roof, In a statement, Mary Ann Tournoux,
“Indeed, there is growing evi- including dermatology, plastic surgery, and obstetrics and gynecology. Construction is scheduled for completion in August. HAP’s senior vice president and chief
dence that hospital-physician inte- marketing officer, said that HAP is con-
gration has raised physician costs, Mergers with Obamacare “We have been so focused on (in- 86,041 the prior year. sidering a tiered provider network in
hospital prices and per capita medi- stalling) Epic that has meant that our As a result, Henry Ford Allegiance’s Jackson market that could place some
cal care spending,” the paper in the Over the past several years, Henry other integration efforts have been de- revenue increased 7 percent to $501 providers in higher cost-sharing tiers.
National Academy of Social Insur- Ford and Allegiance explored mergers layed some,” she said. million for the first nine months of the “As with all health plans in Michi-
ance concluded. “Similarly, hospital with various health systems. Nation- But Fojtasek said Allegiance has merger ending Dec. 31, 2016. Howev- gan, HAP is evaluating the use of tiered
integration into health plan opera- ally, many health systems and insur- continued to bring in more patients by er, net operating margin declined 2.3 networks in all of our markets that
tions and capitated contracting was ance companies did the same be- opening a level-two trauma center, re- percent for the same period to a loss of would give an incentive to those mem-
not associated either with clinical cause of the need to reduce costs and cruiting physicians and getting a Hen- $2.5 million, primarily because of bers who choose to get their health
efficiency (shorter lengths of stay) or improve quality to take advantage of ry Ford name-recognition bounce in merger costs and the Epic EMR instal- care from high-quality providers that
financial efficiency (lower charges incentives and payment cuts con- the market. lation, Fojtasek said. deliver the best value,” Tournoux said.
per admission).” tained in Obamacare, or the Patient “It is impressive to me what the Overall, by adding Allegiance, Hen- Under the tiered network approach,
The 15 systems studied included Protection and Affordable Care Act of Henry Ford brand has meant to staff, ry Ford added assets of about $524.8 health insurers charge patients higher
Henry Ford Health System, Advocate 2010. physicians and employees,” she said. million in net fair value and net reve- copays for tier 2 or tier 3 to discourage
Health Care in Chicago and the Uni- Four years ago, Henry Ford at- “Henry Ford talks about commitment nue of $414 million from April to De- the use of certain providers or to en-
versity of Pittsburgh Medical Center, tempted to merge with Beaumont to excellence and how they treat peo- cember 2016, according to Henry courage use of lower-cost and high-
three health systems widely recog- Health System in Royal Oak. Cultural ple, and that is true.” Ford’s 2016 audited financial state- er-quality providers. Tier 1 is consid-
nized as successful systems. and management incompatibilities Since last year, Henry Ford Alle- ment. HealthPlus added $18.9 million ered the preferred network providers
But Burns added that studies also ended that deal. Beaumont then giance’s market share has increased by in fair market value to Henry Ford with and have the lowest copayments.
show there is a great deal of varia- merged with Oakwood Healthcare 1.5 percentage points to 33 percent of premium revenue of $331.7 million In the Jackson and Ann Arbor mar-
tion in outcomes, depending on and Botsford Hospital to become inpatient discharges, a number similar from February through December, the kets, sources tell Crain’s, the end result
such factors as the leadership of the eight-hospital Beaumont Health, the to Henry Ford’s market share in South- report said. is expected to reduce the number of
organizations, the market and how largest health system in Southeast east Michigan. Allegiance’s total dis- Besides adding size and revenue, HAP members using UM and direct
the mergers are implemented. Sur- Michigan in market share. charges for 2016 were 19,996, a 3.6 per- health care mergers and acquisitions more to Allegiance or possibly coming
veys also show employers don’t be- Allegiance also discussed various cent increase from 2015. also traditionally save some money for to Henry Ford Hospital in Detroit for
lieve hospital mergers reduce costs, deals with the University of Michigan Fojtasek said Allegiance was able to the combining hospitals by taking ad- higher-cost specialty services.
but do lead to better care coordina- Health System in Ann Arbor and Pro- attract a Henry Ford rheumatologist vantage of economies of scale, central- “HAP has (placed UM in tier 2 for
tion and quality. Medica in Toledo. part-time to see patients in Jackson ized business services, but also the proposed narrow network insur-
Bob Riney, But one of the advantages Henry and recruited a radiation oncologist through employee and top manage- ance product), but these actions oc-
Henry Ford’s Ford had over UM and ProMedica is and neurosurgeon, both of whom re- ment layoffs, Burns said. curred after our announcement (with
COO, said the that Henry Ford offered to invest more cently completed residency training at But other than normal attrition at St. Joe’s Chelsea hospital),” said Spah-
health system than $300 million in capital improve- Henry Ford. Allegiance, Riney said there haven’t linger.
ALTH approached the ments over five years in the Jackson “There has been a small shift of been any staff reductions. “Our job is
merger with Al- market. Henry Ford also pledged to people going to to grow the business and also be sensi- HealthPlus helps
legiance very dif- enhance clinical services in Jackson. Henry Ford in tive to the jobs in all the communities HAP expand
ferently than Capital projects underway at Alle- Detroit from Ann we serve,” he said.
hospital combi- giance include adding a much-await- Arbor,” she said. Looking to the future, Henry
Bob Riney: Jackson market

s
nations of the ed $45 million, 66-bed patient tower, “Obviously, some Ford’s ultimate goal is to have a
Approached past. enhancing cardiovascular services, of our patients statewide health insurance network
merger differently. “When we adding a $70 million Epic Corp. elec- still go to the Uni- Competition for patients will in- for HAP. Expanded geographic mar-
made the deci- tronic medical record and a $10 mil- versity of Michi- crease in the Jackson market with a ket to Genesee, Washtenaw and
taffs sion to partner with Allegiance, it lion, two-story health innovation and gan and St. Jo- stronger Henry Ford Allegiance Health Jackson counties will help toward
g a was a mutual decision to become education center. seph’s. Some go hospital and the University of Michi- that goal, Riney said. Henry Ford
that one,” Riney said. “We set out as a Georgia Fojtasek, president of Georgia Fojtasek: to Beaumont and gan Health System creeping closer to joining the Affirmant Health Net-
soli- system determined to try and get Henry Ford Allegiance Health who Henry Ford has also to (hospitals Jackson. work, a statewide clinically integrat-
with advantages with mergers and miti- was president of the old Allegiance kept promises. in) Lansing and In March, UM announced it plans ed network with seven health sys-
ming gating the challenges that have system, said the early positive im- Kalamazoo. We to purchase a 49 percent interest in St. tems and 33 hospitals, will also
and plagued so many mergers across the pact from the merger has been that are keeping more patients than we Joseph Mercy Chelsea Hospital, which enable HAP to enter other markets.
goti- country.” Henry Ford has kept its promises on used to do.” is between Ann Arbor and Jackson. “HAP is in a unique position (to of-
With the HealthPlus purchase, im- capital projects and how it has treated Riney said Henry Ford also is build- Officials for St. Joseph Mercy Health fer) value-based narrow network
esti- mediate goals were to reduce admin- Allegiance physicians and employees. ing out Allegiance’s network of 40 System, which owns the Chelsea hos- products” in Jackson and elsewhere,
t to istrative costs, create a mutual brand “Being aligned on values has really medical facilities by adding a new am- pital, said the two are expected to in- Riney said. “We will be offering prod-
any identity and connect information helped us manage the challenging bulatory care center in Brooklyn. He vest at least $20 million in improve- ucts that are high value with preven-
du- systems with HAP, Riney said. “Con- parts of bringing two organizations to- said plans call for adding other centers ments. The community hospital tive medicine and wellness that hope-
eau- solidation went pretty quickly and gether,” said Fojtasek, a nurse who has in the coming years. would increase operating rooms to fully is unique in the marketplace.”
arly efficiently without much fallout,” he been Allegiance’s CEO for 23 years. “It “We have had tremendous growth. eight from six, boost operating beds HAP’s entry into Jackson will help
said, adding that the merger is about is still early, and we have a lot to do, but We had 300 more patients, and 70 per- from about 100 now to the licensed ca- provide competition and diversity of
fly- 75 percent complete, although new (the merger) has worked out very cent of those patients were new to pacity of 133 beds and add minimally payers in the state, Fojtasek said. In
nent product development is just begin- well.” Henry Ford,” Riney said. invasive robotic surgery. January, Allegiance put its 5,000 em-
of a ning. Fojtasek said Henry Ford has al- On the other hand, Allegiance be- Fojtasek said the move to Chelsea ployees and dependents on the HAP
the After adding 300 employees from ready integrated Allegiance with its gan a community paramedic program makes sense for the University of plan with UM as a tier 2 provider.
You” the old HealthPlus and 73,000 com- billing and collections revenue-cycle with Jackson Community Ambulance Michigan. “We are competitors, and “It takes time for a new insurer to
o far mercial members, Henry Ford’s processes, combining group purchas- to reduce unnecessary emergency de- that probably will increase competi- take hold in market, and we are talking
mer, Health Alliance Plan of Michigan ing, human resources, legal, finance partment visits and lower costs. Addi- tion and makes sense for them,” she with them about how our clinically in-
pa- now has 1,300 employees and a total and marketing. The system is working tional hours were also added to eve- said. tegrated network of physicians can
ng a of 662,000 insured lives in its com- on merging employee benefit pro- ning clinics for primary care. Both But David Spahlinger, M.D., presi- manage care together in the commu-
mercial, Medicaid, Medicare and grams and its new Epic records sys- programs helped reduce ER visits by dent of the University of Michigan nity,” she said.
E 12 PPO business lines. tem. 1.6 percent in 2016 to 84,663 from Health System, said UM’s decision on SEE HENRY FORD, PAGE 10
10 C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 9 , 2 0 1 7

SPECIAL REPORT: HEALTH CARE

HENRY FORD “You will always have divergent


views on every topic,” Riney said. “I
same platform,” Riney said.
Fojtasek said Allegiance and its
FROM PAGE 8 am not going to suggest if there were physicians had already chosen to pur-
doctors negative in past there has chase Epic before Henry Ford ac-
Bridging the physician been a dramatic change now. But a quired it at a cost of about $30,000 per
divide vast majority of Jackson doctors are physician. One challenge Allegiance
excited to partner with Henry Ford doctors and administrators have is
At Allegiance, Henry Ford execu- Medical Group. They don’t feel threat- adapting the EMR to Henry Ford poli-
tives took the position that Allegiance’s ened.” cies.
management and physicians had just Riney said he has spoken with sev- “It becomes more complex be-
as many best practices to share with HENRY FORD HEALTH SYSTEM eral physician leaders of the indepen- cause since 2008 we have all been on
Henry Ford as Henry Ford has to share Henry Ford Allegiance Health’s family medicine location in Brooklyn, which opened dent group and believes they under- the Jackson Community Medical Re-
with Allegiance. in 2016, offers imaging and laboratory services. stand Henry Ford is not the enemy. cord system, a NextGen (EMR) plat-
“We did not pre-suppose that there “We are hoping to change minds,” he form,” said Fojtasek. The JCMR,
is an automatic Henry Ford way that is crease in quaternary (high complexity) with their clinical partners at Alle- said. owned by Henry Ford Allegiance, in-
best,” Riney said. “We wanted to share cases,” said Riney, noting that a hand- giance,” Riney said. “They are on the cludes Allegiance, about 250 of the
approaches together and develop syn- ful of patients have been transported same page on value-based care that Installing Epic EMR medical staff's 400 doctors, the Jack-
ergies and sustainable values.” by helicopter to Detroit. can be one of the biggest challenges.” son County Health Department, area
Riney said Henry Ford wanted to For Allegiance, clinical areas target- Jackson also has a group of 50 or 60 In early August, Henry Ford Alle- clinics and other health providers, she
first show the community and physi- ed for improvement first include radia- independent doctors, some of whom giance is expected to go live with the said.
cians that they were there to improve tion oncology, cardiovascular and have been critical of Allegiance’s installation of its Epic EMR system. Riney said he couldn’t predict how
clinical services and quality. neurosurgery. Riney said telemedicine management over the years. Sources Henry Ford installed Epic for its long it might take to integrate opera-
“We wanted to gain the respect of has allowed Henry Ford specialty doc- told Crain's that a good percentage of Southeast Michigan doctors, hospi- tions and cultures of Allegiance and
the community and show we could tors in Detroit to conduct virtual visits the independent doctors initially tals and clinics in 2013. HealthPlus. He said the public, the
add value to them,” he said. “We didn’t with patients and local Allegiance doc- wanted Allegiance to join UM. “It is a big, complex enterprise and business community, employees and
want to just say, we can save you $4 tors. Two independent doctors told we have significant numbers of teams physicians already are seeing im-
million in supplies with a broader base. “There is a way to align physician Crain’s that Henry Ford executives, in- working on the construct and adop- provements. But clinical service inte-
That doesn’t resonate in a community organizations in a non-threatening cluding Riney and John Popovich Jr., tion of the Epic system, with appropri- gration with complex specialties
as much as bringing value, and we way,” he said. “We don’t want to have M.D., president of 805-bed Henry ate modifications for Allegiance,” could take years.
wanted to do that for the people of (local) doctors feel threatened for their Ford Hospital and the system’s senior Riney said. “Cultures are like living things.
Jackson.” existence.” vice president for clinical affairs, have Once Epic is installed, communi- They are constantly evolving within
Riney said Henry Ford wanted to al- In fact, Riney said one of the more reached out to them to explain Henry cation between doctors on medical the community,” Riney said. “We have
leviate anxieties of the community and satisfying aspects of the merger for him Ford’s plans. cases will be improved dramatically made incredible strides. The capital
Allegiance physicians that the goal was has been how well the employed doc- They said independent doctors as patient hospital and physician data investments they are seeing. (These
to expand services in the local market. tors at Henry Ford Medical Group have have become more comfortable with can be shared instantly to avoid dupli- are) examples of promises made,
“There are some serious complex accepted and worked closely with Alle- Henry Ford as the new owner, al- cation of tests or medication errors. promises kept.”
care needs that can be done at Henry giance doctors in Jackson. though some are still not sold on the “The continuity of care will become Jay Greene: (313) 446-0325
Ford Hospital and we have seen an in- “The clinical chairs regularly meet change. incredibly easy once we get on the Twitter: @jaybgreene
C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 9 , 2 0 1 7 11

CRAIN'S LIST: LARGEST HEALTH CARE INSURERS/


MANAGED CARE PLANS
Ranked by 2016 Michigan revenue
SE Mich. SE Mich.
SE Mich. enrolled SE Mich. enrolled
Michigan SE Mich. enrolled members in enrolled members
Company revenue Mich. revenue members HMO/ members in
Address ($000,000) percent ($000,000) year-end DHMO in PPO POS Other
Rank Phone; website Top local executive(s) 2016/ 2015 change 2016/ 2015 2016/2015 plan plan plan members Types of health plans
Blue Cross Blue Shield of Michigan/ Daniel Loepp $25,900.0 B 6.9% $25,900.0 B 4,618,800 C 1,000,530 D 3,413,045 205,225 NA PPO, HMO, HSA-eligible products; Medicare
Blue Care Network president and CEO $24,222.0 $24,222.0 4,533,379 C Advantage, Medigap, Medicare Part D prescription
1 600 E. Lafayette Blvd., Detroit 48226 drug plans; and PPO, HMO and HSA-eligible
products for individuals. BCBSM and BCN also offer
(313) 225-9000; www.bcbsm.com
prescription drug, dental and vision benefits.
Priority Health Joan Budden 3,406.9 21.7 275.1 755,754 291,145 124,043 91,902 248,664 PPO, POS, HMO/EPO, HSA, HRA, Medicare,
27777 Franklin Road, Suite 1300, president and CEO 2,800.0 341.4 NA Medicaid
2 Southfield 48034
(800) 942-0954; www.priorityhealth.com
Health Alliance Plan of Michigan E Teresa Kline 2,480.7 0.8 NA 662,846 277,410 72,221 10,550 302,665 HMO/POS/PPO/EPO/EPA/ASO/TPA
3 2850 W. Grand Blvd., Detroit 48202
(313) 872-8100; hap.org
president and CEO 2,460.7 F NA F 689,020

Meridian Health Plan of Michigan Inc. Jon Cotton 2,420.8 G 14.6 NA 504,832 NA NA NA NA Medicaid, Medicare HMO
777 Woodward Ave., Suite 600, Detroit president and COO 2,113.2 G NA 455,299
4 48226
(313) 324-3700; www.mhplan.com
Molina Healthcare of Michigan Inc. Christine Surdock 2,104.8 G 43.4 NA 391,148 NA NA NA NA Medicaid, Medicare
100 W. Big Beaver Road, Suite 600, Troy president 1,467.9 G NA 327,904
5 48084
(248) 925-1700;
www.molinahealthcare.com
Delta Dental of Michigan Inc. Laura Czelada 1,813.4 4.8 937.6 2,596,931 0 61,454 2,425,552 109,925 Delta Dental Premier, PPO
6 Farmington Hills and Okemos
(517) 349-6000; www.deltadentalmi.com
president and CEO 1,729.9 941.4 2,633,565

McLaren Health Plan Inc. Kathy Kendall 929.6 G 3.0 NA 186,387 NA NA NA NA HMO, POS, Medicaid, Medicare Advantage
G-3245 Beecher Road, Suite 200, Flint president and CEO 902.6 G NA 203,942
7 48532
(888) 327-0671;
www.mclarenhealthplan.org
UnitedHealthcare Dustin Hinton, CEO, 420.0 NA 420.0 NA NA NA NA NA NA
26957 Northwestern Hwy., Suite 400, UnitedHealthcare NA 302.9 H NA
Southfield 48034 Michigan and
8 (800) 842-3585; uhc.com Wisconsin; Tim
Dimartino, VP sales
and account
management
Aetna Better Health Pamela Sue Sedmak 340.2 G 20.6 NA 52,064 NA NA NA NA NA
1333 Gratiot, Suite 400, Detroit 48207 president and CEO 282.1 G NA 48,094
9 (313) 465-1519;
www.aetnabetterhealth.com/Michigan
Upper Peninsula Health Plan LLC Dennis Smith 283.6 G 14.3 NA 47,852 NA NA NA NA Medicaid, Medicare
10 228 W. Washington St., Marquette
(906) 225-7500; NA
president 248.1 G NA 47,112

Physician Health Plan Dennis Reese 177.4 G 8.9 NA 36,158 NA NA NA NA NA


11 1400 East Michigan Ave., Lansing 48912 president
(517) 364-8400; www.phpmichigan.com
162.9 G NA 33,972

Vision Service Plan VSP M. Scott Mitchell, 138.6 NA NA 3,762,860 NA NA NA NA NA


2000 Town Center, Suite 725, Southfield market director; NA 133.5 1,800,550
12 48075
(248) 350-2082; www.vsp.com
Barbara Aikman,
senior account
executive
Total Health Care USA Inc. Randy Narowitz 136.4 -15.8 136.4 32,787 31,590 NA 1,197 NA HMO
3011 W. Grand Blvd., Suite 1600, Detroit CEO 162.1 162.1 40,800
13 48202
(313) 871-2000; www.thcmi.com
Humana Medical Plan of Michigan Bruce Broussard 115.1 G 43.7 NA 30,074 NA NA NA NA NA
250 Monroe NW, Ste. 400, Grand Rapids president and CEO 80.1 G NA 17,011
14 49503
(502) 580-1000; www.humana.com
Harbor Health Plan Inc. Jesse Thomas 51.8 G 41.5 51.8 10,162 NA NA NA NA Medicaid, HMO
3663 Woodward Ave, Detroit 48201 CEO 36.6 G 36.6 6,638
15 (313) 578-2234;
www.harborhealthplan.com
Michigan Complete Health Inc. Amy Williams 46.9 -22.6 46.9 4,125 NA NA NA NA Medicare, Medicaid, HMO
(formerly Fidelis SecureCare of CEO 60.5 60.5 7,540
16 Michigan Inc.) I
800 Tower Drive, Suite 200, Troy 48098
(877) 373-8085; www.fidelissc.com

This list of leading Michigan insurers/managed care plans encompasses medical, dental, optical and other health care organizations. It is not a complete listing but the most comprehensive available.
Unless otherwise noted, information was provided by the companies or the Michigan Office of Financial and Insurance Regulation. Companies with headquarters elsewhere are listed with the address
and top executive of their main Detroit-area office. NA = not available. Health care plan types include: Exclusive Provider Organization (EPO) - Members must use the EPO provider network
exclusively and medical services received outside of the EPO network are not covered except for emergencies. Exclusive Provider Arrangement (EPA) - Similar to an HMO. Members must choose a
physician who authorizes referrals and arranges hospital admissions. Point of Service Plan (POS) - Members designate a primary care physician but can go outside the network for services.
Administrative Services Only (ASO) - Offered by insurers to self-insured employers.
B Revenue includes premiums and premium equivalents of both fully insured and self-funded business.
C Does not include members that are part of Michigan-based groups but reside outside of Michigan.
D Includes Blue Care Network members.
E Merger of HealthPlus of Michigan in Flint and Health Alliance Plan in Detroit was approved in February 2016.
F Figures include Health Alliance Plan (HMO), Alliance Health & Life Insurance Co. PPO and EPO; Medicare HMO and PPO; HAP Midwest Health Plan (Medicaid HMO), HAP Preferred Inc Ð Network
Leasing, ASR (TPA)
G From Department of Insurance and Financial Services.
H Crain's estimate.
I Effective April 1, 2017, Fidelis became Michigan Complete Health Inc.
An expanded version of this list is available with a Crain’s data membership at crainsdetroit.com/lists
12 C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 9 , 2 0 1 7

SPECIAL REPORT: HEALTH CARE SP

BEAUMONT low-hanging fruit, because it doesn’t


require buy-in from doctors,” Burns
legacy partner cultures.
Fox understands physician frustra-
adm
stru
FROM PAGE 8 said. “The administrative side is a tions at the pace of change. He often phy
This year, Beaumont plans to open small portion of total costs. They get listens to physician concerns and out
a new ER center and proton beam some savings there, but it will not take meets monthly with all eight hospital F
cancer center in Royal Oak and a new you very far. Merger costs tend to slow medical staffs, physician leaders, di- said
patient tower at Botsford Hospital in and stop in the intermediate term (five rectors and managers. cian
Farmington Hills. It also will break years).” “We are very open with physicians. port
ground on a new shopping village with I meet one-on-one with clinical lead- thou
a hotel, shops and food services adja- Staff buy-in critical ers and hear their concerns (that) de- surp
cent to its 1,100-bed hospital complex pend on their area of specialty,” Fox “
on Woodward Avenue and 13 Mile After the failed merger deal with said. “Whether you are employed or tion
Road. Detroit-based Henry Ford Health Sys- in private practice, it is hard to be a chan
While individual merger cases may tem in 2013, which primarily was ter- doctor in American health care. It run,
vary, Robert Burns, chair of the health minated because physician and exec- pulls on you in ways not there 10 or 20 with
care management department in the utive cultures didn’t mesh, the years ago.” wee
Wharton School at the University of Beaumont board and executives real- To ease external medical practice they
Pennsylvania, said research on hospi- ized they needed more like-minded pain, Fox said Beaumont is trying to phy
tal mergers shows long-term results partners, especially on the physician help physicians adjust to coming val- BEAUMONT HEALTH W
show little improvement in cost reduc- side. ue-based payment reimbursement The newly renovated Neonatal Intensive Care Unit pod at Beaumont Hospital, an
tion and quality compared with non- The culture of Henry Ford’s em- changes, which tie payment increases Dearborn, formerly Oakwood Hospital. cou
merged competitors in markets they ployed physicians and Beaumont’s to quality improvement, coming in poin
share. mostly independent medical staff 2019. “We have presentations going the more disturbing changes at Beau- mont hospitals only had this report- mon
"Hospitals that merge to become were never going to mesh, sources on with private practice doctors and mont occurred earlier this year when ing relationship. Most hospitals in B
one reduce costs a little bit (estimated have told Crain’s. Administrators also office staffs. We want them to know each local hospital chief medical offi- health care systems, including those cern
2.5 to 5 percent) but don’t improve differed on a variety of other policy is- how to manage that and do well in the cer was asked to report directly to the in the old Oakwood system, do have ical
quality" compared with competitors, sues, including location of corporate environment of health care.” local hospital president. Before, local medical directors report to the hospi- mer
Burns said. “The systems that coalesce headquarters and the fate of the his- But one recurring complaint he CMOs reported directly to the sys- tal president. is d
under one roof, they don’t reduce toric Henry Ford Hospital in Detroit. hears is that physicians don’t think tem’s chief medical officer, David “It was very unusual. We tried to den
costs or quality. Most studies show While supportive of the Beaumont Beaumont has enough support staff. Wood, M.D. provide clarity around that,” Fox said. Th
that.” Health merger, five veteran physi- “They want more experienced people. “Beaumont operated under the “Hospital CMOs still talk with Dr. told
Burns said merged hospitals, espe- cians at Beaumont’s three legacy hos- It is a two-way street,” Fox said. “We theory that two people were jointly re- Wood. ... The hospital president and mon
cially those who form larger systems pitals told Crain’s they are becoming have to be competitive with salaries sponsible for the hospital, the CMO CMO have to be on the same page. deci
like Beaumont, first tackle administra- disenchanted with some of the chang- and be attractive for nurses, physical and the president,” Fox said. “That can When they are not, we have a real and
tive and staffing costs. es underway. They increasingly view therapists” and other clinicians. be a difficult situation and very con- problem.” mat
“Centralizing financial, human re- the merger as a business deal and ha- For the five Beaumont physicians, fusing in a crisis, having two people But Beaumont doctors told Crain’s W
source, back office, that is the easy ven’t yet seen much of an effort by who asked for anonymity because of decide.” that the reporting change from Beau- staff
stuff, the chump change, the management to integrate the three their positions, they agreed that one of Fox said the three legacy Beau- mont’s once-independent medical der

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C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 9 , 2 0 1 7 13

SPECIAL REPORT: HEALTH CARE


administration has led to a more rigid ship council, but he added that there cialty, location and time spent in the cine program and Beaumont recently ground up.”
structure that is less appreciated by would be some minimum criteria and system. added more residents to support the So, Fox said he also is looking for a
physicians because they often feel left some shared bylaws across the sys- “Many of the legacy Oakwood phy- hospital and orthopedics. new corporate headquarters location,
out of decisions. tem. sicians enjoy (being part of) the Beau- “Our market share in orthopedics one that he called “a shared services
From his perspective, CMO Wood “By regulation, each hospital has a mont brand and feel very positive has increased. I can’t say it is entirely building.” He declined to specify an
said he believes the impact to physi- separate medical staff. With all the about that. Many of the legacy Bots- due” to clinical care improvements, area, but said it could be multiple lo-
cians and the hospitals from the re- mergers (going on nationally), that ford doctors feel a lot of stability be- but Wood said there has been growth. cations. “I don’t want to increase real
porting change has been minimal, al- system is somewhat archaic,” he said. cause they are in a larger system,” One project that began last year estate speculation” and drive up costs,
though at first some doctors expressed “We are merging Wood said. “The legacy Beaumont will clinically integrate three Beau- he said.
surprise and concern. the back offices physicians, they are enjoying size and mont departments — mothers and But it is clear Fox wants the new
“We have excellent working rela- of credentialing stability. Then went through a period children, oncology and orthopedics corporate HQ to be located closer to
tionships. The change didn’t really to be more effi- of time where there was quite a bit of and spine — across all eight hospitals. one of Beaumont's hospitals.
change practically how things are cient. We will merger talks and uncertainty.” “What we are trying to do is get an This year, Fox said Beaumont also
run,” said Wood, who added he meets have one creden- identity for each clinical program” plans to expand the number of patient
with all eight local CMOs every two tialing system, Priority list that reflects Beaumont health instead and family advisory councils. “We will
weeks. “The hospital presidents, if but the (privileg- of individual Beaumont, Oakwood have hundreds of advisers,” he said.
they are to be effective, have to have es) criteria will be Over the past two years, Beaumont and Botsford hospitals, said Fox. “Patients use the ER a lot. They have a
physicians behind them.” a local decision.” has taken steps to improve clinical “We will have the services (in feel for it. They have been involved in
ALTH Wood said Beaumont has formed David Wood: But Wood said care programs — primarily quality, place) to support them: emergency, our ER redesign. They will see things
an 18-member clinical leadership Excellent working decisions of who patient safety and outcomes — across pain management, imaging, pharma- that you don’t.”
council composed of elected and ap- relationships. will be on each the system, Fox said. Wood said the cy, infection control, palliative care Patients and families also helped
pointed physicians to work on com- hospital medical goal is to ensure quality and customer and laboratory,” he said. “The real design the waiting room area in Beau-
port- mon issues, problems and projects. staffs “will be a hospital decision” be- experience is consistent. message is we need these clinical pro- mont’s new proton beam center,
s in Beaumont physicians are con- cause the needs of each hospital are Depending on the service line, pro- grams talking with each other.” which will become operational this
hose cerned about the possibility that med- different. grams at smaller hospitals will be en- month. “They are in your facilities ev-
have ical staffs of the hospitals will be Despite hearing some grumbling, hanced, Fox said. Other changes ery day. Whatever we are doing, we
spi- merged into one and that the system Wood said he believes overall physi- “Orthopedics is constrained in want to get their perspective on this,”
is developing a single physician cre- cians are doing well with the merger. Royal Oak (Beaumont’s 1,100-bed In March 2015, Fox began CEO du- Fox said.
d to dentialing process. “Health care is at very turbulent flagship hospital). We are looking at ties at Beaumont. But he didn’t report Fox said Beaumont will invest in
aid. The Beaumont Royal Oak specialist times for hospitals and physicians. I (Beaumont Hospital) Taylor to be a for work at the Beaumont Royal Oak other therapies that include transaor-
Dr. told Crain’s he and other legacy Beau- think considering all the turbulence, platform. Taylor has four to five ORs campus, as had the five previous CEOs tic valve replacement, deep brain
and mont doctors would oppose any such they are doing well. They are seeing that can open quickly. We will hire in the hospital’s 62-year-old history. stimulation and urological advances.
age. decision. “We don’t want Oakwood the value of the new size, scope and more spine surgeons for orthopedics,” “I have never worked in this kind of “There are new disruptive technol-
real and Botsford doctors getting auto- geography and feeling positive about Fox said. “It is a way to vector out more building. It was done before I got off ogies that will truly add value and ad-
matic system privileges,” he said. it.” to the west. ... We need to offer more the plane,” said Fox, adding he misses vance patient health better than any-
ain’s Wood said a systemwide medical However, Wood acknowledged programs to more markets.” rubbing elbows with doctors, nurses thing in the portfolio,” he said.
eau- staff credentialing proposal is not un- physicians can have positive and neg- Wood said the Taylor hospital is and patients. “You can’t do this job Jay Greene: (313) 446-0325
dical der discussion by the clinical leader- ative feelings depending on their spe- known for its excellent physical medi- unless you listen to people from the Twitter: @jaybgreene

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14 C R A I N ’ S D E T R O I T B U S I N E S S // J u n e 1 9 , 2 0 1 7 C R A I N ’ S D E T R O I T B U S I N E S S // J u n e 1 9 , 2 0 1 7 15

DETROIT 1917 / 1967 / 2017


PART 1: PRELUDE TO ’67

It’s difficult to draw a straight line connecting


the demolition of Paradise Valley and Black Bottom
to the violent summer of 1967.
But some of the businesses that relocated to
12th Street from the bustling commercial heart
of black Detroit were destroyed — twice.

DETROIT HISTORICAL SOCIETY


An aerial view of Hastings Street looking north from Mack and St. Antoine in 1959. Above: Looking north along the Chrysler
Freeway from the same location in 1961. The red box is the approximate view of the left picture.

Seebaldt Street near Grand River


and Tireman.)
A pair of small black-owned ho-
tels, the Norwood and the Biltmore,
each with about 30 to 40 rooms, were
in Paradise Valley. Ed Davis, who in
1963 became the first African Ameri-
can to get a Big Three auto dealer-
ship from Chrysler-Plymouth, had a
Studebaker Corp. dealership at Ver-
nor and Brush.
There were also doctors, lawyers,
real estate brokers, drug stores,
restaurants, numbers-running oper-

Hastings
ations and even a candy shop.
During the Prohibition Era, Paradise
Valley also had speakeasies, becom-
ing “a place where you can go into a
saloon and drink whiskey out of a
COURTESY MARSHA MUSIC Dixie cup,” Coleman said.
Joe Von Battle’s record shop on Hastings Street once had an inventory of 35,000 Some, like John Roxborough,

Street
albums and almost $2.5 million in revenue. Louis’ co-manager and a num-
bers-runner, began to accumulate
the city in the two decades prior to Brush Street to the west. substantial wealth.
1967. Exactly where the neighborhoods “He was certainly thought to be a
Seven decades ago, a very similar started and ended is up for debate, millionaire,” Coleman said.
word, “renewal” — more precisely, Coleman said. Others saw success in Paradise
urban renewal — nebulously re- “It’s not like these communities Valley, too.

Blues
ferred to what would become the were codified in boundaries at City “For the first time, African Ameri-
government-sponsored forced exo- Hall. They were loose in general.” cans became either managers or
dus of tens of thousands of people Still, what’s clear is that the two owners of some of these places.”
from densely-packed Black Bottom areas were vibrant, bustling with ac- More than 300 businesses in Para-
and later, the destruction of hun- tivity. dise Valley in all, and well over
dreds of businesses in lively Paradise Joe Louis co-owned a restaurant, 100,000 residents in Black Bottom,
Valley. the Brown Bomber’s Chicken Shack, living in increasingly cramped quar-
with Sunnie Wilson on East Vernor ters as racially-based housing re-
Vibrant business district (it reportedly lost the legendary box- strictions kept them in the neighbor-
er $40,000, according to LIFE maga- hood.
Paradise Valley, the commercial zine). “Because of restricted covenant
district, covered the area approxi- Charles Diggs, later the state’s deeds, it (Black Bottom) was very,

A
Editor’s note: This story is first in our By Kirk Pinho | kpinho@crain.com That’s a question Marsha Battle An exodus describe both incremental and mately where Comerica Park and first black state senator, was a lead- very dense,” Coleman said.
two-part series about the 1967 upris- Philpot, Joe’s daughter who goes by the marked progress made in Detroit Ford Field are today downtown, said ing funeral home owner there, as “Some of those second-floor resi-
ing ­— an exploration of economics t one point, Joe Von Battle’s record store in Detroit had an inventory of 35,000 albums and the name Marsha Music, likely wrestles The prefix “re-” generally means this decade — asterisked though it Detroit historian Ken Coleman. His was James Cole, whose funeral dential living quarters, on top of bars
and business in Detroit in the 50 equivalent of almost $2.5 million in revenue. ¶ That was in the late 1940s, when Joe’s Record Shop with. But it’s not just Von Battle’s store to occur again, that something is may by the nation’s largest-ever book, Million Dollars Worth of home business survives to this day. and restaurants and bakeries, where
years before the summer of ’67 and on Hastings Street was just one of the mainstay businesses for African Americans who made their that suffered at the hands of what was happening anew. Chapter 9 municipal bankruptcy Nerve, profiles the power-players of (Two months ago, the funeral home an owner might put a wall partion up
the 50 years since. In next week’s is- homes in the now demolished Black Bottom and Paradise Valley neighborhoods. ¶ It’s difficult to then called “urban renewal,” a steril- Detroiters have been hearing case until Puerto Rico just a few Paradise Valley and Black Bottom, a provided services for Orsel Mc- in a bedroom and make it two bed-
sue, we’ll explore the impact of the ri- draw a straight line connecting the years-long demolition of the commercial Paradise Valley en- ized term to describe what in reality those two letters a lot lately. Revital- weeks ago and convictions in one of residential neighborhood that exist- Ghee, who along with his wife, rooms, or take the living room and
ots on three generations of entrepre- was the forced relocation of black resi- ization. Rebirth. Resurgence. Re- the most scintillating public-corrup- ed generally where Lafayette Park is Minnie, were part of a landmark slice that in half, until you get a cou-
clave, and also Black Bottom adjacent to the southeast, to the riots of July 23-28, 1967. ¶ Not only did the violence
neurs. For more on the language we dents and businesses from the neigh- naissance. tion cases in recent memory. now, bounded by Gratiot Avenue to court case in 1948 that helped ban ple different families living in the
use to describe what happened in those six days claim 43 lives — it also claimed Von Battle’s store, which was founded in 1945. ¶ Would Joe’s Record borhoods they called home. Today, these terms are liberally But those words hold a different the north, Congress to the south, the restrictive covenant deeds nation- same 400 or 500 square feet, or prob-
1967, see Ron Fournier’s column on Shop still be around had it not been forced to move in the early 1960s to the 12th Street area from Hastings, the “In a rout like that, some business- and practically interchangeably meaning for some long-time Detroit Grand Trunk Railroad (the present wide following an attempt to re- ably even less.”
page 6. main north-south artery running through Paradise Valley and Black Bottom? es weren’t able to survive,” she said. used by city and business leaders to residents, particularly if they were in day Dequindre Cut) to the east and move them from their house on CONTINUES ON PAGE 16
16 C R A I N ’ S D E T R O I T B U S I N E S S // J u n e 1 9 , 2 0 1 7 C R A I N ’ S D E T R O I T B U S I N E S S // J u n e 1 9 , 2 0 1 7 17

DETROIT 1917 / 1967 / 2017


PART 1: PRELUDE TO ’67

FROM PAGE 15 MILWAUKEE the Black Bottom razing, with Diggs


JUNCTION moving to 689 Mack in the 1940s and
“Slum removal” Cole to 446 E. Warren Ave. in the
1930s, Coleman said.
NEW CENTER
The beginning of the end for Black Sunnie Wilson, who co-owned
Bottom came during the administra- Blv
d. the chicken restaurant with Joe Lou-
nd
tion of then-mayor Edward Jeffries, Gra is, had hotels on Garfield Street and
POLETOWN EAST
who ran the city from 1940-48, Cole- e.
Grand River Avenue, and in the
n Av
man said. rre 1980s had a nightclub downtown.
Wa
During the previous decade, fed- ART CENTER
He died in 1999 at age 90.
eral financing through Franklin D. 94 Ed Davis’s Studebaker dealership
Roosevelt’s New Deal was made Paradise in Paradise Valley went out of busi-
available for so-called “urban re- WAYNE STATE Valley ness in 1956. His Chrysler-Plymouth
newal.” Several years later, in 1944, a FOREST PARK dealership on the west side was a suc-
New York City developer, Eugene ve. cess in the ‘60s, and sold more than
75 ckA
Ma
Greenhut, proposed what became 1,000 new cars per year, according to
known as the Detroit Plan, which in- the Detroit Historical Society — and
volved the razing of Black Bottom 1 twice that in used vehicles. But the
3

e.
MIDTOWN

Av
and a mostly white neighborhood neighborhood declined after 1967

ot
CASS CORRIDOR
west of Woodward in the name of and Davis closed up shop in 1971.

ati
BRUSH PARK

Gr
Wo
“slum removal.” 10 2 Coleman said after Hastings

od
“It was intriguing to Jeffries, and Street, the main business artery, was

wa
Gr 4 375

rd
he begins to float the idea,” Coleman an demolished, much of the illegal ac- AUTOMOTIVE NEWS

Av
dR LAFAYETTE PARK
ive
6 Edward Davis (left) receives a Small Businessman of the Year award from the Small

e.
said. “White folks in the community rA
ve Black t.
tivity — drug dealing and prostitu-
go ballistic. The black folks, you hear NORTH CORKTOWN
.
5 7 Bottom yett
eS
tion, for example — moved to the Business Administration of Michigan. Davis opened his west side Chrysler-Plymouth
FOXTOWN fa
a little bit of noise, but not so much La 12th Street area. dealership after his Studebaker dealership in Paradise Valley, went out of business.
E.
GREEKTOWN
because they don’t have the political “A lot of people will tell you that
power that the whites do.” DOWNTOWN BRICKTOWN 12th Street became the new Hast- said she didn’t think much of her fa- business owners out.
75 Michigan Ave.
At $50 million ($695 million to- ings,” he said. “With vice and drugs ther leaving the house with a weap- “He never shook the feeling that
day), the plan proposed clearing two CORKTOWN and illicit behavior comes a lot of po- on. So she and her family started by halting his efforts to protect his
sprawling areas: One, bounded by Detroit River lice presence, and that ended up watching television and, eventually, store, they had guaranteed its de-
Myrtle, Trumbull, Henry and Four- building tension between the police succumbed to sleep. struction,” she wrote in an essay,
teenth streets; the other, Black Bot- CRAIN’S MAP and the neighborhood.” They woke up to something they “Joe’s Record Shop,” in Detroit ‘67:
tom, bounded by Hastings, Macomb, 1. Joe’s Record Shop At one point in the late 1940s, Joe’s Record Shop, owned by Joe Von couldn’t have foreseen. Origins, Impacts, Legacies.
Dequindre and Larned, according to 3530 Hastings St. Battle, had an inventory of 35,000 records and $100,000 per year in “Gone forever” “We can look over the horizon to She says on her website that he re-
a 1944 Detroit Free Press article out- sales (almost $2.5 million today). The business moved to 12th Street the west side, from Highland Park, turned after the unrest to find
lining the plan. after Black Bottom was razed and was destroyed in the uprising in Joe Von Battle, Marsha Music’s fa- and see these clouds of black smoke.” “mounds of charred and melted re-
As proposed, Greenhut would pay JACOB LEWKOW FOR CRAIN’S
1967. ther, picked up his gun. Not long after that, Battle’s record cords and fire hose-soaked reel-to-
$8 million (about $111 million) for Above, Marsha Music, outside her Lafayette Park home. Below, Marsha as a young girl in front of her father’s record store. 2. Brown Bomber’s Legendary boxer Joe Louis co-owned this restaurant with Sunnie It was the middle of the night in shop, whose original location had reel tapes, unwound and slithering
98 acres of east side land and 120 Chicken Shack Wilson on East Vernor. It reportedly lost him $40,000, according to July 1967. The U.S. was mired in the been forced to close and demolished like water snakes; thousands of
acres of west side land for the proj- yond due to little interest from devel- tions were for the 1967 riot, but po- 424 E. Vernor LIFE magazine article at the time. Vietnam War. And 12th Street, where less than 10 years earlier, was de- songs, sounds and voices of an era,
ect, which would have brought al- opers, Coleman said. lice brutality seems to be the plurali- 3. James H. Cole James Cole Sr. founded his funeral home in the Black Bottom he relocated the record shop from stroyed for the second time. most never pressed onto records —
most 31,000 “rooms” to the market “They begin to call it ‘Cobo’s Rag- ty reason, if there is such a thing.” Home for Funerals neighborhood in 1919. After Black Bottom was cleared, the funeral Hastings Street, was broiling, brim- Her father tried to protect his gone forever.”
for an average rent of $10.50 (about weeds.” “But a lot of it is being moved 3515 St. Antoine, home moved to E. Warren and then to the 2600 block of W. Grand ming with tension. shop, Marsha said, but after the first Kirk Pinho: (313) 446-0412
$146 today) per month, the article That is, until October 1956, when around, people literally being kicked Detroit MI Boulevard, where it still operates today. The funeral home is owned by In an interview last month, she day of violence, the police cleared Twitter: @kirkpinhoCDB
Karla Green, James Cole Sr.’s granddaugher.
says. ground broke on the area’s first de- out of their homes and having to find
Eventually, the western portion of velopment, The Pavillion. somewhere else to live,” Horner con- 4. Davis Motor Sales Ed Davis opened a used car dealership at Vernor and Brush in 1939.
the development plan was aban-
doned.
The plan sat until the fall 1946,
Lafayette Park, the residential
area that now stands, was born, and
Black Bottom was dead.
tinued. “There is a lot of evidence that
a lot of people who were in the Black
Bottom area moved to the 12th Street
Intersection of Vernor
and Brush
Studebaker offered Davis a franchise in 1940. After Black Bottom, in
the 1960s, Davis became the first African-American to get a Big Three
auto dealership when Chrysler-Plymouth offered him a new car
franchise. It sold more than 1,000 new cars per year, according to the
Housing discrimination stokes tension
when the council approved it. Dem- area, so there is some linkage there.” Detroit Historical Society, but he closed the business in 1971 as the By Tyler Clifford met by white mobs. In turn, most From 1930 to 1950, Detroit’s black
olition didn’t begin until 1950 under Links to 1967 As people and businesses were neighborhood around him deteriorated.
tclifford@crain.com were relegated to substandard neigh- population more than doubled during
then-mayor Albert Cobo. But he did scattered throughout Detroit from As millions of African Americans borhoods, most notably in Black Bot- the second wave of the Great Migra-
5. Norwood Hotel A small black-owned hotel in Paradise Valley between Beaubien and
not want to take federal funding, so Housing availability and condi- Black Bottom and Paradise Valley, 550 E. Adams St. Antoine with 30-40 rooms. In the basement of the Norwood was a fled the Jim Crow south during the tom on Detroit’s lower east side. tion, which was powered largely by
he put the land that was cleared tions were among the concerns which began to be demolished in jazz club called the Congo Room. Great Migration’s first wave, tens of Housing segregation was later rein- World War II. Housing segregation still
through the condemnation process during the unrest in 1967, said Jef- 1959 to make way for the Chrysler thousands sought refuge in Detroit. forced when the Federal Housing Ad- persisted as the city’s black population
6. Biltmore Hotel A 22-room hotel in Paradise Valley, according to historian Ken
out to the private sector in a request frey Horner, a senior lecturer and di- Freeway, they also ended up in the Coleman.
The city’s black population swelled ministration, created in 1934, and reached more than 300,000 and made
1926 St. Antoine
for proposals, Coleman said. It’s not rector of the Urban Studies Program 12th Street and Clairmount Avenue by nearly 2,000 percent between Home-Owners Loan Corp. began up more than 16 percent of the city.
known exactly how much was paid at Wayne State University. area, among others. 7. The Michigan Established as The Detroit Chronicle in 1936 to serve the African 1910 and 1930. But racial covenants, granting low-interest loans and mort- When racial covenants were
Chronicle American community, the Michigan Chronicle became known for
to property owners for the land, but “There were some people who The Michigan Chronicle moved to often written into home deeds, gages. While white residents took ad- banned in 1948 in the Shelley v. Kram-
1727 St. Antoine politics radical for its time, including advocacy for organized labor and
Coleman said some were satisfied were still very upset about the loss of Eliot Street from East Vernor in 1948 the Civil Rights movement. In the 1940s, the Chronicle moved to East
barred black residents from buying vantage of the opportunity, African er U.S. Supreme Court case, it served
while others felt it was not enough. their old neighborhood, as any per- and survives to this day, publishing a Vernor Street and later to Eliot Street. In 2013, the Chronicle or renting homes in many of Detroit’s American neighborhoods were out- as an early sign of the looming move-
Still, the land sat for years, for the son would be. It’s very difficult to weekly newspaper. The Diggs and announced that it was relocating its headquarters to Harmonie Park, white neighborhoods; some who lined in red by the agency, which denot- ment for Civil Rights. Yet the city’s seg-
duration of the Korean War and be- disentangle what the exact motiva- Cole funeral homes moved before site of a planned downtown black business and cultural district. tried to integrate communities were ed the habitants as high-risk for lenders. regation would persist until after 1970.
COURTESY MARSHA MUSIC

Detroit 1967 timeline: 1917 to 1967


1917: In May and again in July, simmering racial tensions between white and black laborers 1925-1926: Dr. Ossian Sweet, along with >> June 20-22, 1943: A brawl among Jan. 30, 1959: Construction of the >>April 14, 1960: March 8, 1965: The first U.S. ground
boiled over in East St. Louis, Ill. in two deadly race riots. Though the death toll remains unclear, his family and some friends, were acquitted teens on Belle Isle spills over into citywide Chrysler Freeway begins. Its southernmost Music executive Berry troops land in South Vietnam, beginning the
as many as 200 people, most of them black, may have been killed. In the aftermath of the in a series of trials after they defended racial violence, as false rumors spread of leg cuts through Black Bottom, the poor Gordy, Jr. incorporates escalation of a war that soon would become
violence, the Burlington Free Press pointed to Detroit as an example of a city that had figured themselves when a mob tried to force the attacks by both whites and blacks. Both working-class neighborhood that had the Motown Record Co. a central element of American society.
out how to peacefully integrate an influx of black workers, pointing to the Detroit Urban Sweet family from the home they had white and black mobs attack residents and become the residential and cultural heart Aug. 11-16, 1965: Riots erupt in the Watts
League’s efforts to help black migrants find gainful employment and to collaborate with the bought in an all-white Detroit neighborhood. businesses. The violence is suppressed by of black Detroit by the mid-20th century. >>1960: Cobo Hall neighborhood of Los Angeles over allegations
6,000 federal soldiers. Most of the 34 and Cobo Arena open
Detroit Board of Commerce to form a commission on worker housing. The highway was built through the area as of police brutality. Snipers battle police, and
1940-41: An influx of about 400,000 people killed are black, and most are killed at a cost of $56 million.
1910 Total population part of the city’s “urban renewal” efforts, looting and arson are widespread. The
Between 1910 and 1920: migrants — largely Southern blacks and by police or soldiers. Most of the 433 A $225 million
Detroit population

1920 Black population which also included creation of the violence claims 34 lives.
Detroit’s population more than Europeans — move into the city seeking injured are black. Property damage is expansion in 1989
1930 Lafayette Park neighborhood. The highway July 18-23, 1966: Cleveland’s densely
doubled, growing from 465,766 wartime production work, a wave that valued at $2 million, much of it sustained in doubles the size of the
1940 opened June 12, 1964. A portion of Black populated Hough neighborhood, which is 90
people in 1910 to 993,678 people inflames social and housing tensions. the city’s black business corridor, Paradise exhibition hall to
1950 TOTAL POP. HIGH: 1,849,568 Bottom’s population and business had percent black, explodes into violence over
by 1920. In that time, the black Integrated federal housing projects built in Valley. 723,000 square feet. In
1960 relocated to the 12th Street area of the
population of Detroit grew from the city for defense workers fueled 2015, work is finished inequality, racism, segregation, poor city
1970 1950: Detroit’s population peaks at Virginia Park neighborhood that became
a little over 5,000 in 1910 to over backlash, especially from white Polish to turn the arena into services and other problems.
1980 1,849,568, of which 84 percent is white. the 1967 riot’s epicenter.
40,000 in 1920, jumping from 1990 BLACK POP. HIGH: 777,916 residents. White supremacist groups such an exhibition and event July 12–17, 1967: The arrest of a black
just over 1 percent of Detroit’s 2000 as the Ku Klux Klan also had support in the April 8, 1956: Streetcar service ends in 1960: The city’s population has declined to space at a cost of $279 DETROIT HISTORICAL SOCIETY cabdriver sparks a riot that leaves 26 dead in
population to over 4 percent. 2010 city at the time. Detroit in favor of buses. GETTY IMAGES 1,670,144. STEVEN MIRIC VIA ISTOCK million. Cobo Hall and Arena being built in the late 1950s . Newark, N.J.
SPI
18 C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 9 , 2 0 1 7

CALENDAR
WEDNESDAY, JUNE 21 ecutive coach and leadership consul-
SPOTLIGHT

IN
Social Media for Business Growth Work- tant, will explain the five keys to devel- DTMB director
shop. 9-11:30 a.m. Oakland County. oping and managing a brand: to join La-Z-Boy
Using LinkedIn, YouTube, Facebook, presence, purpose, strengths, learn-
Instagram and Twitter to grow any ing and personality. JVS, Southfield. David Behen, who is leaving
business. Terry Bean, Motor City Con- Free. Contact: Angela Bevak, email: Gov. Rick Snyder’s administra-
nect, on “Is social media a waste of abevak@jvsdet.org; phone (248) 233- tion, will be-
time or an essential power tool for 4482; website: http://www.jvsdet.org come vice
business in a post phonebook world?” president
INSPIRING DESIGN Oakland County Executive Office How the Industrial IoT Can Transform and chief in-
Building Conference Center. $40. Business. 8:30-10:30 a.m. July 12. LHP formation of-
Contact: Karen Deaver-Lear, phone: Engineering Solutions. More and ficer for La-
(248) 858-0783; email: smallbusi- more companies are looking to lever- Z-Boy Inc.,
ness@oakgov.com; website: http:// age the Industrial Internet of Things the company
www.advantageoakland.com/busi- as a means of competing globally. The said.
nessworkshops speaker is Michael King, president, Behen, 48,
Data Analytics & IoT at LHP Engineer- David Behen most recent-
THURSDAY, JUNE 22 ing Solutions. Topics will include: The ly served as
Critical Hires for Your Startup Venture. business value of IIoT, case studies of director of the Michigan Depart-
5-7:30 p.m. New Enterprise Forum. successful IIoT implementations and ment of Technology, Manage-
Panel discussion on understanding predictive maintenance solutions and ment and Budget. His last day
importance of hiring the right people how IIoT can help manufacturers will be Friday.
for the success of a venture. Panelists meet ISO 26262 Automotive Func- Monroe-based La-Z-Boy
include: Bill Crane, founder and CEO, tional Safety standards. Automation (NYSE: LZB) said Behen will
IndustryStar Solutions LLC; Jeff Ma- Alley, Troy. Free for members. $20 lead all information technology
son, founder and CEO, Groundspeed nonmembers. Phone: (800) 427-5100; functions for the furniture pro-
Analytics; Stewart V. (Stew) Nelson, website: automationalley.com ducer, including expanding and
CEO of Mayasil LLC; Steve Schwartz, developing such areas as cyber-
co-founder and CTO, Genomenon. security and new technologies.
Moderator: Helen Ewing, president, Calendar guidelines. Visit Behen will report to Kurt Dar-
The Ewing Group LLC. Ann Arbor crainsdetroit.com and click “Events” row, the company’s chairman,
Spark. Free. Event email: info@Ne- near the top of the home page. Then, president and CEO.
wEnterpriseForum.org; event web- click “Submit Your Events” from the “In this critical role, he will
site: http://www.NewEnterpriseFo- drop-down menu that will appear. Fill ensure optimal technology per-
rum.org out the submission form, then click formance for the company to
“Submit event” at the bottom of the support La-Z-Boy's future
Fishbeck, Thompson, Carr & Huber, Inc. UPCOMING EVENTS growth and success across our
engineers | scientists | architects | constructors
page.
Five Keys to Maximizing Your Personal manufacturing and retail opera-
Novi | Macomb | 800.456.3824 | ftch.com More Calendar items can be found
Brand. 7:30-8:45 a.m. June 28. JVS. tions,” Darrow said in a state-
at crainsdetroit.com/events.
Guest speaker Priscilla Archangel, ex- ment. “He brings a wealth of ex-
perience to La-Z-Boy and will
undoubtedly make a significant
contribution as we continue to

Litigation Experience
expand and enhance our tech-
nological footprint.”

In Your Corner.
American Society of
® Employers replaces CFO
The American Society of Em-
ployers has hired Tracy Neil to re-
Ŷ Commercial litigation, with experience in asset place its retir-
purchase agreements, supply chain disputes, ing CFO.
trade secrets, non-competes and other business Gary Lovio
retired from
related litigation. the Livo-
nia-based
Ŷ Employment counseling and litigation on behalf nonprofit
of employers, including matters involving June 2 after 12
years there,
discrimination, harassment, wrongful discharge
CEO Mary
and employment contracts. Tracy Neil Corrado an-
nounced in a
news release.
Neil, 54, officially took over
June 5 in the Livonia office after
a month working with Lovio as
part of the transition.
Before joining ASE, which
helps Southeast Michigan em-
ployers with human resource
needs, Neil served as vice presi-
dent of finance for Que-
bec-based GDI Integrated Facil-
ity Services Inc., which has an
office in Southfield.
He received his master of
business administration from
Walsh College, a bachelor’s de-
First Tier Ranking in gree in management from Saint
Six Areas of Litigation Mary’s College of California
and a master’s degree in taxa-
tion from Golden State Univer-
Contact Brett Rendeiro at barendeiro@varnumlaw.com Ŷ Detroit Ŷ Novi Ŷ Grand Rapids Ŷ Kalamazoo Ŷ Grand Haven Ŷ Lansing Ŷ Ann Arbor Ŷ Hastings sity.
C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 9 , 2 0 1 7 19

TEACHERS wealthy and poor, urban and subur-


ban and are the result of the anger
Teacher pay presents two bad choices: Be unhappy
about crowded classrooms or be un-
FROM PAGE 1 stemming from pay cuts and freezes In a number of Michigan school districts, teachers have negotiated to limit the pay of new happy that new teachers make more.
that have taken a chunk out of the hires, ensuring they cannot get full credit for prior teaching experience. In other districts, For Mackinac Center’s DeGrow, the
There’s little wiggle room because earning power of teachers who have those decisions are left to the administration. In most cases “max pay” refers to salaries of decision should be easy: Door No. 2.
the collectively bargained contracts worked for years in troubled districts. teachers with master’s degree plus 30 additional hours of graduate education who have “This kind of policy is just an obsta-
set salaries exclusively by experi- the maximum number of years of experience. Below are the 25 largest districts in the cle for getting the best talent in the
ence and education. Critics say the Not found everywhere state. The restrictions were more common among the 21 districts that surround Detroit, classroom,” DeGrow said. “The kids
restrictions put teachers’ interests with more than half calling for limits on credit for teaching experience. (in Detroit) are already at a disadvan-
ahead of students. Bailey said it’s common for teach- Maximum tage. Why would we want to make it
“School districts that want to attract ers who change districts to get less years of Years to top harder to bring qualified teachers in?”
the best teachers … for their students than full credit for their experience. District credit of scale Max pay
would not want these kinds of poli- “We can’t do it when we go to an- Need ‘best teachers’
Detroit 2* 10 $65,965
cies,” said Ben DeGrow, director of ed- other district, either,” she said. “No-
ucation policy at the Mackinac Center, body’s going to give you all of your Utica full 11 $89,563 Brad Banasik, director of labor rela-
a free-market think tank based in Mid- time.” Dearborn 2* 18 $82,006 tions for the Michigan Association of
land. It has been a frequent critic of But a survey of teacher contracts School Boards, said he’s not heard
teachers’ unions. from more than 40 districts around the Plymouth-Canton 5* 14 $81,049 complaints about the contracts, but
Ivy Bailey, president of the De- state show that many allow district ad- Ann Arbor full 11 $80,769 noted that he thinks “administrators
troit Federation of Teachers, said the ministrators to grant full credit. Chippewa Valley full 12 $89,443 would like the ability to hire some on
language has been in the contract In Ann Arbor, Kalamazoo, Fern- the higher step (pay level).”
for years and acknowledges those dale, Warren Fitzgerald, Warren Van Grand Rapids 5* 12 $68,042 Some unions agree. Doug Hill is a
teachers who’ve suffered through Dyke, South Redford, Utica and oth- Rochester full 20 $86,420 veteran teacher who’s now president
years of pay cuts and freezes. ers, a teacher could jump to the top of of the Rochester teachers’ union in
Warren Consolidated full 12 $94,700
“You have teachers who stayed the scale without the teachers union Oakland County, and he said he’s
here and endured it all,” she said. contract prohibiting it. Walled Lake full 15 $90,362 aware of painful cuts at other districts.
“They care about the children and In the Grosse Pointe schools, which Livonia 7 12 $84,595 Hill’s union decided in a recent ne-
they’ve stuck it out.” pays among the best in the state, new gotiation to remove a restriction on
Bailey said the contract allows the teachers can be hired at the 13th of a Troy full 14 $92,400 pay for counselors who held teaching
district more latitude when trying to 14-step salary schedule. Kalamazoo full 25 $76,881 certificates. The district had seen posi-
hire teachers in critical areas such as Yet in other places, teachers have tions go unfilled but now can hire
Wayne-Westland 3* 14 $76,839
special education. Those specialty put the brakes on salaries. Those that teachers in at whatever level experi-
areas can receive salary credit for up have are communities suburban and Lansing 8 22 $76,850 ence they want.
to eight years’ experience. urban, wealthy and poor. In Oak Park, L’Anse Creuse full 16 $84,386 “I can see both sides of this,” Hill
But if it’s not in a critical area, no the teachers’ contract has a provision said, but added “we’re trying to get the
Farmington 4* 11 $86,830
dice. And that’s been a problem for that says all new hires should be hired best teachers to put in front of stu-
principals wanting to fill vacancies at beginners’ wages. Forest Hills full 28 $84,590 dents.”
such as Jeffrey Robinson, principal Hiring at higher levels “puts finan- Traverse City full 20 $74,819 Union officials say they asked for —
at Paul Robeson Malcolm X Acade- cial pressure on the district and cre- and got — the restrictions because
my on Detroit’s west side. ates an environment which disenfran- Waterford 8 15 $78,351 they say without it their veteran teach-
“On three separate occasions, we chises staff currently restricted by Huron Valley 5* 17 $75,915 ers would be demoralized by having
got people who got past the on- contractual step freezes,” according to new hires, who had not endured the
Port Huron full 13 $69,831
boarding process, right to the point the contract. same pay cuts and freezes, make more
where they were ready to sign the The Walled Lake schools, the 10th Kentwood full 26 $80,403 money doing the same work.
contract. Then they took a better of- largest district in the state, had restric- Portage full 30 $88,808 It would be hard to determine how
fer because the salaries are just not tions in prior contracts. But the union often these provisions have hurt dis-
competitive,” Robinson told Detroit agreed to take them out a few years Grand Blanc full 12 $73,588 tricts like Detroit and Dearborn. If
Journalism Cooperative reporting ago even though they continue to en- Source: Collective bargaining agreements teachers know they’d have to take a
partner Chalkbeat Detroit recently. courage the district to hire teachers at *In some cases, union contracts allow districts to acknowledge additional years of experience. $20,000 or $30,000 pay cut, would they
Despite the obstacles in pay and a as low a step as possible. even apply? And they’d likely know: All
push by officials some to consider Still, the union recognized the need dates.” grams, and sometimes harsh public Michigan districts are required to post
uncertified teachers, district spokes- to give the district more flexibility. To be sure, restrictions on teacher and political rhetoric directed toward teacher contracts online; Bridge did its
woman Chrystal Wilson said the “It makes it really hard to have one pay for outsiders is hardly the only fac- public education almost certainly also survey using this easy-to-access infor-
district “is committed to hiring cer- blanket policy for every opening,” said tor in teacher shortages in parts of the play a role in the shortage. So too, mation.
tified teachers.” Daryl Szmanski, president of the state. It’s difficult to say if it’s even a there are far fewer substitute teachers “I think they’re very aware of what’s
Detroit is not the only district with teachers’ union in Walled Lake. “As a major factor. Stagnant state funding available to fill in when permanent out there,” Rochester’s Hill said.
restrictions. They are found in union teacher shortage looms, it’s going to be for education, a steep drop in enroll- teachers are absent. For Detroit and other districts, that
contracts
Page 2 at districts large and small, harder and harder to get good candi- ment Cin teacher preparation pro-
RAIN’S DETROIT BUSINESS
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20 C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 9 , 2 0 1 7

Startup Nation founder launches business-to-consumer app


By Vickie Elmer
Special to Crain’s Detroit Business “We have seven figures book to connect, and he’s seen a few
people with ideas similar to Pinter-
We are a values driven business” in-
tent on helping Main Street busi-
Jeff Sloan, founder of Startup Na- into this app in total. est or Wantify in his office in Ann nesses, he said.
tion and several other small busi-
ness ventures, is launching a busi-
We’re in the throes of Arbor, on average two a year.
“Wantify has to have good mar-
The app will carry no paid adver-
tisements. “We don’t want any ad-
ness to consumer app that borrows getting some traction keting — maybe marketing in the vertising on it at all. Consumer
from email marketing and aims for right now.” stores” to compete with larger social crafts the experience based on what
a national rollout by next year. media platforms, Stevens said. they’re interested in,” he told the
Wantify Inc. is testing its app that Jeff Sloan Wantify faces other challenges. downtown association members.
connects local merchants to their It’s hard to develop an app without Instead revenue will come from
best customers, and shares insider tech companies including Apple working with local downtown asso- signing up a lot of consumers or a lot merchants who after an initial free
information and special sales. and eBay. ciations and chambers of com- of stores — and each wants to see trial, will pay $29 a month to con-
Since January, the beta is being run Sloan and his team have merce as the “local champion” for the other participating before they nect to consumers, plus some pre-
in 15 Birmingham merchants and launched or assisted with the the mobile phone based app. join, Stevens said. Wantify has that mium add-ons. Wantify also will
now is being expanded. The first launch of such companies as Rubi- “We have seven figures into this worked out: It will emulate the email test some other revenue streams,
merchants in Lake Orion signed in con Genomics and Clarity through app in total. We’re in the throes of marketing services such as Constant but Sloan declined to discuss those.
on Friday, and others will follow in his Aria Ventures. He’s been work- getting some traction right now,” he Contact. “It’s the businesses respon- From the current 15 businesses
Oxford, Holly, Flint and Lapeer ing on Wantify on and off since told the downtown association. sibility to get the consumers on using Wantify, the business base
over the next 30 to 45 days, Sloan 2012, with a few pivots in focus and Yet some experts say traction board,” he said. will grow to 100 within 45 days and
said. direction. may be difficult in the crowded The app gives merchants a direct 200 by the fall and 500 merchants
Backed by $2 million in venture Since the new app launched at small business and consumer com- way to share updates — hard-to- by year end, when it covers the en-
capital funding, the Birming- the end of January, Sloan and his munications app world. Businesses find toys or a special menu item — tire state, Sloan said.
ham-based company will have ex- team of five have signed up around already rely on tools such as Con- to consumers who opt in, cutting Axis Music, one of the test busi-
panded throughout Michigan by 60 Birmingham merchants, and stant Contact or MailChimp — through the clutter in Facebook and nesses, is sold. “We love the plat-
year-end, Sloan told Crain’s. around 250 consumers, all through email programs — or social media Instagram. Businesses download a form — the instantaneous nature of
“We want to be able to … scale word of mouth. It’s been “test and to stay in touch with shoppers. merchant version of the app, avail- notifications,” said Donny Klem-
rapidly in the most efficient way,” tweak, test and tweak, all under the “There’s a lot of these out there — able for iPhone and Android; they mer Jr., marketing manager. Be-
he said. He expects a $5 million radar,” he said. intermediaries between restaurants send updates, almost like a text cause consumers get a message
second-stage venture capital infu- Wantify put itself on the radar re- and retail and consumers,” said Ron message, Sloan said. similar to a text, they’re “guaran-
sion to support the national rollout, cently by sponsoring the Michigan Stevens, associate regional director He acknowledges it will be tough teed to see it” and on a good pro-
with investors already interested. Downtown Association conference of the Michigan Small Business De- to develop a successful small busi- motion, Wantify may generate up
He declined to name current or po- in Dearborn, where Sloan shared velopment Center. Many of the re- ness “loyalty app” but believes it is to half of a day’s revenue for Axis,
tential funders, adding many are details of the company’s plans. The tailers and boutiques he works with important to support small busi- which provides music and voice
individuals who have worked for company expects to expand by use Pinterest, Instagram and Face- nesses. “This is not going to be easy. lessons and classes.

CLARK nizations including the NAACP


Legal Defense and Education Fund.
to the board about this, is how do
we get to a place of shared prosper-
foundation was about attracting
and retaining new people who Detroit looks for
FROM PAGE 3
“I would like for us to be
Her career has been aligned with
identifying and litigating inequities
ity?”
Beyond an advocacy approach,
come into the city. We can’t aban-
don that because that’s vital ... we ideas to fill Rosa
Parks Transit
thoughtful … and smart about and policy work around them. the new strategic plan is likely to in- need the taxbase,” Clark said.
whether there’s a policy lever to She’s viewing the next iteration clude an increased focus on ex- In another example of an area

Center space
pull,” in all of the foundation’s of Hudson-Webber’s work through panding opportunities for Detroi- that could see new attention from
work, she said. the same social justice lens. ters, Clark said. the foundation, Clark believes tax-
“I’d like to see us lean into in- “The thing that is so exciting “Part of that, to make sure that payers aren’t getting the right re-
vestments that support the policy about being in this position and we’re doing this right, is to also be turn for dollars invested in the By Kurt Nagl
knagl@crain.com
work that can move the needle.” particularly coming from the Jus- really explicit about acknowledging criminal justice system.
Before joining the foundation tice Department where you had a that there are racial inequities and “We are putting people under The City of Detroit is trying to fill
last August, Clark served as the national scope … (is) you can wrap structural barriers to opportunity.” supervision, which is super expen- unused space at the Rosa Parks Tran-
White House Domestic Policy your arms around it. It’s so exciting On the safety front, last summer sive, and not putting investments in sit Center with farmers’ markets, en-
Council’s senior policy adviser fo- to think we’ve got these broad port- Hudson-Webber funded the launch the system in the right places for us trepreneurial vendors or anything
cused on criminal and juvenile folios that inform each other. And of pilot of the national renowned to get the outcomes that presum- else beneficial that residents can think
justice reform and civil legal aid I’m finally in a place where it’s not “ceasefire” violence prevention ably we would want,” she said. up.
during the Obama administration, siloed,” Clark said. program targeted at violent crimi- In Michigan, counties are reim- On July 6, the city is issuing a re-
beginning in the spring of 2013. In thinking about the founda- nals, in the city’s 12th precinct, in bursed for juvenile services only quest for proposals to fill the three-sto-
After a year on the job, Clark, tion’s work into the future, Clark partnership with the Detroit Police after juveniles hit the justice sys- ry, 26,000-square-foot transit hub at
who was pregnant at the time with said it’s unlikely to abandon its Department. tem, Clark said. the corner of Cass and Michigan ave-
one of her two young children, place-based work in downtown Ceasefire’s power lies in its ef- Research shows the best out- nues.
thought a move to the U.S. Depart- Detroit and for over 20 years in fectiveness in getting groups and comes in areas such as educational “The city is highly interested in pro-
ment of Justice as chief of staff of what is now Midtown. There’s work gangs to pressure their own mem- attainment and keeping ex-cons posals that complement the high-traf-
the Office of Community Oriented yet to be done and the recovery is bers to stop shooting, Clark said. from returning to prison are fic, high-energy, grab-and-go culture
Policing Services, or COPS, would still fragile. The financing gap is Coordinated community meetings achieved through early interven- of Downtown Detroit,” according to a
offer a little slower pace. But short- creeping down, but it’s not yet zero, known as “Call-Ins” are held regu- tion. Offenders are referred to re- city news release. One idea it pro-
ly after she took the role, 18-year- she said, quoting her husband, larly in which agreements are habilitative programs by the police posed was a support services shop
old Michael Brown was shot by a Moddie Turay, who was hired as ex- formed between gangs, law en- on their first, nonviolent offense, offering helmet rentals and bike re-
white police officer in Ferguson, ecutive vice president of real estate forcement and the community. not after a string of offenses that pairs for Detroit’s new bike share pro-
Mo., early in August 2014. and finance for the Detroit Eco- The agreement establishes harsh put them into the system. gram.
Clark worked to devise creative nomic Growth Corp. in December consequences from law enforce- “We’ve got a policy and funding Proposals are due by 5 p.m. on
funding strategies and partner- 2015. ment to the next group to shoot or mechanism that incentivizes pro- Monday, Aug. 7, and can be submit-
ships to advance community po- At the same time, there are so kill someone. Community mem- grams that pick you up after you’ve ted via www.bidsync.com after regis-
licing and police reform and, in many more foundations in town bers, faith-based leaders and wrap- been through all of those things,” tering for an account on the site.
connection with the department’s than there were even 10 or 20 years around services providers deliver a Clark said. Winners will have the opportunity
Access to Justice Initiative, imple- ago and a lot of dollars for the types message focused on resources and Perhaps there’s a policy lever to negotiate a lease with the city for up
mented a strategy to increase legal of physical improvements the foun- support for pursuing constructive where legislation could get passed to five years, the release said.
counsel for homeowners facing dation has funded in the past, Clark alternatives. to provide additional state funding The RFP is part of the city’s Enhanc-
foreclosure and working with said. And the city of Detroit now Having safe neighborhoods before the juvenile is in the system ing Detroit’s Transit Center Challenge
HUD’s International and Philan- has an economic development ca- would improve the quality of life for for prevention, she said. — the challenge being to fill vacant
thropic Affairs Office to engage a pacity it didn’t have before Mike residents in the neighborhoods. At “We would have moved the nee- space on all three floors of the transit
group of foundations around op- Duggan was elected, giving Hud- the same time, it would set the dle further by working on chang- building. It serves 6,000 transit riders
portunities for philanthropic sup- son-Webber the opportunity to stage for business and people from ing that policy lever than just per day, according to the city’s web-
port. think about expanding its strategy. the suburbs to come back into funding the difference,” she said. site.
Earlier in her career, Clark led “I think that what is most im- them. Sherri Welch: 313 (446-1694) Funded by state and federal grants,
public policy and civil rights orga- portant to me, and I’ve been talking “The most recent push of the Twitter: @SherriWelch the transit center opened in 2009.
C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 9 , 2 0 1 7 21

SOURCE: WWW.ALIBABAGROUP.COM
Alibaba’s Group corporate campus in Xixi, Hangzhou, China.

GATEWAY strategy very clear. Simply put, we


want to help the American business-
platforms selling to nearly 500 mil-
lion Chinese consumers.
FROM PAGE 3 es sell to the China market. This is a It’s not an overstatement to say
electronics, cosmetics, personal massive opportunity, which is good that most middle class Chinese lit-
care goods and health products. for U.S. businesses and good for Chi- erally live their lives with Alibaba.
nese consumers. They chat with friends and shop —
How does Michigan help address often daily — on our marketplaces;
this issue? We’re a large ag Is Michigan, specifically Detroit, they entertain themselves watching
exporter, but not the largest. being eyed as a potential area of original and user-generated con-
Detroit is an ideal location for sev- investment? tent on our media properties, they
eral reasons. Detroit is an important market for pay for nearly everything — not just
There are many great small busi- Alibaba’s long-term globalizations online purchases, but everyday real
nesses and agriculture producers in plans, with its proximity to small world transactions like taxi rides,
the Midwest that are ideal candi- businesses and agriculture, and we utility bills, restaurant checks and
dates for selling on our platforms. are honored to be holding our first movie tickets, using our payments
Agriculture for sure, but also con- Gateway conference here. That said, solutions. It’s the tremendous scale
sumer products we don’t have any plans to open a of this captive audience of active
It’s also a location — in the middle Detroit office. Chinese consumers that we pro-
of the country — that is easy for busi- vide access to which sets Alibaba
nesses and agriculture producers to Is there a timeline for Alibaba’s apart.
reach. entrance into the U.S. market?
We have received tremendous We are already very active in the
support from Mayor (Mike) Duggan, U.S. market today, with offices in
Lt. Gov. (Brian) Calley and Gov. California, Washington State, New
(Rick) Snyder. They have really acti- York City and Washington, D.C. We
vated local business associations are here to help the American busi-
and agriculture co-ops to join us and nesses sell to the China market.
learn about the opportunity.
Are you facing any challenges in the
What will you consider a successful U.S., given our current anti-
Gateway event? globalism climate?
Our metrics for success are fairly Alibaba and our founder Jack Ma
straightforward: has been very clear in its support
Alibaba’s business strategy in the for “inclusive globalization” — an
United States is focused on helping open global trade environment that
the U.S. businesses sell to the China allows for more and more opportu-
market. So, our objective for this nities for small business every-
event is to help educate participating where. Specifically, there is a big
small businesses, entrepreneurs and opportunity for U.S. businesses to
agriculture producers on the China sell to China through Alibaba to-
market opportunity and how Aliba- day. Despite some concerns about
ba can operate as a gateway to help U.S. engagement in various trading
them reach Chinese consumers with agreements, it’s clear that the U.S.
a level of ease that has never before will be focused on increasing ex-
been possible. ports to other countries. We think
We set out to have 1,000 attendees Alibaba is well positioned to sup-
at this inaugural conference. And, I port such a trend by helping to
am delighted to say we now have build the commerce infrastructure
well over 2,000 already registered to for the future which is beneficial for
attend. business, economies and Alibaba
It is our intention for attendees alike.
develop a clear understanding of
how they can begin working with us, What makes Alibaba unique for
if it makes sense for their businesses. businesses that are used to more
This is how we will scale with U.S. traditional supply channels?
businesses on our platform over the Alibaba’s mission is to make it
next five years and beyond. easier to do business anywhere. We
started out 17 years ago helping
What are Alibaba’s plans to expand small businesses in China sell to
into the U.S.? Chinese consumers. Today there are
We have made our U.S. business nearly 10 million merchants on our
22 C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 9 , 2 0 1 7

INSURE pre-existing conditions, but not


enough to stabilize the individual
ucts if the cost-sharing subsidy is ap-
proved by Trump, Blue Cross Blue
utilization, prices of services, tech-
nology advances and inflation. Other
FROM PAGE 1 markets for 2018, especially by this Shield of Michigan is asking for a 26.9 contributors to health care costs may
www.crainsdetroit.com
“The political climate continues to August when insurance commis- percent average rate increase, and a include taxes, fees and other
Editor-in-Chief Keith E. Crain make it difficult to price and the un- sioners make final decisions on pric- 13.8 percent hike for Blue Care Net- Obamacare requirements.
Executive Vice President KC Crain
Publisher/Editor Ron Fournier, (313) 446-1674 or certainty over the future of the subsi- es, experts say. work’s more closely managed HMO Priority Health filed for 17.7 per-
rfournier@crain.com dies creates the largest reason for plans. cent rate increase with cost-sharing
Group Publisher Mary Kramer, (313) 446-0399
or mkramer@crain.com
significant rate increases,” said Dan- Group markets stable However, if the federal subsidies subsidies and is requesting a 19 per-
Managing Editor Michael Lee, (313) 446-1630 ielle Devine, MeridianHealth’s Mich- — that lower-income people under cent increase without the subsidies,
or malee@crain.com igan director of operations. While the individual health insur- 250 percent of the federal poverty said spokesperson Amy Miller.
Director, Crain Custom Content Kristin Bull,
(313) 446-1608 or kbull@crain.com
Insurers say the need for the sec- ance market has always been prone level receive by insurers to help pay “With market challenges and un-
Product Manager/Marketing and Events Kim Winkler, ond set of rates is primarily because to premium spikes because of its rel- out-of-pocket claims — are discon- certainty in federal funding, Priority
(313) 446-6764 or kwinkler@crain.com the Trump administration has de- atively small size, the much larger tinued, Blue Cross is asking the state Health has had to make significant
Digital Product Manager Carlos Portocarrero,
(313) 446-6056 or cportocarrero@crain.com
layed deciding whether it will pay for employer-sponsored health insur- to approve an increase in average changes to its plan offerings,” said the
Creative Director David Kordalski, (216) 771-5169 the subsidies that help lower-income ance market historically has been rates of 31.7 percent and 22.6 percent Priority statement. “For 2018, Priori-
or dkordalski@crain.com people pay for out-of-pocket expens- more stable, increasing under 7 per- for Blue Care. ty Health will offer new plans and
News Editor Beth Reeber Valone, (313) 446-5875
or bvalone@crain.com
es. cent annually the last five years in Blue Cross is the state’s largest new narrow network options de-
Special Projects Editor Amy Elliott Bragg, The proposed increases are steep Michigan. health insurer. In 2017, Blue Cross signed to lower costs and continue to
(313) 446-1646 or abragg@crain.com even if the subsidy is continued, be- Michigan’s midsized employer av- has sold about 215,000 individual help individuals across the state ac-
Design and Copy Editor Beth Jachman, (313) 446-0356
or bjachman@crain.com cause customers are using more erage health care costs were project- policies, down 100,000 from 2014, cess high quality health care.”
Research and Data Editor Sonya Hill, (313) 446-0402 health care services, fewer younger ed to increase by 5 percent in 2017 Andy Hetzel, vice president of corpo- Total Health Care, a Detroit-based
or shill@crain.com people are purchasing policies with- after benefit plan changes, a slight rate communications, said. Blue HMO, also filed a 27.59 percent rate
Newsroom (313) 446-0329, FAX (313) 446-1687,
TIP LINE (313) 446-6766 out an enforced individual mandate uptick from last year’s 4 percent ex- Cross’ total membership in 2016 was increase that assumed no federal
and prices are sky-high for specialty pected rate and higher than the pro- 4.61 million in Michigan and 5.34 cost-sharing subsidies, according to
REPORTERS
Tyler Clifford, breaking news. (313) 446-1612 or
cancer and antiviral drugs, insurance jected national rate of 4.1 percent, million nationwide. its state filing.
tclifford@crain.com experts say. Troy-based Marsh & McLennan With the rate increase proposals, Of the health insurers participat-
Annalise Frank, breaking news. (313) 446-0416 or The majority of the state’s under Agency LLC reported last month. Hetzel said Blue Cross expects indi- ing in the Obamacare individual
afrank@crain.com
age 65 insured population, about 57 marketplace, only Blue Cross is offer-
“The political climate
Jay Greene, senior reporter Covers health care.
(313) 446-0325 or jgreene@crain.com percent, purchase health insurance ing an individual PPO product next
Chad Livengood Covers Detroit rising. (313) 446-1654 or
clivengood@crain.com
through their employers. Most of the
rest are either on Medicaid, Medi-
continues to make it year, Hetzel said. The other estimated
eight health insurers are offering a
Kurt Nagl Breaking news. (313) 446-0337 or
knagl@crain.com care or are uninsured. difficult to price and the variety of HMO plans on the ex-
Kirk Pinho Covers real estate. (313) 446-0412 or
kpinho@crain.com
The increases in the individual uncertainty over the future change. Blue Cross also is the only
market for 2018 are expected to be insurer to offer plans in all 83 Michi-
Bill Shea, enterprise editor Covers the business
of sports. (313) 446-1626 or bshea@crain.com much higher than the average 16.7 of the subsidies creates the gan counties.
Lindsay VanHulle Lansing reporter. (517) 657-2204
or lvanhulle@crain.com
percent increase insurers approved largest reason for significant Obamacare has four types of
Dustin Walsh, senior reporter Covers economic issues.
(313) 446-6042 or dwalsh@crain.com
by the state this year, according to
several health insurance executives
rate increases.” “metal” policies — platinum, gold,
silver or bronze (catastrophic) — that
Sherri Welch, senior reporter Covers nonprofits and contacted by Crain’s. Danielle Devine, MeridianHealth Michigan include the same 10 essential health
philanthropy. (313) 446-1694 or swelch@crain.com
The uncertainty over federal benefits but have different networks
ADVERTISING
cost-sharing subsidies prompted Michigan’s small-group employer vidual enrollment to decline further. and cost-sharing arrangements. For
Sales Inquiries (313) 446-6032; FAX (313) 393-0997
Director of Sales Lisa Rudy state insurance regulators to request market of 50 or fewer workers also has He did not estimate the drop. example, the most popular plan is a
Senior Account Manager Katie Sullivan that insurers submit two sets of pro- been a source of some volatility the Last year, for 2017, Blue Cross won high-deductible silver metal plan
Senior Account Manager/Political Specialist posed rates — one including the sub- past few years as the Affordable Care a 18.7 percent rate increase for the that pays 70 percent of the typical
Maria Marcantonio
Advertising Sales Gerry Golinske, Sharon Mulroy, sidies and one without. Act forced some changes in policy de- individual market. Blue Care Net- costs of that plan. Enrollees cover the
Diane Owen President Donald Trump has pub- signs. However, rates in the small work won a 14.8 percent increase. remaining out-of-pocket costs.
Classified Sales Manager Angela Schutte, licly threatened to withhold the pay- group market averaged a 2.5 percent While the overall state average was “There are a lot of dynamics affect-
(313) 446-6051
Classified Sales Lynn Calcaterra, (313) 446-6086 ments to cause the Obamacare mar- increase from the previous year. 16.7 percent, those numbers were an ing market,” Hetzel said. “Our com-
Events Manager Kacey Anderson kets to collapse and force the For 2018, an early analysis by average and did not include federal mitment is to membership. We un-
Marketing and Sales Promotions Manager Democrats to compromise on the Crain’s of the 17 plans that filed with subsidies that lowered the overall in- derstand premium increases impact
Christina Fabugais-Dimovska
Senior Art Director Sylvia Kolaski Republican-backed American the state to sell health insurance to crease for those eligible to an effec- family budgets significantly. Our goal
Special Projects Coordinator Keenan Covington Health Care Act, which the House small employers showed many were tive rate of less than 8 percent. is to try our best to get health insur-
Sales Support Suzanne Janik approved last month. Trump now requesting under a 5 percent rate re- Meridian Health Plan of Michigan ance to people as best as we can and
Media Services Manager Hussein Abdallah
says he supports a “more generous” quest hike for 2018. said its average 2018 rate increase re- help (them) afford coverage.”
CUSTOMER SERVICE
Senate version of a Obamacare re- For example, Total Health Care of quest with cost-sharing subsidies in- While Hetzel said prices on the
Main Number: Call (877) 824-9374
or customerservice@crainsdetroit.com
placement bill. Detroit is proposing to increase small tact is 8.3 percent, but it jumps to 59.4 Obamacare exchanges in Michigan
Subscriptions $59 one year, $98 two years. Out of state, Nationally, some insurers, includ- group rates in 2018 by 4.55 percent. percent without the subsidies. are “volatile,” the individual market is
$79 one year, $138 for two years. Outside U.S.A., add $48 ing United Healthcare, Anthem, Hu- McLaren Health Plan of Flint is asking HAP is proposing a 16.1 percent not the “complete disaster” it was be-
per year to out-of-state rate for surface mail. Call (313)
446-0450 or (877) 824-9374. mana and Aetna, have already an- for a 4.22 percent increase. Priority average rate increase with cost-shar- fore 2010 when Obamacare was ap-
Single Copies (877) 824-9374 nounced they will drop out of the Health Insurance Co. requests an 8.3 ing subsidies, or 24 percent without proved.
Reprints (212) 210-0750; or Krista Bora at individual market, citing the uncer- percent increase for PPO plans; Blue the subsidies, said Lee Ann Welsh, a For years in Michigan before
kbora@crain.com
To find a date a story was published (313) 446-0406 tainty of the federal subsidies and Cross a 5 percent increase in PPO HAP spokesman. The increase would Obamacare, Hetzel said people with
or e-mail infocenter@crain.com individual market financial losses. small group rates. affect 17,000 members of HAP, which health conditions were subjected to
Other health insurers have said their Other plans are asking for a cut in is owned by Henry Ford Health Sys- medical underwriting and routinely
Crain’s Detroit Business is published by
Crain Communications Inc. proposed rates could be 15 to 20 per- small group rates. They include: Prior- tem. rejected by other health insurers.
Chairman Keith E. Crain cent higher without the federal sub- ity Health, down 0.9 percent average “The primary driver of the rate in- Prices in the individual market also
President Rance Crain sidies. decrease for HMO products; down crease is the continued rise in the routinely jumped 10 percent to 20
Treasurer Mary Kay Crain
Senior Executive Vice President William A. Morrow Last week, Trump said for-profit 0.62 percent decrease for point of ser- cost of health care, which includes percent each year. The Michigan
Executive Vice President/Director of Strategic Anthem leaving Ohio and causing vice. Blue Care Network, -3.1 percent increases in the price of services Blues were mandated by a 1980 state
Operations Chris Crain (unit costs) from hospitals, physi-
nearly 11,000 people to seek another decrease for HMO rates. HAP has law to sell policies to anyone, and the
Executive Vice President/Director of Corporate
Operations KC Crain carrier on the exchange was more three HMO products; one could go up cians and pharmaceutical compa- state insurance department ap-
Vice President/Production & Manufacturing proof that insurers are “fleeing and 4.59 percent and the other two could nies,” the HAP statement to Crain’s proved rates far below what Blue
Dave Kamis
Chief Financial Officer Bob Recchia
leaving” the individual exchanges. go down 1.8 percent each. said. Cross requested.
Chief Information Officer Anthony DiPonio He said Congress needs to pass a Blue Cross covers more than HAP said factors driving its premi- Jay Greene: (313) 446-0325
G.D. Crain Jr. Founder (1885-1973) compromise bill repealing 250,000 of the estimated 360,000 um increases include higher medical Twitter: @jaybgreene
Mrs. G.D. Crain Jr. Chairman (1911-1996)
Editorial & Business Offices
Obamacare this summer that he im- people in Michigan who participate
plies will stabilize the individual in the small group market.
INDEX TO COMPANIES
1155 Gratiot Ave., Detroit MI 48207-2732;
(313) 446-6000 markets.
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But neither House-approved Proposed increases These companies have significant mention in this week’s Crain’s Detroit Business:
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individual market, experts say. The acle in Congress that would mitigate Beaumont Health 8 Little Caesars Arena 3
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cover some high-cost patients with For its more expansive PPO prod- Hayman Co. 5 Total Health Care 22
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THE WEEK ON THE WEB RUMBLINGS


June 9 - 15 | For more, visit crainsdetroit.com

Spirit of Detroit
Plaza opens
downtown
T he Spirit of Detroit Plaza test is
now open for business, lunch,
entertainment, lounging and other
uses.
The downtown stretch of Wood-
ward Avenue at Jefferson Avenue
was shut down to traffic last week, KURT NAGL/CRAIN’S DETROIT BUSINESS
and Mayor Mike Duggan and city Ethan Davidson (center) sings at Detroit’s Third Man Records as part of the release party
and community leaders cut a ribbon for his 11th album, titled “Crows.”
Monday morning to open the new

Ethan Davidson packs


public space to accompany Marshall
Fredericks’ iconic Spirit of Detroit
statute.
Sandwiched between Campus
Martius and Hart Plaza, the
20,000-square-foot plaza offers pic- TYLER CLIFFORD/CRAIN’S DETROIT BUSINESS
Third Man for release
nic and dining tables, games and
space for public activity. The goal is
to create a more walkable downtown
The Spirit of Detroit Plaza is sandwiched between Hart Plaza and Campus Martius in
downtown Detroit near the iconic Spirit of Detroit statue. B irmingham singer-songwriter
Ethan Davidson’s album re-
lease party on Tuesday night packed
songs,” he said, explaining that ’40s
and ’50s music were the template for
his latest work.
and civic, culinary and cultural cen- porations including DTE Energy Co., Third Man Records to capacity, With tracks such as “My Own Bad”
ter. Three food trucks will park along Detroit Adient plc and Dow Chemical Co. drawing some big names in Detroit’s and “Close to the Gallows,” the album

digits
Woodward to serve guests and around the country have com- music scene. was inspired by a “lifetime of train
Monday-Friday. mitted to a best-practices diversity Davidson — son of the late Detroit travel” and focused on interpersonal
The project’s collaborators — initiative called CEO Action for Di- Pistons owner William Davidson — and relationships, particularly those that
the city of Detroit, Downtown De- A numbers-focused look at last versity & Inclusion. his band delivered a cosmic folk/rock are problematic, Davidson said, be-
troit Partnership, Detroit Public week’s headlines: performance with country twist to a cause “those are more interesting.”
OTHER NEWS:
$55 million
Works and other agencies — will crowd of about 250 at the location in For this album, Davidson did
test the concept for the next 90 Midtown Detroit, home to Jack White’s away with the horns section heard
days and accept public feedback The amount Hayman Co. paid for J Focus: Hope is looking to lease its store and vinyl pressing plant. on “Drawnigh” and introduced
into how the space could be used the 732,000-square-foot Troy former headquarters building on its Several of the live cuts were off pedal steel for a distinct country
and improved, or if the idea should Officentre complex. campus and 25,000 square feet of in- Davidson’s new album “Crows,” a twang. The fuzz guitar and signature
be scrapped. dustrial/warehouse space across 12-track offering that is in some distortion of previous albums re-
“It’s a network, but they are all
complementary,” DDP Director of 5 from it as part of a larger plan to pro-
duce revenue and attract more jobs
ways a departure from his previous
work. “Crows” is his 11th album and
main. He also throws into the mix a
Civil War-era banjo and cello banjo.
Public Spaces David Cowan said The number of Detroit projects to its campus. first since “Drawnigh,” released in His main instrument continues to be
when asked how the plaza would that won more than $800,000 J Detroit’s three casinos reported an 2015 on Davidson’s label, Seeds- electric guitar, but he hopes to even-
compete with Hart Plaza and Cam- through the Knight Foundation’s aggregate revenue of $120 million in men Co. tually phase that out.
pus Martius. “We try to make them Knight Cities Challenge to help May, up 1.2 percent from a year be- Davidson’s wife, Gretchen, who Between numbers, Davidson
all unique places. A lot of city work- attract and keep residents, fore and down 0.9 percent from sings, plays lead guitar and pro- thanked fans for support and gave
ers were having difficulty getting to expand opportunities and engage April, the Michigan Gaming Control duced the album, and Warren Defe- Michigan Opera Theatre founder
Cadillac Square in the amount of communities. Board reported. ver, who also helped produce the David DiChiera, who was in atten-
time they have for lunch.” J Mayor Mike Duggan and the De- album and plays slide guitar and dance, special recognition for “invest-
The plaza is inspired by spaces troit Economic Growth Corp. other backing instruments on it, put ing in Detroit when no one else was.”
such as New York City’s Times 125,400-square-foot Troy office launched Motor City Re-Store, a “tight restriction on the music” for “Crows” was released Friday on
Square and its planners, such as building for about $9 million. which will provide $500,000 in “Crows,” Davidson said. vinyl, CD and via digital download
DDP planner James Fidler, hope it J Cobo Center is spending $2 mil- matching grants each quarter to “The restriction was liberating from the album’s label, Cleve-
can spark civic engagement and one lion to upgrade its broadband tech- existing businesses to help im- and made it easier to write the land-based Blue Arrow Records.
day rival the popular tourist destina- nology in a bid to attract e-sporting prove neighborhood business

Simoncini namechecks
tion. New York City-based events and exhibitions with virtual districts.
Bloomberg Associates, which creat- reality exhibits. J The Michigan Department of
ed public spaces in The Big Apple, J Detroit-based Ally Financial Inc.’s Transportation plans to modernize

competitors at benefit
was enlisted to design the fledging “Hardest Working Dollar” campaign I-94, reconstructing a 6.7-mile seg-
center in Detroit. launched, with five George Wash- ment of freeway just east of the
ington impersonators taking to the I-94/I-96 interchange to east of Con-
BUSINESS NEWS:

J A pair of early 20th century apart-


streets of Detroit as the company
promotes special dollar bills put into
circulation that are worth $100,
ner Avenue and constructing an ad-
ditional through-lane in each direc-
tion of the freeway.
M att Simoncini cupped his
mouth in his hands and
shouted above the noisy crowd at a
Beneath a huge tent with a clear
ceiling, hundreds of Motown fans
were entertained by the Four Tops
ment buildings in Detroit’s Midtown $5,000 or $10,000. J Dearborn and Southfield are try- fundraiser he was sponsoring Thurs- after a live auction that raised tens of
at 3525 Cass Ave. and 624 Charlotte J Waterford Township-based Cor- ing out their own short-term bicycle day night for the Motown Museum. thousands of dollars for the cause.
St. have been put up for sale for $6.35 porate Eagle is planning to build a rental systems in the wake of the late “Delphi! Delphi! Anybody here from “We were raised on Motown,” Si-
million. new facility at the Oakland County May rollout of Detroit’s bike share Delphi!” moncini told the crowd during brief
J The four-county metro Detroit re- International Airport after being se- dubbed MoGo. The Lear Corp. president and remarks during dinner. “It was the
gion saw a 3.4 percent increase in the lected for a 5.7-acre parcel of land J Federal investigators have sub- CEO was trying to shame his auto song track of my life.” He said the
number of home and condominium there. poenaed demolition contractors in supplier competitors into matching Motown brand represents creativity
sales last month, rising to 5,556 from J Automotive industry design ele- Detroit’s troubled blight-removal his $200,000 donation toward the and entrepreneurship, and linked
5,373 in May 2016. The median sale ment manufacturer I.M. Branded program as part of an ongoing inves- museum’s $50 million expansion the 1960s music revolution to the
prices also climbed 6.7 percent to plans to move from its Rochester tigation, but Mayor Mike Duggan’s plan. blossoming of modern Detroit. “This
$176,000. Hills headquarters to a space more office says it has not received a sub- Hearing no takers, Simoncini brand represents what we are.”
J Discount supermarket chain Aldi than double the size in a former GM poena for records. turned his attention to another com- UAW Vice President Jimmy Settles
expects to open three more new facility in Pontiac. J At least three Michigan congress- petitor. “Anybody here from Adi- Jr. urged the crowd to help make the
stores in Michigan in 2017 as part of J John Gibbs, the son of Birming- men were present at a shooting ent?” The audience roared with museum a global destination. “The
its plan to build 900 new stores by ham-based retail strategist Robert scene last week and are reported safe laughter as the hyper exuberant Si- ask is easy,” he said. “Please dig deep
the end of 2022. Gibbs, bought The Keyes apartments after a gunman shot multiple people moncini twisted the knife. tonight.”
J An entity tied to Bingham Farms- and Villa Lante apartments, 63 units during baseball practice at a park in “You want to be Lear when you Speaking last, Mayor Mike Dug-
based real estate company Core total, for an undisclosed price. Alexandria, Va., outside of Washing- grow up? Write a check!” gan joked, “I’m the third-best politi-
Partners LLC purchased a J CEOs from Michigan-based cor- ton, D.C. Kidding aside, it was quite a night. cian on stage.”
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