Crain's Detroit Business, Jan. 28, 2019 issue by Crain's Detroit Business

China’s retaliatory tariff on soybeans is hurting Michigan farmers Page3

JANUARY 28 - FEBRUARY 3, 2019 | crainsdetroit.com DEVELOPMENT

Kraemers go from hotel architects to owners By Kirk Pinho kpinho@crain.com

Robert and Maureen Kraemer have worked on some of the highest-profile Detroit hotel projects in recent years, ranging from the Shinola Hotel that opened earlier this month to the Foundation Hotel on Larned Street. But now the Detroit-based husband and wife architecture team is stepping out on their own with their own transformation of a century-old lodge and motel on Torch Lake in the Upper Peninsula, 300-plus miles north of their downtown Detroit office on Broadway Street. The Birch Lodge, which the founders of Kraemer Design Group bought for about $570,000 in May, is undergoing a renovation to the two-building, 20-acre property’s 20 rooms, eight of which are in a 1960s-era motel and 12 of which are in the lodge, built in 1912 as a tuberculosis sanitarium but never used as such. In all, the pair and their investors are in the middle of a $1.7 million project with the goal of retaining the site’s charm while also bringing its amenities and service into the modern era — while hopefully turning a profit by 2020. Contemporary eating in a new lodge restaurant. Updated carpet and new mattresses in the motel, period-style alarm clocks with USB ports. Spruced up bathrooms. Adding bathrooms to the lodge rooms. It’s all in homage to the decor the Kraemers found when they bought the motel and lodge (which had “gone to hell” under the previous ownership, a pair of archaeologists who the Kraemers credit with sparing the property’s demolition). “That is a time capsule in of itself because it’s a perfect example of sort of motel architecture and all the furnishings on the inside are midcentury modern, which is all the retail rage now,” Robert Kraemer said of the motel.

Detroit Vegan Soul has plans to expand statewide Page 19

HEALTH CARE

DMC training program faces scrutiny Inspection planned for cardiology fellows program after department shakeup By Jay Greene jgreene@crain.com

Need to know

Inspection team from Accreditation Council for Graduate Medical Education expected to arrive at DMC on Feb. 8 

An important heart-surgery training program at the Detroit Medical Center is getting extra scrutiny from its accrediting body after controversial changes within the organization. DMC will face an inspection Feb. 8 from the body that governs its interventional cardiology residency program after it replaced last fall five top teaching doctors, including its na-

 Officials for Detroit Medical Center terminated top core faculty of DMC's interventional cardiology program last October and are using replacements  Four cardiology fellows write letters to DMC objecting to the changes and voicing concern over their training

tionally known director Ted Schreiber, M.D. In a Dec. 20 letter from the Chicago-based Accreditation Council for Graduate Medical Education residency review committee, DMC was told that “a full site visit of the program must be conducted before an accreditation decision can be made.” The RRC said it is concerned about conflicting information it has received from DMC that includes ma-

jor changes in faculty and in locations where training takes place. It also said there are questions whether DMC has the requisite minimum number of faculty, their qualifications and where the fellows rotate for training and for how long. An ACGME official confirmed the letter and the Feb. 8 site visit but would not answer questions related to the site visit. SEE DMC, PAGE 22

SPECIAL HEALTH CARE REPORT

PULLING BACK THE CURTAIN OF CRISIS As rising numbers of patients wait in busy hospital ERs for psychiatric evaluations and inpatient bed placements, mental health experts search for solutions. PAGE 10 Emergency room registered nurse Jessica McMillan tends to a patient at Ascension St. John Hospital in Detroit. Rising numbers of people seeking emergency psychological care in emergency rooms are straining the system. PHOTO BY BRANDY BAKER FOR CRAIN’S

SEE BIRCH LODGE, PAGE 18

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MORE INSIDE State work groups study fixes for “emergency room boarding” of psychiatric patients. Page 11 Beaumont’s planned psychiatric hospital aims to meet critical need. Page 12 Two programs — one in Wayne County, the other in Oakland County — aim to ease ER psychiatric burden. Page 12

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MICHIGAN BRIEFS

INSIDE

From staff and wire reports. Find the full stories at crainsdetroit.com

No one in jail over Flint water crisis 3 years later

Michigan’s attorney general in 2016 promised to investigate “without fear or favor” the scandal over Flint's lead-tainted drinking water and pledged that state regulators would be locked up for fudging data and misleading the public. Yet three years later, no one is behind bars, the Associated Press reported. Instead, seven of 15 defendants have pleaded no contest to misdemeanors, some as minor as disrupting a public meeting. Their records eventually will be scrubbed clean. That has angered some people in Flint who believe key players who could have prevented the lead disaster are getting off easy. Four of five people at the state Department of Environmental Quality who were on the front line of the crisis have struck deals. The remaining cases mostly center on a deadly outbreak of Legionnaires’ disease and early disastrous decisions to use water from the Flint River. “I’m furious — absolutely furious,” said LeeAnne Walters, a mother of four who is credited with exposing the lead contamination. “It’s a slap in the face to every victim in the city of Flint.” Walters, 40, said she was repeated-

ly brushed off by the DEQ, even as she confronted officials with bottles of brown water. She testified in Congress after then-Gov. Rick Snyder in 2015 finally acknowledged the lead mess, and she later was honored with an international prize for grassroots environmental activism. “Instead of people being held accountable, they’re getting a free pass,” Walters said. “The fact remains there wouldn’t have been a problem with the lead and the Legionella if the water had been treated properly, if MDEQ would have done their job.”

Michigan gets $2.9 million in Johnson & Johnson settlement

Michigan Attorney General Dana Nessel reached a $120 million settlement with Johnson & Johnson, under which Michigan will receive over $2.9 million, for the pharma company’s unlawful promotion of its metal-on-metal hip implant devices. Michigan, along with 45 other states, reached a settlement that puts an end to the probe into DePuy Inc., a franchise of orthopedic and neurosurgery companies purchased by the pharma giant in 1998 and maker of the hip implants in question. DePuy allegedly promoted ASR XL and Pinnacle Ultamet hip implants with “misleading claims about the longevity,” a news release from Nessel’s office said.

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When adjusted for inflation, Michigan’s total education revenue in 2015 was 82 percent of what it was in 1995.

Patients who had to replace a defective ASR XL or Pinnacle Ultamet implant endured persistent groin pain, allergic reactions, tissue necrosis and buildup of metal ions in the blood, the release said. “It is essential that companies which provide medical devices live up to their obligation to provide accurate and up-to-date information for both doctors and patient/consumers,” Nessel said in a written statement. “This settlement will help ensure doctors are provided with better information for use when caring for their patients.” Under the settlement the New Brunswick, N.J.-based company will be required to base claims of longevity and stability on scientific proof, and maintain a post-market surveillance program and complaint handling program, among other actions, according to the release.

Michigan ranks last in school funding growth

No state has squeezed school spending more in recent decades than Michigan, education researchers said last week in a study that attributes the tightening to tax cuts and notes a corresponding drop in student achievement, according to a report from the Associated Press. When adjusted for inflation, the state’s total education revenue in 2015 was 82 percent of what it was in 1995 — shortly after voters passed a law that lowered property taxes, boosted the state sales tax and narrowed funding inequities across K-12 districts. The overhaul largely shifted the power to fund schools from local communities to the state government. “No other state is close to a decline of this magnitude,” says the report, written by Michigan State Uni-

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versity professor David Arsen and two doctoral students at the university’s College of Education. Michigan’s per-pupil spending declined by 15 percent over the same 20-year period when modified for inflation, which ranked 48th among 50 states. The study says Michigan and the federal government have substantially raised expectations for student performance over the past 15 years, while Michigan students’ achievement on standardized tests has slipped relative to other states. The state has never calibrated funding levels so that students can meet the new standards, according to the report. “Michigan’s public school system is at a crossroads. It is not performing well,” the study says. “In contrast to 1993, Michigan’s tax rates and student performance now fall well below the national average. These unsatisfactory educational outcomes now constitute the primary catalyst for changes in funding policy.”

NOMINATION DEADLINE EXTENDED Crain’s Detroit Business will name the 2019 Notable Women in HR in a special report on March 18. We’re looking for leading women working in the human resources field, including: ■ ■ ■ ■ ■

HR Generalists and Executives Payroll Professionals Benefit Administrators Analysts, Consultants and Employment Lawyers AND MORE

The form and accompanying materials must be submitted by MONDAY, FEB. 4. Go to crainsdetroit.com/nominate to nominate a woman you know.

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NONPROFITS

ECONOMY

GreenPath focused on growth By Sherri Welch swelch@crain.com

TRADE TROUBLES Soybean prices peaked at $10.71 a bushel in March 2018 before dropping to $8.11 a bushel immediately after China instituted its retaliatory tariffs.

ASSOCIATED PRESS

2019 a tough row to hoe for SE Michigan soybean farmers By Dustin Walsh dwalsh@crain.com

Sixth-generation farmer Doug Darling is, as farmers are, optimistic about the future. Even though last year was one of the worst on record for Darling Farms. Input costs, such as fertilizers and fungicides, were high. An unseasonably rainy spring preceded a six-week drought in the summer during peak soybean germination. Then China issued retaliatory tariffs on agriculture imports from the U.S., including soybeans, two days after the Fourth of July. “It was a difficult year. Spring was horrendous for us ... and in farming we’re in a partnership with Mother Nature,” Darling, 59, told Crain’s.

Need to know

JJSoybean prices dropped immediately

after China instituted its retaliatory tariffs

JJMichigan farmers lost nearly $110 per acre as a result JJFarmers still support Trump tactic for

new trade deals

“There have been huge tariffs dropped on our crops here in the U.S. that have lowered prices, but we’re still optimistic because whatever comes out of these trade negotiations has to be better than we had before.” There’s no sign it’s going to get better, input costs are rising in 2019,

again, and tariffs continue as China and the U.S. are “miles and miles” away from a trade deal, Commerce Secretary Wilbur Ross said last week. Yet Darling represents a large cadre of Michigan farmers who were negatively impacted by trade tensions escalated by the Trump administration, but who support the president’s overall objective of correcting longstanding trade issues. For Michigan farmers, those who survive will thrive. “This isn’t something we’re used to, necessarily,” said Darling, who farms soybeans and corn on his family’s 1,600-acre farm in Willis, on the border of Monroe and Washtenaw counties. “We’re used to doing our work, planting seeds. But now

we’re paying attention with what’s going on in the rest of the world. It matters. Our incomes depend on it. So while we’ve always opposed tariffs, because we’re often the victim of them, we’ve never had anyone use them as a negotiation tool.” Soybean prices peaked at $10.71 a bushel in March 2018 before dropping to $8.11 a bushel immediately after China instituted its retaliatory tariffs. For farmers in Michigan, who averaged about 42 bushels per acre in 2017, that equates to a loss of revenue of nearly $110 per acre. Which seems paltry, but when you’re farming more than 1,000 acres of soybeans, the results are potentially devastating. SEE SOYBEANS, PAGE 18

SPORTS BUSINESS

Michigan and its million-dollar assistant coaches By Bill Shea

No one really blinks an eye anymore at such hires, but a football staff filled with gold-plated assistant coaches may become even more costly because of changes to federal tax law last year, though that hasn’t halted the college football-industrial complex’s upward compensation trend.

bshea@crain.com

The University of Michigan’s football program will have at least three assistant football coaches earning more than $1 million in 2019, making the school among the leaders in the ongoing trend of skyrocketing assistant coach salaries. Michigan had two $1 million-plus football assistants in 2018, out of 21 nationally, per USA Today’s online database of assistant coach salaries. In 2019, the Wolverines will have three of them on the sidelines next to Head Coach Jim Harbaugh and his $7.5 million paycheck. The newest is Josh Gattis, hired earlier this month as offensive coordinator under a three-year deal that pays him a $900,000 base salary with a $200,000 signing bonus this year.

ASSOCIATED PRESS

Need to know

JJGreenPath looking to acquisition, more referrals from credit unions, marketing and new employer financial wellness program to grow JJHas fifth acquisition in three years in its sights, rolling out employer program with Asset Health during first quarter JJBroader footprint and more clients needed to give it the scale needed to operate sustainably and expand services

A broader footprint and more client referrals from credit unions, employers and current clients for fee-based financial wellness services will give GreenPath the scale it needs to operate sustainably and continue to provide debt management and other services to help people control their finances and meet their goals. “We’re not going to touch every single person in the country, but we can influence the country to help people improve financial wellness,” Holt said. “We’re always going to be there when there’s problems, but we want to work with people so that they can think about what’s important to them, what’s their version of the American dream and how can we help them get there.”

Acquisitions

Millionaire head football coaches have been around since Florida State’s Bobby Bowden and Florida’s Steve Spurrier breached that threshold in the mid-1990s. In 2018, 24 head college football coaches were paid at least $4 million, per USA Today, and 82 of the 130 head coaches in the Division I database were paid $1 million or more.

A decade ago, there were about 250 nonprofit credit counseling agencies in the U.S., Holt said. Today, there are 75. Those agencies have declined as the number of for-profit debt resettlement agencies has risen, she said. Where nonprofit credit counseling agencies offer debt management plans to help consumers lower interest rates and pay off debt balances to help improve their credit, debt resettlement agencies negotiate lower payback amounts to get debts paid off without regard for credit improvement, Holt said.

SEE COACHES, PAGE 20

SEE GREENPATH, PAGE 21

The spending

University of Michigan Head Coach Jim Harbaugh watches the action on the field while his assistant coaches call out instructions.

With four acquisitions over the last few years, GreenPath Financial Wellness has held on to its spot as the second-largest nonprofit credit counseling agency in the country. But with significant consolidation in the industry over the past decade, President and CEO Kristin Holt is intent on continuing to expand its national footprint and the number of people it serves. GreenPath has another acquisition in its sights and is looking at other growth strategies, like expanding relationships with credit unions across the U.S. and a new employer financial wellness program set to launch this quarter with Troy-based Asset Health. Holt expects those moves to help increase the agency’s 2018 revenue of more than $40 million by 9 percent this year to about $44 million. To remix the American dream so it works for everyone, the vision Holt brought to GreenPath nearly three years ago, “we have to grow,” she said during a conversation at the agency’s headquarters last week.

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Represents employers in litigation involving all types of employment and labor claims Advises healthcare organizations in matters involving peer review activities, professional credentialing and discipline Counsels employers regarding employment policies, reductions in force and employment agreements Tier 1 Metropolitan Ranking

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2019

Kelley LaFontaine, vice president, LaFontaine Automotive Group, and COO Ryan LaFontaine.

LaFontaine Automotive execs take hands-on approach to philanthropy By Sherri Welch swelch@crain.com

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COM M U N IT Y We travel your roads and live on your streets so we know well what is important to your community. Local knowledge and personal understanding – it’s all connected.

FISHBECK , THOMPSON, CARR & HUBER engineers | scientists | architects | constructors

LAFONTAINE AUTOMOTIVE GROUP

The LaFontaine Automotive Group and its executives are taking a handson approach to philanthropy. In early February, the group will award $780,260 in grants to five cancer research projects underway by researchers affiliated with Beaumont Health, DMC Children’s Hospital of Michigan, Henry Ford Health System, and C.S. Mott Children’s Hospital at the University of Michigan. Those projects, and others LaFontaine has funded through the U CanCer Vive Foundation launched three years ago, were hand-selected by a core group of about 20 of LaFontaine executives, employees, family and friends who raise money, plan events and review grant proposals. With the latest round of funding, the group has granted just under $1 million to fund local cancer research over the past three years. The effort is personal for COO Ryan LaFontaine, who was diagnosed with Hodgkin’s lymphoma at the age of 29 in 2008. Following his successful treatment and remission, he and his sister Kelley LaFontaine, vice president of the automotive group, began looking for a way to make a difference for others diagnosed with cancer. They started out raising money for the Leukemia & Lymphoma Society but launched their foundation out of a desire, they said, to see 100 percent of the net proceeds raised go directly to research. “There are so many people we know who have been impacted by this disease,” said Ryan LaFontaine, 41. “I was fortunate to have a 86 percent cure rate with my cancer. We felt it was important to raise the cure rates for all the forms of cancer, (so) we really focused on research.” The U Can-Cer Vive Foundation reported $427,149 in total revenue in 2017, the year of its most recent 990 tax form. Operating expenses outside of program or grant costs totaled $86,713, or 20 percent of total revenue. LaFontaine and his sister serve as chairman and vice chair, respectively, on the foundation’s board. Two friends serve on the board with them:

U Can-Cer Vive foundation grants for February J $90,400 to Dr. Jeffrey Taub and Dr. Madhvi Raipurkar, DMC Children’s Hospital of Michigan, for evaluation of coagulation complications and global assays in acute oromyelocytic leukemia J $48,610 over two years to Dr. Fred Valeriote, Henry Ford Health System, for development of arctiin/arctinogenin as anticancer drugs for the treatment of pancreatic cancer J $391,250 over two years to Dr. Gazala Khan, Henry Ford Health System, for genomic sequencing to optimize treatment algorithms in pancreatic cancer study J $100,000 to Dr. Bernadette Zwaans, Beaumont Health, for development of urine biomarkers to predict radiation cystitis, expanding on $50,000 grant made by U Can-Cer Vive Foundation in 2017 J $150,000 over two years to Dr. Carl Koschmann, C.S. Mott Children’s Hospital, University of Michigan Health System, for improved targeting and monitoring of pediatric brain tumors J

Total 2019/2020 grants: $780,260

Dean Brody, managing director of Accenture, and Eric Bowden, principal partner at Bloomfield Hills-based Colombo & Colombo, P.C. The brother and sister duo tour hospitals and research facilities and meet with the leaders of local hospitals and oncology departments for guidance on where grants can make the most difference. They invite local cancer researchers to apply for funding and also take grant requests through the U Can-Cer Vive Foundation website. The foundation seeks projects that see minimal funding, such as childhood cancers, and/or are aimed at fighting cancers with the lowest cure rate, such as pancreatic cancer. They’re also looking for research projects that need funding in order to be able to do more research or collect more data to boost the project to a level that it could qualify for a grant from the National Institutes of Health, La-

Fontaine said. “We’re learning as we grow,” said Kelley LaFontaine. “We formalized our committees this past year instead of all (20) of us meeting at large for two hours a night every month. We can get more done and are more focused and divide this up in our specialties and wheelhouses.” Six work committees oversee everything. The events committee plans the foundation’s annual June golf outing, a fashion show with cars at the M1 Concourse in Pontiac and also a sponsorship program that provides teddy bears to children at local hospitals on Valentine’s Day. In addition to raising funds through the planned events, the LaFontaine Group also offers customers at its dealerships and body shops in the Metro Detroit, Lansing and Birch Run areas a donation opportunity to round up to the nearest dollar with purchases and gives employees the option of wearing jeans to work for a donation. Other committees oversee everything from giving to media and promotion to volunteer outreach and management and grant proposals review for presentation to the full core group of those who are continuously engaged with the foundation’s work. Once grants are awarded, recipients are asked to report back at the sixmonth and one-year points on how the grant dollars are being spent and how the research is going, whether as expected or not, and whether more funding is needed. Ryan LaFontaine said the goal is to raise $1 million a year for cancer research in Michigan. By working together and pulling in an increasing number of volunteers, that’s attainable, Kelley LaFontaine said. And she believes the foundation’s volunteer-driven, low-cost model is sustainable. “If it continues to grow, we’ll just get more people to support us,” she said. “When you get together as a team … it’s so empowering what you can do.” Sherri Welch: 313 (446-1694) Twitter: @SherriWelch

C R A I N ’ S D E T R O I T B U S I N E S S // J A N U A R Y 2 8 , 2 0 1 9

Metro Detroit at less risk for job loss from automation By Dustin Walsh

Need to know

dwalsh@crain.com

Despite a large manufacturing sector, jobs in metro Detroit are less at risk for being automated than many other major cities. Jobs in sectors such as office administration, production, transportation and food preparation services are, predictably, the highest risk for automation, but metro Detroit and Michigan fare better in not losing jobs to robotics and software than communities in Ohio, Indiana, Kentucky and elsewhere, according to a recent report by Washington D.C.based Brookings Institute. Why? Michigan was ground zero for the original automation boom in the 1980s and globalization, particularly its car factories, and since the Great Recession, the state and its largest city have worked to diversify, said Mark Muro, senior fellow, policy director of Brookings’ metropolitan policy program unit and lead author of the study. “Michigan and Detroit were really hard hit with middle-skill jobs replacement years ago,” Muro said. “The professional and digital services sector of its economy has been drifting up, so it’s more safe than it was 20 years ago.” But that doesn’t mean a rosy outlook for jobs, Muro points out, as 25.6 percent of jobs in the state are considered a “high risk” for automation, ranking 21st for most at-risk jobs, by 2030, according to the Brookings research. Indiana is most at risk with 29 percent of jobs categorized as highrisk. Most of these are routine, low-

JJStudy: 640,000 jobs in metro Detroit alone at high risk for automation by 2030 JJBrookings study found that men will be more negatively impacted than women JJResearchers urge governments to take action now to lessen impact

skilled jobs. Metro Detroit ranks 57th in the U.S. with the highest automation potential — with only 24.7 percent of jobs facing the high-risk of automation. While that figure is lower than metro Milwaukee (24,6 percent), Grand Rapids (28.3 percent) and the city with the highest-risk for automation, Toledo, Ohio (29.7 percent), that still means more than 640,000 jobs are at high risk of being automated between now and 2030, according to Brookings. “The places that didn’t adjust well to the first round of automation and globalization are now confronted with the next generation of automation and artificial intelligence,” Muro said. Brookings urges legislators to recognize automation as a threat to the workforce. The impacts could exacerbate income and race inequality, Muro said. The Brookings study found that men will be more negatively impacted than women due to automation. Men make up over 70 percent of production occupations, over 80 percent of transportation occupations, and over 90 percent of construction and installation occupations, which are all occupations with a higher likelihood of

being automated. By contrast, women make up more than 70 percent of the labor force categorized by the study as safer occupations from automation, such as health care, personal services and education occupations. But automation also has a more pronounced impact on the Hispanic, Native American and black communities, according to the study. For example, Hispanic workers account for 15.5 percent of the U.S. labor force but represent 32.6 percent of the construction and extraction industries, which face higher-than-average risk for automation. “While the technology is everywhere, the impact will be uneven among the demographics,” Muro said. “If we aren’t careful, we could exacerbate the many divides we already have in this nation.” Brookings urges the federal, state and local governments to adopt policy changes to make the impact of continued automation less onerous on citizens and the economy. Those policies include creating a universal adjustment benefits program to fund worker retraining, creating a subsidized employment program, adjusting the Federal Reserve to focus on full employment rather than managing inflation, increase research and development funding in technology, expand certificate programs, increase employer-led training programs, allow financial aid to cover more forms of education, expand the earned incomes tax credit, among others. Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh THESE BONDS ARE ANTICIPATED TO BE RATED BY MOODY’S.

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Howard & Howard evolves from single ex-farmer to 160-lawyer team By Annalise Frank afrank@crain.com

A decade isn’t long for a 150-yearold business. But for Royal Oak-based law firm Howard & Howard, the past seven to 10 years offered dramatic change: dozens of hires, more than doubled revenue and new national growth. And after surpassing end-of-2018 goals to build a “longer and deeper bench,” the firm must define its next chapter, President and CEO Mark Davis said. Howard & Howard serves businesses and owners in bankruptcy issues, commercial litigation, mergers and acquisitions, and other areas. Its recent success comes after the firm “took a hard look at ourselves when I Mark Davis: was elected,” DaSurpassed end of vis said, and grew 2018 goals. to adapt to clients’ needs. The company recorded approximately $81 million in revenue in 2018, over its goal of $75 million and up from $40 million in 2011. The firm hired 60 lawyers over the past decade and hit a headcount of 160 in 2018, surpassing its target of 150. There are also 130 support staff. It’s a long way from Howard & Howard’s Kalamazoo founding. The firm’s start in 1869 came after the Kalamazoo community pitched in to help pay for Bill Howard, the son of a farming family, to attend school to become a lawyer. Howard’s agricultural days ended after he fell off a piece of machinery and severed his arm. Howard started as a sole practitioner in an office above a blacksmith shop, serving predominantly the business community. His son Harry joined in 1896 and the practice developed from there.

Battles for the courtroom Howard & Howard is no longer a family affair — Richard Howard, who joined the firm around 1969, was the last of the clan and retired in the mid1990s. The business is currently owned by 103 partners. Davis estimates the family started taking on owning partners around the mid1970s. Still, leadership has sought to maintain the charitable and collaborative nature the Kalamazoo community founding represented, Davis said. “It’s a strong part of our DNA,” he said. “There are four words I use to describe our culture: collegial, transparent ... entrepreneurial and meritocracy. “It’s hard enough to do battle, and sometimes the practice of law is a bit of a battle with the other side, (that) we do not want to do battle in our own hallways.” Davis, 56, joined Howard & Howard in 1991, focusing on mergers and ac-

Need to know

JJFirm founded 150 years ago in Kalamazoo; now has national reach JJRoyal Oak-based law firm has more than doubled revenue in seven years JJLeadership works to maintain charitable and collaborative nature

quisitions, and was elected as president and CEO in 2004. “We have changed dramatically over the last 10 years” in size and footprint, the longtime leader said. Around 2010-11, leadership “set some target growth goals, not just to be bigger, but to be able to serve our clients better ... The business environment has become more and more complex so you have to have that expertise to be able to serve the clients.” So Howard & Howard narrowed in on its core business services, ending less essential practices such as personal injury law. Hiring and training bolstered niche skills in taxes, environmental, securities, benefits and other areas businesses need expertise. More than 30 percent of Howard & Howard’s attorneys worked in business before going to law school, according to its website. The firm also looks for individuals who have succeeded in other pursuits, such as college athletes, former military members and musicians, Davis said.

Expansion westward Another way Howard & Howard needed to grow to keep up with clients was expanding nationally. The firm had eight lawyers and $1 million in revenue in Kalamazoo in 1980, according to previous Crain’s reporting. Its first metro Detroit office, in Bloomfield Hills, opened in 1988. It now has offices in Ann Arbor; Peoria, Ill.; Las Vegas; Chicago; and Los Angeles. Howard & Howard spun off its Kalamazoo office to the partners there in 2010, as businesses’ presence there seemed to wane, Davis said. The Royal Oak headquarters came in 2009 as Bloomfield Hills and downtown Detroit offices were consolidated. The Chicago office opened through a merger with 22-attorney Defrees & Fiske LLC in 2009. Discussions are underway on potential merger partners in Los Angeles. Howard & Howard’s disparate offices meet quarterly at the Detroit Marriott Troy for practice group meetings, as well as talks about skills and marketing successes. “Then the best part is we have dinner and a glass of wine,” Davis said. “Maybe somebody has a client who has an issue and someone else had a similar experience. It just keeps us connected as people.” The next such meeting is at the end of February, and the first item on the agenda is discussing where the firm should be in — say — 2025. “We just hit our goal, so we're going to have to reassess,” he said. Annalise Frank: (313) 446-0416 Twitter: @annalise_frank

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have to approach security quite differently. We're on a 33-acre campus, we have seven buildings, about 800,000 square feet of floor space, 1,300 employees, 500 volunteers, 800 students a year, 100,000 outpatient visits a year, so we prepare for the most incredible of circumstances. We have an active shooter policy. We're in the process of ordering and equipping every staff with a personal alarm system containing GPS technology. We're going in-house with our security because we believe our security personnel can be part of the patient care team. Patient safety is not only about the clinical aspect of it, it's the physical safety for our patients, for our families and visitors. Burns: What else should we know about the symposium? Marra: We can learn from reading and research but the best opportunities are through networking. We are very proud of the work we do and we're impressed with the work that happens here in Michigan. The symposium is an opportunity to learn and create relationships that can be long standing between both sides of the border.

Burns: The symposium is bringing together people from Canada and the United States. How important do you think that conversation is? Blanchette: This is one of the most critical things I think we can have. Detroit and Windsor are at such a unique crossroad where we can actually lead both countries in sharing of best practices. The other big piece that I'd like to see come out of this is innovation. How we can push our healthcare system to make it more efficient? Prevention is the biggest key that's going to help, not only the patient, but even our economy. Burns: Are you integrating the social determinants of health in the educational process? Blanchette: We’ve implemented a program working with the Windsor Downtown Mission and the Windsor Essex County Health Unit providing not only care, but educational pieces. It's been fantastic. One that I'm proud of is a fitness and health program for the homeless and those at the Downtown Mission. Burns: If someone's interested in attending, what's the best way to find out more about St. Clair College? Blanchette: Go to the website at stclaircollege.ca

that the physician putting in the central line does it the same every single time. There is a greater emphasis on safety, on prevention of injury, and prevention of complications to the modern trainee. A lot of them have a simulation background so instead of doing a first procedure on a patient, they've rehearsed it on a mannequin many, many times. I'm looking forward to learning some of the tricks of the trade as is practiced across Canada. We have collaborated clinically for many years with folks in Windsor, but I think on the educational front there's a lot to be learned. Burns: What things are happening at Children's Hospital of Michigan? Valentini: From an innovation standpoint, one of our leaders in neonatology, Dr. Girija Natarajan, is starting a neonatal neuro NICU. We have specially wired rooms so that we can do continuous EEG monitoring. We've started increased focus on infection prevention. We continue to try to drive safety and innovation. And on a lighter note, patients and visitors now have free parking. For more information or to register for the symposium, visit ipssdetroitwindsor.com.

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OPINION COMMENTARY

LETTERS

The tale of a $20 million appropriations whodunit

Putting together a keystone

he $20 million for water and sewer lines in rural Salem Township that the Michigan Legislature quietly tucked into two budget bills over the past two years had all the markings of a political whodunit. On its last day in session last month, in the literal dark of night, the Legislature set aside a second chunk of $10 million for underground infrastructure needed to build homes and commercial buildings on a 1,400-acre tract of largely undeveloped farmland between Detroit and Ann Arbor. Roughly half of the land is owned by Schostak Bros. & Co. Inc. — the family-owned Livonia real estate development company of Bobby Schostak, the former chairman of the Michigan Republican Party. Schostak is a heavy hitter in Lansing — a GOP mega-donor whose leadership of the state party from 2011-2015 is largely credited with helping former Gov. Rick Snyder win re-election and keep Republicans in total control of Lansing for the past eight years. And when Bridge Magazine first shined some light on the $10 million appropriation, not a single Republican leader raised a hand to take credit for getting it added to the Legislature’s $113 million spending spree on various pet projects four days before Christmas. The former chairs of the Legislature’s appropriations committees even claimed they didn’t know. Snyder, now out of office, declined to say who sought the money. Finally, former Senate Majority Leader Arlan Meekhof is stepping forward to take partial credit for helping secure what he called “a straight appropriation to try to spur the economic development” in Salem Township that’s “proper to help grow Michigan.” “This is what government does — infrastructure,” Meekhof said in an interview. But the backstory of these unusual direct grants reveals a classic tale of metro Detroit’s patchwork development policies, regional divisions that defy common sense and how term-limited legislators can greenlight spending of millions of dollars in taxpayer money in the name of economic development — without anyone knowing who did it. The origins of this story are in the early 1990s when Salem Township’s board approved a master plan for an “urban services district” that contained any future development to 1,400 acres on the north and south sides of the Gotfredson Road exit off M-14, just west of the Washtenaw-Wayne county border. In April 2001, auto supplier Johnson Controls Inc. bought 365 acres on the south side of the highway with the intention of building a new headquarters and research and technology center. In late 2003, Schostak Bros. bought 200 acres of farmland on the north side of the highway, speculating that a major JCI campus would spur demand for new homes and commercial buildings. Six months later, in the first quarter of 2004, JCI canceled the project and decided to stay put in neighboring Plymouth Township — thanks, in part,

said. “Our emphasis has always been, they have to figure out how to finance this thing,” Whittaker told Crain’s. “I don’t know anybody in Lansing.”

Going to the Capitol CHAD LIVENGOOD clivengood@crain.com

to a tax break. By the time the Great Recession hit, Schostak Bros. had shelved all of its plans for the area, company CEO David Schostak told Crain’s. In December 2013, JCI sold the 365acre tract to Schostak Bros., which later bought 140 more acres on the north side of the highway from Magna International founder Frank Stronach. This gave Schostak Bros. ownership of 700 acres of largely untouched exurban land on three corners of a highway exit between Detroit and Ann Arbor. But there was a problem — there are no public water or sewer lines leading to this land. In 2016, Schostak Bros. began making plans to build a 554-home subdivision on the 365-acre tract bounded by Gotfredson to the west, Joy Road to the south and Napier Road to the east. Napier Road is the county border and there’s a subdivision of upscale homes across the road from the Schostak land, which is being developed with residential housing developer Steven Fisher through a joint venture called Schostak-Fisher Group. Salem Township, however, refused to make the same mistake other municipalities made in the 1990s housing boom when they issued bonds to fund water and sewer systems, township Supervisor Gary Whittaker said. Schostak Bros. could have built onsite drinking water and sewage plants — like JCI planned to do — but Salem Township officials wanted the developer to tie into existing municipal utility systems. Connecting to a drinking water system was easy — there’s a pipeline across the street. Sewer service was “more complicated,” Schostak said. The Western Townships Utilities Authority, which serves Northville, Canton and Plymouth townships, turned away Salem Township from joining their authority, which services the Plymouth Township subdivision across Napier Road. “Politely, they don't want us to (join),” David Schostak said. “That wasn’t viable.” The western Wayne County communities didn’t have the capacity for a new large-scale development, said Plymouth Township Supervisor Kurt Heise, a member of the authority’s board. Instead of connecting to a sewer system across the road, Salem Township needs to lay a nine-mile sewer line south down Gotfredson Road — through Superior Township — to the Ypsilanti Community Utilities Authority sewage plant in Ypsilanti. The water and sewer connections are estimated at $30 million, Whittaker

Bobby Schostak knows people in Lansing. Although he’s chairman and a partner in Schostak Brothers, Bobby Schostak has been largely out of the day-to-day operations of the family business for years while he ran the Michigan Republican Party, started a Lansing political consulting firm and got into business with Compuware founder Peter Karmanos Jr. at Karmanos’ Mad Dog Technology LLC. David Schostak said he asked his brother if they could get a grant from the Michigan Economic Development Corp. to pay for the water and sewer connections to their development. “He said, ‘If you want to do something like that, you need to engage a consultant who works through the inner workings of Lansing and let them work on it — it’s a long process, assuming you can get it,’” David Schostak said. On Bobby Schostak’s advice, the company hired the Lansing lobbying firm Kandler Reed Khoury & Muchmore to lobby for a direct appropriation for Salem Township. David Schostak said they gave the lobbyists this pitch to lawmakers: “There’s over a billion dollars of economic development here.” Schostak said they wanted lawmakers to know if they would help underwrite the water and sewer, it would “spur the private sector to be able to afford to put in the balance of it.” “Initially, they asked, I think, for about $25 million — I don’t remember, quite frankly, but a much bigger number,” David Schostak said. Salem Township itself never asked the Legislature for money for water and sewer pipelines, Whittaker said. In mid-2017, KRKM secured the first $10 million during the normal appropriations process. The money came out of the MEDC’s budget. “(Lawmakers) said that’s all we’ve got right now, we love your project, maybe we can have some money in the next year’s budget,” Schostak said. “And we said, ‘Thank you very much, that goes a long way.’” Salem Township got the first $10 million last year and hired the engineering firm Stantec to begin designing the sewer and water mains, Schostak said. Schostak argues the water and sewer lines will benefit other property owners within the designated “urban services” district straddling the two-lane Gotfredson Road. “This perception that it’s subsidizing a specific deal of Schostak’s, quite frankly is just not correct,” David Schostak said. “It’s a misnomer.” Schostak Bros. will still have to invest up to $35 million of its own money in the construction of sewer, stormwater drainage, water service lines and streets within the new housing subdivision, Fisher said.

“It’s all our nickel,” Fisher said. But a developer’s costs are inherent when they’re converting a corn field into a constellation of half-million-dollar homes. And there are probably some of Schostak’s competitors out there wondering, “Where’s my $20 million?” These appropriations are unusual and set a new precedent for developers that if they can’t get local municipalities to bond for utilities, they just have to persuade the right people in power in Lansing to cut a check from the state. And a special appropriation for a single real estate development project in the exurbs of Washtenaw County runs counter to the general moratorium Snyder and the Legislature declared on picking winners and losers in economic development. Snyder repeated this position dozens of times during his eight years as governor. But maybe the moratorium has been lifted. Getting answers to the political motivations behind the $20 million in grants for Salem Township is difficult because all of the leaders who could have plausibly had a hand in this decision are no longer in office. Thanks, term limits. Now-former state Rep. Laura Cox and former Sen. Dave Hildenbrand, the chairs of the House and Senate appropriations last term, both told Bridge Magazine they didn’t know who sought the grant on Schostak’s behalf. That seemed incredible to anyone who understands the process. Since leaving office at the end of December, Hildenbrand has moved straight into the lobbying corps, joining the firm Kelley Cawthorne to specialize in lobbying the same appropriations committee he chaired last month. Cox, the wife of former Attorney General Mike Cox, is running for chair of the Michigan Republican Party, a position that requires a speed-dial relationship with an important donor like Bobby Schostak. Hildenbrand and Cox did not return multiple phone messages seeking comment. The other three people who should know how that $10 million got into the budget also are no longer in office: Snyder, former House Speaker Tom Leonard and former Senate Majority Leader Arlan Meekhof. Leonard could not be reached for comment. Snyder declined to comment on the appropriations bill he signed on his last Friday in office. “I am refraining from commenting on anything political,” Snyder wrote in a LinkedIn message to Crain’s. “Happy to talk Michigan basketball, the weather or other exciting activities.” Meekhof, who recently launched a Grand Haven-based government consulting firm, ARM Consulting Services LLC, said taxpayers will see “a good return on investment” from the water and sewer lines. “It’s not that it’s Schostak’s,” Meekhof said. “I always like to pick winners — and I believe we did.” Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

To the Editor: I appreciated very much the tribute by Sherri Welch to Al Glancy. I worked at Detroit Renaissance from 1994-1996, during which time he chaired the board of directors. As executive director of downtown and community development, my job focused mainly on three things — creating a downtown organization, which became the Downtown Detroit Partnership, organizing a charrette on Woodward Avenue’s future and acquiring the Hudson’s building and a number of surrounding buildings. Along with Bob Larson (Eric Larson’s father) and Jim Tervo, (Mayor Dennis Archer’s top aide at the time) we worked with Glancy to assemble a $2 million war chest to acquire the 16 acres containing the Hudson’s building. Others involved were John Lobbia, Detroit Edison; Bob Eaton, Chrysler; Gene Miller, Comerica; Verne Istock, NBD Bank; Jack Smith, GM; and Wayne Doran, Ford. We used one attorney, Beth Baergen, from Honigman Miller Schwartz and Cohn, and one broker, Tom Vigliotti. Over an 18-month period, we secured options or agreements on 80 percent of the properties in the site, and the Hudson’s building was the last to be secured. I clearly remember Bob Eaton at the meeting telling the group that he was ashamed with the current state of downtown Detroit, and he said, with regard to Chrysler’s participation, “We’re in for a quarter million; and if it takes a million, count us in.” Had we not done this with Glancy’s and Larson’s leadership, there would likely have been no Compuware, no Quicken Loans, and nothing like the current revitalization of downtown Detroit. Few people know this story, because it was kept quiet at the time. But it is a great tribute to Glancy, Larson, Eaton and others who stepped up at a crucial time and risked $250,000 each to make this happen. I was an eyewitness, because I managed the project. My only regret is that many of the corporate leaders who stepped up at that meeting have now passed away, but they would all be proud to see how downtown Detroit has become an international success story. Sincerely, David M. Feehan President and CEO Civitas Consultants LLC

SEND YOUR LETTERS J Crain’s Detroit Business will consider for publication all signed letters to the editor that do not defame individuals or organizations. Letters may be edited for length and clarity. Email: mlee@crain.com

C R A I N ’ S D E T R O I T B U S I N E S S // J A N U A R Y 2 8 , 2 0 1 9

Huron Capital hires former Herman Miller CEO By Kurt Nagl knagl@crain.com

Huron Capital Partners LLC has hired the former CEO of furniture company Herman Miller and a human resources pro as it aims to grow its investments. The Detroit-based private equity firm has taken on Brian Walker and Sherry Mennenga as partners with plans to add one more new partner by the end of the month, according to a Wednesday news release from the company. It also added three transaction associates to its staff. “These are new positions. We have become large enough that it makes sense for us to internalize managers who aren't M&A pros but are seasoned executives and top leaders at corporations, so they apply that experience to companies we make investments in,” said Mike Beauregard, senior partner at Huron Capital Partners. “This allows our M&A pros to be focused entirely on doing transactions.”

Brian Walker: Former CEO of Herman Miller.

Sherry Mennenga: Background in human resources.

ga is tasked with providing leadership for activities related to human resources, organizational development and change management initiatives across

Huron Capital Partners’ companies. She most recently formed OE Consulting Associates LLC, a Nashville-based management consulting practice specializing in human resources. From 2008 to 2012, she was senior vice president of human resources for medical equipment manufacturer Smith & Nephew plc. Huron Capital has 49 platform companies in its portfolio, including Ross Medical Education Center, Michigan Orthopedic Services and 1-800-Hansons. It has invested in more than 150 companies and raised more than $1.8 billion in capital, according to its website.

“We have become large enough that it makes sense for us to internalize managers who aren’t M&A pros but are seasoned executives and top leaders...” Mike Beauregard

years ago. It made 17 transactions, including three investments and 14 acquisitions. Already in 2019, Huron Capital is expecting to close five deals by the end of the month. Its goal is to add four platform companies and 10 “add-ons” per year. An “add-on” is an acquisition made by a company already in the firm’s portfolio, while a platform company represents a first-time acquisition in a specific industry. The firm makes investments across the U.S. and into Canada, with some local companies also under its thumb.

Beauregard said 2018 was one of the firm’s best years since it formed 20

Kurt Nagl: (313) 446-0337 Twitter: @kurt_nagl

Need to know

JJBrian Walker joins as partner, strategic leadership JJSherry Mennenga added as partner, human capital JJDetroit-based private equity firm has raised more than $1.8 billion in capital

Walker and Mennenga start at the firm this week. Walker, whose title is partner, strategic leadership, was president and CEO of Zeeland-based Herman Miller from 2004 until 2018, when he retired from the company after 29 years, according to a Herman Miller news release. Walker also is a director of Milwaukee-based Briggs & Stratton Corp. and Ohio-based Cooper Tire & Rubber Co. He earned a bachelor’s degree in business administration from Michigan State University. Walker’s new job puts him at the helm of the Huron Capital Partners’ operating and finance performance. He will work alongside several of the its portfolio companies to provide oversight and strategic direction. As partner, human capital, Mennen-

Crain’s seeks Notable Women in HR As part of an ongoing series of special reports, Crain’s Detroit Business is looking to honor Notable Women in Human Resources, and we need your help. Those selected will be featured in a special section in Crain’s on March 18. Nominations can be submitted at crainsdetroit.com/nominate, and click on Notable Women In HR. There is a $65 processing fee. Nominations are due by Feb. 4. For questions about the program, contact Keenan Covington at kcovington@crain.com.

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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 A N U A R Y 2 8 , 2 0 1 9

FOCUS HEALTH CARE

THE PAINFUL WAIT Patients in psychiatric crisis wait longer — and longer — in ERs

Margarita Pena, M.D., (right) examines the gait of a patient in the emergency room at Ascension St. John Hospital in Detroit. BRANDY BAKER FOR CRAIN’S

By Jay Greene jgreene@crain.com

Throughout emergency rooms in Southeast Michigan, there are patients in the midst of a psychological crisis — and they’re waiting, sometimes for days. And health care organizations report that the amount of time it takes for people to go from diagnosis to being admitted to a hospital psych ward is growing, partly because of shortage of available beds and partly because of growing demand in a state where suicide rates and substance abuse are rising. Solutions exist, but they will have to overcome obstacles that have minimized people with those problems, placing them at a lower priority for funding and treatment than those with similar physical conditions such as diabetes, heart disease or cancer. And the problem goes beyond treating the patients themselves. While waiting in the emergency room, patients may become disruptive, interfering with care for other patients. They sometimes become combative and pose a safety risk for themselves, staff or

Need to know

 As dozens of patients wait in busy hospital ERs for psychiatric evaluations and inpatient bed placements, mental health experts search for solutions  Causes include lack of psychiatric beds for seriously ill patients, lack of behavioral health urgent care centers for intermediate problems and overall underfunding of the mental health system  Solutions include payment reforms, expansion of crisis centers and online psychiatric hospital bed registry

In this package  Patients in crisis wait longer — and longer — in emergency rooms. This Page  State work groups study fixes for “emergency room boarding” of psychiatric patients. Page 11  Beaumont’s planned psychiatric hospital aims to meet critical need. Page 12  Two programs — one in Wayne County, the other in Oakland County — aim to ease ER psychiatric burden. Page 12

other patients. Finally, hours later — studies show 21 hours or more on average in Wayne County for difficult patients — an inpatient psychiatric bed is found that fits their diagnosis. The long waits are sometimes referred to in the industry as “ER boarding,” housing patients for long periods while they wait for an available psychiatric bed. Lack of a timely admission and even just waiting for a diagnosis also leads to poorer outcomes for behavioral health patients and other patients in the typical ER, Sanford Vieder, D.O., chair of emergency medicine at Beaumont Health, and other experts tell Crain’s. Vieder said that last fall, Beaumont Hospital in Farmington Hills had 16 patients in its ER who waited more than 48 hours each because the hospital had no available psychiatric beds or could not find other hospitals willing to take them. Beaumont has a 25-bed behavioral unit in Farmington Hills and 30 beds in the psych unit at the flagship Royal Oak hospital. They are almost always full. The system operates 87 psychiatric beds and is building a new 75-

bed psychiatric hospital in Dearborn. (See story, Page 12.) And demand is rising. In 2018, Beaumont’s eight hospital ERs saw 18,000 patients with a mental health diagnosis, up 13 percent from 16,000 in 2017. “The greater the numbers, the greater the stresses on the system,” Vieder said. “The unfortunate piece is the ER is a safe place for patients who are having an acute issue, but not the best place for (those with behavioral problems). They may be acting out and violent. We try to separate them out from other patients and make sure they are safe and get them definitive treatment for their specific issues as fast as we can. It is complex because sometimes they have other medical problems.” Ascension St. John’s Hospital in Detroit also is seeing rising numbers of incoming psychiatric patients. St. John’s emergency department averaged 17 psychiatric consultations per day in 2018, a 21 percent increase from 14 in 2015. St. John handled 6,205 behavioral health consultations in 2018. “We are still significantly challenged

with that problem of way too many psychiatric patients in our ERs for extended lengths of time,” said Stephanie Brady, vice president of care transition with Ascension Health Michigan. And despite adding staff, Brady said the time it took to admit a patient at a St. John facility — after they were medically clear and approved by insurance — increased by 12 percent to 12.8 hours in 2018 from 11.4 hours in 2015. However, when a St. John bed is unavailable or inappropriate for a particular patient — for example, if they are an adolescent, or aggressive — the time it took to transfer them to another inpatient unit grew by 36 percent to 24.1 hours in 2018 from 17.7 hours in 2015, she said. For patients with less urgent problems, discharge time to community behavioral health programs also increased 32 percent to 9.9 hours in 2018 from 7.5 in 2015, primarily reflecting slowness within the ER because of high patient volume but also lack of services in the community, Brady said. Nationally, a study of more than 6,000 ERs found 70 percent reported SEE WAIT, PAGE 12

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SPECIAL REPORT: HEALTH CARE

Groups study fixes for ‘ER boarding’ of psych patients By Jay Greene jgreene@crain.com

Multiple work groups in Michigan are looking for solutions to tackle the difficult problem of too many psychiatric patients waiting in hospital emergency rooms for too few open beds. Like most health care delivery and financing issues, the problem is multifaceted, involving inpatient and outpatient care, staffing, and — of course — money. It’s a financial problem because mental health receives less funding than physical health care conditions like heart disease, stroke and cancer. It is also a health care delivery problem because since the state closed 30 psychiatric hospitals more than two decades ago, the number of staffed public and private psychiatric beds has not kept up with demand, experts say. But it also is a process problem, involving hospital ERs evaluating patients quickly enough for psychiatric problems along with medical conditions, funders like insurance companies and mental health agencies taking different approaches in approving treatment plans and then actually finding an available bed for the condition. Experts say the problem is worsening in Michigan when it comes to what is called hospital ER psychiatric boarding, which is defined by the Joint Commission as holding a patient in the ER longer than four hours after conducting a medical evaluation that has determined the patient should be admitted. To address the problem, in July 2017, Lynda Zeller, former deputy director of behavioral health services in the Michigan Department of Health and Human Services, started the Michigan Inpatient Psychiatric Admissions Discussion. “(Lynda) heard from multiple people in the health care system about their growing concern about the availability of inpatient psychiatric beds, and the problem of boarding,” said Phil Kurdunowicz, a policy and strategic initiatives specialist with the MDHHS. “They are struggling to find beds and solutions.” MDHHS initially called for three work groups to study delivery-related issues: medical clearance, or evaluation of medical and psychiatric conditions; certificate of need to assess whether there are enough psychiatric beds; and an online bed registry system to modernize the process of finding open beds by using information technology and the internet. However, after some discussion, the CON issue was transferred to the Michigan Certificate-Of-Need Commission Workgroup. The CON work group has eight areas it is exploring, three of which have the potential to expand psychiatric bed availability. A health provider must demonstrate there is a need for new hospital beds, including psychiatric beds, that isn’t being met by getting a certificate of need approved. Kurdunowicz said he expects an advisory group will be convened to help design a bed registry, but nothing will be completed before May. He said the state is looking at how to use the existing state information technology system. MIPAD’s medical clearance committee also is making progress in

Need to know

State health agency forms workgroups to recommend solutions to the ongoing problem of ER logjams for psychiatric patients J

J Potential solutions include standardizing medical clearance, creating online bed registry J Experts are hopeful new policies will be adopted this year that can ease problem

Jennifer Peltzer-Jones: Doing fewer labs.

Dom Pallone: Would support increasing beds.

“We need to get all stakeholders together and agree on what standards should there be before entering a unit. It is really about agreement on medical condition thresholds.” George Mellos, M.D

coming up with a voluntary common standard, Kurdunowicz said. The department formed a work group with the Michigan Health and Hospital Association to develop a draft standard protocol for medical clearance that is on the department’s website. George Mellos, M.D., MDHHS’ director of behavioral health, said the department hopes to finalize its medical clearance policy by May. He said it is challenging because requirements for medical clearance vary by hospital. Doctors also must be careful when psychiatric patients have other medical issues that need to be addressed before transferring patients for mental health care. For example, “ERs get upset with psychiatric units because they say we can’t (admit a patient) because don’t have thyroid level (test) on a patient,” said Mellos. “We need to get all stakeholders together and agree on what standards should there be before entering a unit. It is really about agreement on medical condition thresholds.” Jennifer Peltzer-Jones, R.N., a senior ER staff psychologist with Henry Ford Health System, said part of the problem in a hospital is that some health insurers require medical clearance of patients, along with specific labs and other tests, before they’ll pay for a psychiatric evaluation. She said one of the biggest factors in how Henry Ford cut insurance approval time was coming to agreement with some payers on medical clearance requirements. “We are doing a lot fewer labs on patients. That is evidenced-based and a lot less traumatic for patients. (They were being) stabbed (with blood testing needles) without being medically necessary,” Peltzer-Jones said.

Changing outdated CON bed laws Another complex issue that has become something of a debate is whether there are enough private and public psychiatric beds in Michigan. The last inventory showed about 1,424 licensed private adult and adolescent psychiatric beds and an estimated 800 public psychiatric beds. But mental health professionals say many of those beds are either occupied or otherwise unavailable, sometimes for hours, days or weeks. The CON Commission’s Psychiatric Beds and Services Workgroup is working on a plan to evaluate psychiatric bed needs in the state and is developing policy recommendations to address hospital ER psychiatric boarding, said Beth Nagel, MDHHS’ division director in the office of planning. On the public side, Michigan now operates five public psychiatric hospitals with about 800 beds, including three hospitals for adults, one for children and adolescents and one for people with developmental disabilities. They are in Caro, Kalamazoo, Northville, Ann Arbor and Westland. Of the 2,148 private adult psychiatric licensed beds and 276 licensed adolescent psychiatric beds in the state, only 69 percent are occupied on average, according to the CON Commission, indicating bed availability. However, those occupancy figures are misleading because many beds are not in use because lack of staffing, experts said. In 2015, the CON Commission decided more psychiatric beds were needed, especially for adult or child patients with developmental disabilities, health needs that are both physical and psychiatric and serious emergency cases. It offered providers 370 special pool beds in those categories, but only 180 licensed beds were taken by providers, according to the Jan. 10 CON Workgroup report. Nagel said one of the goals of the CON work group is to decode whether the special pool for psychiatric beds needs to be updated. “We need a new methodology to show data from occupancy rates from each unit to show if there is additional needs in the community,” said Nagel. For example, if one hospital shows it is running its psychiatric unit at 50 percent occupancy and the region shows a need of 20 beds, the data might need to be corrected to show needs of 30 more beds. Nagel said the goal is to reach agreement for new rules in March and present to the CON Commission in June for a public hearing. Carol Zuniga, executive director with Livonia-based Hegira Health, said she believes the CON methodology for psychiatric beds is outdated and needs an overhaul to free up more beds. “If the CON process determines there is a need for more psychiatric beds, we should have them,” Zuniga said. “The current data shows there are enough (licensed) beds based on the population, but that gives a false sense of security. (If a hospital) has 20 psychiatric beds, but only staffs for 10, it doesn’t help. And if a hospital down the street wants beds and can’t get them, something needs to be changed.” Bret Jackson, president of the Economic Alliance of Michigan, said it is a good idea to take away unused psychi-

atric beds from providers that don’t use them. “We are supportive of adding more psychiatric beds in a market even if it shows to have excess capacity,” he said. “If providers are willing to expand capabilities to treat patients when clearly there is a need, we should support that.” Dom Pallone, executive director of

the Michigan Association of Health Plans, said he would support increasing the number of psychiatric beds if the state CON work group determined more beds were necessary to create more access points. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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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 A N U A R Y 2 8 , 2 0 1 9

SPECIAL REPORT: HEALTH CARE

New Beaumont psych hospital designed to meet critical need By Jay Greene jgreene@crain.com

Beaumont Health’s plans to build a 75-bed private psychiatric hospital is welcome news to mental health industry professionals in Southeast Michigan who are constantly searching for inpatient beds for a variety of patients in crisis. Last fall, Beaumont CEO John Fox announced that the eight-hospital nonprofit system would partner in a joint venture with for-profit Universal Health Services out of King of Prussia, Pa., to build a $45 million, 100,000-square-foot psychiatric hospital and outpatient center in Dearborn. It will be across from Beaumont Hospital Dearborn on 8 acres of vacant land on Oakwood Boulevard, near the Southfield Freeway. Universal, which owns 200 mental health facilities nationally, operates four psychiatric facilities in Michigan: Havenwyck Hospital in Auburn Hills; Skywood Recovery in Augusta; Cedar Creek Hospital in St. Johns; and Forest View Hospital in Grand Rapids. Mental health experts welcomed the addition of psychiatric beds to a market that regularly experiences shortages amid rising suicide rates and overdose deaths from substance abuse. Nationally, one in five Americans, or 43.8 million adults, has a diagnosable mental health condition. Between 1999 and 2016, suicide rates in Michigan increased 33 percent, and suicide

Need to know

JJBeaumont's new 75-bed psychiatric hospital will open in 2021 in Dearborn JJWill be minority owner with for-profit Universal Health Services JJExpected to treat patients with more severe psychiatric disorders than Beaumont’s four current hospital units

Sanford Vieder: New hospital to free up space.

John Fox: Decided 87 beds weren’t enough

continues to be one of the leading causes of death in the state, according to the Centers for Disease Control and Prevention. But several mental health professionals interviewed by Crain’s wanted to want to know if Beaumont will accept Medicaid patients, the uninsured and those developmentally disabled or considered high-risk because of aggressive behavior. Those patients are the most difficult to admit. Fox said Beaumont would accept a wide range of patients, including Medicaid and the uninsured, but that ad-

mission decisions would be up to doctors. “We have got commitments that admissions are not going to be driven by financial screening,” he said. “There will be a clinical criteria for admissions, and we believe it will be effective in addressing our needs to place patients, who are waiting in different parts of the system.” Sanford Vieder, D.O., chair of Beaumont Health’s emergency medicine department, said the new hospital will free up space and give flexibility in Beaumont’s four psychiatric units that run near capacity. “The new hospital will be there to serve the higher-acuity patients, and there will be a robust outpatient area as well,” he said. Fox said the joint venture came about after Beaumont decided its 87 behavioral health beds weren’t enough for current market needs. “It was a long process with a lot of vetting and site visits before we made the decision that partnering with them would be the most effective way to go forward,” he said. “We have a need and want to move as fast as we can.” Under the agreement, Universal will own 70 percent of the hospital and oversee day-to-day operations. A groundbreaking is planned for later this year, and the facility is set to open in 2021. While the hospital will initially be staffed for 75 beds, Fox said Beaumont has plans to increase that to 150 over time because of growing needs.

2 programs aim to ease ER burden By Jay Greene jgreene@crain.com

There are many small, but successful, efforts going on in Michigan to reduce psychiatric bed wait times for patients both inside hospitals and within the community mental health. Two examples are operated by Hegira Health in Wayne County and Common Ground in Oakland County. Hegira operates an outpatient crisis center and program for Medicaid patients called Community Outreach for Psychiatric Emergencies, or COPE, which evaluates, takes care of and screens more than 550 Medicaid patients each month for inpatient admission, Executive Director Carol Zuniga said. The program is funded by the Detroit Wayne Mental Health Authority. “People who are in a psychiatric crisis are using ERs because there is no substantial place for them to go,” Zuniga said. “ERs are not equipped to handle these problems. We try to provide alternatives.” Common Ground operates a mobile crisis unit that responds to hospital calls and a mental health crisis center in Pontiac that has drastically reduced backlogs in hospital ERs and improved health outcomes for mental health patients, CEO Heather Rae said. The program is funded by the Oakland Community Health Network. “What we are doing is providing ER psychiatric services outside of the ER,” said Rae. “Many community mental health providers are interested in developing crisis services.”

Need to know

JJEfforts going on in Michigan to reduce psychiatric bed wait times JJHegira operates an outpatient crisis center and program JJCommon Ground operates a mobile crisis unit

Once Common Ground gets a hospital call, it sends out an ER department mobile crisis team to evaluate patients covered by Medicaid and the uninsured. “That Carol Zuniga: speeds up the Hegira tries to offer alternatives. process” to admit a patient, said Rae, adding that the team usually can be at the hospital within an hour. “Not all hospitals want mobile teams involved because of liability issues.” Each month Common Ground averages about 170 people served from ERs with the mobile team. Overall, Common Ground responds to about 600 calls per month. “The number has continued to go up” from hospital ERs, she said. Common Ground also operates a 24-7 Resource & Crisis Center in Pontiac, where Rae said the number of walkins is up to about 3,000 per year out of a total of 6,500 people treated annually, excluding police drop-offs. Regardless

of insurance or permanent residence, people are assessed, stabilized, treated or referred for appropriate follow-up care. “This has increased every year at our crisis center since we opened in 2014,” Rae said. “They are coming to us instead of going to the ER.” Rae said she believes the crisis center and the mobile unit have improved outcomes and access to psychiatrists. “It is much better being seen sooner than being strapped to a gurney and waiting in an ER,” she said. Hegira’s COPE program, which began in 2015 and now employs 150 specialists, takes two to 24 hours or more to find a bed for a patient after they are called by the hospital ER, Zuniga said. “Eighty-five percent of the time we are there within two hours (down from five hours when the program first began),” she said. Hegira’s psychiatric evaluation of patients takes an average of 1.6 hours. “We get requests to review 1,000 to 1,300 people per month, all from ERs. We went from 2017 averaging about 19.5 hours per placement to 14.7 hours per placement last year,” she said, adding that one reason was fewer calls from hospitals. Another reason was operational improvements. Rae and Zuniga said they would like to expand their programs because they are so successful, save the system money and improve patient outcomes. “That is part of the challenge. You build it and they will come, but you have to build it first,” Rae said.

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boarding psychiatric patients for hours or days, with 10 percent of patients boarded for several weeks, said the National Association of State Mental Health Program Directors. Another study found that 61 percent of hospitals did not have psychiatric staff caring for the ER patients while they waited, said the American College of Emergency Physicians. While the studies were conducted several years ago, Michigan experts told Crain’s they believe the situation has worsened. In the 1980s and 1990s, Michigan closed more than 30 psychiatric hospitals as part of a national trend that started in the 1960s to de-institutionalize mental health, use more modern anti-psychotic drugs and move more care to outpatient settings. The problem: Many states, including Michigan, failed to expand outpatient care to keep up with demand. Then, to make matters worse, they underfunded public community mental health services. As a result, hospital ERs, jails and prisons became overburdened with people with severe psychiatric, substance abuse and other conditions. “It is important to keep in mind that this is more than a place issue (hospital ERs) but is a systemic issue that warrants implementing new models of integrated (physical and mental health) care,” said Jim Haveman, president of the Haveman Group and director of the state Department of Community Health from 1996-2003 and from 2012-2014. At Henry Ford Hospital, Jennifer Peltzer-Jones, R.N., a senior ER staff psychologist, said a more than doubling of psychiatric patients to 3,000 annually the past few years — half of whom require admission — necessitated hiring more trained mental health staff to serve the busy ER on a 24-7 basis. “Lots of things are happening. The patient walks in the door, then waits to see a nurse, see a doctor, see specialists. We talk with family. Then the decision is made that a patient needs to go into the hospital. We get whatever insurance involved and we find a bed,” she said. “If I am taking 12 hours to get insurance involved, that is on me.” From 2015 to 2017, Henry Ford cut median psychiatric evaluation time from 12 hours to about three hours, Peltzer-Jones said. It then takes five more hours for insurance approval, down from eight hours in 2015. By collecting data on psychiatric patient wait times for beds, Peltzer-Jones said she had proof of high utilization to show bosses to request extra staff. The extra staff helped the ER cut time for evaluations, insurance approval requests and bed placements, she said. “We work really hard to get the mental health team involved as early as possible,” she said. But the time it takes to find a psychiatric bed varies greatly because of a dysfunctional system, Peltzer-Jones said.

Potential solutions In more than a dozen interviews with local experts, Crain's found multiple opinions on how long it takes to get insurance approvals and then actual bed placements for psy-

chiatric patients that ranged from eight hours to more than 48 hours, depending on the severity of the patient’s condition. The interviews also uncovered a number of recommended solutions to address the growing numbers of more serious psychiatric patients who are boarded in hospital ERs. They include: J Standardized procedures where hospitals, agencies and payers evaluate patients the same way and agree on common tests and labs for insur-

anc J E hea urge som tal E ters cou tien ters men and J C regu

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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 A N U A R Y 2 8 , 2 0 1 9

PHOTOS BY BRANDY BAKER FOR CRAIN’S

Emergency room RN Jessica McMillan (above) works with a patient in the emergency room at Ascension St. John Hospital in Detroit. At left, nurse Ryan Black transports a patient through the emergency room.

ance approval and bed placement. Expansion of community mental health crisis centers or psychiatric urgent care centers that can take on some of the patients entering hospital ERs. People would use these centers for walk-in care, or hospitals could transfer medically cleared patients to screening units at the centers to wait for a bed and for treatment, rather than having them sit and wait in an ER. J Changing certificate-of need bed regulations to force hospitals that J

“hoard” psychiatric beds and don't staff or operate enough of them to “use them or lose them.” This would potentially free up licensed beds for facilities that will use them. Or the state could simply increase the number of psychiatric beds allowed in a region with shortages. J Creating an online psychiatric bed registry where hospitals would be required to report on open beds and what type of patients they can take, which would speed the process of locating beds for patients. J Increasing payment for behavioral patients admitted to the hospital and creating more inpatient psychiatric reimbursement codes for patients with worse problems. For example, new psychiatric "ICU" reimbursement level codes could give hospitals a financial incentive to open higher-acuity beds and provide additional revenue for appropriate staffing. J Expanding training programs for psychiatrists, psychologists, psycho-pharmacologists, advanced practice nurses and social workers to staff hospital ERs and crisis centers, and paying higher salaries and expanding benefits for these professionals. J Developing new technologies to help manage ER clearance and transfer protocols. Expand psychiatric telemedicine programs to get quicker diagnoses, especially in small or rural hospitals that don't have access to in-house expertise.

Crisis centers Mental health agencies and hospitals are beginning to consider investment in mental health crisis centers as a way to steer patients away from busy ERs, allow for referrals once patients are medically stabilized and

provide alternatives for walk-in patients. But Michigan doesn’t have enough such centers, and regulatory and legal barriers exist that prevent more from opening, experts tell Crain’s. More crisis centers, which some call psychiatric urgent centers, won’t solve the problem, but it would be another way to reduce boarding, they say. Only a handful of crisis centers are open in Southeast Michigan: Common Ground’s in Pontiac and Hegira’s in Livonia. (See story, Page 12.) Last fall, the Macomb County Mental Health Authority completed phasing out its 2-year-old behavioral health urgent center because of funding problems related to 24/7 staffing and regulatory concerns. It now offers a crisis hotline and sameday open-access services at its clinics. Three more crisis centers plan to open, in Ann Arbor, Grand Rapids and Detroit. Marianne Udow-Phillips, executive director with the Center for Health Research and Transformation in Ann Arbor, said the basic problem is behavioral health services are underfunded and there aren’t enough available inpatient psychiatric beds for seriously and chronically ill patients. Udow-Phillips said there is a great need for outpatient crisis centers that can serve people under mental stress. “We need more places people can go before they go to a hospital ER,” she said. “The only places doctors can send people is to hospital ERs.” But there are regulatory and statutory barriers discouraging more psychiatric urgent cares from opening, said Common Ground CEO Heather

Rae, who is on a private work group of mental health executives planning to create a better business climate for more crisis centers. “The (state mental health) code is a barrier to having more crisis centers. It is very outdated because it was written in the 1970s and assumed there were enough psychiatric beds in hospitals that would accept anyone,” Rae said. “There aren’t enough beds for the population.” To address the problem, the Partners in Crisis Services work group is working with behavioral services health care attorney Greg Moore of Dickinson Wright PLLC in Troy to develop a white paper that they hope can lead to legislative solutions and ultimately more outpatient community mental health crisis centers across Michigan. Moore said three barriers exist that discourage crisis center development. Two of the barriers are language in mental health codes that limits the time centers can hold patients in preadmission screening units to 24 hours after a diagnosis is made, and restrictions on using restraints for aggressive mental health patients. The other has to do with antiquated state law on who may transport patients to non-hospital facilities, essentially preventing ambulances from dropping off patients at crisis centers after they have been to a hospital. “Michigan’s mental health code has simply not kept pace with the clinical and social advancements in crisis services,” Moore said. Dom Pallone, executive director of the Michigan Association of Health Plans, said expanding the number of crisis centers could reduce the burdens of hospital ERs. “Once a (patient) is in an ER and stabilized, we would be supportive of taking them for follow-up care to a crisis center,” Pallone said. “That could help with the boarding problem.” But Pallone also said allowing HMOs to manage both physical and behavioral health in the Medicaid system, which will be the subject of a pilot program later this year, could coordinate care better and reduce the need for emergency visits to hospitals. He said savings on the medical side could be used to expand mental health services. Vieder said an expansion of mental health urgent care centers would relieve hospital ERs from non-emergency cases. “It also might help (prevent) the delusional, psychotic or depressed person (from getting) to the point where he strongly considering taking own life,” he said. “For the more severe cases, it is more difficult to bypass ERs,” he said. “We are required to do the right thing by people. It might be low sodium level because you have diabetes that results in a acute mental health status change. We need to assess that first.”

Higher funding? Bob Nykamp, COO of Pine Rest Christian Mental Health Services psychiatric hospital, who also is chair of the behavioral health services committee at the Michigan Health and Hospital Association, said he supports the development of psychiatric “ICU-type” reimbursement payment codes, similar to the multiple ICU reimbursement codes for medical conditions. The MHA is discussing a plan to ad-

vocate for variable inpatient rates for psychiatric services based on acuity to address lack of bed availability and required staffing, Nykamp said. In a statement, the MHA confirmed with Crain’s it is working on various policies to address hospital ER psychiatric boarding. “Those efforts focus on improving access to behavioral health care to ensure that patients receive the care they need, when they need it, in the appropriate care setting,” MHA said. Helen Stojic, director of corporate affairs with Blue Cross Blue Shield of Michigan, said payers follow codes developed by the American Medical Association. She said the codes went through an overhaul in 2013 and Blue Cross monitors and reviews code changes carefully. Bret Jackson, president of the Economic Alliance for Michigan, said he also supports greater behavioral health reimbursement that could increase staffing of psychiatric units that can limit available beds. He said it could be resolved by changing payment models “so medical facilities will make room for psychiatric beds.” Nykamp said better treatment of psychiatric patients can also reduce medical costs. Studies have shown that every $1 spent on behavioral health services saves $4 to $6 on the physical health side. “Behavioral health is a good investment. Developing a system to pay for a relative cost for the ICU payments will save significant dollars on the medical side of equation,” he said. George Mellos, a psychiatrist and director of behavioral health with the state Department of Health and Human Services, told Crain’s that low inpatient payments for psychiatric services is frustrating for providers because they are revenue starved when it comes to treating patients. Mellos also is medical director of the Hawthorne Center in Northville, a 118bed public psychiatric hospital for children and adolescents. “We need a more sophisticated coding system in behavioral health,” said Mellos, adding that advocacy for higher payment rates is beyond the scope of the state’s efforts. Matt Owens, vice president of network operations with Oakland Community Health Network, which oversees and finances Medicaid inpatient psychiatric admissions, said that in October 2017 the organization increased inpatient rates to hospitals from $639 to $650 per day. He said OCHN also sometimes offers higher rates, as much as $1,200 per day, when more intensive staffing is required as a way to ensure an admission.

Refused admissions There are other reasons why hospitals refuse to admit some patients. Hegira Health Executive Director Carol Zuniga said some hospitals are leery about admitting some patients because they “fear it will be difficult to discharge them, especially if they don’t have somewhere to live.” Hospitals also say their units are not always designed and staffed for the type of patients seeking admission. Or the patient has been at the hospital before and caused damage or attacked staff. “I sense it is an excuse, but I have to empathize with the hospitals,” Zuniga said. “Some patients are very difficult people.” Peltzer-Jones agreed that hospitals sometimes refuse to accept psychiatSEE WAIT, PAGE 15

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Epicurean, under new owner, adds Big Red Orchard By Kurt Nagl knagl@crain.com

The owner of Big Red Orchard in Washington Township has acquired a majority stake in Detroit-based restaurant company Epicurean Group and moved the orchard and cider operation under the restaurant group’s umbrella. The addition of the 90-acre farm and orchard in Washington Township, along with its restaurant and hard cider operations, will be a centerpiece in a strategy to be the largest authentic farm-to-table operator in metro Detroit. Ryan Moore is principal of California-based holding company Conlan Abu, which owned the orchard The deal to combine the businesses closed Jan. 1, and Moore became CEO and majority owner of Ryan Moore: Deal Epicurean Group, he told Crain’s on is to grow Wednesday. together. Stanley Dickson Jr., who had owned Epicurean Group since buying the assets of the now-defunct Matt Prentice Restaurant Group in 2009, assumes the title of chairman, according to a news release. Eric Djordjevic remains president of Epicurean Group, a post he’s held since 2011. Terms of the transaction were not disclosed. Moore said Dickson still has a “financial stake in the business” but declined to elaborate.

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ric patients because they are too difficult. “It is not the diagnosis. We accept patients who are medically sicker. We have medical ICU beds that are staffed two patients for one nurse. No one argues that,” she said. “For some reason we don’t mimic that for mental health patients. We know patients need more intervention, but we won't fund in the same way.” For example, medical ICUs are funded at a higher level than general medical departments or ER observation units. “We don’t have that different funding levels for mental health that would allow for different staffing requirements,” Peltzer-Jones said. “There should be a psychiatric ICU level of reimbursement,” she said. Common Ground CEO Heather Rae said hospitals often make the following tough decision. “You have one bed available and you are presented with two patients for admission. Do you take the patient who might hurt staff? Or a patient with (mild behavioral health diagnosis) who has diabetes and high blood pressure who will not hurt staff?” Rae said. “It is easy. You take patient B.” Zuniga said she believes if hospitals were reimbursed more for higher level acuity patients they would increase beds and staffing. Rae said Common Ground gets more than “1,000 hospital denials a month. Many times it is a highly aggressive person who has co-occurring symptoms like developmental disabilities or substance abuse problems. No hospital wants those people. They want patients with less challenges.”

BIG RED ORCHARD

Big Red Orchard in Washington Township was purchased in September by investor Ryan Moore, who is partnering with the Epicurean Group and taking on a majority ownership role in the company.

Need to know

Ryan Moore, who owned the Washington Township farm, is now CEO of Epicurean Group 

 He bought the farm last year and started a restaurant and hard cider production  Moore has big plans to expand farm and Detroit-based restaurant group

“The deal is basically that we are going to grow together now,” Moore said. “(Dickson) is definitely sticking around. We have a great working relationship." Djordjevic said Epicurean Group had been in discussions about collaborating with the farm for the past couple of years. “We were always talking, you know, saying we need to do something together,” he said. “Getting to this part wasn’t a surprise.” Epicurean Group owns five restaurants and a handful of catering compa-

“Payers know the list of beds in an area and literally have to make cold calls in networks inquiring whether they have space or capacity. They are told no, not the right type for the needs of the patient, and move on down the list looking for an available bed.” Dom Pallone

Hospitals, on the whole, have enough beds for moderately ill patients. “There are not enough beds for patients who have co-occurring problems or those who are highly aggressive,” she said. Vieder agreed. He said hospitals need higher funding levels from all payers. “If insurance companies understood we need more funding for our high acuity patients that would be a big help,” he said. “Another is we need more physical beds in Southeast Michigan. That number has declined over the years” after many state psychiatric hospitals closed.

Solution: Online inpatient psychiatric bed registry In Michigan, there are 60 private psychiatric hospital units with 2,148 licensed beds and another 276 pri-

nies in metro Detroit, including Plaza Deli in Southfield and Soul Café in West Bloomfield Township. Add to that a farm. Moore bought Big Red Orchard — a popular destination for apples, cider and doughnuts in the fall — from Jeff Mulholland in September. The sale is recorded as from Big Red Land LLC to Apple Orchard Note Holdings LLC for $2.45 million, according to Washington Township public records. Moore, who grew up in metro Detroit and whose family owned Detroit Ball Bearing before selling the company in the late 1990s, knew Mulholland from his years at Cranbrook Kingswood Upper School in Bloomfield Hills. Since moving to northern California, Moore said he had dreamed of owning a farm and restaurant, which are impractically expensive and complicated pursuits on the West Coast. He looked at Big Red, where business has “leveled off ” in the past few years, as an opportunity. vate beds in 10 units to serve child and adolescent mental health needs. Nobody at the state or in private practice knows how many of these beds are staffed and actually in use. But the occupancy rate for the licensed beds is 69 percent, state officials said. One proposal being developed by the MDHHS is to create an online psychiatric inpatient bed registry. Last December, the Legislature approved funding for the registry and plans are being developed to launch one this year. Pallone said a bed registry can help insurers and mental health agencies find inpatient psychiatric beds for patients. “It is not a silver bullet, but (finding) available bed space is problematic for commercial insurers, like Medicaid, but it is not just a Michigan program, it is a national access problem,” Pallone said. While the state’s bed registry work group is seeking to help Medicaid, Pallone hopes the online solution can help in commercial health insurers as well. “We have issues with calling around, just like everyone else. It is a search and find function. Payers know the list of beds in an area and literally have to make cold calls in networks inquiring whether they have space or capacity. They are told no, not the right type for the needs of the patient, and move on down the list looking for an available bed,” he said. But even with a bed registry, from Zuniga’s perspective there absolutely is a lack of psychiatric beds. “People should not be waiting days for a bed.” Jay Greene: (313) 446-0325 Twitter: @jaybgreene

Epicurean Group’s strategy now is to go all-in on farm-to-table, Djordjevic said. “Our goal is that everything grown on the farm is used in our restaurants,” he said, adding that it’s too early to tell how many fruits and vegetables will be produced. “The farm becomes our creative hub to drive our chefs.” Moore and his family moved back to metro Detroit in July and began making big changes at the farm after taking the helm. He opened a 49-seat restaurant there in September called Beef & Jeff ’s Meatery & Smokehouse inside of the barn’s new taproom. Then, the company began producing hard cider for the first time. Both projects are part of the farm’s new business model. For the first time, the business is staying open yearround. In addition to adding a revenue stream with a restaurant, Moore aims to ramp up production of hard cider, which he sees as the most efficient way to grow revenue at the 50-year-old business. He declined to disclose revenue figures. Workers produced a couple hundred barrels of hard cider in the fall, and Moore hopes to achieve a total of 5,000 in its first year of production. Of course, farming also will expand, Moore said. Around 60 of the 90 acres is used to grow apples, while the other 30 acres is intended for pumpkins and other vegetables. Moore said much of the land was left fallow, and he hopes to grow more tomatoes, asparagus and different types of peppers to supply Epicurean’s restaurants. There’s also land surrounding the farm that he is looking

to acquire, which could double or triple its acreage and further expand the farm-to-table operation. “We are going to expand, but where we do it (is not decided),” he said. The farm employs around 13 people full time all year and 100-125 during the peak Halloween season. Moore said employees will not be affected by the acquisition and that there are plans to add more as business expands. Expansion is also part of Moore’s vision for the Epicurean Group in general, he said. At its peak, the company had about 15 businesses under its control, including Coach Insignia atop the Renaissance Center, which closed in 2017. “We’re looking for more expansion in metro Detroit,” Moore said. Djordjevic said Dickson took the opportunity to step back from operations. Dickson could not be reached for comment, but said in the release: “We are enthusiastic about the future of The Epicurean Group and Ryan’s collaboration in it. With our shared values and culture, we are steadfast in delivering an exciting, value-driven, dining experience to our guests.” Djordjevic said he is excited about the partnership with Moore and the prospect of stepping out of his comfort zone in the new venture. “Giving Dickson the opportunity to enjoy life now is a wonderful thing, and Ryan’s business acumen is gonna help drive us in areas that maybe we've been missing or underperforming in,” he said. Kurt Nagl: (313) 446-0337 Twitter: @kurt_nagl

C R A I N ’ S D E T R O I T B U S I N E S S // J A N U A R Y 2 8 , 2 0 1 9

DEALS & DETAILS EXPANSIONS JJHenniges Automotive, Auburn Hills, an automotive supplier of sealing and anti-vibration systems, plans to open a technical and innovation center in the Czech Republic next year. Website: hennigesautomotive.com JJCooper Standard, Novi, an automotive supplier, plans to build a world headquarters facility on Seven Mile Road west of Haggerty in Northville. Its current world headquarters is in Novi and it has a Global Technology Center in Livonia. The project is expected to be completed in early 2020. Website: cooperstandard.com

SPOTLIGHT

JJAthletico Physical Therapy, provider of orthopedic rehabilitation services, has opened a new location at 22606 Northline Road, Taylor. Phone: (734) 720-8797 Website: athletico.com/Taylor JJPowerhome Solar, Mooresville, N.C., a solar energy and roofing services provider, launched a new commercial division in Michigan. Its Michigan locations are at 500 Stephenson Highway, Troy, phone: (248) 460-9345, email: Troy_Office@powerhome.com; 56308 North Bay Drive, Chesterfield Township, phone: (586) 204-1666, email: Chesterfield_Office@powerhome.com; and 4652 Danvers Drive

SE, phone: (616) 201-0314, email: Grand_Rapids_Office@powerhome. com. Website: powerhome.com

GRANTS JJThe Institute of Gerontology at Wayne State University, the Institute of Social Research at the University of Michigan and the College of Human Medicine at Michigan State University received a $3.5 million grant renewal from the National Institutes of Health’s National Institute on Aging to extend the Michigan Center for Urban African American Aging Research, one of 18 resource centers for minority aging re-

search across the nation tasked with improving the health of older minorities through research, scholarship and education. The fifth round of funding, the grant renewal expands into the Flint area in partnership with Michigan State University. Website: mcuaaar.wayne.edu

NEW PRODUCTS JJWolverine Studios, Ortonville, a video game developer, has launched new versions “Draft Day Sports: Pro Basketball 2019” and “Draft Day Sports: Pro Football 2019.” Website: wolverinestudios.com

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Cornerstone Municipal Advisory Group is proud to announce the promotion of Steve Brown to Account Director. During his 20+ years in the insurance industry, Steve has filled a variety of roles from analytical to service and compliance to strategic. He has a wide range of experience in both public and private sectors. Steve’s expertise includes: in-depth compliance knowledge of both federal and state benefit regulations, complex issue resolution, as well as strategic development and execution.

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Michael Karson, MBA, recently celebrated his first year as president and CEO of Area Agency on Aging 1-B. Previously, he served in executive-level positions, including Optum, a division of United Health Care, and HAP, Midwest Health Plan. Karson has helped to expand the number of home-based Medicaid waivers for seniors and disabled adults who are aging in place with the proper services and support. Under his supervision, AAA 1-B is growing to meet the needs of the state’s graying population.

Katie Brennan has joined the Area Agency on Aging 1-B as its first director of philanthropy. Brennan has spent her career helping non-profits such as the Henry Ford Health System, the American Heart Association and American Cancer Society to grow through strategic fundraising. At AAA 1-B, Brennan will fill in funding gaps and further our mission to nurture and care for older and disabled adults throughout southeast Michigan. She holds business and law degrees from Michigan State University.

Veteran Owned Business Roundtable

Laurent Borne will lead the Stoneridge Electronics division, overseeing Stoneridge’s OEM and aftermarket business and fleet technologies, including vision and safety, driver information systems, and connectivity products. He will champion Stoneridge’s continued transition from a components and parts supplier to a developer of innovative systems and solutions for the various mobility industries Stoneridge serves. Borne will also retain his current role as chief technology officer (CTO).

The Veteran Owned Business Roundtable (VOBRT) today announced the board appointment of Tom Lake, senior vice president of purchasing at Honda of America Mfg., Inc. Lake will assume the role of president for the corporate advisory board. He replaces Phillip Gillespie, vice president, programs and business development, Blue Cross Blue Shield. Based in Sterling Heights, Mich., the VOBRT is a non-profit veteran organization.

Guaranteed Rate, one of the largest retail mortgage lenders in the country, welcomes Steve Konja as Regional Manager to cover the entire state of Michigan. Konja brings almost two decades of industry experience and will be primarily based out of the Troy, Mich., branch. Working with Divisional Manager Jim Eboli, Konja will continue to grow his business for Guaranteed Rate through relationships with referral partners and borrowers across the state.

David Giltner has been promoted to Senior Vice President within the Industrial & Logistics Group for CBRE in Detroit. Giltner brings more than 25 years of experience to CBRE and represents industrial landlords and tenants in southwestern Oakland and western Wayne counties. Some key clients include: Veritiv, Bluewater Technology, Amson Nassar Development, Stuart Frankel Development Company, Redico and Kojaian. David is the Admissions Chair for SIOR, and a graduate of Michigan State University.

KNOW SOMEONE ON THE MOVE? For more information or questions regarding advertising in this section, please call Debora Stein at (917) 226-5470 or email: dstein@crain.com

Brooks Kushman names new president

Brooks Kushman PC, a Southfield-based intellectual property law firm, has named Frank Angileri as its new president as it moves away from a traditional managing partner makeup toward a collaborative leadership structure. Brooks KushAngileri man has formed a new executive committee to act as its governing leadership, with Sangeeta Shah elected as its chairperson, according to a news release. Angileri, 52, replaces Mark Cantor, who was the firm’s president since 2007. Cantor will continue his role as chairman of the board and in a general counsel role. “This move is part of a succession plan that has been in place for several years,” Cantor said in the release. “We are confident that we have all the right pieces in place to lead the firm into the future and to continue to achieve success and long-term growth.”

Shank joins Consumers Energy board

Suzanne Shank, CEO and co-founder of a leading municipal finance and underwriting firm on Wall Street, has been elected to Consumers Energy’s board of directors. Shank will serve on the audit and finance committee boards of the Shank Ja ck s o n - b a s e d utility and its parent company, CMS Energy Corp., the company said in a news release. Shank has been involved in metro Detroit civic leadership over the years, including serving on the Detroit Institute of Arts board, the Detroit Regional Chamber board of directors and the Charles H. Wright Museum of African American History board of trustees. She has been CEO of Siebert Cisneros Shank & Co. LLC since 1996, operating from the firm’s Detroit office, and became chairwoman of the investment bank in 2015. The company has headquarters in New York City and Oakland, Calif.

Grand Valley names first female president

Grand Valley State University’s search for new leadership has officially ended with the naming of the school’s first female president. The school’s board of trustees announced its selection of Philomena Mantella last week. Mantella, 63, Mantella who will become the university’s fifth president in its nearly 60-year history, is currently the senior vice president and CEO of the Lifelong Learning Network at Northeastern University in Boston, according to a news release.

C R A I N ’ S D E T R O I T B U S I N E S S // J A N U A R Y 2 8 , 2 0 1 9

CALENDAR THURSDAY, JAN. 31 Five Steps to Networking Mastery. 9-11:30 a.m. Oakland County. Topics will include: why networking works, how to be ready to network, which online sites are worth the time, how to identify referral partners and how to grow your business. Speaker: Terry Bean, founder, Networked Inc. and Motor City Connect. Oakland County Executive Office Building Conference Center, Waterford Township. $40. Contact: phone: (248) 8580783; email: smallbusiness@oakgov. com

UPCOMING EVENTS 7th Annual Canada-US Business Association Cross-Border Economic Forecast Meeting. 11:30 a.m.- 2 p.m. Feb. 5. Speakers: Paul Traub, senior business economist at the Detroit Branch of the Federal Reserve Bank of Chicago, and William Adams, vice president and senior economist for the PNC Financial Services Group. Federal Reserve Bank — Detroit Branch. $50 members; $65 nonmembers. Website: eventbrite. com/e/7th-annual-cusba-cross-border-economic-forecast-meeting-tickets-53830560656?aff=ebdssbdestsearch Patriotism vs. Nationalism — The New American Challenge. 11:30 a.m.-1:30 p.m. Feb. 7. Detroit Economic Club. Marc Morial, president and CEO, National Urban League, will discuss the distinction between the America of yesterday, and the promise Morial of tomorrow’s America. The Masonic. $45 members, $55 guests of members. Website: econclub.org Power of the Future: 2019 Economic Forecast. 8-9:30 a.m. Feb. 12. Troy Chamber. Panel includes: Jennifer Llewellyn, manager and workforce development director, Oakland County Michigan Works! Agency; Dan Gilmartin, executive director and CEO, Michigan Baruah Municipal League; and Sandy Baruah, president and CEO, Detroit Regional Chamber. MSU Management Education Center, Troy. $28 members; $34 nonmembers. Email: theteam@troychamber.com; website: troychamber. com/events/troy-chamber-annual-meeting The Divided City: Poverty and Prosperity in Urban America. 11:30 a.m.-1:30 p.m. Feb. 12. Detroit Economic Club. Alan Mallach, author of The Divided City, and Maurice Cox, Detroit’s Planning and Development director, will share their thoughts on what’s happening in America’s cities and on Detroit’s urban revival. The Masonic. $45 members, $55 guests of members. Website: econclub.org

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CLASSIFIEDS

The Role of Business: Creating Value in Society. 11:30 a.m.-1:30 p.m. Feb. 26. Detroit Economic Club. Jim Hannan, executive vice president and CEO, Koch Enterprises, will discuss Koch Industries’ perspective on the role of business — to create value in society. Westin Book Cadillac. $45 members, $55 guests of members. Website: econclub.org Detroit 2030: A Vision for the Future. 7:30 a.m.-4 p.m. Feb. 28. Detroit Regional Chamber. The 2019 Detroit Policy Conference will discuss a vision for Detroit’s next generation. Leaders from business, government and civic organizations will offer their vision for Detroit 2030 and discuss removing barriers to economic prosperity. Author Jay Pitter is the keynote speaker, and Dennis Archer Jr. will chair the event. MotorCity Casino Hotel Sound Board. $159 members; $235 nonmembers. Contact: Jordan Yagiela, phone: (313) 596-0384; email: jyagiela@detroitchamber.com 16th Annual APACC East West Business Connection. 9:30 a.m.3:30 p.m. March 6. Asian Pacific American Chamber of Commerce. Networking, exhibits and buyer showcase. Laurel Manor, Livonia. $80 member; $105 nonmember. Registration closing date Feb. 20. Contact: Leonie Teichman, email: leonie@apacc.net Economics of a Health Crisis: How Business Must Lead In the Battle Against Opioids. 11:30 a.m.-1:30 p.m. March 7. Detroit Economic Club. Chris Swift, chairman and CEO, The Hartford, will discuss actions that companies of all sizes can take to help reduce the impact of opioids in the workplace and steps that policymakers can take to support employers in fighting the epidemic. Cobo Center. $45 members, $55 guests of members. Website: econclub.org International Women’s Day Lunch. 11 a.m.-1:30 p.m. March 11. Detroit Regional Chamber. A panel of female executives will speak to business leaders on how they can engage in inclusive practices to foster diversity of thought and encourage all employees to have a voice. Speakers include: Ana Almeida, vice president, customer business unit, Faurecia Automotive Seating; Najah Bazzy, executive director and founder, Zaman International; Adrienne Bennett, president and CEO, Benkari Mechanical LLC; Leigh Ann Hello, vice president, The Cabinet Studio; and Moderator Christy McDonald, anchor, Detroit Public Television. Detroit Golf Club. $45 members; $65 nonmembers. Contact: Andrea Rayburn, phone: (313) 596-0340; email: arayburn@detroitchamber.com To submit calendar items visit crainsdetroit.com and click “Events” near the top of the home page. Then, click “Submit Your Events” from the drop-down menu that will appear. Fill out the submission form, then click “Submit event” at the bottom of the page. More Calendar items can be found at crainsdetroit.com/events.

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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 A N U A R Y 2 8 , 2 0 1 9

BIRCH LODGE FROM PAGE 1

A ramshackle website has been overhauled and reservations are now available thorough more contemporary methods like Expedia and booking.com. A professional management team — including the day-to-day operator who spent seven years as vice president of revenue management for the company that owns The Stanley Hotel of “The Shining” fame in Estes Park, Colo. — has been brought on board. It’s the first time the Kraemers have done their own redevelopment, a process that poses challenges even for seasoned developers, never mind those leading an effort like that for the first time. But with boosted nightly rates and being open year round, the couple anticipates just shy of $1 million in revenue this year (zero profit) and ultimately making a profit next year on the venture, which began around Thanksgiving 2017.

PHOTOGRAPHS BY KYLE BERRYMAN/BIRCH LODGE

Robert and Maureen Kraemer and their investors bought the Birch Lodge on Torch Lake in the Upper Peninsula for about $570,000.

A trip back to 1912 Fourteen months ago, the couple — whose firm is highly regarded for its historic preservation work — was thumbing the pages of Preservation Magazine, a publication of the National Trust for Historic Preservation. In it were small ads of historic properties for sale. There would be old horse farms, Michigan lighthouses, barns across the country. Sitting in a conference room in their office at 1420 Broadway, the couple recounted that night. “There was a little ad in the bottom corner for Birch Lodge, listed for $600,000,” Robert Kraemer said. “And there’s never anything listed under $1 million,” Maureen Kraemer interjected. “Typically without some sort of caveat,” he added. Just a few days later, they hopped in their car and drove the four-plus hours across the Mackinac Bridge into tiny Moran, Mich., population of just a few hundred. “It was one of those things where it had just snowed that morning. Fresh, blue-sky day, and you wouldn't believe how bright the inside of this lodge was because of the reflection across the lake and the snow. It was unbelievable,” Robert Kraemer said. “You walked into it and it was 1912, for all intents and purposes.”

SOYBEANS FROM PAGE 3

Net income for Darling Farms was down nearly 20 percent in 2018, Darling said. Crop insurance, a federal subsidy that protects farms from lost revenues, saved the farm, he said. “(Crop insurance) was the only reason I was able to sleep at night,” Darling said. “We did have losses on a per-acre basis, but because of smart management, good contracting and keeping a sharp pencil, we lived to play another day.” Trade has become critically important for Michigan farmers because efficiencies over the past 20 years have raised yields but lowered prices. In short, farmers have become so good at growing crops, market economics of supply and demand devastated their commodity pricing. The U.S. pork and poultry farms faced massive consolidation in recent years as supply flourished

Maureen and Robert Kraemer Birch Lodge has extensive frontage on Torch Lake, about 30 miles into the Upper Peninsula from the Mackinac Bridge.

Challenges mounted The Kraemers saw a value-add opportunity in the property, which sits about 35 miles inland from the Mackinac Bridge. The previous owners had only been pulling in about $50,000 annually in revenue on rooms for about $65 per night, the Kraemers said. The hospitality business wasn’t their forte. The Kraemers, on the other hand, have extensive experience in the industry but only from the architecture and design perspective, never from the development or management side of things. So unexpected challenges arose: What sort of comparable properties are

there to a 20-acre, century-old lodge in the Upper Peninsula for appraisers? The revenue stream under the previous ownership is basically a rounding error for the Kraemers, whose firm had $3.4 million in revenue in 2017 and $11.1 million last year after folding its Intramode company into the business portfolio, employing about 40. How do you justify a loan to a bank based on $50,000 in income? “We started running the numbers,” Robert Kraemer said. “The bank was like, ‘Are you sure you can make this work?’ When you can’t find a hotel within 30 miles that’s open this time of year, it might not be too hard to fill eight rooms or 20 rooms if everything is open.” The Kraemers said contractors in

ahead of demand, said Ernie Birchmeier, manager of the center for commodity, farm and industry relations at the Michigan Farm Bureau. “We’ve seen a lot of structural Doug Darling: changes in our Farm in family for system,” Birch185 years. meier said. “Our customers want choices, but affordable food and the economics have dictated that.” So China, the largest soybean consumer in the world, has become a massive lifeline to Michigan soybean farmers. Michigan farms exported $146 million worth of soybeans in 2017, a majority to China. In the U.S., $14 billion in soybean exports went to China, accounting for nearly a third of U.S. soybean production and 60 percent of its exports.

“Trade is critical. When we say 95 percent of the world’s population lives outside of the U.S., people sometimes roll their eyes,” Birchmeier said. “But we’ve got 375 million people; they have 1.3 billion. We need to compete in that marketplace.” China imported zero U.S. soybeans in November, instead leaning on Brazil, where it imported more than 5 million tons of soybeans. But in December, President Donald Trump and China’s President Xi Jinping reached a truce to reinstate trade talks and China began importing U.S. soybean again in 2019. Soybean prices have recovered slightly as the two parties are at least discussing a trade deal and settled at $9.16 a bushel on Friday. “China stepped back into the marketplace because a hungry population is not a good thing to have, so I’m optimistic this will be ironed out,” Birchmeier said. "It’s probably going to take longer than anyone wants, but our

CRAIN’S FILE

the U.P. prefer to work outdoors during the summer and indoors during the punishing winter months, which countered their planned construction and renovation cycles. Skilled trades professionals were also difficult to find. “It took four months to get construction numbers from contractors because there aren’t enough people,” Maureen Kraemer said. “And it’s not that the contractors are overly busy,” Robert Kraemer quickly added. “It’s just that they don’t really exist up there.”

Building a team The key to jumping into property development from one of real estate’s complementary industries like architecture is surrounding yourself with seasoned pros who know what they’re farmers feel good about the potential.” Laurie Isley, co-owner of Sunrise Farms Inc. in Palymra near Adrian and president of the Michigan Soybean Promotion Committee, has more mixed feelings about the methods the administration is employing. “As part of the committee, I’ve had the opportunity to travel to the places we market our soybeans. China doesn’t always play fair,” Isley, 60, said. “We would love to have a level playing field, I’m just not so sure tariffs are the best way to achieve that. (Farmers) are feeling an unfairly large brunt from these tariffs. We worked many years at developing a good relationship with China. Yes, we would like to see a more fair and equal playing field, but we’d also like to see this settled very soon.” The early rains and summer drought also cut into Isley’s crop yields, which were down about 20 percent last year, she said. Isley’s 1,100 acre farm in Lenawee County sur-

doing, said Gail von Staden, a Royal Oak-based architect who along with her husband, Tamás, redeveloped the 13,000-square-foot former Dobie Jewelers building downtown into retail and office space for their Von Staden Architects LLC and a single-family residence. “The interesting thing about architects branching out on their own work is that you do end up getting to do the work you want to do because you’re the client and the developer, so you end up being able to really be able to see your vision through,” she said. “But you find yourself doing a totally new business. Being a hotelier is very different than running an architecture and design business.” That’s where James Woodruff and his wife, Carol Ann, come into the picture. Woodruff, who spent summers working at the Grand Hotel as a bellman on Mackinac Island and has moved around the operations side of the hospitality industry his entire career, said he entered the business as he was trying to pay for college. Years later, he and his wife tried to buy the Birch Lodge but were unsuccessful. But the effort wasn’t for naught as the next potential buyers — the Kraemers — reached out. It wasn’t long before the two couples realized that they were a good fit. “Our plan is essentially to honor the legacy, honor the history and our elements,” said Woodruff, vice president of operations. “What I like about Bob and Maureen is that they understand that. They understand the details of that and how it can add to more of a guest experience concept. Where things are missing, they take the time to understand that guest experience.” Armed with their business plan — soon, year-round operations, and with the renovations, the ability to command an average daily rate of north of $200 per month — and experienced management in place, the Kraemers are optimistic about the Birch Lodge’s future and their place in the sleepy Up North community. “We thought we would get a lot more backlash or comments about the rate increase,” Maureen Kraemer said. “But only a few people have said anything.” “Our biggest fear, creating this real negative impression, when we showed up to town,” Robert Kraemer said. “But we are finding an incredible amount of support.” Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB vived, much like Darling’s, thanks to crop insurance and contracting out some crop ahead of price drops. Another lifeline has been the Trump administration’s effort to shield farmers from China’s retaliatory tariffs with $6.2 billion in direct payments last fall. Soybean farmers received $3.6 billion in payments — or about $0.80 a bushel — as part of the U.S. Department of Agriculture program. But since yields for both Darling Farms and Sunrise Farms were down significantly from previous years, those payments were low as well. “It was based on production, so that was an issue,” Isley said. “The impact of weather gave us a lower yield. Normally we have had a higher yield and would have benefited from a large payment. That’s how the program should work, but it still hurt.” Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

C R A I N ’ S D E T R O I T B U S I N E S S // J A N U A R Y 2 8 , 2 0 1 9

‘Detroit Rising’

Detroit Vegan Soul owners eye statewide expansion T

CHAD LIVENGOOD

he co-owners of Detroit Vegan Soul have “big plans” for serving their plant-based cuisine well beyond the city limits after more than a year in their second restaurant on Detroit’s north-

west side. The vegan restaurant and cafe opened at 19614 Grand River Ave. in July 2017, four years after its original location at 8029 Agnes St. in West Village had become a destination restaurant for patrons looking for meatless southern soul food. “We’d love to see Detroit Vegan Soul locations throughout Michigan,” co-owner and general manager Kirsten Ussery said in interview for the Crain’s “Detroit Rising” podcast. “That’s the big vision. ... We have big plans.” Ussery and her business partner, Erica Boyd, know that once they take the leap beyond two restaurants they both can individually manage “it becomes a lot more challenging” business to operate. “Right now, we’re really focused on making these two locations the best that they can be, make sure they’re running smoothly,” Ussery said. “... We are just trying to make sure we have a really strong foundation.”

LARRY PEPLIN FOR CRAIN’S

Detroit Vegan Soul co-owners Kirsten Ussery (left) and Erica Boyd in front of their second location on Grand River Avenue on Detroit’s northwest side. They borrowed $125,000 from JPMorgan Chase’s Entrepreneurs of Color Fund to help finance the purchase and renovation of the building.

Detroit Vegan Soul’s second location in the Grandmont Rosedale neighborhood became a reality in 2017 when Ussery and Boyd secured $125,000 in financing from the Entrepreneurs of Color Fund started by JPMorgan Chase & Co. and the W.K. Kellogg Foundation. The loan fund for small businesses in Detroit has loaned $6 million to 75 entrepreneurs of colors, creating a new form of financing that isn’t always available from commercial banks, said Peter Scher, global head of corporate

responsibility for JPMorgan Chase. The New York banking giant and the Battle Creek-based W.K. Kellogg Foundation created the fund as part of JPMorgan Chase’s $150 million commitment to aiding Detroit’s economic recovery. “One of the things we started to see is there was a real desire from entrepreneurs in the city to be part of the recovery, but a lot of people couldn’t get access to capital, couldn’t get traditional lending from banks, including ours, because of some of the re-

strictions that we operate under,” Scher said. The Entrepreneurs of Color Fund, which is administered by the Detroit Development Fund, now has $22 million in lending capacity from JPMorgan, the Kellogg Foundation, Kresge Foundation, Ralph C. Wilson Jr. Foundation, Liberty Bank and Trust Co. and Fifth Third Bank. JPMorgan has since replicated the fund in Chicago, San Francisco and the south Bronx borough of New York City. On Grand River Avenue, Detroit

Vegan Soul was the first dine-in restaurant to open in nearly a decade in a local market dominated by fast food, Ussery said. Boyd and Ussery knew Peter Scher: there would be a Small business demand for a sitbig part of down restaurant. Detroit. But traditional bank financing was a challenge to be sure, Ussery said. “Without that funding, this would have never been possible,” she said. JPMorgan Chase officials “didn’t realize how big a part small business would play in driving the economy of Detroit,” said Scher, who became a frequent patron of Detroit Vegan Soul’s West Village location during his visits to the city. “If someone had told me at the time that I would be sitting here in the second location for Detroit Vegan Soul, you might as well say I’d be sitting on the moon,” Scher said. You can hear the Detroit Rising interview with Detroit Vegan Soul’s owners at crainsdetroit.com/voiceschad-livengood or on iTunes Apple Podcasts, Google Play or wherever you access podcasts by searching for “Crain’s Detroit.”

2018 brought a stream of headlines that involved some of the biggest names in Michigan: from a deal that lead to the future development of the Wayne County jail site to Governor Gretchen Whitmer’s run to become the 49th chief executive of the state. Our annual Newsmaker of the Year luncheon has highlighted these leaders for more than three decades. Come here how our new class of honorees made news and connect with an audience of business influencers from an assortment of industries. The event will also feature remarks from Bill Ford Jr., executive chairman of Ford Motor Co. and 2018 Newsmaker of the Year, and recognize our Best-Managed Nonprofit awardee for 2018.

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DUG SONG AND JON OBERHEIDE

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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 A N U A R Y 2 8 , 2 0 1 9

COACHES FROM PAGE 3

Assistants started seeing big paydays in the 2000s as the revenue generated by the sport grew from national, conference and regional TV deals and enormous contracts with apparel providers such as Nike Inc. The first was Monte Kiffin, who got $1.2 million to become the University of Tennessee’s defensive coordinator in 2009. By 2015, the number of assistant coaches paid at least $1 million reached nine, USA Today’s database shows, and that increased to a dozen in 2016 and 15 in 2017 and last season’s 21. Michigan in 2017 became the first school with three million-dollar assistants. Of those 21 assistants being paid at least $1 million last year, five were from the Big Ten Conference — the two UM coaches and three from Ohio State. LSU defensive coordinator Dave Aranda was paid $2.5 million and was one of three assistant coaches to top at least $2 million. There is concern in college football about the rising coach costs. Florida athletics director Scott Stricklin, during the Southeastern Conference’s spring meeting in May, expressed worry. “I think it’s one of the biggest challenges we have in college athletics is what our coaches are making,” Stricklin was quoted as saying by South Carolina’s The State newspaper. “They are in a market that allows them to enjoy those kinds of salaries, but I do think the optics of it are not helpful.”

The reason Why such spending on assistants? After simple market economics, it’s because the big college athletics programs such as Michigan are nonprofits and don’t pay players, so they have to spend the revenue on something and one of those somethings has been coaches, said David Berri, a sports economist and professor of applied economics at Southern Utah University. “They cannot spend on players, so it gets funneled to the coaches. This is where the profit is going. They just spend it all on the coaches,” Berri said. “College head coaches are paid a larger percentage of revenue than head coaches in the NFL. It’s the same for the assistant coaches. If Michigan were a pro team, it would pay its coaches substantially less.” National Football League teams pay their professional players millions. College football players get the value of their scholarship, and some other perks, but nothing for their onfield labor that generates billions for the universities. If schools did pay players something more, some of the big-money coach deals would dry up, Berri said. “The college revenue would not justify that (coach spending) if they had to pay the players,” he said. Michigan’s current athletics budget lists $27.8 million for scholarships for the department’s 900 student athletes. Salaries for coaches, staff and administrators are budgeted at $70.8 million, which is the department’s biggest expense. The school’s entire current athletics budget, which is self-sustaining, is $185.2 million in spending against $187.7 million in revenue. Michigan’s athletics department enjoys donations from wealthy loyal alums, and it offsets some of its key

University of Michigan Head coach Jim Harbaugh helps create interest and fill seats at Michigan Stadium.

Michigan’s assistant coaching salaries: JJJosh Gattis, offensive coordinator: $1.1 million, plus possible $400,000 bonus JJPep Hamilton, assistant head coach/passing game coordinator/quarterbacks coach: $1 million, plus possible $250,000 bonus JJEd Warinner, offensive line coach: $550,000 JJJay Harbaugh, running backs coach: $300,000 JJSherrone Moore, tight ends coach: $250,000 JJDon Brown, defensive coordinator: $1 million, plus possible $400,000 bonus JJShaun Nua, defensive line coach: N/A (requested by Crain’s via FOIA) JJChris Partridge, safeties/special teams coach: $500,000 JJMike Zordich, cornerbacks coach: $400,000 JJAnthony Campanile, defensive assistant: $415,000 JJTotal (without Nua): $5.515 million

Source: Detroit Free Press, Crain’s research

coaching job salaries with endowments from them. For example, J. Ira and Nicki Harris paid the university $10 million in 2014 to endow the head coaching position. The offensive coordinator job was endowed via a $3 million gift from alum Sanford Robertson in 2014, and in 2017 an undisclosed amount from Matthew and Nicole Lester endowed the defensive coordinator job.

The coaches Last season, Michigan ranked ninth in college football with its 10 assistants being paid a combined $5.875 million, which ranked ninth nationally, per USA Today’s online database of assistant coach salaries. Atop the list for 2018 was Ohio State at $7.3 million. National champion Clemson ranked 2nd at $6.825 million. At UM in 2018, it was Pep Hamilton, the assistant head coach and passing game coordinator, being paid $1.45 million, and defensive coordinator Don Brown earning $1.3 million. The lowest-paid UM assistant in 2018 was first-year tight ends coach Sherrone Moore at $225,000. Michigan will pay about the same in 2019 assistant salaries. Harbaugh sets the salaries for his assistants, per his deal with the school. The contract set the assistant coach salary pool at $4 million to $5 million initially with 10 percent increases in 2017 and 2019. UM Athletic Director Warde Manuel can authorize spending beyond the limit.

“There is an established salary pool for our coaches that Coach Harbaugh and I have worked hard to maintain while bringing the very best coaches to our program,” Manuel said in a statement to Crain’s. “We are comfortable with that salary pool and have an open dialogue when there is a need to fill a position. With any sport at Michigan, we are always going to compete for the most talented individuals to instruct and mentor our student-athletes. Our institution believes in fiscal responsibility while also being competitive within the market.” The NCAA limits colleges to 10 assistant coaches. Salaries for other staff, such as strength coaches, aren’t included in the database. UM also has a bowl bonus program for football coaches. Based on the team’s total number of victories, the type of bowl, and whether the Wolverines win or lose, assistants can each get a bonus ranging from $10,000 for losing a bowl game in a five- or six-win season, up to $100,000 for winning the national championship game. Additionally, participating in the Big Ten championship game — which UM has yet to do since the game was launched in 2011 — earns coaches a bonus of $25,000 for a loss and $50,000 for a win.

The tax What’s new when it comes to coaches’ salaries is a potential additional cost for the university: The Republican tax bill that went into effect

for 2018 (which also ended tax writeoffs on season tickets) includes a 21 percent excise tax on any nonprofit’s top five employees earning $1 million or more. Whose compensation triggers the tax depends on how a school pays its administrators and coaches. At many universities, it’s a handful of athletic department employees. It’s not immediately clear if the tax would apply to UM’s coaches because of the complexities of how the school compensates various high-level employees. Crain’s requested from the athletic department confirmation of any coach salaries that might be taxed under the new rule, but did not receive a reply. If the excise tax does apply to Michigan’s assistants, the likely bill on those two coaches would be $577,500. If the federal levy is applied with Harbaugh’s full 2018 compensation factored in, that increases to $2.15 million. Next season, the three UM assistants topping $1 million will be new offensive coordinator Josh Gattis ($1.1 million), Hamilton ($1 million) and Brown ($1 million). The three also can earn bonuses: up to $250,000 for Hamilton and up to $400,000 for Gattis and Brown. The excise tax, at minimum, would cost UM $651,000 on those three assistants’ salaries, and if they earn all of the bonus money, the tax bill increases to $871,500. Michigan’s athletic department is aware of the tax, which doesn’t appear to have been any impediment to spending on assistants. “We are always looking forward and take into consideration tax laws when forecasting/setting budgets,” said Associate Athletic Director David Ablauf. “The athletic department will cover the tax obligation for any athletic staff member determined to be in the top five salaried individuals at the university.” Berri, the sports economist, said the excise tax could slow coach salary spending at schools where revenue lags. “It might give some teams incentives to not hire (pricier coaches),” he said. UM’s athletic department’s enormous revenue makes it easier to absorb a new tax. Its chief revenue sources estimated for the current fiscal year were ticket sales ($52.3 million), conference distributions from

TV contracts and shared monies within the Big Ten ($52.1 million), the “Preferred Seating Donation” for the right to buy football tickets ($30.2 million), and corporate sponsorships ($18 million). Michigan’s enormous apparel and equipment deal with Oregon-based Nike Inc. that began in 2016 will pay the athletic department up to $127.12 million over 11 years. A four-year option would boost the deal to $173.8 million and would take the contract through 2031.

The value Do the results justify the spending on coaches at Michigan? If the metric is winning, then the university has a proven history of paying well for it. Fielding Yost, the godfather of Michigan football, was given a $2,300 annual salary when hired in 1901, when the average hourly wage of a U.S. factory worker was 23 cents. It was money well spent: The Wolverines went 55-1-1 over his first five years, and Michigan outscored opponents 2,821 to 42. That included an 86-0 rout of Ohio State in 1902. More recently, Michigan football was a mess before Harbaugh. The Rich Rodriguez-Brady Hoke era (2008-14) saw the program stumble to a 46-42 record and miss postseason bowl games three times. Michigan Stadium was clearly less than full for games. Harbaugh, who played quarterback for the Wolverines in the 1980s before an NFL career and several college and NFL coaching gigs, has stabilized the program. His eccentric ways also keep Michigan in the media spotlight. Michigan sports economist and professor Rodney Fort, who USA Today notes is sometimes critical of college athletic spending, said he thinks Harbaugh is worth the spending because he helps create interest and fill seats at Michigan Stadium. “You have to put 107,601 of the nicest people every week into the hole that Yost dug,” Fort told the newspaper. Harbaugh’s boss, the athletic director Manuel, is unequivocal in his belief that Harbaugh is worth the price. “Absolutely,” he told USA Today last year. “Every dime.” Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

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crainsdetroit.com Editor-in-Chief Keith E. Crain Publisher KC Crain Group Publisher Mary Kramer, (313) 446-0399 or mkramer@crain.com Associate Publisher Lisa Rudy, (313) 446-6032 or lrudy@crain.com Managing Editor Michael Lee, (313) 446-1630 or malee@crain.com Product Director Kim Waatti, (313) 446-6764 or kwaatti@crain.com Digital Product Manager Carlos Portocarrero, (313) 446-6056 or cportocarrero@crain.com Creative Director David Kordalski, (216) 771-5169 or dkordalski@crain.com Assistant Managing Editor Dawn Riffenburg, (313) 446-5800 or driffenburg@crain.com News Editor Beth Reeber Valone, (313) 446-5875 or bvalone@crain.com Special Projects Editor Amy Elliott Bragg, (313) 446-1646 or abragg@crain.com Design and Copy Editor Beth Jachman, (313) 446-0356 or bjachman@crain.com Research and Data Editor Sonya Hill, (313) 446-0402 or shill@crain.com Newsroom (313) 446-0329, FAX (313) 446-1687, TIP LINE (313) 446-6766

REPORTERS

GreenPath President and CEO Kristin Holt is intent on continuing to expand its national footprint and the number of people it serves.

GREENPATH FROM PAGE 3

To help GreenPath operate on an efficient, sustainable model, Holt has doubled the pace of acquisitions since joining GreenPath in April 2016. The deals have brought it new clients, new grant funding, a revenue source it hasn’t traditionally sought and economies of scale, Holt said. All GreenPath employees around the country are on one contact center, which is where GreenPath is getting a lot of efficiencies, she said. “I’ve got a person sitting in Oklahoma City. If they are not doing an in-person counseling session, they’re working the contact center,” she said. “That’s really the big game changer as far as having scale. You’re able to keep a counselor busy the whole day ... the more counseling we’re doing, the more people are taking us up on our services,” and generating feebased revenue. Holt is no stranger to nonprofit mergers and acquisitions. She was named among Crain’s "40 under 40" in 2005 for overseeing several acquisitions while at Ann Arbor-based NSF International, a food and water testing and standard-setting nonprofit . The deals she’s led at GreenPath have taken it into six new states: Montana, Idaho, Oklahoma, California, Minnesota and Washington, D.C It’s now operating from 59 sites in 22 states with about 550 employees. GreenPath is still closing the books on 2018, but Holt is projecting revenue of just over $40 million — down from $41.7 million in 2017 — and a loss of roughly $4 million tied to losses absorbed with the acquisition of Rural Dynamics last May. Restructuring moves taken this year, including bringing a call center for Rural Dynamics in-house, should turn the losses around this year, Holt said. One of the most unique among those acquisitions was a deal with the Homeownership Preservation Foundation in September 2017, she said. The foundation operates the Hope Hotline, which launched during the housing crisis to provide foreclosure prevention counseling. It has contracts with several mortgage companies to provide counseling and sub-

contracts those services out. As demand for foreclosure prevention services started to go down, the foundation was looking for someone to acquire it, Holt said. “We were one of the largest providers of counseling under their model,” she said. “They chose GreenPath because we’re thinking of this broader work of helping people achieve their dreams.” GreenPath provided financial assistance to over 200,000 people last year with a range of programs that included: debt management plans that pay down principal at reduced interest rates and an online portal for accessing the plans, foreclosure prevention and pre-homebuyer counseling, a Facebook peer support group and Simple Payment Plan, a service launched in December 2017 with automated loan payment platform EarnUp to help consumers efficiently budget their money, save more and pay off debts faster.

The wellness path This quarter, GreenPath plans to roll out another new product: an online financial wellness program developed over the past two years with Asset Health. “We were actually trying to get into the financial wellness market on our own … but we figured we didn’t know how to sell to employers,” Holt said. Asset brought that expertise and people to do the coding for the new program, and GreenPath provided its financial services expertise. Due out during the first quarter, the Healthy Cents program will provide a financial education portal for employees of firms that add the program to company-sponsored benefits. Piloted with Carhartt Inc. and another local employer, Holt said, it includes a financial wellness quiz to assess participants in six categories: spending, planning, borrowing, saving, financial stress and financial confidence. It then provides personalized financial coaching, education, achievement tracking and other features like videos and interactive games to engage users. It includes a link to connect with GreenPath for additional, fee-based counseling, should users want that. Allied will offer Healthy Cents to employers as part of a wellness bene-

fit package for employees. GreenPath plans to offer the program to credit unions to make it available to their members. The program “allows us to comprehensively address financial wellness, which is a critical determinant of individual health and well-being,” said Asset Health President and CEO David Wilson, in an emailed statement GreenPath will benefit from a revenue-sharing agreement with Asset Health for Healthy Cents, Holt said, increased brand awareness and possibly new clients.

Deepening relationships Born out of the Michigan Credit Union League in 1961, GreenPath is also looking to increase awareness of the services it offers with its more than 500 credit union partners across the country. Those institutions “are very mission-oriented like we are,” Holt said. “They want what’s best for their members.” Credit unions refer members to GreenPath for financial assistance when they are turned down for a loan, have maxed-out credit cards or are regularly overdrawing their account. They also pay GreenPath to provide counseling, reporting services and employee training on when to refer a member for credit counseling. Those credit unions reach about 20 million members, Holt said. “So just being able to go deeper in that relationship base that already exists of 20 million people, we can grow the number of people we serve,” she said. At the same time, GreenPath is looking to ramp up its marketing through online and social media channels. “We’re really trying to get the word out about who we are, what we do, we’re here for you,” Holt said. About 72 percent of people live paycheck to paycheck, she said. “Debt settlement companies advertise like crazy that you don’t have to pay your credit cards, but (consumers) might not hear about us,” and the ways a credit counseling agency can help pay off debt and bolster financial position, Holt said. To increase its brand awareness, GreenPath is stepping up its social media presence and capitalizing on grants from Google to run online ad-

GREENPATH

vertisements, said Donna Doleman Dickerson, chief marketing officer. About a year and a half ago, the agency launched a private Facebook group for clients on its debt management plan and others considering one of the plans. The site is serving as an ad hoc support group, with people who are on debt management plans encouraging those who’ve just gotten on one or are thinking about it. Someone might post their dismay at having to close down all but one credit card for emergencies and the ensuing 30-point drop in their credit scores, Holt said. But others will come on to say the same thing happened to them, but their credit score has recovered and they went on to secure a car loan. “It’s much better to hear from people who aren’t providing the service that everything will be OK and they are on the right path,” Holt said. “We weren’t anticipating that. We do a lot of experiments, and that one worked.”

Increasing impact Amid the efforts to expand the number of people GreenPath reaches, Holt emphasizes a “human-centered focus” that puts the people calling for help at the center of everything GreenPath does. It seems like that would go without saying, but “historically, I think GreenPath probably viewed the credit card companies more as the client,” Holt said. “We are (now) very clear that the client is the person calling us. We partner with the credit card companies ... but the person who picks up the phone is our client.” That approach comes with listening to each person who contacts GreenPath to understand what is important to them, Holt said in a video GreenPath posted on youtube.com. “The remix of the American dream just means it’s what’s important to each individual. It’s not for us to decide what someone’s dream should be,” Holt said. “And then we want to make sure that we can be that guide to people to help them achieve whatever their dreams are.” Sherri Welch: 313 (446-1694) Twitter: @SherriWelch

Annalise Frank, breaking news. (313) 446-0416 or afrank@crain.com Jay Greene, senior reporter, health care. (313) 446-0325 or jgreene@crain.com Anisa Jibrell, breaking news. (313) 446-1612 or ajibrell@crain.com Chad Livengood, senior reporter, Detroit rising. (313) 446-1654 or clivengood@crain.com Kurt Nagl, breaking news. (313) 446-0337 or knagl@crain.com Kirk Pinho, real estate. (313) 446-0412 or kpinho@crain.com Bill Shea, enterprise editor, the business of sports. (313) 446-1626 or bshea@crain.com Dustin Walsh, senior reporter, economic issues. (313) 446-6042 or dwalsh@crain.com Sherri Welch, senior reporter, nonprofits and philanthropy. (313) 446-1694 or swelch@crain.com

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DMC

FROM PAGE 1

Crain’s also asked for an interview with DMC officials to go over the ACGME letter and complaints lodged against the program. Instead, DMC provided a written statement in an email last Wednesday. “The DMC is proud of its record as a teaching institution for the 1,100 residents in DMC programs. We welcome the opportunity to meet with ACGME to discuss the implementation of training programs for cardiology fellows over the last several years.” Under ACGME authorization, DMC’s interventional cardiology program trains a total of four approved fellows, who work closely with faculty for a year on advanced procedures. After their fellowship, they must pass an exam administered by the American Board of Internal Medicine. They also must complete at least 250 cardiac procedures during the year. Last October, three top DMC cardiologists were relieved of their administrative duties for alleged codeof-conduct violations. Schreiber, who was also president of DMC Cardiovascular Center, was removed from the program and resigned from other positions in protest. Crain’s also has learned that a fifth teaching cardiologist, Ashok Kondur, DMC’s associate interventional fellowship director, was also removed from the program. The cardiologists contend they were retaliated against because they have complained for years about DMC staffing and service reductions they say have jeopardized patient care. DMC has denied patient care problems and said the physicians violated the health system’s code of conduct when it comes to employees and other physicians. “We made the changes in the cardiology service line for reasons that we have been clear about — standards of conduct violations that involved bullying of DMC team members including nurses, ancillary staff and physician colleagues,” said the DMC statement. “We believe the cardiology program is better off for it, and we have received favorable feedback from fellows that the program now offers a much richer learning environment.” But a Dec. 28 letter from all four fellows to the DMC Heart Hospital expressed concern over the firings of core faculty members cardiologists Mahir Elder, Tamam Mohammed and Amir Kaki. The fellows credited the former core faculty with developing a world-class training program and exposing them to a great education. They objected to DMC’s alleged retaliation against them for raising quality-of-care issues. “It has been a disservice to our education to not be permitted to work with them and see their roles have diminished over the last few months,” they wrote. “Not permitting us to attend their lectures, didactics, clinic and cases have compromised the entire training program. The replacement physicians have not been able to match the education, procedures and high standards of patient care that has been traditionally provided by these physicians.” Two physicians, who are in contact with the fellows and asked for anonymity, said at least one of the four fellows is looking to transfer to another program and the other three are seriously considering it, depending on the ACGME’s action and

CREATIVE COMMONS/PARKERDR

The DMC’s cardiology fellowships have been centered on DMC Harper Hospital.

whether the program improves in the coming weeks. DMC’s statement concluded: “Our priorities start and end with providing great patient care. The cardiology leadership changes we made to foster a better atmosphere for teaching residents and fostering teamwork are a great example of that.” In a Dec. 21 email from a DMC graduate education manager and upon recommendation from Patricia Wilkerson-Uddyback, M.D., DMC’s vice president of graduate medical education and community affairs, Kaki, Elder and Mohammed were “deactivated” from the interventional cardiology faculty roster “until we decide what the comprehensive update will be for your site visit. Please add the voluntary faculty we have discussed.” This email, say two physician sources, indicates that DMC did not make the faculty announcement change immediately after the firings. DMC also did not inform ACGME in October of the changes, which is one reason the accrediting body said it received conflicting information on the program, they say. On Nov. 4, Schreiber wrote ACGME an email to notify the accreditation body that he was removed from his director’s position he held for 14 years on Oct. 1 “without justification, notice or due process.” He said he has trained more than 50 successful interventional cardiologists, many of whom are tops in their field at hospitals across the U.S. and world. When contacted by Crain’s, Schreiber declined comment and referred to his letter. After leaving DMC last fall, Schreiber became chief of cardiology at Ascension St. John Macomb-Oakland. A nationally recognized cardiologist who has published more than 120 academic papers and conducted more than 25,000 procedures, Schreiber started the interventional cardiology program at St. John Hospital in 1990. He also has worked at Beaumont Hospital before being recruited to DMC in 2004, where he turned around DMC Harper Hospital’s interventional cardiology program.

In his email to ACGME, Schreiber asked the interventional cardiology review committee to evaluate the DMC program “so action may be taken to make corrective steps ... so that the current fellows do not waste a year of their professional lives.” Four incoming fellows, expected to begin training July 1, also expressed concerns about the program to him, he said. Schreiber’s complaint to ACGME noted the following problems with the DMC program: J None of the four interventional fellows are expected to perform the necessary 250 coronary interventions during their fellowship year by June 30. J Fewer than 10 interventional coronary procedures were conducted at DMC during October. The previous year, more than 1,400 were performed, or 117 per month. At the current rate, the program will perform less than the 400 annual procedures required. J There are not enough faculty with documented qualifications and volume to instruct and supervise all fellows. (ACGME requires faculty demonstrate evidence of productivity in scholarship, peer-reviewed funding and publication of original research and review articles). J Fellows are now sent to non-approved programs in metro Detroit (Beaumont Hospital Trenton and St. Mary Mercy Hospital in Livonia) as assistants to private interventional cardiologists who do not have sufficient volume and who do not meet criteria for key faculty doing service. J Some fellows are asked to “double-scrub” on cases because there are so few procedures available. Each of the two fellows performing the case are counted as the primary doctor by the program, although ACGME requires fellows to be the sole primary provider.

Implications of ACGME site visit People familiar with the ACGME and medical education say the alleged violations could result in the

program being shut down, or put on probation and given a period to come up with a corrective action plan to remedy the alleged lack of faculty qualifications and low procedure volume, or reduce the number of fellows in the program. Kim Williams Sr., M.D., head of cardiology at Rush University Medical Center in Chicago, said programs are shut down from time to time and residents and fellows transfer to other hospitals, which try to help out future physicians. A recent heart program that shut down was a voluntary withdrawal this year at Wright State University Boonshoft School of Medicine in Dayton, but that was a general cardiovascular residency program, not an interventional cardiology fellowship program. No details were available about the reasons. “You can't expect private practice (cardiologists) to run an academic program and keep the volume (of procedures) up if they leave. Volume will drop. It’s not surprising,” said Williams, who also was former director of Wayne State’s cardiology department from 2010-2013. “If the fellowship program is shut down, the fellows will be protected and positions found for them at other institutions.” ACGME doesn’t provide details on why programs lose accreditation. However, a Crain’s public data search on ACGME’s website found nine interventional cardiology programs dropped accreditation over the last 15 years, mostly smaller programs. The last two were in 2018 at Icahn Medical School at Mt. Sinai Hospital in New York with two fellows and in 2014 at Seton Hall University Hackensack Meridian medical school in Newark with two fellows. In Michigan, eight interventional cardiology programs are accredited by ACGME, including at Henry Ford Hospital, Beaumont Hospital, University of Michigan and at three Ascension hospitals in Southeast Michigan. At DMC, each January since 1999, DMC Harper Hospital’s program has been re-accredited for one-year terms. Site visits are normally done

every 10 years and the next normal one is scheduled for Nov. 1, 2020, ACGME said. However, the last inspection was Aug. 19, 2014, when a complaint was filed about several fellows who were overexposed to radiation. ACGME ordered Harper to improve its radiation safeguard protocols. On the planned Feb. 8 site visit, ACGME did not provide further information other than to state in its letter to DMC that it is required for continued accreditation. Site visits can be triggered by complaints and major program changes, according to ACGME. The two training hospitals added to the program since last October to give fellows additional procedures — Beaumont Trenton and St. Mary Mercy — may not have sufficient volume and complex procedures for the fellows training, the two physicians said. DMC Sinai-Grace Hospital was also added to the program, but the hospital has at least 50 percent fewer procedures than it did in 2017, sources familiar with the program have told Crain’s. DMC officials did not respond to several specific questions about program changes. Officials for the Beaumont and St. Mary’s hospitals said they each have a formal “program letter of agreement” with DMC to help out its interventional cardiology program. It is not clear, however, whether ACGME has approved the changes in DMC’s program. In a statement, “St. Mary Mercy Livonia agreed to help support the cardiology fellowship training program by enabling senior cardiology fellows to work with our attending cardiologist physicians to provide patient care in order to meet their training requirements. “This type of support is common among hospitals to ensure ACGME resident or fellowship trainees have access to necessary hospital-based training during unanticipated faculty or facility changes,” said the St. Mary Mercy statement. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

C R A I N ’ S D E T R O I T B U S I N E S S // J A N U A R Y 2 8 , 2 0 1 9

THE WEEK ON THE WEB

RUMBLINGS

Packard Plant bridge collapses

Tigers’ digital tickets: Street scalpers’ bane?

JANUARY 18-24 | For more, visit crainsdetroit.com

he Packard Plant bridge over East Grand Boulevard in Detroit, one of the mammoth former auto plant’s most recognizable features, collapsed onto the road below Wednesday afternoon. No injuries were reported. Crews were working to clear the debris and reopen the street. Joseph Kopietz, a member of Detroit-based Clark Hill’s real estate group representing the 3.5 millionsquare-foot plant’s owner, confirmed the collapse to Crain’s. Earlier Wednesday, according to Kopietz, some construction crews on the site reported bricks were falling from the bridge that crosses Grand Boulevard as part of the sprawling, blighted factory campus on Detroit's east side. Kopietz spoke on behalf of Arte Express Detroit LLC, run by Peru-based developer Fernando Palazuelo. It bought the plant from Wayne County for $405,000 in a 2013 auction of foreclosed property. An attempted revitalization there is underway. Crain’s left a message for Palazuelo on Wednesday evening. “We took efforts to try and at least block traffic in the interim to assess what was going on structurally,” Kopietz said. The contractors on site installed private barriers to try to block traffic ahead of the collapse, but some cars seemed to be “ignoring” them, he said. “Later in the day, however, the structural issues just continued to surmount, and catastrophic collapse occurred at approximately 3 p.m. this afternoon,” he said Wednesday. Ron Dickerson, a security guard with Sterling Security & Patrol, told reporters on the scene that he noticed bricks falling from the bridge late in the morning. Dickerson has worked for five years for the private security company that was hired to keep urban explorers out of the ruins of the once-storied auto plant. He said he had passed underneath the bridge “thousands of times,” growing more wary of its condition in recent weeks. “We’d seen it leaking a little bit (of water) because it was already damaged a long time ago,” Dickerson said. “You’d be scared to be underneath it.” The bridge is a joint property of Arte Express and the city of Detroit, according to Kopietz, because Detroit owns the connected building south of the bridge — 1539 E. Grand Blvd. Arte Express has been trying to acquire the property under a development agreement. He said Arte Express hasn’t been able to oversee structural assessment of that building because the company doesn’t own it. “At this point it’s in the public roadway, it’s unfortunately not our property, so we’d like to work with the city to find some mutually beneficial way to take care of this as quickly as possible,” he said. “It highlights the need for the city to transfer their ownership if they’re not going to do anything with that building.” The affected portion of East Grand Boulevard was shut down by the Detroit Police Department, the city said

CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

The Packard Plant bridge over East Grand Boulevard in Detroit collapsed Wednesday afternoon. Earlier Wednesday, some on-site construction crews reported bricks were falling from the bridge..

Detroit digits A numbers-focused look at last week’s headlines:

$21 million

Expected cost to renovate a historic school in Midtown

$4 million Grant awarded to the Michigan Opera Theatre by the William Davidson Foundation

The percent increase of commercial property values in Detroit over the past year

in a statement Wednesday evening. The city said it hired Blue Star Demolition to handle the removal under an existing contract covering emergency work. That work began late Wednesday night. “Our first priority is to ensure the area is made safe for the public and the roadway is reopened as soon as possible,” the statement said.

BUSINESS NEWS J A historic school building in Detroit’s Midtown is pegged for a $21 million redevelopment into a “business ecosystem” for entrepreneurs, startups, artists and residents. Denver-based developer Q Factor is planning to transform the 103,000-squarefoot Thomas Jefferson Intermediate School into creative office space, it announced last week. J The last day for the Hard Rock Cafe in Detroit was Saturday. Plans for the prime downtown property are still up in the air, but Dan Gilbert’s Bedrock promises a top-notch tenant. J Quicken Loans Inc. is being targeted with a federal lawsuit by a San Francisco-based startup that won a $740 million verdict against an affiliate of the Detroit-based mortgage lender last year. HouseCanary, which makes appraisal software and automated-home valuation models, is claiming Quicken Loans is responsible for stealing trade secrets, along with Amrock. J Construction has begun on Royal

Oak’s new City Hall, marking the start of a municipal headquarters maneuver that’ll also involve demolishing the old city building and replacing it with a park. The new 32,000-square-foot City Hall, the 2-acre park and a new police headquarters building are part of the long-planned Royal Oak Civic Center project downtown. J Fiat Chrysler Automobiles NV agreed to sell car-parts unit Magneti Marelli to KKR & Co.’s Calsonic Kansei in the first major deal for the Italian-American carmaker under new CEO Mike Manley. The transaction, valued at $7.1 billion, will create Japan-based Magneti Marelli CK Holdings. J Foot Locker is bringing an interactive store concept to metro Detroit that will double as a neighborhood hub for artists, musicians and sneakerheads. The 8,668-square-foot store at 17755 E. Eight Mile Road in Eastpointe across from Eastland Center is the first “Power Store” concept to hit North America, according to a news release. J Huron Capital Partners LLC has hired the former CEO of furniture company Herman Miller and a human resources pro as it aims to grow its investments. The Detroit-based private equity firm has taken on Brian Walker and Sherry Mennenga as partners with plans to add one more new partner by the end of the month, according to a news release last week from the company. It also added three transaction associates to its staff.

ENTERTAINMENT NEWS J Tickets for the wildly popular musical “Hamilton,” set to debut in Detroit in March, went on sale Friday. The Broadway hit is scheduled at the Fisher Theatre from March 12 through April 21. The 46 shows are expected to be sold out. J The Michigan Opera Theatre has been awarded a $4 million grant from the William Davidson Foundation for community outreach, educational programming and facility improvements. The grant supports the Detroit-based opera company’s Historic Path to a Bold Future campaign, which has raised $30 million against its goal of $50 million since it launched in 2015.

he Detroit Tigers’ decision last week to move to digital ticketing and eliminate almost all paper tickets for games at Comerica Park drew a chorus of online boos from fans and ticket collectors. It also has a street-level economic effect: Scalping tickets on the street becomes harder. Digital tickets show up on your mobile device and use a bar code that’s scanned upon ballpark entry. For the Tigers, they’re available for sale only via a Major League Baseball app or through official MLB resale partner StubHub’s app. That means to scalp, each party now has to trade their email address with a stranger. Will fans trust the person with the “NEED TICKETS” sign around this neck on Brush Street? If they do, they can exchange information. The MLB app allows only ticket forwarding, so a street scalper could send tickets in return for cash. Street-level ticket arbitrage has long been the bête noire of teams, artists and concert promoters and

promoting e-tickets within their own sales ecosystem have been one way to combat scalping. Of course, there are online ticket scalpers and companies that buy up tickets to games and events and resell them, sometimes at inflated prices, on secondary market sites such as StubHub and SeatGeek. Last year. Ticketmaster denied a joint Toronto Star-CNBC report that accused the company of colluding with bulk online scalpers in return for a cut of sales. The Tigers did say that fans without smartphones and those unable to use digital tickets can call or come to the stadium box office for printed tickets, so that’s one theoretical backdoor for scalping paper tickets on the street. Group ticket sales of 15 or more also will be via paper tickets. The team also will sell commemorative tickets for major events that occur at a game, such as a no-hitter or historic home run. The Lions, Red Wings and Pistons all previously moved to paperless ticketing.

WENDY HILLIARD GYMNASTICS FOUNDATION

Wendy Hilliard is expanding her gymnastics foundation to a newly renovated recreation center in southwest Detroit.

Expat Wendy Hilliard grows foundation in Detroit H

all of Fame gymnast and Detroit native Wendy Hilliard is expanding her gymnastics foundation to a newly renovated recreation center in southwest Detroit. The Wendy Hilliard Gymnastics Foundation, which provides free and low-cost quality gymnastics programming for urban youth, is now offering weekly classes through Kemeny Recreation Center, according to a news release. Cost is $20 for members of the facility, which saw a $9.5 million renovation last year that included a new gymnasium. Hilliard founded her New York Citybased nonprofit in 1996 and brought it to Detroit in 2016 with weekly classes at Joe Dumars Fieldhouse. She announced the move during Detroit Homecoming in 2015. Since then, she’s expanded the nonprofit’s reach in Detroit to after-school classes for more than 200 students per week. City-sponsored GOAL Line Detroit and nonprofit Boll Family YMCA in Detroit are providing assistance with

transportation. Troy-based foam products manufacturer Envirolite and Shepherd-based gymnastics company Tumbl Trak are providing equipment. Hilliard's connections to Detroit are strong, and her passion for helping urban youth was inspired by her mother and role model Gwen Hilliard. Gwen Hilliard was a Detroit Public Schools administrator who was instrumental in creating the Detroit Metro Gymnasts program, which bred world champions and Olympians. Gwen Hilliard died Dec. 10 and will be honored with a posthumous proclamation from Detroit City Council at a memorial service Feb. 9. Largely because of her mother’s efforts, Wendy Hilliard went on to become captain of the Detroit Metro Gymnasts and the first African-American to represent the U.S. Rhythmic Gymnastics team. “My gymnastics training through the Detroit Recreation Department changed my life,” Hilliard said in a news release.

The U.S. Bureau of Labor Statistics predicts a

20% INCREASE in health care management positions over the next decade.

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The degrees for health care leadership

LEARN MORE Âť global.cmich.edu/health CMU quality. Online convenience. Central Michigan University is accredited by the Higher Learning Commission (www.hlcommission.org), a regional accreditation agency recognized by the U.S. Department of Education. CMU is an AA/EO institution, providing equal opportunity to all persons, including minorities, females, veterans and individuals with disabilities (see cmich.edu/ocrie). 3786708 1/19