Crain's Detroit Business, Oct. 19, 2015 issue by Crain's Detroit Business

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CRAIN’S Readers first for 30 Years

DETROIT BUSINESS

Not scared of the big pumpkins Independent costume shops dress up in their own way, PAGE 3

OCTOBER 19-25, 2015

Medicaid change may rock insurers

Housing market HEATS UP

HAP Midwest among those taking a hit By Jay Greene jgreene@crain.com

The financial impact from the potential loss of Medicaid contract business in Michigan could be massive next year for Detroit-based Henry Ford Health System and its 100,000-member HAP Midwest Health Plan, which accounts for half of the five-hospital system’s profits. Lansing-based Sparrow Health System, which owns Sparrow PHP, a 20,000-member Medicaid HMO, also could take a hit, though much smaller than what’s expected for Henry Ford, based on Medicaid contract recommendations issued last week by the state Department of Health and Human Services. Unless the recommendations are overturned in November in a hearing before the State Administrative Board, Henry Ford Health and Sparrow will lose out as the state converts from a county-based Medicaid approach to a 10-region system. At stake for all 11 of the state’s Medicaid HMOs are six-year contracts worth a total of $42 billion for the 1.7 million Medicaid members. Officials for HAP Midwest and Sparrow PHP, which have scored high marks in national quality ratings, declined to comment. State Medicaid Director Chris Priest told Crain’s the state will review decisions with Medicaid HMOs that have appealed, including HAP Midwest. But he said the recommendations were based on a comprehensive review. SEE MEDICAID, PAGE 21

Sales, prices hit 10-year highs; experts don’t see a cooldown soon By Chad Halcom chalcom@crain.com

LON HORWEDEL

Already sold is this home (top) in Hunter Pasteur Homes’ StoneLeigh development in Lyon Township; (bottom) HQ Exteriors employee Jim Daniels works on a StoneLeigh home.

SEE HOMES, PAGE 24

Analysis: Why Tigers might be sold – and why they might not With a disappointing Detroit Tigers season now in the history books, talk has turned to potential free-agent player signings and lineup changes for next year. There also are whispers — mostly bar talk and Internet chatter, but

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ummer has flown by, but a gathering heat in the Southeast Michigan housing market is unlikely to cool soon, now that the backlog of foreclosed homes is nearly gone and buyers are looking to beat a creep in interest rates. Home sales across much of the area hit 10-year highs in three of the past five months, according to Realcomp II Ltd . The Farmington Hills listing service reports that home sales in a four-county region of metro Detroit rose 8.4 percent for 26,174 sales for May through September, compared with 24,156 sales in the same period of 2014. Median sale prices for a larger region of

Southeast Michigan were at 10-year highs for each of those five months, soaring even in markets where total sales volume was weak. Experts say the tide is rising on several factors: pent-up demand from buyers who sat out the last recession, sellers who also waited and are no longer underwater on mortgages, and a clearing inventory of bank-owned homes. Realcomp reports that foreclosure properties in the greater region decreased more or less steadily from 6.4 percent of sales in May to 5 percent in September figures released last week. “That’s almost back to normal,” said Dan

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also some scuttlebutt in the business community — that team owner Mike Ilitch or his heirs could sell the baseball club he bought for $85 million in August 1992. The Ilitch family says it intends to keep the team: “None of our businesses or teams are for sale. Careful planning has been done over many years by Mike and Marian Ilitch to ensure the Detroit Tigers, the Detroit Red Wings and our entire family of businesses remain under ongoing and long-term Ilitch ownership,” said son Chris Ilitch, CEO and president of Ilitch Holdings Inc. However, plans can change and there are compelling reasons to sell, despite the patriarch’s financial and emotional investment.

BILL SHEA bshea@crain.com Twitter: @bill_shea19 At age 86, Mike Ilitch appeared in good health Oct. 2 at the annual Goodfellows Breakfast, which honored Chris. But his health — and intentions — often are a topic of speculation among fans and pundits. Publicly, Mike Ilitch has been outspoken about his hunger to win a World Series with the team that

employed him as a minor-leaguer in the early 1950s. Since 2006, he’s spent $1.5 billion on players to get that elusive championship. The club’s front office in recent weeks has said such spending, rather than significant cutbacks, will continue next season. So why sell? Sports industry insiders estimate the Tigers could fetch more than $800 million on the open market. That could be a strategy to offset what might be an enormous estate tax bill, and to provide cash for the family’s wave of new investments in Detroit. Conversely, those investments are a major reason to keep the SEE TIGERS, PAGE 25

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MICHIGAN

BRIEFS Lawmakers approve aid for Flint to switch water source Flint will receive $6 million in state funding to help switch its drinking water source after the discovery of lead and other problems connected to water quality, The Associated Press reported. Gov. Rick Snyder approved nearly $9.4 million in aid last week that includes money for water filters, inspections and lab testing; the Senate and House previously voted for the aid. Flint stopped getting its water from Detroit’s system last year in a cost-cutting move but, as it awaits a new pipeline to Port Huron, has had trouble with water taken from the Flint River. Returning to Detroit will cost $12 million through June. Flint will pay $2 million for the project, and the Flint-based Charles Stewart Mott Foundation pledged $4 million.

RV resort anticipates big demand for tiny houses Some houses are very small at Traverse City RV Resort, but not so for their price tags. The Acme-based re-

sort is tapping into the “tiny house” fad by opening an area devoted exclusively to high-end cabins, MLive.com reported. The 400-square-foot houses, built by Wheelhaus of Jackson Hole, Wyo., will start at $129,000, said David Scheppe, the resort’s operator and developer. An additional studio shed can be purchased for $9,000. The buildings are placed on a 5,000- to 13,000-square foot lot that can be leased for up to 15 years for $450-$500 per month. “We’re an alternative to the condominium,” said Scheppe, who operates the 150-acre campground annually from May through October. “We are not off the grid.” Meanwhile, Jamie McKay, Wheelhaus founder and CEO, told MLive that its cabins are designed to be the “BMWs of tiny houses.”

MICH-CELLANEOUS 䡲 An investigation by Reuters has found that multiple employees of Midland-based Dow Chemical Co. have questioned whether the company’s high-profile chief executive,

Andrew Liveris, was exploiting his position to finance his lifestyle, further his personal pursuits, or favor his family and friends. In more than 2,000 pages of documents reviewed by the news service, new details and allegations call into question how Liveris has been running the $58 billion company, and how its internal watchdogs battled with him over what they considered inappropriate practices and perks. 䡲 Executives from Grand Rapidsbased Lake Michigan Credit Union and United Federal Credit Union of St. Joseph announced a merger to form an organization with more than $6 billion in assets with 500,000 members in 78 locations in seven states, MiBiz reported. The deal is scheduled to close by year’s end. 䡲 Improving information technology in government could save Michigan $286.8 million over the next five years, according to a report from the Washington, D.C.-based Information Technology and Innovation Foundation. The report said state gov-

ernments should make it a top priority to boost productivity with IT. 䡲 Two submissions each won $200,000 grand prizes at the seventh annual ArtPrize, The Associated Press reported. Textile artist Ann Loveless and her husband, photographer Steven Loveless, from Beulah won the public vote for “Northwood Awakening,” a large photo print and quilt hybrid that depicts a

serene woodland panorama. Ann Loveless also won in 2013. Kate Gilmore of New York won via jury vote for “Higher Ground,” for which she transformed a former Grand Rapids convent into performance art with women swinging on swings in open windows. The competition brought 1,550 entries to Grand Rapids this month. 䡲 Michigan State University and Plymouth-based corporate partner Fraunhofer USA are investing $5 million in the expansion of the MSU-

INSIDE THIS ISSUE BANKRUPTCIES . . . . . . . . . . . . . . . . . 23 CALENDAR . . . . . . . . . . . . . . . . . . . . . . . 16 CLASSIFIED ADS . . . . . . . . . . . . . . . . 21 DEALS & DETAILS . . . . . . . . . . . . . . 20 MARY KRAMER . . . . . . . . . . . . . . . . . . . 8 OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . 8 OTHER VOICES . . . . . . . . . . . . . . . . . . . 9 PEOPLE . . . . . . . . . . . . . . . . . . . . . . . . . 20 RUMBLINGS . . . . . . . . . . . . . . . . . . . . 26 WEEK ON THE WEB . . . . . . . . . . . . . . 26

Fraunhofer Center for Coatings and Di amond Technologies in East Lansing,

COMPANY INDEX: SEE PAGE 24

where diamonds are grown for industrial purposes. 䡲 “Miss Margy,” the newly built ferryboat for transporting passengers between Mackinac Island and the mainland, made its maiden voyage last week, AP reported. The 85-foot vessel, the first ferryboat to be built in northern Michigan, is named for the mother of Bill Shepler, CEO of the company that has long provided ferry service to and from the resort island. Meanwhile, Mackinac Island’s Grand Hotel was named best historic resort for 2015

by the Historic Hotels of America. 䡲 Would it really be Christmas if Michigan’s official holiday tree didn’t come from the Upper Peninsula? The state announced last week that the 66-foot spruce from the western U.P. city of Wakefield, in Gogebic County, will arrive at the Capitol on Halloween morning, AP reported. This year’s is the 21st state tree chosen from the U.P. The new tree will be lit Nov. 20 during Lansing’s Silver Bells in the City celebration. 䡲

CORRECTIONS 䡲 A 40 under 40 profile for Charlie Knoll on Page 19 of the Oct. 12 edition incorrectly said that Knoll held a minority interest in an Illinois company as a teenager. 䡲 A 40 under 40 profile for Anika Jackson on Page 17 of the Oct. 12 edition misstated the name of Prestige Automotive Group.

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Indie costume shops not spooked by monstrous rivals By Vickie Elmer and Rivan Stinson Special to Crain’s Detroit Business

hile much of Michigan is buying chocolates and hearts for Valentine’s Day, Patrick Lynch is choosing costumes he hopes customers will love in October. Between January and March, Lynch buys 50,000 items for his family-owned Lynch’s Inc. in Dearborn, adding much makeup and about 30,000 costumes to the 200,000 items in the shop during slower months. Halloween starts early at a handful of independent costume shops in metro Detroit, with trips to trade shows in Las Vegas or New Orleans and the Toy Fair in New York City to find compelling items and creative options. They know the competition will sell the basics — and that competiRIVAN STINSON tion includes almost every chain store in Patrick Lynch says flapper dresses town. By late September, and other Roaring ’20s costumes pop-up chains, drug- are top sellers at his Lynch’s Inc. stores, supermarkets and discounters all promote children’s costumes and witches’ hats in weekly circulars. So the independents compete by offering extra services and more choices in costumes — plus shoes, wigs, and for those who want to impress their friends, higher-priced custom-made finery. “If you want to rent a theatrical-quality Darth Vader or

SEE HALLOWEEN, PAGE 22

New paramedics programs work to keep patients at home By Jay Greene jgreene@crain.com

In new programs being tested throughout Southeast Michigan, the paramedics come to keep patients out of the hospital. The practice, known as community paramedicine, is expanding in the region as more ambulance companies join Southfield-based Community EMS in helping hospitals reduce readmissions and unnecessary emergency department visits. The idea is for paramedics to visit

people at home with chronic diseases before they wind up in the hospital, or to do follow-up with patients recently discharged from the hospital to keep them from coming back. Last year, Community EMS began a mobile health pilot program with Botsford Hospital in Farmington Hills to use paramedics and telemedicine to assess the health of chronic-disease patients who develop non-emergency health problems.

Huron Valley Ambulance and Liv ingston County EMS joined with St. Joseph Mercy Health System and the University of Michigan Health System ,

both in Ann Arbor, to launch in August a three-year community paramedic pilot project to make house calls and try to keep non-acute patients at home rather than them taking an ambulance to the hospital. In Macomb County, Medstar Am bulance also has begun a community paramedicine program to help

recently discharged heart failure and chronic obstructive pulmonary disease patients from McLaren Ma comb and Henry Ford Macomb hospitals stay at home. Community paramedicine programs are just one way hospitals are working with nursing homes, home health agencies, medical groups, admitting physicians and other organizations to reduce readmission rates and health care costs. Nationally, hospitals are struggling to reduce readmissions be-

MUST READS OF THE WEEK Seeking transparency Low gear on high-tech Shades of Michigan’s fall As health care costs rise, employers and consumers push for better data on prices, services, Page 11

Thirty years ago, most Michigan auto suppliers gave little thought to using robots, other advanced technology, Page 6

Crain’s readers like Daniel Lutz, president of Prime Commercial Group in Farmington Hills, share their photos of the season. Share yours, too, www.crainsdetroit.com/photo

cause they are financially penalized under the 3-year-old Hospital Readmissions Reduction Program, which was mandated under the Affordable Care Act. More than half of Michigan’s hospitals — 71 of them — were fined this year a total of $25 million for having too many non-managed care Medicare patients readmitted for heart attack, heart failure, pneumonia and two new categories — SEE PARAMEDICS, PAGE 22

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Top real estate execs take new jobs at area companies By Kirk Pinho

Recent brokerage moves

kpinho@crain.com

A rundown of some other notable brokerage moves in the past year:

Commercial real estate has seen some shake-ups in the past two weeks in metro Detroit as two highprofile executives have changed companies. First, Barry Swatsenbarg parted ways with Farmington Hills-based

Arthur Itkis, from associate at CBRE Inc., Southfield, to real estate consultant at A.F. Jonna Development and Management Co., Bloomfield Hills Viktor Gjonaj,from principal at Signature Associates Inc.,Southfield,to associate broker, Landmark Commercial Real Estate Services Inc.,Farmington Hills Peter Jankowski, from senior associate broker at Colliers International Inc., Southfield, to vice president at Core Partners LLC, Bingham Farms

Friedman Integrated Real Estate Solu tions LLC as its national director of

Gary Grochowski, from senior vice president at L. Mason Capitani, Troy, to senior vice president and director of agency leasing, Colliers

investment sales and loan sale advisory services to take a similar role in the Southfield office of Colliers International Inc. There, he is senior vice president of investment and loan sale advisory. He started Oct. 5. Then last week, Larry Emmons left the Southfield office of CBRE Inc. to join

Richard Ludwig, from senior vice president and director of retail brokerage at Colliers to senior director at Fortis Net Lease, Farmington Hills Renée de Spelder, from senior associate at Lee & Associates, Southfield, to senior associate at Principal Associates, Southfield Ben Rosenzweig, from commercial real estate agent at Howard Schwartz Commercial Real Estate LLC, Farmington Hills, to vice president of brokerage at Indigo Centers, Birmingham

Jones Lang LaSalle

as managing director, overseeing about 15 brokers, mostly representing landlords, in Larry Emmons: metro Detroit. Will oversee about Emmons, 50, 15 brokers at JLL. had been CBRE’s senior vice president of capital markets, a position he took two years ago after working in the Southfield office of Newmark Grubb Knight Frank for three years. Emmons, who said he left CBRE on “very good terms,” said the chance to manage a stable of brokers led him to Jones Lang LaSalle. “The element that really tipped the balance for me was the ability to take the leadership at a peer company to CBRE,” he said. Emmons plans to boost JLL’s landlord representation ranks. “That’s going to be a big part of my recruiting effort,” he said. “Industrial, retail and office, in that order, and five, maybe 10, hires in a year. JLL is very mindful of its reputation and

culture and only hires the best.” He was on the Newmark Grubb brokerage team that sold the Travelers Towers I and Travelers Towers II buildings in Southfield to Time Equities Inc. for $25.1 million as well as the New York City-based company’s purchase last year of the 104-acre former Unity Studios site in Allen Park for $12 million. Emmons was also a broker on the $22.5 million GE Capital sale of the 1.1 million-square-foot Allied Commerce Center to Toronto-based IKO Industries Ltd. in 2012. Swatsenbarg, 41, had been with Friedman since January 2001, according to his LinkedIn profile. Before that, he worked in investment sales for the former Grubb & Ellis from 1998 to 2000 and was managing director of the Trenchant Group from 1995 to 1997. He declined comment. Among Swatsenbarg’s notable deals recently was this summer’s online auction sale of the Fisher Building and Albert Kahn Building in

the New Center area to a four-headed investment and development group for $12.2 million. Matt Farrell, principal, board member and partner of Bingham Farmsbased Core Part ners LLC , had high praise for Swatsenbarg and Emmons. Farrell worked Barry with both during Swatsenbarg: stints at the forWorked on Fisher, mer Grubb & Kahn building sale. Ellis and Friedman. Farrell called Swatsenbarg a “phenomenal broker with a deal at the table.” Farrell said Emmons is a “good administrator, and a good executive-caliber guy.” “Larry is a class act,” Farrell said. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

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Every year, Crain’s 40 under 40 awards program honors high achievers who have made an impact as executives, managers, entrepreneurs and community leaders. This year’s honorees will be recognized at a special event Nov. 19 at the Detroit Marriott Renaissance Center. This year’s winners launched successful companies, grew established firms, took on highpressure projects and more. Individual tickets for the event, scheduled from 5-9 p.m., cost $80. Tickets for groups of 10 or more are $75 each. For past 40 under 40 winners, the cost is $40 per ticket. A strolling dinner and drinks are included. To register for the event, go to crainsdetroit.com/events or call (313) 446-0300.

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30 years ago, suppliers were in low gear over high-tech By Dustin Walsh dwalsh@crain.com

While today’s automotive plants are on the cutting edge of technology — complete with 3-D modeling, advanced robotics and cloud-connected computer systems — the industry long struggled to adapt in the early years of high-tech. A survey released 30 years ago, and covered in a Crain’s article titled “Auto suppliers balk at high tech” on Oct. 21, 1985, showed just how far removed many of Michigan’s suppliers were from the incoming technological boom.

LOOKING BACK: On Oct. 21, 1985, Crain’s reported on a survey that indicated many Michigan auto suppliers weren’t anticipating the growth of high technology. But their lack of foresight might be forgivable in hindsight. More at crainsdetroit.com/30 According to the survey of 553 suppliers by the Industrial Technology Institute of Ann Arbor, 30 percent had no plans to install computers of any kind, 58.4 percent had no plans to use industrial robots, and 70.9 percent didn’t intend to install flexible manufacturing systems. “I’d wager most of those companies aren’t in business today,” said Jay Baron, president and CEO of the

Ann Arbor-based Center for Automotive Research. “The complexity of cars, and making a car, has gone way up since then. We’ve got more parts per vehicle at a reduced volume per model. A plant unwilling to automate simply wouldn’t make sense.” However, suppliers 30 years ago faced a far different market in which technology was unreliable and expensive, according to the survey.

Mark Boyadjis, senior analyst of automotive technology and manager at Southfield-based auto advisory and research firm IHS Automotive Inc., said the results aren’t surprising, given the speed of business in 1985. “When it comes to the changes the auto industry has experienced over the last 30 years, the wildest dreams of these suppliers wouldn’t have matched what’s on the road

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today,” Boyadjis said. “You can look 30 years ahead and anything suppliers say today will seem bogus. “The fact is, tech moves at a speed that has doubled down three or four times over. It’s not surprising that these guys would have said this about their own manufacturing.” Boyadjis pointed to the future product development cycle of San Francisco-based technology company Cisco Systems Inc., which develops technologies only three years in advance. “If the guys on the cutting edge of technology — in industrial, financial, telecommunications, etc. — are thinking in a three-year time frame, suppliers 30 years ago thinking about high-tech was nothing more than tossing ideas at a dartboard,” he said. The high cost of competing on the cutting edge was also too much for many suppliers, according to the survey. Of those surveyed, 32 percent responded they could not justify the cost of investing in advanced technologies, while 20 percent said retraining their workforce would be a problem. Mike Cicco, general manager for Rochester Hills-based robotics manufacturer Fanuc America Corp. , told Crain’s last month that industrial technology has become much cheaper since the 1980s. “Robots are simply more capable, vastly more intelligent and much smaller than they used Mike Cicco: to be,” he said. Robots are better. “This has really opened up the potential for more productivity for manufacturers.” This includes smaller manufacturers that once couldn’t afford the high cost. Fanuc frequently fills orders for one robot at a time for mom-andpop manufacturers looking for more advanced ways to compete, Cicco said. Other issues stem from user friendliness, said Jeff Burnstein, president of the Ann Arbor-based Association for Automation Advance ment.

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“Technology simply might not have been ready for those users at that time,” Burnstein said. “The industry lacked a robust integrator community and the training programs we have today.” Burnstein said automotive suppliers currently make up 34 percent of industrial robots in North America, the largest of any industry. Today, that’s translated into higher-quality vehicles made more efficiently, Baron said. “The quality of cars today is unbelievably high,” Baron said. “To do this, you need repeatability and consistency, which happens through automation … so thankfully technology won out.” 䡲 Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

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CRAIN’S DETROIT BUSINESS

OPINION Snyder must take lead on energy issues T

he Lansing debate on replacing Michigan’s 2008 energy law is heating up, but it’s been hard for the general public to follow. Does Michigan need mandates for generating energy from renewable sources like wind and solar? Should utilities be required to continue to help customers reduce energy use? Should customers have broader choice on providers for electricity? These issues are complicated. It’s also hard to know whose information to trust. Legislation currently pending would eliminate the renewable standard and mandate for energy efficiency programs. Separate bills would either continue or eliminate choice of an electricity provider. Here’s a rundown on the three main issues: Electric choice. Current law allows 10 percent of power sales to be bought from sources other than the state’s primary utilities, DTE Energy and Consumers Energy. Demand has outstripped availability, and large users, in particular, would like that percentage increased or eliminated. Utilities say broadening choice unfairly burdens their customers with infrastructure costs. Our take: There’s a lot of conflicting information about the consequences of widely increasing choice, so we don’t believe that should be done at this time. However, it makes sense to allow local governments, school districts and public universities to shop on the open market. The ones who have participated in the choice program so far have saved money, which means more tax dollars are used to serve students and the community. All customers, regardless of vendor, should contribute to maintaining infrastructure. Renewable standard. Utilities met the goal of producing 10 percent of energy from renewable sources by 2015. The utilities argue that pending federal carbon pollution standards make a higher standard moot. Gov. Rick Snyder has advocated for increasing renewable targets to as much as 24 percent of a utility’s electric portfolio by 2025, but he hasn’t asked for a mandate. Our take: The Legislature should set a new renewable standard that can sunset when and if the new federal standards come into play. Otherwise, publicly traded utilities could be vulnerable to investor pressure to put current profits ahead of long-term investment. The Public Service Commission should give utilities broad leeway to choose the best way to meet the standards. Energy efficiency programs. DTE and Consumers now must offer efficiency programs to cut their use each year by 1 percent of retail sales for electricity and 0.75 percent for gas. The programs are funded by surcharges on bills. Utilities argue a mandate isn’t needed because they will continue to offer the programs. Our take: These are widely used and projected to save customers more than $1 billion over the life of the programs, so we believe they should continue to be mandated. And there’s history to be considered: When the PSC dropped a similar mandate in 1995, many programs were eliminated until they were mandated again under the 2008 law. We do believe that large companies that fund programs themselves should be able to more easily opt out of the surcharges than they can under the current law. Where does Gov. Snyder stand on this legislation? At least some of it conflicts with his stated preferences. The governor needs to lead more strongly on this important issue.

Biz should back state plan to make sure 3rd-graders can read ast week, the state House passed a bill intended to ensure that third-graders know how to read before they move on to the fourth grade. It needs approval by the Senate. Gov. Rick Snyder likely will sign it. Opponents object to holding kids back a grade, but the real thrust is to intervene and offer special instruction to get kids to a third-grade level. If poor readers move on to fourth, when kids start learning content in specific subjects, they may never catch up. Already, some school districts are urging parents to contact lawmakers to kill the retention proposal. That may be one of the reasons Michigan has dropped to 38th in fourth-grade reading, according to national assessment tests. My guess is most people probably think their kids’ schools are great, their kids are doing fine and Michigan’s problems are in the big cities, not in their suburban systems. But the numbers don’t show that. Last week, The Education TrustMidwest brought in warriors from

MARY KRAMER: Publisher the front line of education reform in two states to talk about the paths that led their states to be, in the case of Massachusetts, the highest-performing state in the country and, in Tennessee, the fastest-improving. The small meeting was held in Lansing. Some highlights: Business leaders in Tennessee saw lousy schools as a talent issue and acted. Leaders from the four largest cities created a political action committee to support board candidates who supported reform. “Other groups were dumping money in the state, spouting conspiracy theories,” said Marc Everett Hill, chief policy officer for the Nashville Area Chamber of Com-

merce. Today, six of nine school board members in Nashville were endorsed by the business-led PAC. Now, a focus on student achievement has become part of Nashville’s brand, Hill told the gathering. Making sure kids can read is an idea that the entire business community can and should rally around. That’s one reason I volunteered for the Education Trust’s Michigan Achieves Leadership Council. The goal is simple: To make Michigan a top 10 education state by 2030. As Hill told the group, Nashville has 500 to 1,000 technology jobs open at any given time. The business community is working to ensure that local talent can fill those slots — “we don’t want those jobs to go elsewhere.” Mary Kramer is publisher of Crain’s Detroit Business. Catch her take on business news at 6:10 a.m. Mondays on the Paul W. Smith show on WJR AM 760 and in her blog at www.crainsdetroit.com.

LETTERS

Cheaper electricity helps small businesses Editor: Lindsay VanHulle’s Oct. 2 blog, “PSC: Energy efficiency programs should save Michigan customers $4.2 billion,” notes that energy efficiency investments made by electric and gas utilities in 2014 will save consumers at least $1.1 billion. These savings are just the tip of the iceberg when it comes to benefits from increased energy efficiency and clean energy usage in Michigan – and that’s great news for small businesses. The new Clean Power Plan encourages further energy efficiency measures, which lower electricity bills and put money in the hands of consumers so they can spend at local small businesses. Plus, cheaper electricity means small businesses can spend more money on hiring and growing. The Clean Power Plan also promises to help entrepreneurs tap the growth potential of the clean energy industry. Michigan was fifth in the country for clean energy job creation in the first quarter of 2015, and we’ve secured $3 billion in private investments in the clean energy industry over the past seven years. By embracing the Clean Power Plan, we can increase those investments so entrepreneurs have access to the newest markets and latest technologies. Entrepreneurs are itching for ways to save, grow and innovate. We should help them do that by

Send your letters: 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: cgoodaker@crain.com

following the Clean Power Plan. Trent Varva Michigan outreach manager, Small Business Majority, Northville

What happens when the sun doesn’t shine, and wind is low? Editor: This is in response to Jim Dulzo’s and Dan Worth’s Sept. 28 Other Voices, “Don’t keep state mired in past with GOP energy bill.”

When they write, “today the world wants solar panels and wind turbines ... ,” they do not speak for me or the world. There is proposed legislation to have 47 percent of Michigan powered by green, renewable energy by 2030. This means that many residences and businesses would be off the grid and directly connected to renewable energy. Fifty percent of the base load generation, 24/7 reliable electrical generation would be shut down. Where would residences and businesses get electrical power when it is not supplied by green, renewables or grid reliables? Isn’t that wonderful? This means the public utility mandate of base load generation, 24/7 reliable electrical energy must be repealed. Residences and businesses would have electrical energy when the sun shines and the wind blows sufficiently. Residences and businesses would experience rotating brownouts and blackouts. Michigan would experience Third World electrical supply. Is this what American citizens want? Do American citizens understand where we are going with green, renewable energy? If this is not what is going to happen, tell me how green renewable energy is going to be 24/7 reliable? Neil Karl Livonia

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Hiring the disabled is good business sense for Michigan employers or many people with disabilities, including intellectual or developmental disabilities, employment is a source of pride. It gives that person a sense of community and allows a connection to normal, day-to-day life. According to recent census data, there are more than 56 million Americans with disabilities, nearly 20 percent of the population. For those living with a disability, there are many challenges they have to overcome, including finding a job. October marks National Disability Employment Awareness Month, which is dedicated to education about disability employment issues and celebrating the many and varied contributions of America’s workers with disabilities. However, most Americans with intellectual or developmental disabilities, which can include conditions such as autism or Down syndrome, remain shut out of the workforce, despite changing attitudes and billions of dollars spent on government programs to help them. Even when they find work, it’s often part time. A job provides a crucial link for improving the quality of life. Yet only 34 percent of intellectually disabled adults are actually working, according to a survey by Special Olympics and conducted by Gallup and the University of Massachusetts at Boston. Even with tremendous progress removing hindrances to employment, barriers still exist. The largest barrier to employing someone with a disability is perception. We can eliminate the barriers by continuing to educate others on the value and benefits of hiring workers with disabilities. Men and women living with a disability are smart hires. Employing someone with a disability, such as behavioral health problems, benefits both employers and employees. Earlier this year, Lt. Gov. Brian Calley and Michigan Supreme Court Justice Richard Bernstein launched a partnership to highlight the opportunities for hiring Michiganians with disabilities across the state. The MI Hidden Talent tour was focused on highlighting the skills of people with disabilities who are often overlooked. “Employers that hire disabled people are ultimately rewarded with team members who bring passion, energy and loyalty to the workplace. Disabled employees rally their fellow workers and serve as a unified force who can teach the values of resiliency, compassion and understanding,” said Bernstein. Employing people with disabilities leads to increased independence and happiness, not just for the person with the disability, but

OTHER VOICES: Brent Mikulski The writer is president and CEO of Services to Enhance Potential, a community-based nonprofit that helps find employment for people with disabilities. for everyone in the workplace. People with disabilities are known

to have a strong work ethic, low turnover and a desire to succeed. Hiring people with a disability makes good business sense. It also demonstrates a commitment to diversity and inclusion in the workplace. It is time business leaders stop underestimating people with disabilities. Stop focusing on what they can’t do, and focus on what they can do and can offer. A job is more than a paycheck. It is about respect, it is about dignity and it is about the opportunity to make your life productive. We have made tremendous

“It is time business leaders stop underestimating people with disabilities. Stop focusing on what they can’t do, and focus on what they can do and can offer. A job is more than a paycheck.” progress since the Americans With Disabilities Act was passed 25 years ago. However, a disability should not define a job candidate. We need to continue to support funding for special education, high school transition

programs and other ways to think beyond the label and encourage Detroit companies to support and celebrate workplace policies of diversity and inclusion in employing those with a disability. 䡲

BOOK OF LISTS

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SPECIAL REPORT: JAY GREENE jgreene@crain.com Twitter: @jaybgreene

DCCC plans for retirement of ‘guiding light’ fter 18 years at Southeast Michigan’s newest federally qualified health center, Irva Faber-Bermudez, CEO of Detroit Central City Community Mental Health Inc., has decided to step down this December. In May, Faber-Bermudez informed the board so that it could begin succession planning. “I had been thinking about retiring for a while and wanted to get somebody in place before I left,” said FaberBermudez, a former psychiatric nurse. During the summer, DCCC interviewed more than 50 candidates and finally selected one of their own — current CFO Ryan Lepper. “Ryan came to us about a year ago. He was doing well in the banking industry but wanted to make a contribution to the community,” FaberBermudez said. Lepper had been senior vice president in wealth management and institutional investments at Sterling Heights-based Longhorn Capital Management LLC. “He believes in the mission and is great at team-building,” she said. “We are lucky to have him.” DCCC board Chairman Jerry Frohlich said Faber-Bermudez has put the center in a good position to serve the community’s medical, dental and behavioral health needs for the next generation. “The board has always looked to Irva as the guiding light, leading the agency in its mission and purpose by serving all our clients with dignity and respect,” he said. In late 2013, DCCC received a $793,000 federal funding grant to create Southeast Michigan’s sixth federally qualified health center. Now under expansion, DCCC’s Midtown health center at 10 Peterboro St. provides integrated primary medical, dental and mental health services along with housing and support services to more than 4,500 clients each year. Lepper said he hopes to double clients served over the next five years and grow the organization to a $20 million business from the current $12 million annually. “We are embarking on some very new territory in becoming a patient home for all our clients’ medical needs,” said Frohlich, group practice director at Henry Ford Health System. Under Faber-Bermudez, DCCC also has received more than $2 million in federal grants and donations to expand the first floor of the health center to nearly 6,000 square feet. A second floor, which will house dental and pediatric services, will add another 7,500 square feet of space.

HEALTH CARE

Push is on for more price, quality data Employers, consumers demand more transparency

What does transparency mean? FOR EMPLOYERS

Health care transparency can help improve the health care employees receive, while enabling employers to control medical costs. It also can lead to more engaged, activated employees. FOR EMPLOYEES

By Jay Greene jgreene@crain.com

he other shoe has clearly fallen. The movement to high-deductible health insurance plans — designed to control costs and put more decision-making in the hands of patients — has saved employers billions of dollars, but it has also put pressure on the health care industry to become more transparent on the price and quality of its services. Since 2010, 43 percent of employers are now offering high-deductible health plans of $2,500 or more, up from 23 percent five years ago, according to Troybased Marsh & McLennan Agency LLC. While the plans reduce em-

ployer’s costs, employee total out-of-pocket costs — which include premiums, deductibles and copayments — have been rising. From 2003 to 2013, employee costs for family coverage have risen to 26 percent of total income in Michigan from 18 percent. This is slightly lower than national averages, in which average employee costs have jumped to 28 percent from 25 percent of total income, according to a study this year from the Commonwealth Fund. When the cost of a colonoscopy can range from $579 to $3,061 and a knee arthroscopy surgery can range from $1,279 to a high of $11,131 in a single market in Michigan, a

prospective patient with a deductible of $2,500 clearly has a larger financial stake to lose when purchasing health care services. What can individuals do? Only one thing: Shop around for lower prices with an eye for quality, says Jeff Rice, M.D., CEO of Brentwood, Tenn.-based Health care Bluebook, a consulting company that works closely with employers and health insurers in Michigan to provide price transparency. “Patients are more engaged in price and quality because they are being asked by employers, who pay 80 percent of costs, to act like consumers. Most pa-

With more large employers now offering highdeductible health plans, consumers are faced with increasingly large out-ofpocket expenses. Access to price and quality information helps employees save money. It also empowers them to get the best care. FOR PROVIDERS

High-quality health care providers will receive recognition for the excellent care they deliver. Source: Castlight Health and Crain’s research

SEE HEALTH CARE, PAGE 12

Leapfrog CEO, Crain’s health care summit keynoter, backs transparency: Page 15

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SPECIAL REPORT: HEALTH CARE

HEALTH CARE

“Transparency is starting to get pushed down to the smaller health plans. They get objections from providers in their networks. Historically, price information has been proprietary. They don’t want competitors to know.”

FROM PAGE 11

tients don’t know the questions to ask,” said Rice, whose firm contracts with employers that include Priority Health in Michigan to provide price and quality data on providers. “Patients are looking for cost and quality data,” said Rice. “The little secret in health care is that cost and quality aren’t related. We provide price and some quality data. The Leapfrog Group , Consumers Reports and CMS (Centers for Medicare and Medicaid Services) are evolving quality” reporting on hospitals. Leah Binder, CEO of the Leapfrog Group, and keynote speaker at Crain’s upcoming Health Care Leadership Summit on Oct. 28, said the debate is over on whether transparency is a good thing or not. “Transparency is not optional anymore,” Binder said. “It is happening. The question is, how do we get there safely?”

Better data, better choices While an all-claims payer database hasn’t yet been established in Michigan to provide employers and consumers with comparative price data (see Page 14) — which some contend is critical to help employers and patients shop for care — some health insurers and hospitals are beginning to provide price and quality data to the patients they serve. Driven by employer demand, Grand Rapids-based Priority Health earlier this year doubled down on efforts to provide members with online price information by offering participating employers a “health care cost estimator application” through Healthcare Bluebook. The innovative aspect of Priority’s cost estimator app is that it can calculate members’ estimated out-ofpocket costs based on their policy’s benefits and deductibles. Providing this price transparency is important to Priority CEO Mike Freed, who has worked on the hospital side as well as the health insur-

Suzanne Delbanco, executive director of San Francisco-based Catalysts for Payment Reform

ance side of the business as CFO of Spectrum Health, parent company of Priority. Freed said patients need to be able to research prices to make better decisions where they seek care. “We need more transparency in health care because people are paying more out of pocket because of the transition to high-deductible policies,” said Freed, noting that patients also should consider quality of care when making final decisions on a provider. Other insurers are also offering price and quality data on physicians and hospitals in their network. They include Aetna Inc. and United Healthcare. Employers are demanding that health insurers help their employees manage rising out-of-pocket health care costs, said Suzanne Delbanco, executive director of San Franciscobased Catalysts for Payment Reform. “They are pushing contracted health plans to offer effective tools” to their employees, she said. “They are also seeking support of an independent vendor to estimate prices based on historic price data.” Those vendors include Healthcare Bluebook, San Francisco-based Castlight Health and Change Health care, she said. While transparency barriers are slowly coming down, Delbanco said, “there has been an agreement between health plans and providers to keep prices secret.” But when insurers balk at providing more price transparency, employers hire vendors like Healthcare Bluebook to gather data for them and to create online solutions that allow “employees to look up prices before seeking care,” she said. Larger employers have had better

OAKLAND

luck gaining provider price transparency with national payers like Aetna and United, but Delbanco said smaller employers are also beginning to gain greater access to prices. “(Large employers) have all the tools now to incorporate quality information with price information,” she said. “It is getting more userfriendly, but employers with smaller health plans may have less luck.” There are exceptions, noting Priority Health as one example in Michigan, Delbanco said. “Transparency is starting to get pushed down to the smaller health plans,” she said. “They get objections from providers in their networks. Historically, price information has been proprietary. They don’t want competitors to know.” Jay Levine, M.D., a surgeon and Priority’s chief medical officer, acknowledged that Priority sometimes finds itself in between competing interests of its network providers and employer clients. He said some hospitals and doctors are concerned that making data public might be misunderstood because data often is not adjusted for sicker patients, and that it could lead to a loss of business. But Levine said transparency can also help improve patient outcomes. “If I prescribe a medicine that is way outside of the patient’s budget, they won’t comply, won’t fill the scrip and that leads to health problems,” he said. “Transparency helps doctors understand the economics, and that is a good think in the long run.” Moreover, Levine said, patients armed with data can ask questions, shop for care and create competition among providers to help transform the health care system.

“Physicians want to improve the lives and health of patients,” Levine said. “Transparency starts to get that conversation going. There used to be a disparity in what patients and I know about health care. Now that disparity is narrowing.”

Toward transparency Since 2008, Oakwood Healthcare, a Dearborn-based four hospital system now part of Beaumont Health, also has offered its customers a website that lists the average prices and quality information on more than 100 of its most requested top procedures, said former CEO Brian Connolly, who now is a health care conBrian Connolly sultant with Associates. “We were the first in (Southeast) Michigan” to present cost and quality data on Oakwood hospitals, said Connolly. “We always felt like we had a sweet spot in the value equation with quality and costs.” Connolly said prospective patients can go on the website and Brian Connolly: look for price inSome hospitals formation and have been reluctant analyze outto give data comes and customer satisfaction data. He acknowledged that some hospitals have been reluctant to present internal data because the reasons hospitals are high or low in quality and price are complicated, and sometimes beyond their control. For example, some teaching hospitals attract sicker patients that have complications and cost more

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to treat. “Everybody in the hospital industry knows where we are going inevitably,” Connolly said. “We didn’t have anything to hide. I love the idea to have as much information out there as possible.” Other Michigan hospital organizations, including Grand Rapidsbased Spectrum Health in 2006 and Lansing-based Sparrow Hospital in 2008, also offer patients pricing and quality information on their websites. Since 2008, the Michigan Health & Hospital Association has been offering the public a limited but searchable database on hospital Medicare price and quality information. The MHA’s database comes from the Centers for Medicare and Medicaid Services, which has been providing the public transparency data on a variety of quality measures for several years. Medicare also provides hospital utilization and payment data on inpatient and outpatient operations, including physicians. For example, Medicare shows the average amount a hospital bills for services on 100 of the most common inpatient stays and 30 selected outpatient procedures. Another recent example of transparency comes from ProPublica, a New York-based investigative nonprofit organization that earlier this year published a scorecard on surgeon quality. The journalism site worked closely with the North American Spine Society to create the database on more than 17,000 surgeons. Chris Duke, director of the Center for Consumer Choice and Healthcare at Ann Arbor-based Altarum Institute, said he expects more efforts by government, insurers, hospitals and consulting firms to increase availability of price and quality data. “You will see more consistency in pricing and won’t see someone getting billed 10 times more than another,” Duke said. A report last year by researchers at the University of Chicago found that transparency efforts — voluntary and through state and federal regulations to require price and quality transparency — have resulted in an overall 7 percent reduction in the cost of common elective procedures. Scott Eathorne, M.D., CEO of Southfield-based Together Health Network , said data on price and quality of hospitals and doctors is an emerging trend, one that providers are taking seriously, but it must be as accurate as possible. Last year, Together Health was formed to conduct managed care contracting as a clinically integrated network by the 27 hospitals of Ascension Health Michigan and Trinity Health Michigan and 5,000 physicians in dozens of medical groups. “Our goal is to put that information out there, to show comparatively how our prices and quality” of Together Health’s hospitals and physician groups stack up, said Eathorne. “It’s a work in process.” 䡲 Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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SPECIAL REPORT: HEALTH CARE

Current Michigan databases could play role in transparency By Jay Greene jgreene@crain.com

There are five main organizations in Michigan, excluding individual hospitals and insurers, that collect price and quality data. However, only two of these databases are available to the public — the Michigan Health & Hospital Association ’s “Comparing Hospitals” and the Greater Detroit Area Health Coun cil’s “MyCareCompare” websites. But none of the five existing health care databases in Michigan are capable of offering the same level of price transparency as an allclaims payer database, according to the Michigan Health Care Transparen cy Committee Report. If expanded through state legislation, however, three organizations — GDAHC, the Michigan Department of Community Health Data Warehouse, which collects mostly Medicaid data, and the Michigan Data Collabo rative , which is maintained by the University of Michigan and collects mostly primary care physician data — could support an all-claims payer database, the report said. Here are snapshots of the five databases: 䡲 Comparing Hospitals, a section of the MHA’s website that allows consumers to view discharge cost data and quality ratings for hospitals throughout the state. MHA presents to the public average Medicare charges and payments, average length of stay and total number of patients for the top 50 Medicare inpatient and outpatient procedures. Data includes 1.2 million inpatient and 12 million outpatient claims in Michigan. It does not collect reimbursement, or paid amounts, for fear it may break antitrust laws, the MHA said. The website also displays quality data on surgical infections and the most common causes of hospitalization among Medicare patients based on Medicare data drawn from the Centers for Medicare and Medicaid Services’ Hospital Compare website. 䡲 MyCareCompare, a GDAHC website that offers claims data on primary care physicians in metropolitan Detroit and Medicare hospital reports.

GDAHC presents the claims data supplied by Blue Care Network , Blue Cross Blue Shield of Michigan and Health Alliance Plan. The data shows aggregate quality data of physician group practices on a variety of measures, including “appropriate use of antibiotics for adults with bronchitis.” Hospital performance reports are based on quality data submitted to CMS. Data includes “the average number of minutes before patients with chest pain or possible heart attack got an ECG.” GDAHC is seeking to report patient satisfaction results this year and additional physician data in 2016. 䡲 The Michigan Department of Community Health Data Warehouse. This state database collects 19 million claims data from Medicaid, Children’s Health Insurance Plan programs and several other public health initiatives. It also collects Medicare data on those Medicaid enrollees who are considered dual eligible. 䡲 The Michigan Data Collaborative. Operated by the University of Michigan, the collaborative collects multipayer data for the patient centered medical home program sponsored by Blue Cross. Data transparency is only provided to participating physician organizations participating in the medical home program. Blue Cross’ value partnerships and collaborative program database, which is internal to Blue Cross, is designed to support various quality improvement and payfor-performance incentive programs. 䡲 The Michigan Health Information Network. Created by the state in 2005, MiHIN is a public-private nonprofit collaboration that has been formally designated as Michigan’s state health information exchange for electronic medical record data. Like Blue Cross and MDC, MiHIN’s data is limited to participating hospitals, physicians and health insurers. It is not a repository database and is not designed to analyze historical data. 䡲

OUR HEALTH CARE HERO WE PROUDLY CONGRATULATE DR. GWENDOLYN GRADDY, MEDICAL DIRECTOR OF PACE SOUTHEAST MICHIGAN, ON WINNING THE CRAIN’S HEALTH CARE HEROES PHYSICIAN AWARD. Your hard work and dedication to provide compassionate care for seniors has changed countless lives in our community. PACE Southeast Michigan is a program co-sponsored by Henry Ford Health System and Presbyterian Villages of Michigan with the goal of keeping seniors independent — living in their own homes for as long as possible. Dr. Graddy’s passion, care and commitment help us to realize that goal.

WE THINK THEIR EDUCATION HAD SOMETHING TO DO WITH IT. Walsh College is proud that three of its alumni have been recognized on Crain’s Detroit Business’ 40 Under 40 list for 2015. Michelle Kotas (MBA, ’09), Anthony Majewski (MBA, ’10) Paula Nelson (BBA, ’03) are pillars of success in business and in community. Congratulations.

Jay Greene: (313) 446-0325 Twitter: @jaybgreene

GET CONNECTED “SIX DEGREES” DETROIT STYLE Try it now at crainsdetroit.com/mostconnected

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SPECIAL REPORT: HEALTH CARE

Push for all-claims payer database an uphill battle By Jay Greene jgreene@crain.com

Sen. Jim Marleau, R-Lake Orion, is at the forefront of a national movement to increase health care price and quality transparency. But it has been an uphill battle for the former small-business owner who chairs the state Depart ment of Health and Human Services. Since 2012, Marleau has introduced two bills and plans to introduce another this fall to require state health insurers to contribute claims data on insured patients into an “all-claims payer database,” or ACPD, which would be overseen by the Department of Community Health. That’s in part because of concerns about how it would be paid for and also because there isn’t agreement on whether such databases save patients money. But Marleau believes such a database could increase competition between insurers and ultimately lower costs and premiums. The ACPD would collect millions of paid insurance claims from commercial insurers, Medicare, Medicaid and self-insured employer plans and present it to the public in an easy-to-understand format. If approved, Michigan would join 19 states that operate an ACPD or are implementing one, said the Na tional Council of State Legislatures. Supporters say an ACPD is needed to help businesses understand how their costs and services compare with others and would help improve their negotiating position. Depending on how data is presented, consumers could compare provider prices and make more knowledgeable decisions. For hospitals and physician groups, an ACPD could support efforts to design quality improvement efforts and compare performance with peers. Policymakers could use the data to identify communities that provide cost-effective care and implement targeted population health initiatives. However, the National Conference report also concluded “it is too early to determine whether allpayer claims databases can help states control costs.” Agreeing with that conclusion, officials from Blue Cross Blue Shield of Michigan told Crain’s they do not support creating an ACPD in Michigan. They say it duplicates their internal efforts to improve medical group and hospital performance. “I am a big supporter of transparency,” said Tom Simmer, M.D., Blue Cross chief medical officer. “People need to have information. But claims-based information does not provide good information on performance, just costs. I am in

“If we keep saying that people need to be more responsible for the cost of their health care, then they need the tools to make the best possible decisions.” Sen.Jim Marleau,R-Lake Orion

favor doing it right and want to do it successfully.” Simmer said Blue Cross — which is expected to soon offer its own customers health care price information — is open to discussing other methods to increasing price and quality transparency. But “we think it would be a waste to build a huge database like that,” Simmer said. Marleau disagrees. “The average person doesn’t know what a procedure costs until they get the bill,” Marleau said. “Deductibles and copays continue to increase, and if we keep saying that people need to be more responsible for the cost of their health care, then they need the tools to make the best possible decisions.” Rick Murdock, executive director of the Michigan Association of Health Plans, said his 17 member insurance companies also are supportive of an ACPD. The Blues are not a member. An ACPD “helps the competitive environment,” Murdock said. Still, Dominick Pallone, MAHP’s deputy director, acknowledged there is scant evidence so far that ACPDs are effective. “In theory, if done right, it can be used by the public, health care insurers, providers” to choose and develop better products,” he said. “If done wrong, it can drive up costs.” And there is concern over how an ACPD would be funded. Marleau’s unsuccessful Senate Bill 333 in 2013 — the Michigan Healthcare Transparency Act — suggests the roughly $1 million in annual operating costs would be funded by private, government grants and insurance company taxes on the claims submitted. In April 2014, the state Legislature did approve a feasibility study on an ACPD as part of the Healthy Michigan Medicaid expansion that recommended that the Legislature pursue a “staged approach for establishment of an ACPD.” As a result, in the Department of Community Health’s 2016 budget, $5 million was earmarked for the project, which is part of a $70 million federal innovation grant to improve transparency and health care delivery. Marleau said he is drafting new legislation to create an ACPD that would be housed in the Department of Community Health. “The concept was unanimously supported by two state depart-

ments and legislators from both parties,” Marleau said. “We are not reinventing the wheel here. This is about getting more information to consumers and payers and creating a tool for better public policy around health.”

The bigger picture Suzanne Delbanco, executive director of San Francisco-based Cata lysts for Payment Reform , said an ACPD can give a bigger picture of typical average costs, complication and mortality rates. “You have claims data on diabetes and pool that data together from 17 insurers and Medicaid,” Delbanco said. “You get better insight on how treat diabetic patients and be in better position to assess quality care.” Delbanco said payment reform advocates have focused first on health insurers to help employers and employees. But Mark Cook, Blue Cross vice president of government affairs, said some insurers already provide useful information to customers. For example, Grand Rapidsbased Priority Health, Aetna Inc. and United Healthcare offer cost estimators that can calculate estimated out-of-pocket costs based on a policy’s benefits and deductibles. “Claims information is not useful to me as a patient,” Simmer said. “What I am interested in is how much my copay is.” Jeffrey Rice, M.D., CEO of Brentwood, Tenn.-based Healthcare Blue book, said insurers and hospitals are generally opposed to ACPDs because they don’t increase revenue and reveal too much price data. “It is really hard to argue against giving patients information on price,” Rice said. “If a patient knew facility ‘X’ cost more than facility ‘Y,’ they wouldn’t go to facility ‘X,’ unless there are other reasons.” He added: “Where there is information available, patients make more informed decisions. When they make those decisions, we have outcomes we can see and that can impact price and quality.” Major insurers United Healthcare, Aetna and Humana have worked with the Washington, D.C.based Health Care Cost Institute to develop a national payer database, www.guroo.com, which is available to the public without charge. 䡲 Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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SPECIAL REPORT: HEALTH CARE

Leapfrog CEO: Transparency’s the Rx for better health care By Jay Greene jgreene@crain.com

Leah Binder is passionate about her mission as CEO of The Leapfrog Group to shed light on hospital prices and patient safety. As head of Leapfrog, a Washington, D.C.-based, employer-formed watchdog organization that promotes health care transparency, Binder believes individuals and employers deserve to know which providers offer high value before they receive hospital or physician care. Binder said price and quality Leah Binder: transparency is Transparencyallows essential for eminformed decisions. ployers and patients as federal, state and commercial payers move to incorporate patient safety into reimbursement rates. “Transparency is a strong movement that allows people to make informed decisions about where they seek care,” Binder said. “Once they make informed decisions, patients drive the market toward excellence.” Binder will be the keynote speaker Oct. 28 at Crain’s Health Care Leadership Summit at the Marriott Renaissance Center in Detroit. The conference’s theme is health care transparency. Employers are demanding patient safety along with price and quality transparency because of the movement to high-deductible health plans that shift a higher percentage of costs to workers and empowers them to make treatment decisions, she said. But Binder said price alone is not enough for consumers to judge providers. “You don’t buy a car by taking $20,000 and choosing one for that price,” she said. “You look at cars in that price range, and pick the one based on quality. This is true for health care in spades.” Binder said patients will pay a little more for higher quality if it can

CON REPORT The following are selected certificate of need filings from Sept. 17Oct. 14. Letters of intent

St. Anne’s Convalescent Center, Detroit: Acquire 78-bed nursing home from Emmi Care LLC; $3 million. Applications received The Behavioral Center of Michi gan , Warren: Add 14 adult psychi-

atric beds under the high-occupancy provision; $1.2 million. Wellbridge of Palmer Park, Detroit: Begin operation of a new nursing home by replacing 100 nursing home beds from St. Joseph Health care Center to a new site to be leased at Woodward Avenue and Eight Mile Road in Detroit; $16 million. Natalie Broda

be demonstrated. “As we move away from fee-forservice payments to the pay-forvalue agenda, what is sometimes overlooked is the importance of patient safety,” said Binder. “It is shocking how much it costs employers because of problems with patient safety.” Patient safety measurements include medication error rates, hospital-acquired infections, preventable mortalities and patient falls. Others are the so-called “never events”

such as wrong-site surgeries and objects left in the body after surgery. An increasing number of groups, including Leapfrog, the Joint Commission and the Centers for Medicare and Medicaid Services, are starting to publicly report patient safety measures. “The No. 1 error is medication errors. The Institute of Medicine reported there is one medication error per day per patient,” Binder said. “That is three errors per stay. Some are minor, causing a tummy ache, but some can be very painful, extend

your stay and kill you.” Binder said hospitals and doctors are not perfect and accidents can happen. “Good hospitals have many checks and balances,” she said. Despite reluctance of some providers and health insurers, Binder said the debate is over as to whether transparency is a good or not good thing. “Transparency is not optional anymore,” Binder said. “It is happening. The question is how do we get there safely?”

Health Care Summit What: Crain’s 2015 leadership summit. Where: Detroit Marriott Renaissance Center When: 7:30 a.m.-1 p.m. Oct. 28 Details: Tickets are $125; reserved table for 10 is $1,300. Preregistration closes 9 a.m. Oct. 23. Contact: Kacy Anderson, (313) 446-0300 or cdbevents@crain.com

“HOW DID MR. BUCK TRIM HIS ENERGY BILL?” After visiting DTE Energy’s online Lighting Advisor, Mr. Buck replaced old incandescent bulbs with more efﬁcient models to reduce lighting costs. He also adjusted his thermostat just a few degrees when his business was closed. Then he wrapped his water pipes and adjusted his hot water heater to save him even more. All in all, Mr. Buck says he saved around 10%, despite the harsh winter. DTE Energy wants to help you give your costs a trim, too.

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CALENDAR

JOB FAIR

Monday, November 16, 2015 2:00 – 7:00 p.m. Suburban Collection Showplace, Novi

EXHIBITORS WANTED

re you wondering where to ﬁnd the talent your organization needs? If you’ve been struggling to locate the right employees and would like to meet face-to-face with highly qualiﬁed candidates, then plan to attend The Engineering Society of Detroit (ESD) Engineering and Technology Job Fair.

Added Bonus: ESD Job Bank The ESD Job Bank is the foremost electronic recruitment resource for the industry. Each Job fair exhibitor will receive one complimentary posting on jobs.esd.org. For exhibit information and downloadable forms, visit www.esd.org, or contact Leslie Smith, CMP at lsmith@esd.org or 248-353-0735, ext. 152.

THURSDAY

FRIDAY

OCT. 22

OCT. 23

Association for Women in Communications fall meeting.

Shock the World Urban Entrepreneurship Symposium. 8:30

5:30-8 p.m. AWC, Detroit chapter. “Communication Is Ageless” is a panel discussion with local young communicators offering insights on innovation, future trends and using social media to communicate to their audiences. Participants include Tatiana Grant, president and CEO of Infused PR & Events; Anna Leigh Clark, author and Detroit Free Press contributor; and Oona GoodinSmith, an Oakland University senior who will share her experience as a correspondent for USA Today. Motor City Java House, Detroit. $25 members, $35 nonmembers, $15 students. Contact: (248) 643-6590; email: info@womcomdetroit.org; website: womcomdetroit.org.

a.m.-4:30 p.m. Urban Entrepreneurship Initiative. Second annual event brings together business innovators, academics, students, and community and government leaders to inspire for-profit business ideas to urban challenges. College for Creative Studies, Detroit. $75. Contact: David Tarver, (313) 457-2050; email: info@urbanei.org; website: urbanei.org.

SUMIT_2015. 9 a.m.-4:30 p.m. University of Michigan. Annual symposium to raise awareness and educate the community on cybersecurity. Experts discuss the latest cybersecurity trends and threats. Rackham Auditorium, Ann Arbor. Free; registration is required. Contact: Joel Iverson, (734) 7648187; email: iversj@umich.edu; website: safecomputing.umich.edu/ events/sumit15.

Hailed as the premier recruitment event, this job fair will provide you with the unique opportunity to: • Meet hundreds of applicants – all levels of experience • Cultivate your future workforce • Enjoy a tailored event for engineers, students, and IT professionals

Today’s Workplace, Tomorrow’s Profit. 7:30 a.m.-noon. Waterford,

Orion Area, Auburn Hills and Clarkston Area chambers of commerce. Caroline Grech-Clapper, executive partner, Secrest Wardle, presents “Know Your RightsEmployer and Employee.” Other speakers include L. Brooks Patterson, Oakland County executive; Sue Novak, managing partner, Plante Moran; and James Goebel, founding partner, Menlo Innovations. Oakland Schools, Waterford Township. $40 members, $55 nonmembers, $20 students, $225 table of eight. Website: waterfordchamber.org.

Health Care Experience

Crain’s 2015 Health Care Leadership Summit Join Crain’s for this annual event that provides opportunities to learn about the ever-changing landscape of the health care industry, plus make the professional contacts to help navigate these changes. Held at the Marriott Renaissance Center from 7:30 a.m.-1 p.m. Oct. 28, the Health Care Leadership Summit includes keynote speaker Leah Binder, CEO of The Leapfrog Group; roundtable discussions; and the Health Care Heroes awards. Can Michigan provide consumers and employers the data needed to make smart decisions in health care? Network with local business leaders and health care providers and discuss the latest in innovative health care strategies for 2015 and beyond. Individual tickets are $125; reserved table of 10 is $1,300. Preregistration closes Oct. 23 at 9 a.m. If available, walk-in registration will be $140 per person. For more information, contact Kacey Anderson, (313) 446-0300, or email cdbevents@crain.com.

UPCOMING EVENTS 2015 North American International Cyber Summit. Oct. 26. Engineering

Society of Detroit. Hosted by Gov. Rick Snyder, the event brings together experts to address cybersecurity issues. Cobo Center, Detroit. $79; $59 for students or members of Information Systems Security Association and other groups (see list online). Contact: Leslie Smith, (248) 353-0735, ext. 152; e-mail: cybersummit@esd.org. Social Media: The Secret to Attracting and Recruiting Talent. 10 a.m.-1 p.m. Oct. 27. Automation Alley. Joe Serwach, contributing author of The

In Your Corner.

Book of Social Media Strategies and Tactics,Volume 1, will discuss building social media marketing plans for attracting and recruiting talent. Automation Alley, Troy. $20 members, $40 nonmembers, $30 walk-in members, $50 walk-in nonmembers. Preregistration closes Oct. 23. Email: info@automationalley.com; phone: (800) 427-5100.

Ŷ Focused on health care law for systems, physicians and payors in all market segments. Ŷ Third party reimbursement, public and private health care provider financing, and commercialization of physician inventions and ideas.

French Tech, Innovation & SavoirFaire: What It Takes to Implant In Michigan. 6-9 p.m. Oct. 29. French

American Chamber of Commerce, Michigan chapter. Roundtable discussion includes representatives from IES Synergy, Kem One and Kyyba. AdduXi Inc., Rochester Hills. $45 members and guests, $55 nonmembers. Contact: Stephanie Salvadero, (248) 936-9473; email: info@faccmi.org. Calendar guidelines. Visit crainsdetroit.com and click “Events” nearthe top ofthe home page.Click “Submit YourEvents”from the dropdown menu that will appear.Fill out the submission form,then click“Submit event”at the bottom ofthe page.

First Tier Ranking in Health Care Law ■

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DEALS & DETAILS

for its English-language print books, expanding Cornell’s longstanding relationship with Coutts Information Services Ltd. Coutts was acquired by ProQuest in April. Websites: proquest.com. library.cornell.edu.

CONTRACTS ProQuest LLC, Ann Arbor, is working with Cornell University Library, Ithaca, N.Y., to develop a book-selection system that will aggregate metadata from multiple sources into a single interface. Cornell will use ProQuest as the primary source

Altair Engineering Inc., Troy, announced that FluiDyna GmbH, Unterschleissheim, Germany, has joined the Altair Partner Alliance, adding nanoFluidX and ultraFluidX to its software portfolio. Both technologies use graphics processing unit

technology for fast, large-scale computation. Websites: altair.com, fluidyna.com.

owned and operated by Kingston Fit LLC, at 305 W. Main St., Brighton. Telephone: (810) 224-1418. Website: fitwall.com.

EXPANSIONS MedPost Urgent Care, operated by Tenet Healthcare Corp., Dallas, has

opened an outpatient medical center at Crossroads Shopping Center, 11502 Middlebelt Road, Livonia. Telephone: (734) 762-0739. Website: medpost.com. Fitwall Ventures LLC, Irvine, Calif., has opened a Fitwall fitness facility,

MOVES Main Financial Group has moved its

corporate offices from 44325 W. 12 Mile Road, Suite H-163, Novi, to 8273 Grand River Ave., Suite 130, Brighton. Telephone: (844) 6006246. Website: mainfinancial group.com. OneStream Software LLC has

Crain’s has moved its complete list of appointments and promotions to www.crainsdetroit.com/peopleonthemove. Brief online listings for management-level positions are available at no cost, at editor’s discretion. Guaranteed print placement in this promotional feature can be purchased at the website above.

LAW John Wright Of Counsel Attorney, Berry Moorman P.C.

Dave Endres and Matt Milliken KIRCO MANIX Dave Endres has been promoted from Director, Pre-Construction Services to Vice President of KIRCO MANIX. Dave joined the company in 1989 and has successfully served in various Construction roles during his tenure. Dave, as Vice President will assume additional duties in the area of Pre-Construction and Pre- Development. Dave will work with the Sales and Estimating groups at KIRCO MANIX to guide a project from concept to ground breaking and have responsibility for setting budgets, schedules and overseeing design. Additionally, Dave will work to identify, assess, and contain construction risk associated with each project. Matt Milliken has been promoted from Project Engineer to Project Manager at KIRCO MANIX. Matt joined the company as Project Engineer in 2013. As Project Manager Matt will lead two of KIRCO MANIX’s current projects, DSM Engineering Plastics and Doeren Mayhew, both located in Troy, MI by planning, directing and coordinating all activities pertaining to the construction project. Matt will also be involved in the redevelopment and construction of The Dow Chemical Company’s new global headquarters

Berry Moorman P.C. represents individuals and businesses in diverse industries and pursuits with clients ranging from small and emerging enterprises to large, publicly held corporations, governmental bodies, non-profit educational and charitable organizations. Berry Moorman, P.C. has offices in Detroit and Birmingham, Michigan and also in St. Petersburg, Russia. Berry Moorman, P.C. welcomes John Wright as Of Counsel attorney to the firm. Mr. Wright served as an Assistant Attorney General for three years and more recently has been associated with a boutique health care law firm. He will focus his practice primarily on trademark, copyright and business law.

PUBLIC RELATIONS Emily Shirden Partner, Finn Partners

EDUCATION

LAW

Bill L McGrail

Timothy E Harden

Director of Advancement,

Attorney,

Loyola High School Bill will focus on identifying and driving resource growth for Loyola as it looks to expand its ability to provide educational and formational opportunities for the young men of Detroit and the surrounding area that it has served for almost 25 years. Mr. McGrail comes from Windward Capital Advisors, a consultancy group focused on corporate business development and new business start-ups. Prior to Windward, he held several roles with Guardian Industries, including Manager of Business Development.

Berry Moorman P.C. Berry Moorman P.C. welcomes Timothy E. Harden as an associate to the firm. Mr. Harden has been in practice for 13 years, concentrating on tax law, business law, and estate planning. His credentials include University of Michigan Law School, a masters in taxation from Wayne State University Law School.

Deals & Details guidelines. Email cdbdepartments@crain.com. Use any Deals & Details item as a model for your release, and look for the appropriate category. Without complete information, your item will not run. Photos are welcome, but we cannot guarantee they will be used.

PEOPLE: SPOTLIGHT

ADVERTISING SECTION

LAW

moved its headquarters from 425 S. Main St., Rochester, to 362 South St., Rochester. Telephone: (248) 650-1430. Website: onestream software.com.

Emily Shirden was promoted to partner at Finn Partners Detroit, a PR agency whose clients span the consumer, healthcare, public affairs and social impact sectors. Emily will continue expanding the firm's stable of local and national clients. Emily was previously a Vice President for Finn Partners. In addition to clients in the health sector, she has represented a range of clients including financial organizations, technology start-ups, consumer home products and home improvement brands.

Here are some of last week’s executive appointments reported by Crain’s.

Judson Center CEO resigns; agency COO takes new job Cameron Hosner has stepped down as CEO of The Judson Center for personal reasons after leading the nonprofit the past three years. Hosner’s departure had nothing to do with Judson Center, said a spokesman for the human serv- Hosner ices agency with offices in Oakland, Wayne, Macomb, Washtenaw and Genesee counties. Hosner joined Judson in 2012. The center’s board of directors named David Zimmer, managing partner at Stonebridge Business Partners and a Judson board member for 25 years, as interim CEO while it launches a search. Also, Judson Center COO Laura Huot is leaving the organization at the end of October to return to The Guidance Center, where she was director of children’s behavorial health before coming to Hudson in 2013. Susan Salhaney, longtime Judson Center leader running its child and family services programming, will become interim COO.

Lewand-Monroe named acting land bank director Carrie Lewand-Monroe was named acting executive director of the Detroit Land Bank Authority. Lewand-Monroe, formerly the principal director of the authority, replaces Kevin Simowski. Lewand-Monroe, 38, named a Crain’s 40 under 40 honoree last week, has been director of policy of Detroit Future City and executive director of the Michigan Land Bank Fast Track Authority, and an attorney and executive project manager for Wayne County. Simowski has been on medical leave, a spokesman said, declining to elaborate. He became executive director in November 2014. 䡲

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MEDICAID

REAL ESTATE

FROM PAGE 1

However, a Medicaid HMO executive, who asked not to be identified, said DHHS’ scoring process for awarding regional contracts contained several math errors, which could have led to mistakes in awarding some contracts. Late last week, DHHS did acknowledge one math error. It said a calculation mistake was made for Region 7, which includes Ingham, Clinton and Eaton counties surrounding Lansing, with 65,000 Medicaid enrollees. The fix for the mistake means Meridian Health Plan of Michigan , the state’s largest Medicaid HMO with 450,000 members, is now among the providers awarded that region, and Molina Healthcare of Michigan was dropped, leaving it to serve seven other regions. HAP Midwest, which posted net income of $19.1 million on revenue of $381.7 million in 2014, accounted for nearly half of Henry Ford’s total net income in 2014 of $35.1 million, according to the Michigan

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HAP Midwest is doing even better so far this year, posting $12 million in profits during the first six months on revenue of $238.8 million. Even as the largest health system in Southeast Michigan with $4.7 billion in annual revenue, Henry Ford could face a serious financial hit and operational dilemma if HAP Midwest loses the state’s largest Medicaid market, said Allan Baumgarten, a Minneapolis-based consultant who publishes the Michigan Health Market Review. “It could affect their (strategic) plans” for expanding operations in Michigan and potential partnership deals with other systems, Baumgarten said. After the failed merger with Beaumont Health System in 2013, Henry Ford CEO Nancy Schlichting has said the health system is talking with other systems about a potential merger or affiliation. Beaumont ended up merging with Oakwood Healthcare and Botsford Hospital. Over the past 30 years, HAP Midwest has built a membership of 100,000 serving Wayne, Oakland, Macomb, Livingston, Washtenaw and St. Clair counties. But the state DHHS decided that, starting in January, HAP Midwest would be dropped from all those counties except for St. Clair. Where HAP Midwest now competes in counties with more than 700,000 Medicaid enrollees, DHHS awarded HAP Midwest for 2016 the Region 6 contract in the Michigan Thumb, which only has enrolled 169,000 Medicaid beneficiaries. Moreover, HAP Midwest will compete with five other plans in Region 6, including Blue Cross Com plete of Michigan , McLaren Health Plan , U n i t e d H e a l t h c a r e C o m m u n i t y Plan, Meridian and Molina. Medicaid HMO contracts have

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become highly valued the past two years because of Medicaid expansion under the Affordable Care Act, said Joe Spallina, a health care consultant with Ann Arbor-based Arv ina Group LLC . “Hospitals and HMOs never wanted Medicaid because they were such a poor payer. Now, Medicaid has become more lucrative for hospitals and HMOs,” Spallina said. Health systems that own Medicaid HMOs like Sparrow, Henry Ford, Detroit Medical Center and Spectrum Health, which owns Priori ty Health , have a lot at stake when they lose Medicaid contracts because hospital profit margins are flat or down, Spallina said. “(HMOs and systems) deselected from networks are clearly upset about it,” Spallina said. “They have cultivated relationships with physicians and members and the market. Now they have a financial impact to their insurance organization and their parent organization.” Baumgarten said he understands why HAP Midwest executives would be upset about losing Southeast Michigan, while a much smaller plan like Harbor Health Plan, owned by DMC, would have its contract renewed. Compounding Henry Ford’s problems is its commercial health plan, Health Alliance Plan of Michigan, has lost money the last 18 months. Earlier this month, HAP signed a letter of intent to merge with Flintbased HealthPlus of Michigan. HAP, with 261,000 members, lost $7.4 million in the first six months of this year, and dropped another $5 million in 2014. Of Sparrow’s $12.8 million in net income in 2014, Sparrow PHP’s net income of $853,000 amounts to 6.6 percent of Sparrow’s total net income. During the first six months

of 2015, Sparrow PHP has earned $296,000 on revenue of $43.7 million. Sparrow’s commercial plan, Physicians Health Plan, with 32,000 members, also lost $1.7 million during the first six months of this year on revenue of $80.4 million. In 2014, Physicians Health Plan earned $2.9 million on revenue of $157 million. Many states, including Michigan, are ratcheting down the number of HMOs with which they contract, Spallina said. “States want to become more efficient and select only those providers that meet the quality bar and price bar to get value because they have limited resources,” Spallina said. As part of the state’s decision to move from awarding contracts by county to 10 regions to improve efficiencies, service integration and expand population health, experts told Crain’s one goal of the state Medicaid program is to reduce the number of Medicaid HMOs it administrates. If the recommendations are upheld, the number of Medicaid HMOs in Michigan will drop in 2016 to 11 from 13. 䡲 Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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PARAMEDICS FROM PAGE 3

knee or hip replacements and chronic bronchitis and emphysema. Medstar CEO Kolby Miller said its mobile health paramedic program is an “extension of the health system, with its purpose being to extend the care and attention the patients receive in the hospital.” For up to one month after discharge, Medstar paramedics make regular house calls nearly every day for the first two weeks, then every other day for the next two weeks. Paramedics conduct examinations, review medication compliance and report back to the patient’s primary care physician, Miller said. “By visiting patients immediately and regularly, we can keep them on track and communicate directly with their physicians if something has changed with the patient or other concerns,” Miller said. The six-month program, which began in August, has been approved as a pilot program by the Macomb County EMS Medical Control Au thority and the Michigan Department of Community Health EMS Division.

Miller said the state requires a special study to be conducted on the program because there are no specific regulations that allow paramedics to act as physician extenders. They are licensed as first responders, he said. At the end of six months, Miller said, Medstar will submit data on patient quality and cost savings. If McLaren and Henry Ford want to continue the program, Medstar will apply for permanent program status. Over the next year, Miller said, Medstar expects to enroll at least 75

HALLOWEEN FROM PAGE 3

Stormtrooper, we have that,” said Lloyd Coe, co-owner of Ed’s Broad way Gifts and Costume Inc. in downtown Lake Orion. “We have all the items that people can’t find.” His partner, Kathy Coe, adds: “Of course we sell to kids. We do a ton more for adults. Adults want the special things,” like mermaid tails or elaborate costumes. Locally, costume sales are driven partly by Theatre Bizarre, the Damned Show and other high-end Halloween parties and events, owners say. “If Halloween falls on a weekend, it’s always better. There’s always more parties,” said Lloyd Coe. Americans now spend more on adult costumes than on children’s Halloween dress-up, for a total costume tab of about $2.5 billion, according to the National Retail Federation . Overall, consumers spend about $6.9 billion on Halloween candy, decorations and more, or an average of $74.34. “The toughest part is trying to guess which licenses are going to be hot,” Lloyd Coe said, whether it’s a superhero or the Minions, which are merrily moving off shelves. At their Ed’s Broadway shop, their advantage lies not in just the right Disney character, but in depth and

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percent of the 1,000 annual heart failure patients admitted to the two hospitals. Savings on heart failure patients alone could total $3.1 million by reducing readmissions of about 180 patients, he said. On average, 24 percent of all heart failure patients are readmitted to hospitals within 30 days after discharge. An average hospital stay for heart failure patients is $17,000. Miller said the main reason heart failure patients are readmitted is because they fail to follow up with their doctor after discharge. Medstar has made 164 visits to 27 heart failure patients discharged from Henry Ford Macomb or McLaren Macomb, many of whom do not have primary care doctors. Only one patient has been readmitted, he said. “We visited a patient at home last week. She was prescribed with a common blood thinner, but the patient already had one at home, at a significantly higher dose,” Miller said. “She didn’t know which one to take, one or the other, or both.” Average monthly costs for the home visits are about $500, with patients averaging about three visits per week, Kolby said. Additional visits include transportation to doctor’s offices and prescription drug pickups, he said. Miller said paramedics sorted out the medications with the help of the hospital and primary care physician. “If the patient took both, it would have caused her blood to be as thin as hot water,” he said. Medstar does not charge the patient for the visit. Medstar is reimbursed by McLaren Health Care Corp. and Henry Ford Health System, which

breadth of costume offerings, including rentals that cost $1,000 or more to buy. If customers want to be a mad scientist, they choose from a halfdozen or so lab coats, including plussize and better-quality ones. At Lynch’s, a fixture in Dearborn since 1972, “roaring ’20s” has been the top-seller for three years, with flapper dresses, gangster hats, boas and other accessories. “Forty bucks gets you a nice dress,” Lynch said. Local theater departments and October revelers shop the two floors of merchandise. Bunny heads, Santa suits, even a reindeer head fill a shelf on the upper level of the store, while Freddy Krueger sneers in poster form on the stairs. Rows of hats — varying in size, shape, and material — beckon; gladiator amour sits tucked away in a corner; and around a dozen wigs with names like Bride of Frankenstein or Gaga fill the back wall. “You get about a week of boomcrash sales,” said Lynch. Saturdays and a few hours on weekdays are often packed from mid-October on. While Lynch’s does not hire extra help for Halloween, Sutton’s Cos tumes & Tuxedos on Dixie Highway in Waterford Township adds a dozen part-timers for the season to its year-round staff of three. Among the seasonal staff are the owners. “They run it for me all year long — except Halloween,” said co-owner Chris Sutton, who with husband

co-own Medstar and benefit by avoiding readmission financial penalties. Currently, health insurers do not cover these types of home visits by paramedics. Minnesota recently approved a paramedicine program for its Medicaid program, and the Cen -

The Huron Valley and Livingston County EMS program, which began in August, uses community paramedics with six months of additional training to respond to non-acute 911 calls when people need medical care but have no life-threatening symptoms. The paramedics provide primary care for minor illnesses, including antibiotics, instead of a transport by ambulance to the emergency department. They also can schedule a follow-up visit or phone call and can arrange for a primary care physician appointment. Dale Berry, CEO of Huron Valley Ambulance, said non-emergency calls have skyrocketed over the last 24 years, increasing to 49 percent of the total from 38 percent. “Calling 911 is not the best solution for someone who has a minor medical problem and can get to their doctor,” Berry said. “A 911 re-

sponse, ambulance transport, and emergency room visit is a very costly way to take care of a minor, nonacute illness.” If a patient needs treatment, the paramedics also use a telemedicine video and audio link with an emergency physician, said Kennan Bora, M.D., medical director for patient safety at Emergency Physician Medical Group in Ann Arbor, which is working on the program. “We can perform surrogate exams with videoconferencing and get a sense remotely how patients are doing,” Bora said. “Doctors who have had patient interactions like this think it is fabulous. It allows us to treat the right patient at the right place with right supervision.” Bora said it doesn’t replace the emergency department or primary care doctor. “It allows treatment for patients with unscheduled visits,” he said. During the first two months, Huron Valley Ambulance’s community paramedics responded to 83 calls with 43 patients treated at home, or 52 percent, avoiding an ambulance ride to the ER and an estimated $107,500 in ER and ambulance ride costs. Berry said paramedics have provided assistance for wound infections, urinary tract infections, flulike symptoms and medical equipment malfunctions. “We have special state permission to transport patients to the doctor’s office,” he said. While there currently is no charge to patients for the service, Berry said the program is looking at charging $180 for each community paramedic visit. So far, costs to train and staff the 21 paramedics have been $500,000.

Doug lives in Florida most of the year. Halloween has been hot this year, with sales up 25 percent in part because “the parties were really well spaced out this year,” she said. About 31 percent of adults in the retail federation survey said they will attend or throw a Halloween party. The October holiday accounts for one-quarter of Sutton’s $200,000 to $250,000 in annual revenue and about one-fifth of Lynch’s $400,000 in sales. People are spending a bit more this year, but the average sale still does not often top three digits. “For $50 to $100, you can be fabulous,” said Chris Sutton, whether it’s a Steam Punk costume or a wellheeled pirate in a brocade jacket — the two most popular choices. Some of them are sure to be worn to Theatre Bizarre, where creative costumes or tuxedos and masquerade gowns are mandatory. While most local costume stores are busy this year, the recession and competition from major chains killed some local costume shops. Fantasy Attic in Ypsilanti closed, and Lynch’s closed two of its stores — in Warren in 2007 and Livonia in 2009 because high rent and operating costs outweighed demand. “Halloween spending has leveled off since 2012,” says Tom Scott, a senior vice president of the Michigan Retail Association. Halloween spending

is small — Michiganders will spend roughly $215 million — compared to $19.5 billion they’ll spend on Christmas in November and December. Some costume shop owners retire and close their shops instead of trying to sell them, said Dorothy Shadrick, executive director of the National Costumers Association. At Sutton’s Costumes, the owners are eager to sell their business, complete with a 6,720-square-foot building and “about a million in inventory.” Asking price is $474,000, said Chris Sutton, and that includes all the 1950s-era tuxedos and vintage clothing. “While there are challenges for small costume shops to compete in certain areas of the industry, our members are year-round stores … that are very successful businesses and are thriving,” Shadrick said. Those that thrive usually have a second season — or another set of clientele. Sutton’s, family-owned for 33 years, operates a robust tuxedo business year round and makes costumes for corporations. Others including Lynch’s have strong relationships with high school and university theater departments. Lynch also runs a second website targeting clown wear and clown makeup. Showtime in Midtown Detroit carries clothing for rock and other musicians.

ters for Medicare and Medicaid Services

is studying a program in Oklahoma. Miller said Medstar hopes to expand to other chronic conditions based on the wishes of the hospitals. “We all recognize that many of our treatment decisions and instructions may not be understood or followed. This program directly addresses those issues,” said Andrea Phillips, chief nursing officer with McLaren Macomb.

Huron Valley/ Livingston County EMS program

A $98,000 grant from the Washtenaw County Board of Commissioners is supplementing a $1.1 million budget from Emergent Health Partners , HVA’s parent organization. Costs to HVA for the CP unit totaled $73,500, or about $1,500 per day, less than the estimated $2,500 cost if the patient had been brought to the ER. If that patient is admitted or readmitted, savings could be greater than $10,000 per patient. The program will last two to three years before state approval is sought to make it permanent, Berry said. Huron Valley will then seek reimbursement from health insurers and other organizations that benefit from the program.

Community EMS/ Botsford program Over the past year, Kevin Bersche, director of operations with Community EMS, said the community paramedicine program with Botsford Hospital and its nursing home has been in the data collection phase with the state of Michigan. “We created the study to quantify the savings realized when mobile health is used instead of transporting to the hospital,” Bersche said. Botsford Hospital, which owns Community EMS, is now part of eight-hospital Beaumont Health . Beaumont is studying whether to expand the telemedicine program to its hospitals, Bersche said. “We have created this study (with Botsford’s institutional review board) to demonstrate treatment intervention does not compromise patient safety and to quantify the dollars saved to the health system,” he said. 䡲 Jay Greene: (313) 446-0325 Twitter: @jaybgreene

Showtime’s business is down this year because of construction of the M-1 Rail along Woodward Avenue, plus a related flood of the basement wiped out most of the cheaper costumes, said owner Dan Tatarian. Though sales will be off overall, some customers will spend lavishly on Louis XVI frock coats and punk rocker and ’80s rocker costumes. “It’s going to be a higher-end Halloween,” with a few customers a week dropping $1,500, Tatarian said. Despite the construction on Woodward, Tatarian expects “wall to wall” shoppers in the busiest days ahead. “It’s nutty here. … It’s wild” the last two weeks of October, agreed Ed’s co-owner, Kathy Coe. Their Lake Orion shop opens an hour earlier and stays open until 11 or midnight in the days before Halloween. “If people are coming in, we’re staying open. And then we’re right back up in the morning,” she said. Then after Halloween, the costume shop owners may take a few days to rest up and regroup before they turn their buildings into Christmas central. December is the second-busiest month for most of them, with Santa suits and reindeer and snowmen and other holiday costumes. Said Chris Sutton: “Christmas is huge with all the Santas and elves and penguins.” 䡲

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Athletic apparel retailer sues over ‘Run Detroit’ name

“Our state has been through some difficult times the last few years, and there were moments when I worried we wouldn’t make it. My CPA played a major role in keeping our doors open and our business afloat. Now we’re doing better than I could have imagined. In fact, our second location opens in a few weeks.”

By Sherri Welch swelch@crain.com

Okemos-based Narrow & Wide Inc., a running and athletic apparel retailer that operates as New Bal ance-Detroit, has sued RunDetroit LLC in Detroit over use of the name “Run Detroit.” The lawsuit claims trademark infringement, false advertising, unfair competition and cybersquatting on the www.run-detroit.com Web domain. In its suit filed in U.S. District Court in August, New Balance-Detroit claims it has rights to the name and says it has been using it going back to at least 2008. It was granted trademark registration for “Run Detroit” on June 16, 2015. An affiliate of the global athletic gear company New Balance, according to its website, the Okemos company operates stores in Farmington Hills, Troy and Utica. It is asking the court to order RunDetroit to stop using its trademarked name; to destroy all references to it in devices, literature and advertising; and to award New Balance-Detroit an unspecified amount of monetary damages, along with legal costs and fees. The lawsuit says New BalanceDetroit used the name in connection with sales of apparel and products, but didn’t further specify how the company used it. New Balance-Detroit’s attorney, Thaddeus Morgan, shareholder in Fraser Trebilcock Davis & Dunlap PC ’s Lansing office, did not comment last week. The most recent state filing for parent company Narrow & Wide lists Curt Munson of Okemos as the company’s president. In the suit, however, New BalanceDetroit contends that RunDetroit has become “well-known and famous among members of the purchasing public as distinctive indicators of the product by (Narrow & Wide) and its dba New Balance-Detroit.” RunDetroit’s “wrongful use of the ‘Run Detroit’ mark is knowing, deliberate, willful, fraudulent and without extenuating circumstances,” New Balance-Detroit said in the suit. RunDetroit co-owner Justin Craig said he and his partner, Alia Polsgrove, have yet to be served in the case. They learned of it through an acquaintance. Craig said he did extensive searches on the “Run Detroit” name before incorporating with the state in August 2012 and opening the company’s doors in Detroit’s Midtown neighborhood in June 2013. RunDetroit’s attorney, Erin Bonahoom at Detroit-based Sadek Bona hoom PLC , has been trying to get New Balance-Detroit “to come to

RUN DETROIT

Justin Craig and Alia Polsgrove opened their Midtown store in 2013.. the table to talk about resolution, but so far they have not expressed any interest in that,” he said. The two companies have been in communication for the better part of a year, according to Craig. While exploring a federal trademark at the end of 2014, RunDetroit found New Balance-Detroit had applied for it, Craig said. “We sent a cease-and-desist letter ... to show the facts, that we were using the name,” he said. “We are a licensed LLC here in Michigan, and they were effectively filing for a federal trademark of our name.” “After we had a discussion with them, they changed their dates,” Craig contends. “Because the website is very transparent, we can see the initial application and all the dates cited and the dates that were amended.” Craig said he and his partner spent hours searching the name, and at no point in mid-2012 when preparing articles of incorporation and filing with the state of Michigan did they find a link between the words “Run Detroit” and New Balance-Detroit, Narrow & Wide or its other company, Playmakers , which runs a store in Okemos. “We are very successful here in the city. ... Now that we’ve proven there is a retail market for running specialty in the city, others want to jump on the bandwagon,” Craig said. He projects RunDetroit will break $500,000 in sales this year. “I’m excited for more retail operations and competition,” Craig said. “But what I’m not excited about is putting in the work and then having to give someone my name that we’ve been operating under.” According to the U.S. Patent and Trademark Office website, Narrow & Wide filed its initial application to register “Run Detroit” as a trademark in January 2014. It listed its first use of “Run Detroit” as at least as early as Oct. 1, 2012, on that application, but changed its first-use dates for different products to 2010, 2009 and ultimately October 2008 in a filing made in April. 䡲

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2015

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HOMES FROM PAGE 1

UPCOMING

PARTNER EVENTS Detroit Society for Human Resource Management

Tip O’ the Hat to Halloween: Networking event and SHRM fundraiser Meet friends old and new, enjoy tasty appetizers and quench your thirst at our cash bar. Learn about the opportunities to continue your professional development and grow your career with Detroit SHRM. October 28 • 5:30-7:30 p.m. 5th Tavern, Bloomfield Township Detroit SHRM members: $10 Nonmembers: $15 To register, go to www.detroitshrm.org or call (248) 478-6498

Marketing & Sales Executives of Detroit Back to the Future: An Evening with MSED’s Platinum Award Finalists This year, we are inviting past Platinum Award finalists to present their keys to success – what they accomplished to be nominated, why their efforts were successful and what their results are today. October 29 • 5-8 p.m. Management Education Center, Troy MSED members: $45 Nonmembers: $60 To register, please go to www.msedetroit.org or call Meeting Coordinators at (248) 643-6590.

Southfield Area Chamber of Commerce 3rd Thursday Network with the Chamber, the City and the Engineering Society of Detroit. November 19 • 4-6 p.m. Embassy Suites, Southfield Nonmembers: $10 Tickets are available at www.southfieldchamber.com Business Development Series: Business Resources December 2 • 7:30 a.m. Southfield Area Chamber, Southfield Nonmembers: $10 Register online at www.southfieldchamber.com

For more local events, visit Crain’s Executive Calendar at crainsdetroit.com/executivecalendar

Elsea, president of Southfield-based Real Estate One Inc ., who reports bank-owned sales accounted for about 4 percent of his company’s sales volume this year. “When the market peaked for that around 2010, the level was nearly 55 percent of sales that were either bank-owned, short sales or other kinds of distressed transactions. Now that’s down to under 10 percent distressed. The inventory for that has cleared out.” The departure of foreclosure inventory also relieves a downward pressure on prices, but other real estate experts also point to the economy, millennials, robust highend property sales — even gas prices and blight removal may be helping some communities. In Detroit, for example, total yearto-date sales are off about 18 percent compared with the first three quarters of 2014, according to Realcomp. But median sale prices jumped year to date in 29 out of 31 ZIP codes that are partly or completely within the city. For May-to-September, fewer than 2,000 properties fetched more than $113 million combined, compared with about $90 million from nearly 2,200 properties over the same period of 2014. “On the macro end, it probably has a lot to do with how people feel emotionally with the direction of the city,” said Austin Black II, president of City Living Detroit, a Detroit-based real estate brokerage. “People who are staying see where things are headed, and it makes them want to invest. ... That encourages other people.” But Black also said the supply of high-end properties like lofts and Midtown condominiums or singlefamily homes in historic neighborhoods is tight compared with demand, which may be boosting prices. Elsea said he expects the highend market to slow in sales volume soon, since it only has so much inventory and was one of the first segments to recover in recent years. But equity is returning and sales should stay brisk along with new construction in several high-growth or upper middle class communities like Lyon, Macomb and West

LON HORWEDEL

HunterPasteurHomes partners Howard Gitler (left) and Seth Herkowitz are working on

six developments across metro Detroit,including StoneLeigh (pictured) in Lyon Township.

HOT MARKETS Large local real estate markets that have seen the biggest increase in home sales so far in 2015:

Ferndale Northville/Northville Twp. Plymouth Bloomfield Hills and Twp. Sterling Heights Grosse Pointes Livonia Rochester Hills/Oakland Twp. Canton Twp. Birmingham

2015 PERCENT SALES* CHANGE

276 251 341 450 763 442 803 685 729 322

343 308 411 535 896 508 918 780 830 362

24.2 22.7 20.5 18.9 17.4 14.9 14.3 13.9 13.9 12.4

*Year to date Source: Realcomp, selected from markets that saw at least 300 sales.

Bloomfield townships, Farmington Hills or Livonia. “We see this as a long-term recovery with slow and steady improvement in the near term and over the next five years,” said Seth Herkowitz, partner at Farmington Hills-based Hunter Pasteur Homes, which is building on six developments this year compared with four in 2013. The company regularly builds and sells 100-125 living units per year, but Herkowitz said the company is getting a boost this year from local employment, pent-up demand since the recession, and millennials who are starting families and buying first homes. Hunter Pasteur has two development projects each underway in Orion Township and Lyon Township, and one each in Ann Arbor and Commerce Township. Residential building permits in 2015 are on pace for a sixth consecutive growth year in both singlefamily homes and total new living

INDEX TO COMPANIES These companies have significant mention in this week’s Crain’s Detroit Business: Association for Automation Advancement .. 6 Blue Cross Blue Shield of Michigan................ 14 Botsford Hospital .............................................. 3 Colliers International ........................................ 4 CBRE .................................................................... 4 Center for Automotive Research .................... 6 City Living Detroit............................................ 24 Community EMS ................................................ 3 Detroit Central City Comm. Mental Health..... 11 Detroit Red Wings............................................ 25 Detroit Tigers....................................................... 1 Ed’s Broadway Gifts and Costume................ 22 Fanuc America ................................................... 6 Friedman Integrated Real Estate Solutions ..... 4 Greater Detroit Area Health Council ............. 13 HAP Midwest Health Plan ................................. 1 Henry Ford Health System ................................ 1 Henry Ford Macomb Hospital .......................... 3 Hunter Pasteur Homes ................................... 24 Huron Valley Ambulance................................... 3

2014 SALES

IHS Automotive ................................................. 6 Ilitch Holdings ..................................................... 1 Livingston County EMS ..................................... 3 Lynch’s ................................................................. 3 McLaren Macomb Hospital .............................. 3 Medstar Ambulance ......................................... 3 Michigan Association of Health Plans.......... 14 Michigan Health & Hospital Association... 12, 13 New Balance-Detroit....................................... 23 Newmark Grubb Knight Frank ......................... 4 Oakwood Healthcare ....................................... 12 Priority Health.................................................... 11 Real Estate One ............................................... 24 RunDetroit ........................................................ 23 St. Joseph Mercy Health System..................... 3 Showtime.......................................................... 22 Sparrow Health System..................................... 1 Sutton’s Costumes & Tuxedos...................... 22 Together Health Network................................ 12 University of Michigan Health System ........... 3

units across the region, according to data collected through August from the Southeast Michigan Council of Governments. A total of 8,400 units at year’s end would be about five times the total construction planned in 2009, but still less than a third of the 25,328 permits pulled in 2004, the recent peak year. Black said he expects to clear $13 million to $14 million in City Living inventory this year, including an Indian Village home that sold in August for about $400,000, and his company’s high-end property listings are regularly on the market two weeks or less. Sale prices began surging in early 2014, he estimates, and his average unit price last year was around $275,000. Black and Elsea also said it’s possible that blight removal, particularly the recent ramp-up in housing demolitions across the city, is improving curb appeal for other owner-occupied homes within the same neighborhoods. But both said the evidence for that is mostly anecdotal. Herkowitz said he doesn’t think gas prices affect sales much in its outer-ring suburban developments, where homes regularly sell for more than $300,000 and buyers are often focused on school district quality, taxes, and proximity to commercial districts and entertainment. But Elsea said brokers consistently have seen bedroom community sales and suburban sprawl slow down when gas prices are soaring, so it’s possible a reverse trend is underway since gas prices began tumbling in mid-2014. “We’ve seen that forever. Whenever people are paying at the pump, the demand in Milford or Macomb Township gets squeezed,” he said. 䡲 Chad Halcom: (313) 446-6796 Twitter: @chadhalcom

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TIGERS FROM PAGE 1

Tigers. Last year, the Ilitches unveiled a $200 million plan to rehabilitate 45 blocks around the $532.5 million hockey stadium they are building for their other team, the Detroit Red Wings. The Tigers’ home, Comerica Park, is a few blocks away. Here is a look at some of the factors, aside from the massive payout, that could prompt a sale — or convince the family to keep the baseball team.

The taxman cometh

can be spread over 14 years — a proviso intended to help families keep family businesses. Tax attorneys say the value of assets within an estate is the classic battleground for the IRS and the heirs. “You always run into the issue of valuation. That’s always where there is some risk,” said George Malis, a partner with Detroit-based Abbott Nicholson Quilter Esshaki & Young blood PC.

Selling an asset eliminates the valuation fight. “If you convert it into cash, there is no squabble,” Malis said.

Debt and expenditures

Perhaps the most compelling inThere may be additional financentive to sell the Tigers is the potential estate tax bill that will one cial motivation to sell the Tigers because of current and future debt on day fall on the Ilitch family. If the Internal Revenue Service as- the Ilitch family’s books. While the sesses the Tigers to be worth $1.125 privately held holdings aren’t open billion, as Forbes.com did in its an- for public scrutiny — the Ilitches do nual team valuations this year, the publicize the $3.3 billion revenue estate tax bill (at the maximum 40 total — known debt has included its percent rate) for just the ballclub portion of Comerica Park’s $310 would be $450 million. million construction Ilitch cannot avoid “If he does bill, and Marian Ilitch’s that tax bill by leaving nearly $1 billion acthe Tigers to his wife sell, he’s quisition of the casino. after his death, be- going to get a The Ilitches, cause Major League through their Olympia Baseball prohibits its nice price.” Development of Michi gan real estate arm, club owners from hav- Michael Rapkoch, also have committed ing ownership interests Sports Value Consulting to the sprawling “Disin casinos and gamtrict Detroit” plan to bling. Marian Ilitch, 82, rehabilitate 45 blocks owns MotorCity Casino Hotel. around the hockey arena they’re Mike and Marian jointly own the building at I-75 and Woodward AvRed Wings, for which they paid $8 enue. million in 1982, because the National The arena’s $532.5 million cost Hockey League doesn’t share base- actually is not a debt load on the Ilball’s anti-casino prohibition. And itch pocketbook because constructhe hockey arena project suggests tion is being financed via state-isthey intend to keep the Red Wings sued bonds, and repayment is a long-term. blend of arena revenue and special It’s unknown if other Ilitch family downtown property taxes. members or business associates One piece that is theirs is the have minority stakes in the Tigers. eight-story, 205,000-square-foot LitThe collection of Ilitch holdings tle Caesars headquarters they had $3.3 billion in combined rev- pledged to build at Woodward Avenue last year — anchored by the enue and Columbia Street. A cost Little Caesars pizza chain — but the estimate wasn’t disclosed, but comvaluation of all the individual busi- parable projects could put the price nesses for tax purposes could be at as much as $71 million. significantly higher. Then there are the ballplayers: Sports industry insiders say the The midmarket Tigers have a largeIlitch family should have estate and market payroll. In 2015, Ilitch spent succession planning in place that about $173 million on players, the reduces federal tax liabilities, but fourth most among MLB’s 30 clubs. even well-laid plans sometimes go Detroit has $111 million commitawry. ted to player payroll in 2016 and All the Ilitches have to do is to tens of millions more to be added look across town to see the unfold- via free-agent signings and salary ing debacle with the estate of for- arbitration cases. Front office permer Detroit Pistons owner William sonnel, coaches, and support staff Davidson. account for millions more. Despite what was said to be elabThe Red Wings have $73.2 milorate estate planning before his lion in player salaries this season, death in 2009 at age 86, the Pistons the second-largest NHL payroll this were sold and there was an unex- season. pected $2.7 billion bill for estate, gift It’s unknown if the teams, who and generation-skipping taxes, and receive millions in shared revenue penalties. The estate and IRS, after via their respective leagues, are legal wrangling, eventually agreed self-sustaining or require subsiupon a reported $388 million settle- dization from other Ilitch revenue ment earlier this year. streams. There’s a history of estate tax bills In the recent Forbes 400 list of leading to the sale of teams, such as the wealthiest Americans, Mike the National Football League ’s Miami and Marian Ilitch were jointly listDolphins in 1993 and St. Louis Rams ed as being worth $5.4 billion. in 2008. That’s up from $4.1 billion a year Federal tax law stipulates that if ago, an increase fueled by the an asset accounts for 35 percent or value of their sports franchises and more of an estate’s value, the tax bill the continued success of their

pizza business.

Delaying tactics IRS rules allow a spouse to inherit all assets tax-free, but that merely delays the eventual tax bill. The same holds true for putting teams in trust. “The tax bill is going to have to get paid,” Malis said. Pro sports leagues, deeply cognizant of estate tax bills on franchises that have skyrocketed in value, have made moves to aid owners in their succession planning. For example, the NFL in May voted to permit irrevocable family trust ownership of teams. Such a trust allows a team owner, while alive, to put the franchise under control of a trustee and the arrangement removes the team from the value of the estate. MLB has sometimes allowed team owners to use irrevocable family trust arrangements, according to Sports Business Daily. It’s unknown if the Tigers are or could be put in such a trust.

Who would buy the Tigers? Chris Ilitch, 50, is a possible contender to assume ownership of the Tigers. One of seven Ilitch children, he’s been the face of the Ilitch organization since assuming his current role in 2004. If plans change and the team does go on the market, a number of potential buyers are out there. One who is ineligible is billionaire Detroit real estate magnate Dan Gilbert. He owns five casinos, which would run him afoul of MLB’s gambling rules. Martha Ford, owner of the Detroit Lions since inheriting them last year, is out because the NFL prohibits cross-ownership with other sports leagues. One local possibility is Pistons owner Tom Gores, who bought the National Basketball Association team for $325 million in 2011. He recently hired noted sports dealmaker Arn Tellem, who declined to comment, to lead his new strategy of making business and philanthropic investments in Detroit, and Tellem is especially close friends with one of Ilitch’s most trusted advisers, Steve Greenberg. That connection is intriguing: Greenberg, the son of Tigers Hall of Famer Hank Greenberg, is a significant sports dealmaker as managing director for New York City-based boutique investment bank Allen & Co.

He does media rights consultancy for teams, and also aids in team sales. He was an adviser on Gilbert’s $375 million acquisition of the NBA’s Cleveland Cavaliers in 2005; to former Compuware Corp. CEO Peter Karmanos Jr. in his sale of a portion of the NHL’s Carolina Hurricanes in 2010; and to the Pegula family’s $1.4 billion purchase of the NFL’s Buffalo Bills from the estate of Grosse Pointe Shores businessman Ralph Wilson last year. If the Tigers do come on the market, the Tellem-Greenberg link could be the front line of negotiations.

Gores certainly has the money to buy a baseball team. He founded Beverly Hills, Calif.-based Platinum Equity in 1995, and it claims $6 billion in assets under management across 30 companies that generated $17 billion in 2014 revenue.

Sales price If Ilitch or his heirs do sell the Tigers, the team could fetch more than $800 million, sports industry insiders say. “If he does sell, he’s going to get a nice price,” said Michael Rapkoch, president of Addison, Texas-based Sports Value Consulting LLC , which does valuations for teams. “If you want to get a premium price, and someone really wants to get into baseball, this may be the right time.” The most recent MLB team sales were the Los Angeles Dodgers for $2 billion in 2012 and the San Diego Padres selling for $800 million that same year. In 2011, the Houston As tros sold for $615 million. Rapkoch predicted the Tigers would sell for more than the Padres and Astros. A variety of factors drive the sales prices of a team: its market size, the value of its local television rights deal, and its popularity. For the Tigers, a buyer would get a team in the 13th-largest media market. Southfield-based Fox Sports Detroit currently pays the team $50 million a year for local broadcast rights, and the Tigers get among the best local TV ratings in baseball. The deal expires in 2018, and the next contract could be worth $80 million or more per season, industry analysts have said. And despite the Tigers’ subpar record in 2015, after four consecutive playoff seasons, Detroit still finished ninth in all of baseball with 2.7 million in attendance, despite 17 teams playing in 12 larger markets. Local broadcast rights revenue, and the shared money from the gargantuan national TV and licensing deals, can fuel reasons to sell or hold onto the team. “One advantage every owner has at the moment is increased profits — both with retaining a club, and selling it,” said Maury Brown, president of Portland, Ore.-based Busi ness of Sports Network . “While the team fell below expectations this season, the value of the Tigers will continue to climb. “When adding in the large increase in revenues with a new TV deal based off solid ratings, retaining will garner profits now and continued equity growth, while selling would see exceptionally high return.” The attendance and lucrative TV deals are partly thanks to a roster stacked with popular players such as Miguel Cabrera and Justin Verlander — and their enormous contracts. No other MLB teams are actively being shopped, so Ilitch has the opportunity to set a price benchmark for those seeking a ballclub, Rapkoch said. “There are a lot of people wanting a baseball team,” he said. 䡲 Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

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10/16/2015

WEEK on the eve of the University of Michigan-Michigan State University football game, Ann Arbor-based First Martin Corp. — founded by former UM AD Bill Martin — opened its first hotel, a Residence Inn by Marriott, in the city. The 110-room extended-stay hotel anchors a $20 million mixed-use project at 116120 W. Huron St.

COMPANY NEWS 䡲 Detroit Medical Center and Flint-based McLaren Health Care Corp. agreed to collaborate on cancer services in Detroit as part of a settlement over McLaren’s 2013 acquisition of Barbara Ann Karmanos Cancer Institute. Specific details were not announced, but Karmanos will continue to integrate operations into McLaren, and DMC will work with McLaren and Karmanos to expand cancer operations in Southeast Michigan at DMC health sites. 䡲 Olympia Entertainment will use its latest local radio deal for the Detroit Red Wings to tell listeners about the hockey team’s $532.5 million arena to open in 2017. Financial terms were not announced for the new multiyear broadcast rights deals with CBS Radio Inc. for the Red Wings and Detroit Tigers, who share ownership under the Ilitch family. WXYT 97.1 FM stays the teams’ flagship. 䡲 Startup retailer Detroit Fiber Works began a crowdfunding campaign with the Michigan Economic Development Corp. to raise $10,000 to install public art in the median of Livernois Avenue and offer free fiber art workshops. The effort runs through Nov. 30; information is at www.patronicity.com. 䡲 The Grosse Pointe-based Ralph C. Wilson Jr. Foundation

awarded $2 million in grants to St. John Hospital & Medical Center to support the creation of an outpatient senior assessment for independent living center and the new acute care of the elderly unit at the hospital. Both facilities will be named in honor of Wilson, the Buffalo Bills founder and owner who died last year. 䡲 International express delivery service provider DHL Express is adding a flight at Detroit Metropolitan Airport to enhance service for U.S. importers and exporters based in Michigan. 䡲 The University of Michigan said it has received $294.5 million in funding over fiscal year 2015, bringing its total endowment to $10 billion, the third-largest among public universities, Bloomberg and AP reported. Meanwhile, UM announced a new

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Martins open Ann Arbor hotel in time for big game

5:33 PM

ON THE WEB OCT. 10-16

international competition, MPrize, for chamber music ensembles with a $100,000 grand prize. 䡲 At The Parade Co.’s studio in Detroit, Warren-based Art Van Furniture unveiled its new float, “Keeping the Magic Alive,” for Detroit’s annual Thanksgiving parade, which it sponsors. 䡲 Detroit casinos reported a 4.3 percent increase in aggregate revenue during September compared with the same month last year, according to the Michigan Gaming Control Board. September revenue for the three casinos was 0.1 percent higher than August results, the board said.

䡲 Legoland Discovery Center

Michigan at Great Lakes Crossing Outlets in Auburn Hills wants the

public to choose which popular local buildings, statues or attractions it should feature made from Legos when it opens in the spring. The first round of voting runs through Oct. 26 on Legoland’s Facebook page.

OTHER NEWS 䡲 The Chicago-based Liaison Committee for Medical Education notified the Wayne State University School of Medicine that its accreditation probation has been lifted. Instead, the Detroit-based medical school has been placed on the less punitive “accreditation with warning” status. 䡲 About 16,000 square feet of office and retail space in downtown Birmingham’s north end has a new owner who may add a third floor for residential units. A 5,500square-foot third floor may be planned for the two-story building at 720-726 N. Old Woodward Ave., said new owner Brian Najor, president of Birmingham-based Najor Cos.

䡲 The Kingsley Inn in Bloomfield Hills could change hands yet again. The property with the 150room hotel is headed to auction Nov. 16 with a starting bid on auction.com at $1.95 million. 䡲 The Orleans Landing development on the Detroit River is ready to begin construction with a groundbreaking ceremony next week. The $65 million first phase is expected to be largely completed in the third quarter next year. 䡲 Last month’s Arts, Beats & Eats festival in Royal Oak generated $255,802 for over 60 nonprofit and community organizations, organizers said. Topping the list: the Royal Oak Schools Performing Arts Committee ($12,195) and the

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

26,000

The number of artworks owned by the U.S. General Services Administration now on display through a new website from the Detroit Institute of Arts. The interactive website allows users to find works by specific artist, state or region.

313

The number of feet the unofficial “world’s longest box of chocolate” measured for a benefit to support the Detroit RiverFront Conservancy. The box of chocolate was constructed by Hamtramck-based chocolatier Bon Bon Bon.

company, is opening its fourth metro Detroit clinic in western Detroit this week to serve the Medicare-Medicaid dual-eligible population in a pilot program overseen by the Michigan Department of Community Health. 䡲 The Fox Theatre marquee lit up again after a monthslong renovation designed to preserve the signature 1988 marquee design while adding modern LED reader boards and other features. 䡲 Michigan’s seasonally adjusted unemployment rate fell to 5 percent from 5.1 percent in September, the state Department of Technology, Management & Budget

said. The U.S. jobless rate remained at 5.1 percent. It was the first month since August 2000 that Michigan’s jobless rate was lower than the national rate. 䡲

RUMBLINGS Ross’ anti-racism initiative on RISE at Michigan Stadium ans at Saturday’s football showdown between the University of Michigan and Michigan State University were to witness on the Michigan Stadium video boards the inaugural public service announcement from UM alumni and mega-donor Stephen Ross’ new antiracism initiative, the nonprofit Ross

Initiative in Sports for Equality.

Former Michigan quarterback Tom Brady, now a pro Stephen Ross: Has a message for football star football fans. with the New England Patriots, was to deliver a message about standing up against racism and pledging not to tolerate bigotry and bullying. Also in the video are UM Heisman Trophy winner Desmond Howard, former Michigan basketball player Jalen Rose and current UM football coach Jim Harbaugh. Similar PSAs will air in other stadiums and on TV as part of RISE’s effort to create anti-racism awareness using sports and a grass-roots education campaign. All the major pro sports leagues, the NCAA and networks have signed on to the effort, which is using nonprofit Think Detroit PAL for one of its first educational pilot programs. The videos, and details about RISE, will be on the project’s website, RiseToWin.org. RISE formally launched Friday. It was detailed earlier this month

Art at the White House

for Innovation and Entrepreneurship. 䡲 Concerto Healthcare Inc., an

Irvine, Calif.-based health care

Raffle becomes a reason to attend a Lions game The winless (as of Friday) Detroit Lions have been a mess on the field, but off it, they run one of the best-performing 50/50 raffles in pro sports, with jackpots regularly topping $100,000. Last year, fans spent $1.2 million on the 50/50 raffle at Ford Field, and the average pot over 10 regular-season and preseason games was $122,596. That meant the winning fan last year left with an average of $61,298. In 2013, the raffle’s inaugural year, the contest was active only for the eight regular-season games and generated about $730,000, an average of about $91,000 per game. Winners got about $45,000. Detroit’s two home preseason games this year generated a little more than $30,000 each. The Sunday night home opener against the Denver Broncos on Sept. 27 saw a $122,650 jackpot and the Oct. 11 late afternoon game against Arizona Cardinals hit $98,580. Proceeds from the raffle benefit the Henry Ford Health System’s Josephine Ford Cancer Institute and the Detroit Lions Charities.

Kmart venture was a no-go for style diva Stewart Kmart could have been

“KMartha.” That’s what Martha Stewart

Boys and Girls Clubs of Oakland and Macomb Counties ($12,750). 䡲 The Macomb Community College Foundation said an anony-

mous donor’s estate pledged $700,000 to the college’s first philanthropic campaign. Of the gift, $550,000 will back MCC’s Center

by Crain’s Detroit Business after a sit-down video interview with Ross. A Detroit native with degrees from UM and Wayne State University, Ross owns the National Football League’s Miami Dolphins and created RISE earlier this year as a response to a 2013 situation in which one of his players quit the team over racially-tinged harassment.

COURTESY OF PARK WEST GALLERY

This piece by Dominic Pangborn, an artist at Southfield-based Park West Gallery, will be shown at the White House Oct. 22-23.The work, which features photographs taken from each class of the 50 years of the White House Fellows Program, has a 3-D middle portion. It also will be shown during a gala Oct. 24 at the National Portrait Gallery in Washington.

told The Associated Press for a story published last week. Stewart said she thought seriMartha Stewart: ously at one Troy was a turn-off point about buyfor her. ing the discount chain, which for more than a decade carried Stewart-branded goods. But a “less bold” executive at her company, Martha Stewart Living, dissuaded her. Another turn-off was Kmart’s headquarters at the time in Troy. Stewart described the property as “an architectural nightmare.” The empty site now is owned by The Forbes Co., which declined to comment for the story. 䡲

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