Crain's Detroit Business, June 19, 2017 issue by Crain's Detroit Business

JUNE 19 - 25, 2017

Clark looks to next act at HudsonWebber.

Alibaba sees Detroit as ideal place for Gateway President on new small-biz push. Page 3

Page 3

Workforce

Union rules on teacher pay contribute to shortages

Health Care

SPECIAL REPORT DETROIT 1917 / 1967 / 2017

Individual rates jump; employers insulated

Prelude to ’67

By Mike Wilkinson Bridge Magazine

In Detroit, as many as 260 classroom teacher positions are unfilled in the state’s largest district, prompting a shortage so severe that substitutes last year were the full-time solution in more than 100 classrooms. And with fewer new teachers graduating from college every year, pressure is mounting to find qualified teachers. The situation has left teachers working harder in overcrowded classrooms for underwhelming pay — they’ve seen their pay frozen and cut repeatedly in a district that’s beset with problems both financial and academic. Yet in the face of a supply and demand problem, the Detroit teachers, like their peers in numerous Michigan school districts, have bargained for contracts that severely restrict the pay of the folks who could help alleviate the shortage. In Detroit, Dearborn and Roseville, new teachers can only get credit for two years’ experience they accrued working in other school districts. In Grand Rapids it’s five years, in Lansing it’s eight. It’s difficult to gauge whether the restrictions affect teacher recruitment because they may scare away potential applicants. But for those considering a move, the impact is huge. Say you’re a teacher with 10 years’ experience at Utica schools, which had layoffs last year. To work in Detroit, you’d have to accept nearly $36,000 less, going from more than $78,500 to just under $43,000 because eight years of experience wouldn’t count. Detroit already pays less, with teachers topping out at $65,265 after 10 years, compared with well over $78,000 in most districts. But the restriction put in place by the teachers — and agreed upon by the administration — makes that cut even more steep. SEE TEACHERS, PAGE 19

By Jay Greene jgreene@crain.com

WILLIAM VANDIVERT, THE LIFE PICTURE COLLECTION VIA GETTY IMAGES

Paradise Valley, 1942. Once a Detroit neighborhood where African-American businesses thrived, Paradise Valley was destroyed in the name of urban renewal in the early 1960s.

The economic roots that contributed to Detroit’s worst summer First in a series: To recognize the 50-year anniversary of the 1967

uprising, Crain’s looks back 50 years before that summer and the 50 years since to explore its impact on Detroit’s business community. Part 1, pages 14-17

Opinion

Part 2, June 26

How urban renewal projects uprooted a thriving AfricanAmerican business district. Read and comment: crainsdetroit/Detroit1967

Ron Fournier: Language is a matter of viewpoint. Page 6

The business impacts of a riot that tore through many of Detroit’s commercial districts, and how that damage hobbled the city through decades of decline.

Uncertainty over the future of Obamacare, along with high use of health care services and sky-high drugs prices, led last week to requests for huge rate increases for individual health insurance in Michigan — but the volatility is unlikely to extend to the group coverage most employers offer. Michigan’s nine insurers submitted two sets of individual market rates last week to the state Department of Insurance and Financial Services that showed some eye-popping price hikes. One set — including the controversial federal subsidy designed to hold down premiums — requests rate increases from insurers that range from 8 percent to 27 percent. The second set, without the subsidies, range from 19 percent to 60 percent. Individual policies account for about 6 percent of those with health insurance in Michigan, about 560,000 people. Among those are small business owners who don’t carry group coverage and many of their employees. For the majority of employers that carry group insurance, the increases are expected to be much smaller. Congressional Republicans’ moves to repeal key provisions of the Affordable Care Act and uncertainty over whether the Trump administration will pay “cost sharing” subsidies are the reason for the spread for Michigan’s nine insurers participating on the health care exchanges. The spread between the two sets of rate requests amounts to 10 percent to 50 percent above what the normal increase would be based on projected rising drug prices and medical service use. SEE INSURE, PAGE 22

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EACH WEEK DON’T MISS OUT ON CRAIN’S SPECIAL REPORT! HEALTH CARE – Medical mergers, Page 8

17 S I N E S S // J U N E 1 9 , 2 0 CRAIN’S DETROIT BU

CARE SPECIAL REPORT: HEALTH

Medical mergers

biggest in Southeast and Botsford was one of the Health System, Oakwood Healthcare hospital merger mistakes? able to overcome traditional The 2013 merger between Beaumont Henry Ford Health remains is the new Beaumont has created a broader and deeper Michigan in years. The key question Health and HealthPlus of Michigan Meanwhile, the addition of Allegiancefar? gone so System. How has the merger

Henry Ford expands with Jackson, Flint acquisitions By Jay Greene

BROUGHT TO YOU BY:

jgreene@crain.com

year in Henry Ford Health System had a big Allegiance 2016 when it added Jackson-based of Health in April and Flint-based HealthPlus acquisiMichigan earlier in February. The two revetions added about $800 million in annual expandnue to the now $5.7 billion system and to the west ed its geographic reach by 75 miles from five and 70 miles to the northwest and counties to eight. history So, how has Henry Ford, with its rich with a as a Detroit-based integrated system group and 1,200-physician employed medical company, a 662,000-member health insurance fared since then? Ford By all accounts, if you talk with Henry of implementation the officials and physicians, says it the merger has gone well. But experts of failtakes years before determining success or mergure with a major business acquisition er. manRobert Burns, chair of the health care School at agement department at the Wharton research the University of Pennsylvania, said hi d f all corporate mergers,

BEAUMONT HEALTH

Construction is underway on a new patient

tower at Beaumont Hospital, Farmington

Hills, the former Botsford Hospital that

was part of a merger in 2014.

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

MICHIGAN BRIEFS

INSIDE

Officials charged in death during Flint water crisis Attorney General Bill Schuette filed an involuntary manslaughter felony charge against state health director Nick Lyon and four other state and Flint officials over the death of a man who contracted Legionnaires’ disease during Flint’s water crisis. Genesee County District Court Judge G. David Guinn allowed the charges to be filed Wednesday morning, making Lyon the highest ranking state official in Gov. Rick Snyder’s administration to be charged criminally over Flint’s tainted water. Schuette’s involuntary manslaughter charge against Lyon and the four others blames them for indirectly causing the Dec. 13, 2015, death of 85-year-old Robert Skidmore of Mount Morris. “Defendant Lyon’s acts and failure to act resulted in the death of at least one person, Robert Skidmore,” Special Agent Jeff Seipenko said in Genesee County court. Schuette also said he’s filing involuntary manslaughter charges against former Flint emergency manager Darnell Earley, former Flint public workers director Howard Croft and Stephen Busch and Liane Shekter Smith, two top water regulators at the Michigan Department of Environmental Quality

CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

Special Prosecutor Todd Flood (left), Attorney General Bill Schuette, Genesee County Prosecutor David Leyton and Andy Arena, chief investigator for Schuette’s Flint water crisis investigation. during Flint’s water crisis. Earley, Croft, Busch and Shekter Smith were previously charged by Schuette for a variety of criminal allegations of misconduct for their handling of Flint’s tainted water problems. Schuette’s office also filed criminal charges of obstruction of justice and lying to a police officer against Dr. Eden Wells, the state’s chief medical executive. The Attorney General’s office alleges Wells obstructed Wayne State University researchers who have been trying to find a link between the corrosive Flint River water and the Legionnaires’ outbreak.

Snyder, legislators strike budget deal Gov. Rick Snyder and Republican

legislative leaders reached a budget deal that would automatically enroll newly hired school employees in a 401(k)-only retirement plan unless they opt into a costlier pension benefit within 75 days, The Associated Press reported. The change would apply to teachers and other school workers hired next Feb. 1 or later and may cost the state much less than an earlier version of legislation introduced last month, according to a summary of the agreement circulated to GOP senators at a caucus meeting and obtained by The Associated Press. New hires now qualify for a pension and a small 401(k). Under bills that could begin advancing Wednesday, they would default into a better 401(k)-only plan like what state employees receive — a 4

percent employer contribution plus another 3 percent if they kick in at least 3 percent of their pay. They could still pick a pension, but it would cost them an unspecified amount more than what teachers now pay: 6.4 percent of their salary. In the new hybrid plan, workers would be responsible for half of the cost-sharing, including any new unfunded liabilities. If the funding falls below 85 percent for two straight years, the plan would be closed to new entrants. It was not immediately clear just how unappetizing the pension option would be for new teachers, but Republicans expect opposition from labor unions.

House OKs bills to combat opioid addiction

CALENDAR

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KEITH CRAIN

OPINION

OTHER VOICES

PEOPLE RON FOURNIER

WEEK ON THE WEB

COMPANY INDEX: SEE PAGE 22

publican you know or see or heard of kids and others who have faced this and have real struggles and have died as a result,” Lansing Democratic state Rep. Andy Schor said on the House floor before last Tuesday’s vote on his bill dealing with Medicaid payments.

The Michigan House approved legislation that would create an opioid prescription abuse program for school districts and to let Medicaid pay for patient detoxification and rehabilitation services for people with addictions, The Associated Press reported. The bills also would prevent doctors from giving prescriptions without written parental consent and let pharmacists refuse filling prescriptions suspected of being fake. “Whether you’re Democrat or Re-

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Correction An article published in the March 23, 2015, edition of Crain’s under the headline “Sun Communities buys Green Courte Partners” should have stated that Southfield-based Sun Communities Inc. purchased Green Courte Partners’ subsidiary American Land Lease Inc.

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Sports Business

Little Caesars Arena to open in three months

CRUNCH TIME

Three months to the day from when Kid Rock will christen Little Caesars Arena with the first of four shows, Olympia Entertainment’s Tom Wilson took local journalists on a walking tour of the sprawling building Monday afternoon. He showed off the 20,000-seat future home of the Detroit Pistons and Red Wings by highlighting its massive scoreboard beginning to take shape, the unique gondola seating that looks nearly directly down over the floor, and the Via concourse that has a wide transparent roof encircling much of the bowl. More than 1,000 workers are on site daily to get the 20,000-seat venue and surrounding 12-acre site finished on time. Much of the seating is installed, and crews are working to wrap up the interior fixtures and infrastructure. The arena project including nearby developments is now tabbed at $862.9 million, including an adjacent parking garage and commercial buildings flanking the venue along Woodward Avenue and Henry Street.

Little Caesars Arena’s 20,000 seats are still being installed.

PHOTOS BY BILL SHEA/CRAIN’S DETROIT BUSINESS

Olympia Entertainment President Tom Wilson explains Little Caesars Arena’s progress to reporters during a media tour last week.

Q&A

Gateway ’17 looks to connect MI biz to China By Dustin Walsh dwalsh@crain.com

Alibaba is coming to Detroit this week. The Chinese e-commerce giant is hosting its inaugural Gateway event, intended as a way for businesses J. Michael Evans: to learn about Alibaba president exporting to says Detroit China and, in offers access turn, help Alibaba find products to sell. Alibaba, though it sells little in the U.S., is growing quickly. It has forecast revenue next year of up to nearly $35 billion, an increase of 45 percent to 49 percent over 2017. Crain's Dustin Walsh talked with J. Michael Evans, Alibaba Group’s president and director, about why the company picked Detroit, and what Alibaba might do for local businesses. Agriculture seems to be the focus, though not the entirety, of the first Gateway event. Why is ag important to Alibaba and China?

The answer starts with Alibaba’s business strategy in the United States, which is focused on helping the U.S. businesses sell to the China market. On a practical level, there are two main focuses of Gateway ’17: first is educating U.S. brands, small businesses and agricultural providers (including farmers and cooperatives) about the opportunity to sell to the more than 500 million Chinese consumers on our platforms. And second is equipping those brands, small businesses and agricultural providers with the tools and understanding they need to begin the process of getting on our platforms and selling to Chinese consumers who have a high demand for products from the United States. Agriculture is important because our consumers in China are looking for safe, high-quality fresh produce and agriculture products. The U.S. is a net exporter of a wide range of these products and so we can help this supply connect with strong and Others include fashion and apparel, mother and baby products,

Nonprofits

“I’d like to see us lean into investments that support the policy work that can move the needle.”

About Gateway ’17 in Detroit What: Gateway ’17 is the inaugural national event put on by the Chinese e-commerce company to find new U.S. vendors who are interested in exporting to China.

Jack Ma

Martha Stewart

Who: Featured speakers include Alibaba CEO Jack Ma, Martha Stewart Living Omnimedia founder Martha Stewart, UPS CEO David Abney and TV anchor Charlie Rose. When: TuesdayWednesday.

Where: Cobo Center, Detroit. Tickets: Sold out. More: Gateway17.com

SEE GATEWAY, PAGE 21

MUST READS OF THE WEEK Many dollars, not so many wins The Tigers’ return on their payroll investment puts them near the bottom of Major League Baseball, Page 4

Melanca Clark, Hudson-Webber Foundation

Clark brings political, social background to Hudson-Webber By Sherri Welch swelch@crain.com

When Melanca Clark first expressed interest in leading the Hudson-Webber Foundation, there was some question of whether she’d be able to get an interview, given her non-traditional background. Unlike the heads of most private foundations, Clark hadn’t come up through nonprofit channels. Instead, she’d turned her Harvard Law School degree to social justice and political work, a path that took her all the way to the White House. Now, just under a year after joining Hudson-Webber, she’s bringing her political and social justice back-

Office space Hayman buys Troy Officentre for $55 million, plans $10 million in renovations. Page 5

ground to bear in developing a new strategic plan for the funder, one that could see it taking a new advocacy role on policy issues that impact the quality of life in Detroit and funding, among other things, new approaches to crime intervention in the city. The strategic plan is expected to be done later this summer. “Given our scale and scope ... we’re not going to program our way out of some of these issues that we’re trying to take on,” Clark said. The foundation grants $6 million-$7 million annually to efforts supporting physical revitalization, the arts, economic development and safe communities in the city. SEE CLARK, PAGE 20

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

CRAINâ&#x20AC;&#x2122;S DETROIT BUSINESS

Tigers remain one of Major League Baseballâ&#x20AC;&#x2122;s inefficient spenders By Bill Shea bshea@crain.com

Itâ&#x20AC;&#x2122;s June, so summer is basically here, the weather is nice, and the kids are getting out of school. And that other annual midyear phenomenon is in full swing: Detroit Tigers fans are complaining. Are the beefs legit? Has the team been effective or inept with its talent so far this season? The Tigers, going into Wednesday, were 30-33. After 63 games a year ago, they were 32-31, and would go on to chase a playoff spot until the final weekend of the season. In 2012, when the Tigers last reached the World Series, they were 30-33 after 63 games. Across Major League Baseball right now, the average team sits at 32-32. What separates the Tigers from the rest of the middle of the pack is payroll. Average MLB roster spending this season is $139.3 million. The Tigers are spending $201.1 million. More than a third of the season is in the books, and if the Tigers maintain their .476 winning percentage pace, theyâ&#x20AC;&#x2122;ll finish 77-85. Cocktail napkin math suggests theyâ&#x20AC;&#x2122;ll have spent $2.61 million for each victory. A 77-85 team spending the league average on players will have doled out $1.8 million per victory this season. Last season, it cost the Tigers an average of $2.39 million for each of the teamâ&#x20AC;&#x2122;s 86 victories. At their 2017 pace, theyâ&#x20AC;&#x2122;ll win nine fewer games and spend more to do it. The flaw in such math is that itâ&#x20AC;&#x2122;s much harder to be efficient when a team spends more. Big payrolls donâ&#x20AC;&#x2122;t automatically equal winning or a World Series, but being cheap doesnâ&#x20AC;&#x2122;t win many games, either. The elusive grail for front offices is to find the right collection of players for the right price. The only teams to win a championship while having the most expensive roster were the New York Yankees in 2000 and 2009. That said, higher spenders got to the

World Series more often that cheaper teams. The best team in baseball right now is the Houston Astros with a 4422 record. Their payroll is $125.3 million, which is $14 million below the league average. Detroit spending 44 percent more than the league average hasnâ&#x20AC;&#x2122;t resulted in much beyond a .500 club thatâ&#x20AC;&#x2122;s in third place within American League Central Division. The Philadelphia Phillies are the worst MLB club at 21-42. If they keep up with .333 winning percentage and win just 54 games, their $113.2 million roster translates into $2 million spent per victory. At the other end of the spectrum, the L.A. Dodgers have MLBâ&#x20AC;&#x2122;s largest payroll at $246.3 million, and their .615 wining percentage projects out to 100 wins. The math suggests $2.46 million for every Dodgers victory. Or, in other words, theyâ&#x20AC;&#x2122;ll spend less per game for each victory than Detroit. Spending efficiency, of course, is meaningless to fans and billionaire owners if their team wins the World Series. For the Tigers, the math so far paints a muddied picture with a lot of baseball left to be played. Detroit, which was 3.0 games out of the division lead on Wednesday, was 13th among MLBâ&#x20AC;&#x2122;s 30 clubs when it comes to team batting average (.255) and home runs (79) but itâ&#x20AC;&#x2122;s in the upper tier for on-base percentage (.333, 7th), slugging percentage (.431, 10th), on-base plus slugging (.764, 8th), and the Tigers were sixth in baseball with 235 walks. They had the 12th-most strikeouts with 534, so the team is a confounding mix of patient at the plate, hitting for extra bases, but still striking out more than most teams. Pitching has been the teamâ&#x20AC;&#x2122;s bugaboo. The staff has a combined 4.78 ERA, which ranks 24th in MLB, and opposing teams were hitting .273 against Detroit, which ranks 28th. The pitching staffâ&#x20AC;&#x2122;s WHIP â&#x20AC;&#x201D; a measurement of baserunners allowed

per innings pitched â&#x20AC;&#x201D; also was 28th at 1.47. Oh, and that bullpen, ever a source of angst. So far this season, the Tigersâ&#x20AC;&#x2122; bullpen had blown 12 of 26 save opportunities, third worst in baseball, and the groupâ&#x20AC;&#x2122;s 5.01 ERA was 27th in MLB. A more technical measure of the teamâ&#x20AC;&#x2122;s performance so far is an advanced analytical metric thatâ&#x20AC;&#x2122;s become popular over the past decade: wins above replacement, or WAR. The measurement is for individual players, and gives an idea of how many victories a player is worth to his team compared to a replacement-level player. The higher the WAR, the better the player. Through Wednesday, ESPNâ&#x20AC;&#x2122;s version of WAR showed just four Tigers players in the top 100: Outfielder Justin Upton with a 2.1 WAR came in at No. 52, pitcher Michael Fulmer tied for No. 73 with a 1.89 WAR, and backup catcher Alex Avilaâ&#x20AC;&#x2122;s 1.74 WAR was tied for 85th. Avila was starting while everyday catcher James McCann was out with an injury. Last year, the Tigers had several players in the top 50 WAR rankings: pitcher Justin Verlander finished ninth in baseball with a 6.61 WAR. Second baseman Ian Kinsler was 17th with a 6.13 WAR and Miguel Cabrera was 45th with a 4.9 WAR. Fulmer with 46th at 4.87 WAR. A WAR rating increases with games played. Baseball salary tracking site Spotrac.com has a metric called True Value Statistic (TVS) used to value teams by payroll, victories, and accumulated player production. Detroitâ&#x20AC;&#x2122;s 19.47 TVS ranked 25th in baseball, with the Astros as the best at 98.14 and San Francisco Giants worst at 1.74. The average TVS was 48.3 as of Wednesday. Note: The statistics, rankings, and salary information in this story come from MLB, ESPN.com, Fangraphs. com, and Spotrac.com. Bill Shea: 313 (446-1626) Twitter: @Bill_Shea19

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COSTAR GROUP INC.

About $10 million in capital improvements are expected at the five-building Troy Officentre complex along East Big Beaver following a sale to Southfield-based Hayman Co.

Hayman buys Troy Officentre for $55M By Kirk Pinho kpinho@crain.com

Hayman Co. has paid $55 million for the Troy Officentre complex. The deal that closed earlier this month for the 732,000-square-foot property along East Big Beaver Road just north of I-75 amounts to $75.14 per square foot. Andrew Hayman, president of Southfield-based Hayman Co., said about $10 million will be spent updating and renovating the five-building property. Improvements include new elevators, some roof replacements, parking lot and parking deck repairs, and landscaping and signage upgrades. Common areas are also expected to be improved, Hayman said. According to CoStar Group Inc., the average asking rent is $17.95 per square foot per year, and Hayman said he and New York Citybased Torchlight Investments, an investment partner in the deal, hope to increase rents over approximately a five-year ownership period to more than $20 per square foot. “We see a tremendous value opportunity, but at what we feel is a re-

ally good price per square foot,” Hayman said. The complex, most of which was built in the mid-1980s, is about 83 percent occupied, with large tenants including J.D. Power & Associates (43,000 square feet), St. John Providence (30,000 square feet), Urban Fulfillment Services (30,000 square feet), General Physics Corp. (60,000 square feet) and Dialog Direct (60,000 square feet), Hayman said. Hayman Co. will manage and lease the building to tenants, and serve as construction manager on the renovations. The previous owner was a subsidiary of Osprey S.A. Ltd. Anne Galbraith Kohn, senior vice president in the Capital Markets Group in the Southfield office of Los Angeles-based CBRE Inc., brokered the deal. Hayman Co. has an office portfolio of about 4 million square feet under ownership and management, plus more than 10,000 apartment units spread across about 40 properties, Hayman said.

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DOING THE UNDOABLE IS IN OUR DNA.

Mobility center awards $24M contract for proving grounds By Kurt Nagl knagl@crain.com

The American Center for Mobility has awarded Warren-based Angelo Iafrate Construction a $24 million contract to begin phase one of the automated vehicle proving ground at Willow Run. Phase one includes construction of a 2.5-mile highway loop with on and off ramps, a 700-degree curved tunnel, customer garage and operations center, the mobility center announced in a news release. Completion of the project’s first phase is expected by December, when the grounds will open for testing, the news release said. “The American Center for Mobility is attracting worldwide interest from private and public entities that have a need for developing and testing advanced connected and driverless vehicle technologies,” John Maddox, president and CEO of the mobility center, said in a written statement.

In January, the American Center for Mobility, a nonprofit self-driving vehicle test bed at the Ypsilanti airport, was named by the U.S. Department of Transportation an official proving ground for the development of driverless cars. Construction of the proving grounds — at the site of a former General Motors plant that closed in 1992 — is expected to cost $110 million. The mobility center has secured about half those funds with more private investment on the way, according to GM Authority, a forum for news related to the automaker. The Michigan Department of Transportation has also started work on a 1.5-mile section of US-12 between Ecorse Road and Airport Industrial Drive, where plans are to repurpose the westbound lanes of the divided road for part of the proving ground’s closed track, while the eastbound lanes will be converted into two-way traffic for the public.

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OPINION What do you call the summer of ’67?

call what happened in Detroit in 1967 a riot because my father called it a riot, and my father called it a riot because he was a Detroit riot cop. It’s a matter of perspective. It’s trite to open a column with a dictionary definition, but words matter, so we have to start with Merriam-Webster: A riot is “a tumultuous disturbance of the public peace by three or more persons assembled together and acting with common intent.” The word vaguely applies to what happened here 50 years ago this summer: 43 dead (33 blacks and 10 whites), 1,189 injured, more than 7,200 arrests, and 2,509 businesses burned, looted or otherwise destroyed. But “riot” also lacks context. It assumes “common intent” when the violence of 1967 had many intentions, many reasons and justifications, and not all of them pure. Much of it was fueled by anger. Anger over policy brutality. Anger over red-lined neighborhoods. Anger over systemic racism that, among other things, led to the destruction of a vibrant black business community called Paradise Valley (See Kirk Pinho’s story on Page 14). For many black Detroiters, anger defined the words their parents used. Rebellion: “opposition to one in authority or dominance.” Revolt: “to renounce allegiance or subjection (as to a government).” Uprising: “a usually localized act of popular violence in defiance usually of established government.” Insurrection: “an act of instance of revolting against a civil authority or an established government.” I’ve heard people use the word “unrest” rather than riot or rebellion. I looked it up: Unrest means “a disturbed or uneasy state,” which might make it more of a euphemism than a synonym. Same for “civil disturbance.” Frank Joyce, a prominent New Left activist in Detroit in the 1960s, read a lot into word choices. “The investment that a lot of white people have in calling this a riot is precisely because they don’t want to concede that black people had anything to rebel about …,” he said in 2016. Among those who fiercely disagreed was Roman Gribbs, who served as Detroit mayor from 1970 to 1974. “How can you say a rebellion when you have 43 murders, $50 million (of) damages — blocks and blocks of fires,” he said in 2015. “That’s not a rebellion, that’s a riot.” (Gribbs died in 2016.) Both Joyce and Gribbs were interviewed by the Detroit Historical Society for its 1967 oral history project. The DHS collected hundreds of interviews and built a Midtown exhibit, “Detroit 67: Perspectives,” to encourage metro Detroiters to move beyond

RON FOURNIER Publisher and Editor

Ron Fournier is publisher and editor of Crain’s Detroit Business. Catch his take on business news at 6:10 a.m. Mondays on the Paul W. Smith show on WJR AM 760.

the linguistics of 1967 and attack the root causes of whatever we call it. For this issue’s coverage of the 50th anniversary, Crain’s staff didn’t settle on one word to describe what happened, because no single set of letters conveys the full breadth of that bloody summer, and each word reflects a different perspective. We recognize that our readers come from all walks of life. We chose to write about the summer of ’67 because Crain’s is a business publication, and what happened that summer was an economic cataclysm. The financial pain lingers today. Detroit’s future depends upon how well the business community and other civic leaders learn from the lessons of the past. “If we fail again,” Mayor Mike Duggan warned at the Mackinac Policy Conference, “I don't know if the city can come back.” La June Montgomery Tabron, president of the W.K. Kellogg Foundation, was traveling to Mackinac Island when Duggan was tracing the history of institutionalized racism in Detroit. But by the next morning, when she joined me for breakfast at the Grand Hotel, everyone was talking about the mayor’s speech. “Good for him,” she murmured. Then we compared notes: We’re roughly the same age. We grew up on the city’s east side. Her neighborhood was diverse, mine was not. She is black. I am white. My father wore riot gear. Her father wore a grim look of resolve when neighbors and friends filled his basement, taking shelter from violence. “Suddenly, a guy showed up carrying a TV under his arm. My father stood in the door to our house and said, ‘Oh, no you don’t! Get that TV out of here!’” She took a bite of breakfast and continued: “What I remember is leadership — somebody, my father, giving shelter to people who needed it and helping us process right from wrong.” I didn’t ask her what she calls the events of 1967. I suspect it matters much less to her than what Kellogg is doing for Detroit’s neighborhoods under her leadership.

The QLine runs up and down Woodward in downtown Detroit.

CRAIN’S DETROIT BUSINESS

Let’s keep it within reason I happen to think that the new streetcars are great. My only suggestion, as given to me by a friend, is that they need to put more cars on the system. A 10- or 15-minute wait is about the tolerable maximum, and now it’s about double. There is no doubt that the project has been a hit, and if they can find the money to keep it running, then we have a home run. The problem has always been, everywhere, if there is a deficit, they raise the price, fewer people ride, and it becomes a spiral downward. Just about every mass transit system needs a government subsidy, so don’t be surprised when taxpayers are asked for one. Meanwhile, we are hearing a lot of crying for more trolleys going out to the suburbs. It would be hard not to want an expansion of our system after seeing it in operation. Like the People Mover, it does not do as much good as possible without being expanded. In a perfect world with lots of

KEITH CRAIN Editor-in-chief

revenue, we would all like to see an expanded system serving all of Southeast Michigan. But the cost would simply be prohibitive. And let’s be equally careful that we don’t fall too in love with a fixed rail system. I always remembered watching the system in Chicago, called the “Loop,” become obsolete when, over a few decades, the downtown moved, leaving the system today in the wrong place. Buses, whether they are powered by fuel, electricity or even hydrogen, have the simple ability to move as population shifts, a real advantage. Trolleys or streetcars

are cool but very expensive and don’t have the flexibility to move as population moves. Unless you are certain that population will stay put for decades, buses seem to be a better choice. Right now we have isolated transit systems that don’t seem to be connected. Our trolley up and down Woodward is going to be a business bonanza. I hope everyone watches as businesses sprout up all along the system, whether they are restaurants, apartments or offices. I am sure we will see lots of new economic growth along the route. Even in the Motor City, mass transit will build business, something long overdue. But to be really powerful we have to watch it expand all over our region. The People Mover was a beginning, followed now by the streetcars. Over a period of time, when we have the tax revenues, we must see an expansion of our system. It will add substantially to our economic prosperity.

TALK ON THE WEB Re: UM to offer free tuition for students with family incomes under $65,000 Another reason not to send my kids to U of M. Now they have to subsidize these free students through their own student loans. The increase U of M is proposing may not sound a lot as a percentage but when

you consider the average debt, that could add years to the loan repayment. Nice thought, poor implementation. How about cutting the salaries of the professors and charging a fee to the board of regents to subsidize all the students! They certainly make more than $65k and should be happy to take a 3 percent cut. MarkYTH

Since this is funded by out-ofstate tuition and university cost containment won't it simply raise the tuition for those who are paying? I don't see this as the long-term solution for the ever-rising costs of college education. Additionally, if UM is the trendsetter here it could potentially dissuade students from electing to attend the school. BFureigh

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Retiring educator said yes to career-minded young people As debates continue within the business community about how to support education, there is a lesson we can learn from an educator who is worthy of celebration. Pete Bowers is retiring after 41 years as a teacher and, as he is wellknown in local broadcasting circles, the station manager of WBFH-FM in Bloomfield Hills, a community radio station staffed primarily by the students he has mentored since the “The Biff” first signed on the air in 1976. “Bitten by the broadcasting bug” as a college student, Bowers channeled that passion into a career, in his hometown, filled with indelible influence. One of the unusual aspects of the communications business is the lack of barriers to entry. There is no state certification, no licensing exams. Would-be entrants just need someone to open the door to a career. For me, that was Bowers. When I was just 11 years old, as a sixth-grader fascinated by media, he gave me a radio show he named “Middle School Spotlight.” As a senior in high school, he named me the station’s operations manager, overseeing a staff of 30. In between, I learned how to DJ, anchor news, report sports and call play-by-play. In more than four decades, he gave similar career head starts to WXYZ-TV’s Heather Catallo and JoAnne Purtan, WXYT-FM’s Scott “The Gator” Anderson and WDETFM’s Jake Neher, among dozens of others. Sure, we all grew up in and around Bloomfield Hills, which provided us with multiple advantages. But it was Bowers who created an environment that encouraged teamwork and fresh thinking, invaluable lessons for communicators and others who have enjoyed success in a wide range of professions. At a retirement luncheon June 3, administrators, colleagues and alumni thanked Bowers for all he has sent into the lives of his students. In a mix of laughter and tears, we spoke on how experiences as a teenager have shaped our lives as adults. All of the comments had something in common — we talked of intangibles, not anything that can be measured by standardized tests. One former student, now an FBI agent, drove 500 miles from Virginia to be there. Another, an internet entrepreneur, flew in from Atlanta. A third, a teacher and debate coach in Florida, flew in to say, “The three biggest positive influences in my life have been my mother, my father and Pete Bowers.” Too often, the word we hear the most in business is negative — “no.” Forget about creativity. Just hit your numbers. Make the boss happy. Keep your head down. Don’t cause trouble. But with Pete Bowers, the answer to students was always “yes.” When I, at 14, wanted to be the first broadcaster, perhaps nationally, to call a middle school basketball game on the radio, he said “yes.” Three years later, when I wanted to rack up long distance charges interviewing na-

Too often, the word we hear the most in business is negative — “no.” OTHER VOICES Matt Friedman

Friedman is co-founder of Tanner Friedman Strategic Communications in Farmington Hills and an alumnus of WBFH-FM.

tional media figures on a talk show, he said “yes.” Two of many examples of experiences then that built skills used now. Pete Bowers saw his role not just to manage, not just to teach, but also to empower. If we can all figure out ways to say “yes” to career-minded young people, his legacy will long outlast his retirement.

Pete Bowers is retiring after 41 years as a teacher and as the station manager of WBFH-FM in Bloomfield Hills.

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

SPECIAL REPORT: HEALTH CARE

Medical mergers

FRO

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

Henry Ford expands with Jackson, Flint acquisitions By Jay Greene jgreene@crain.com

Henry Ford Health System had a big year in 2016 when it added Jackson-based Allegiance Health in April and Flint-based HealthPlus of Michigan earlier in February. The two acquisitions added about $800 million in annual revenue to the now $5.7 billion system and expanded its geographic reach by 75 miles to the west and 70 miles to the northwest and from five counties to eight. So, how has Henry Ford, with its rich history as a Detroit-based integrated system with a 1,200-physician employed medical group and a 662,000-member health insurance company, fared since then? By all accounts, if you talk with Henry Ford officials and physicians, the implementation of the merger has gone well. But experts says it takes years before determining success of failure with a major business acquisition or merger. Robert Burns, chair of the health care management department at the Wharton School at the University of Pennsylvania, said research shows two-thirds of all corporate mergers, which includes hospitals and insurers, fail to achieve success as defined by the public: providing better coordinated care that leads to improved quality, lower costs and enhanced customer service. “A successful merger is defined by what the hospital says it is, not what society is looking for,” said Burns, a national expert who has studied hospital and physician mergers for more than 30 years. “Reduced costs are what the public wants in a merger,” he said. “Systems seek market power, market share, to weed out competitors” and to protect their pricing scheme against insurers, managed care organizations and employers. Burns says hospital executives will never publicly acknowledge these goals, but the former SEE HENRY FORD, PAGE 9

A 59,000 square-foot inpatient tower at Henry Ford Allegiance Health in Jackson will create 66 private rooms.

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BEAUMONT HEALTH

Construction is underway on a new patient tower at Beaumont Hospital, Farmington Hills, the former Botsford Hospital that was part of a merger in 2014.

Beaumont’s financials, patient volume stats up three years into union of hospitals By Jay Greene jgreene@crain.com

HENRY FORD HEALTH SYSTEM

Hospital mergers like the one that formed eight-hospital Beaumont Health in September 2014 often take five years or more to ultimately be judged a success or failure. But three years into the merger that brought together four-hospital Oakwood Healthcare, Botsford Hospital and Beaumont Health System, progress toward that end has been unmistakable, according to top executives and physicians interviewed by Crain’s. Beaumont’s board chair, John Lewis, declined interview requests. “From an operating standpoint, we have got a beat and rhythm and are doing well,” CEO John Fox said of the merger. “We are exceeding our targets, getting higher volumes, our hospitals are growing with better asset utilization. Part of that reason is that people understand a lot better than a couple years ago what Beaumont Health is.” “Patients and doctors are trying us who have not done so before. All boats are rising. With that, our market share is growing. We see it in all the math. The (Southeast Michigan) market has grown by X, but we are growing by 2X. By

definition, our slice of the pie is getting bigger.” It’s paying off. For fiscal 2016 that ended Dec. 31, Beaumont Health enjoyed an operating income increase of 43 percent to $200.6 million for a 4.6 percent margin, compared with $140.7 million the prior year. Net revenue grew 6.7 percent to $4.4 billion. Beaumont has projected net savings from the merger over three John Fox: years to be more than $134 Beaumont is million. exceeding targets. Beaumont is metro Detroit’s second-largest system by revenue at $4.4 billion, somewhat behind $5.7 billion Henry Ford Health System, which includes $2.4 billion in health premium revenue. Comparing just net patient revenue, Beaumont is ahead of six-hospital Henry Ford, $4.1 billion to $3 billion. Over the two years Fox has been CEO, Beaumont has moved the needle on integrating the eight hospitals with 3,337 beds and 168 outpatient sites into one entity in a number of ways.

They include combining administrative staffs and back-office support services; issuing a consolidated bond for $398.4 million that saved the new system $23.5 million; consolidating electronic medical record systems with Epic Corp.’s electronic medical record; forming 900-physician Beaumont Medical Group and launching Beaumont Care Partners to negotiate managed care contracts. Cost savings last year from the merger, estimated at $77 million, allowed Beaumont to reward employees with pay raises, company 403(b) retirement plan matches and new educational assistance and benefit plans. Beaumont employs 35,000 workers and has nearly 5,000 physicians on its medical staffs. Many smaller improvement projects are flying under the public radar. But prominent changes included the January launching of a new Beaumont branding campaign during the Super Bowl. Its “No Quit in Us, No Quit in You” print, radio, TV and billboard campaign so far is getting good reviews, Fox said. This summer, executives will analyze data to determine if patients responded to the campaign by visiting a Beaumont hospital or doctor. SEE BEAUMONT, PAGE 12

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

SPECIAL REPORT: HEALTH CARE

HENRY FORD

FROM PAGE 8

hospital executive said private motivations never change. In a 2015 study, Burns and fellow researcher Jeff Goldsmith looked at the performance of 15 “integrated delivery networks” in the U.S. as they added hospitals, physician organizations and managed care contracts where they assumed some financial risk. The research concluded there is little evidence that the mergers help to promote quality or reduce costs. “Indeed, there is growing evidence that hospital-physician integration has raised physician costs, hospital prices and per capita medical care spending,” the paper in the National Academy of Social Insurance concluded. “Similarly, hospital integration into health plan operations and capitated contracting was not associated either with clinical efficiency (shorter lengths of stay) or financial efficiency (lower charges per admission).” The 15 systems studied included Henry Ford Health System, Advocate Health Care in Chicago and the University of Pittsburgh Medical Center, three health systems widely recognized as successful systems. But Burns added that studies also show there is a great deal of variation in outcomes, depending on such factors as the leadership of the organizations, the market and how the mergers are implemented. Surveys also show employers don’t believe hospital mergers reduce costs, but do lead to better care coordination and quality. Bob Riney, Henry Ford’s COO, said the health system approached the merger with Allegiance very differently than hospital combiBob Riney: nations of the Approached past. merger differently. “When we made the decision to partner with Allegiance, it was a mutual decision to become one,” Riney said. “We set out as a system determined to try and get advantages with mergers and mitigating the challenges that have plagued so many mergers across the country.” With the HealthPlus purchase, immediate goals were to reduce administrative costs, create a mutual brand identity and connect information systems with HAP, Riney said. “Consolidation went pretty quickly and efficiently without much fallout,” he said, adding that the merger is about 75 percent complete, although new product development is just beginning. After adding 300 employees from the old HealthPlus and 73,000 commercial members, Henry Ford’s Health Alliance Plan of Michigan now has 1,300 employees and a total of 662,000 insured lives in its commercial, Medicaid, Medicare and PPO business lines.

HENRY FORD HEALTH SYSTEM

A renovated Henry Ford Allegiance Health Center on Spring Arbor Road in Jackson will consolidate services under one roof, including dermatology, plastic surgery, and obstetrics and gynecology. Construction is scheduled for completion in August.

Mergers with Obamacare Over the past several years, Henry Ford and Allegiance explored mergers with various health systems. Nationally, many health systems and insurance companies did the same because of the need to reduce costs and improve quality to take advantage of incentives and payment cuts contained in Obamacare, or the Patient Protection and Affordable Care Act of 2010. Four years ago, Henry Ford attempted to merge with Beaumont Health System in Royal Oak. Cultural and management incompatibilities ended that deal. Beaumont then merged with Oakwood Healthcare and Botsford Hospital to become eight-hospital Beaumont Health, the largest health system in Southeast Michigan in market share. Allegiance also discussed various deals with the University of Michigan Health System in Ann Arbor and ProMedica in Toledo. But one of the advantages Henry Ford had over UM and ProMedica is that Henry Ford offered to invest more than $300 million in capital improvements over five years in the Jackson market. Henry Ford also pledged to enhance clinical services in Jackson. Capital projects underway at Allegiance include adding a much-awaited $45 million, 66-bed patient tower, enhancing cardiovascular services, adding a $70 million Epic Corp. electronic medical record and a $10 million, two-story health innovation and education center. Georgia Fojtasek, president of Henry Ford Allegiance Health who was president of the old Allegiance system, said the early positive impact from the merger has been that Henry Ford has kept its promises on capital projects and how it has treated Allegiance physicians and employees. “Being aligned on values has really helped us manage the challenging parts of bringing two organizations together,” said Fojtasek, a nurse who has been Allegiance’s CEO for 23 years. “It is still early, and we have a lot to do, but (the merger) has worked out very well.” Fojtasek said Henry Ford has already integrated Allegiance with its billing and collections revenue-cycle processes, combining group purchasing, human resources, legal, finance and marketing. The system is working on merging employee benefit programs and its new Epic records system.

“We have been so focused on (installing) Epic that has meant that our other integration efforts have been delayed some,” she said. But Fojtasek said Allegiance has continued to bring in more patients by opening a level-two trauma center, recruiting physicians and getting a Henry Ford name-recognition bounce in the market. “It is impressive to me what the Henry Ford brand has meant to staff, physicians and employees,” she said. “Henry Ford talks about commitment to excellence and how they treat people, and that is true.” Since last year, Henry Ford Allegiance’s market share has increased by 1.5 percentage points to 33 percent of inpatient discharges, a number similar to Henry Ford’s market share in Southeast Michigan. Allegiance’s total discharges for 2016 were 19,996, a 3.6 percent increase from 2015. Fojtasek said Allegiance was able to attract a Henry Ford rheumatologist part-time to see patients in Jackson and recruited a radiation oncologist and neurosurgeon, both of whom recently completed residency training at Henry Ford. “There has been a small shift of people going to Henry Ford in Detroit from Ann Arbor,” she said. “Obviously, some of our patients still go to the University of Michigan and St. Joseph’s. Some go Georgia Fojtasek: to Beaumont and also to (hospitals Henry Ford has in) Lansing and kept promises. Kalamazoo. We are keeping more patients than we used to do.” Riney said Henry Ford also is building out Allegiance’s network of 40 medical facilities by adding a new ambulatory care center in Brooklyn. He said plans call for adding other centers in the coming years. “We have had tremendous growth. We had 300 more patients, and 70 percent of those patients were new to Henry Ford,” Riney said. On the other hand, Allegiance began a community paramedic program with Jackson Community Ambulance to reduce unnecessary emergency department visits and lower costs. Additional hours were also added to evening clinics for primary care. Both programs helped reduce ER visits by 1.6 percent in 2016 to 84,663 from

86,041 the prior year. As a result, Henry Ford Allegiance’s revenue increased 7 percent to $501 million for the first nine months of the merger ending Dec. 31, 2016. However, net operating margin declined 2.3 percent for the same period to a loss of $2.5 million, primarily because of merger costs and the Epic EMR installation, Fojtasek said. Overall, by adding Allegiance, Henry Ford added assets of about $524.8 million in net fair value and net revenue of $414 million from April to December 2016, according to Henry Ford’s 2016 audited financial statement. HealthPlus added $18.9 million in fair market value to Henry Ford with premium revenue of $331.7 million from February through December, the report said. Besides adding size and revenue, health care mergers and acquisitions also traditionally save some money for the combining hospitals by taking advantage of economies of scale, centralized business services, but also through employee and top management layoffs, Burns said. But other than normal attrition at Allegiance, Riney said there haven’t been any staff reductions. “Our job is to grow the business and also be sensitive to the jobs in all the communities we serve,” he said.

Jackson market Competition for patients will increase in the Jackson market with a stronger Henry Ford Allegiance Health hospital and the University of Michigan Health System creeping closer to Jackson. In March, UM announced it plans to purchase a 49 percent interest in St. Joseph Mercy Chelsea Hospital, which is between Ann Arbor and Jackson. Officials for St. Joseph Mercy Health System, which owns the Chelsea hospital, said the two are expected to invest at least $20 million in improvements. The community hospital would increase operating rooms to eight from six, boost operating beds from about 100 now to the licensed capacity of 133 beds and add minimally invasive robotic surgery. Fojtasek said the move to Chelsea makes sense for the University of Michigan. “We are competitors, and that probably will increase competition and makes sense for them,” she said. But David Spahlinger, M.D., president of the University of Michigan Health System, said UM’s decision on

Chelsea had nothing to do with blunting Henry Ford’s move into Jackson. He said UMHS simply needs additional beds to serve its patients and is striking deals with health care organizations like St. Joseph’s across the state. Spahlinger confirmed that HAP plans to roll out a tiered provider network insurance product in the Jackson market sometime this year. He said he was informed by Henry Ford that UM will become a “tier 2” provider that will charge patients using UM higher out of pocket costs under the new product plan. In a statement, Mary Ann Tournoux, HAP’s senior vice president and chief marketing officer, said that HAP is considering a tiered provider network in Jackson market that could place some providers in higher cost-sharing tiers. “As with all health plans in Michigan, HAP is evaluating the use of tiered networks in all of our markets that would give an incentive to those members who choose to get their health care from high-quality providers that deliver the best value,” Tournoux said. Under the tiered network approach, health insurers charge patients higher copays for tier 2 or tier 3 to discourage the use of certain providers or to encourage use of lower-cost and higher-quality providers. Tier 1 is considered the preferred network providers and have the lowest copayments. In the Jackson and Ann Arbor markets, sources tell Crain’s, the end result is expected to reduce the number of HAP members using UM and direct more to Allegiance or possibly coming to Henry Ford Hospital in Detroit for higher-cost specialty services. “HAP has (placed UM in tier 2 for the proposed narrow network insurance product), but these actions occurred after our announcement (with St. Joe’s Chelsea hospital),” said Spahlinger.

HealthPlus helps HAP expand Looking to the future, Henry Ford’s ultimate goal is to have a statewide health insurance network for HAP. Expanded geographic market to Genesee, Washtenaw and Jackson counties will help toward that goal, Riney said. Henry Ford joining the Affirmant Health Network, a statewide clinically integrated network with seven health systems and 33 hospitals, will also enable HAP to enter other markets. “HAP is in a unique position (to offer) value-based narrow network products” in Jackson and elsewhere, Riney said. “We will be offering products that are high value with preventive medicine and wellness that hopefully is unique in the marketplace.” HAP’s entry into Jackson will help provide competition and diversity of payers in the state, Fojtasek said. In January, Allegiance put its 5,000 employees and dependents on the HAP plan with UM as a tier 2 provider. “It takes time for a new insurer to take hold in market, and we are talking with them about how our clinically integrated network of physicians can manage care together in the community,” she said. SEE HENRY FORD, PAGE 10

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SPECIAL REPORT: HEALTH CARE

HENRY FORD FROM PAGE 8

Bridging the physician divide At Allegiance, Henry Ford executives took the position that Allegiance’s management and physicians had just as many best practices to share with Henry Ford as Henry Ford has to share with Allegiance. “We did not pre-suppose that there is an automatic Henry Ford way that is best,” Riney said. “We wanted to share approaches together and develop synergies and sustainable values.” Riney said Henry Ford wanted to first show the community and physicians that they were there to improve clinical services and quality. “We wanted to gain the respect of the community and show we could add value to them,” he said. “We didn’t want to just say, we can save you $4 million in supplies with a broader base. That doesn’t resonate in a community as much as bringing value, and we wanted to do that for the people of Jackson.” Riney said Henry Ford wanted to alleviate anxieties of the community and Allegiance physicians that the goal was to expand services in the local market. “There are some serious complex care needs that can be done at Henry Ford Hospital and we have seen an in-

HENRY FORD HEALTH SYSTEM

Henry Ford Allegiance Health’s family medicine location in Brooklyn, which opened in 2016, offers imaging and laboratory services. crease in quaternary (high complexity) cases,” said Riney, noting that a handful of patients have been transported by helicopter to Detroit. For Allegiance, clinical areas targeted for improvement first include radiation oncology, cardiovascular and neurosurgery. Riney said telemedicine has allowed Henry Ford specialty doctors in Detroit to conduct virtual visits with patients and local Allegiance doctors. “There is a way to align physician organizations in a non-threatening way,” he said. “We don’t want to have (local) doctors feel threatened for their existence.” In fact, Riney said one of the more satisfying aspects of the merger for him has been how well the employed doctors at Henry Ford Medical Group have accepted and worked closely with Allegiance doctors in Jackson. “The clinical chairs regularly meet

with their clinical partners at Allegiance,” Riney said. “They are on the same page on value-based care that can be one of the biggest challenges.” Jackson also has a group of 50 or 60 independent doctors, some of whom have been critical of Allegiance’s management over the years. Sources told Crain's that a good percentage of the independent doctors initially wanted Allegiance to join UM. Two independent doctors told Crain’s that Henry Ford executives, including Riney and John Popovich Jr., M.D., president of 805-bed Henry Ford Hospital and the system’s senior vice president for clinical affairs, have reached out to them to explain Henry Ford’s plans. They said independent doctors have become more comfortable with Henry Ford as the new owner, although some are still not sold on the change.

“You will always have divergent views on every topic,” Riney said. “I am not going to suggest if there were doctors negative in past there has been a dramatic change now. But a vast majority of Jackson doctors are excited to partner with Henry Ford Medical Group. They don’t feel threatened.” Riney said he has spoken with several physician leaders of the independent group and believes they understand Henry Ford is not the enemy. “We are hoping to change minds,” he said.

Installing Epic EMR In early August, Henry Ford Allegiance is expected to go live with the installation of its Epic EMR system. Henry Ford installed Epic for its Southeast Michigan doctors, hospitals and clinics in 2013. “It is a big, complex enterprise and we have significant numbers of teams working on the construct and adoption of the Epic system, with appropriate modifications for Allegiance,” Riney said. Once Epic is installed, communication between doctors on medical cases will be improved dramatically as patient hospital and physician data can be shared instantly to avoid duplication of tests or medication errors. “The continuity of care will become incredibly easy once we get on the

same platform,” Riney said. Fojtasek said Allegiance and its physicians had already chosen to purchase Epic before Henry Ford acquired it at a cost of about $30,000 per physician. One challenge Allegiance doctors and administrators have is adapting the EMR to Henry Ford policies. “It becomes more complex because since 2008 we have all been on the Jackson Community Medical Record system, a NextGen (EMR) platform,” said Fojtasek. The JCMR, owned by Henry Ford Allegiance, includes Allegiance, about 250 of the medical staff's 400 doctors, the Jackson County Health Department, area clinics and other health providers, she said. Riney said he couldn’t predict how long it might take to integrate operations and cultures of Allegiance and HealthPlus. He said the public, the business community, employees and physicians already are seeing improvements. But clinical service integration with complex specialties could take years. “Cultures are like living things. They are constantly evolving within the community,” Riney said. “We have made incredible strides. The capital investments they are seeing. (These are) examples of promises made, promises kept.” Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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CRAIN'S LIST: LARGEST HEALTH CARE INSURERS/ MANAGED CARE PLANS Ranked by 2016 Michigan revenue Rank

1 2 3 4 5 6 7

8 9 10 11 12 13 14 15 16

Company Address Phone; website

SE Mich. SE Mich. SE Mich. enrolled SE Mich. enrolled Michigan SE Mich. enrolled members in enrolled members revenue Mich. revenue members HMO/ members in ($000,000) percent ($000,000) year-end DHMO in PPO POS Other Top local executive(s) 2016/ 2015 change 2016/ 2015 2016/2015 plan plan plan members Types of health plans

Blue Cross Blue Shield of Michigan/ Blue Care Network

Daniel Loepp president and CEO

$25,900.0 B 6.9% $24,222.0

$25,900.0 B 4,618,800 C 1,000,530 D 3,413,045 205,225 $24,222.0 4,533,379 C

600 E. Lafayette Blvd., Detroit 48226 (313) 225-9000; www.bcbsm.com Joan Budden Priority Health president and CEO 27777 Franklin Road, Suite 1300, Southfield 48034 (800) 942-0954; www.priorityhealth.com Teresa Kline Health Alliance Plan of Michigan E president and CEO 2850 W. Grand Blvd., Detroit 48202 (313) 872-8100; hap.org Meridian Health Plan of Michigan Inc. Jon Cotton president and COO 777 Woodward Ave., Suite 600, Detroit 48226 (313) 324-3700; www.mhplan.com Christine Surdock Molina Healthcare of Michigan Inc. 100 W. Big Beaver Road, Suite 600, Troy president 48084 (248) 925-1700; www.molinahealthcare.com Laura Czelada Delta Dental of Michigan Inc. president and CEO Farmington Hills and Okemos (517) 349-6000; www.deltadentalmi.com Kathy Kendall McLaren Health Plan Inc. president and CEO G-3245 Beecher Road, Suite 200, Flint 48532 (888) 327-0671; www.mclarenhealthplan.org Dustin Hinton, CEO, UnitedHealthcare UnitedHealthcare 26957 Northwestern Hwy., Suite 400, Michigan and Southfield 48034 Wisconsin; Tim (800) 842-3585; uhc.com Dimartino, VP sales and account management Pamela Sue Sedmak Aetna Better Health president and CEO 1333 Gratiot, Suite 400, Detroit 48207 (313) 465-1519; www.aetnabetterhealth.com/Michigan Dennis Smith Upper Peninsula Health Plan LLC president 228 W. Washington St., Marquette (906) 225-7500; NA Dennis Reese Physician Health Plan 1400 East Michigan Ave., Lansing 48912 president (517) 364-8400; www.phpmichigan.com M. Scott Mitchell, Vision Service Plan VSP 2000 Town Center, Suite 725, Southfield market director; Barbara Aikman, 48075 senior account (248) 350-2082; www.vsp.com executive Randy Narowitz Total Health Care USA Inc. 3011 W. Grand Blvd., Suite 1600, Detroit CEO 48202 (313) 871-2000; www.thcmi.com Bruce Broussard Humana Medical Plan of Michigan 250 Monroe NW, Ste. 400, Grand Rapids president and CEO 49503 (502) 580-1000; www.humana.com Jesse Thomas Harbor Health Plan Inc. CEO 3663 Woodward Ave, Detroit 48201 (313) 578-2234; www.harborhealthplan.com Amy Williams Michigan Complete Health Inc. CEO (formerly Fidelis SecureCare of Michigan Inc.) I 800 Tower Drive, Suite 200, Troy 48098 (877) 373-8085; www.fidelissc.com

PPO, HMO, HSA-eligible products; Medicare Advantage, Medigap, Medicare Part D prescription drug plans; and PPO, HMO and HSA-eligible products for individuals. BCBSM and BCN also offer prescription drug, dental and vision benefits. 248,664 PPO, POS, HMO/EPO, HSA, HRA, Medicare, Medicaid

3,406.9 2,800.0

21.7

275.1 341.4

755,754 NA

291,145

124,043

91,902

2,480.7 2,460.7 F

0.8

NA NA F

662,846 689,020

277,410

72,221

10,550

2,420.8 G 2,113.2 G

14.6

NA NA

504,832 455,299

Medicaid, Medicare HMO

2,104.8 G 1,467.9 G

43.4

NA NA

391,148 327,904

Medicaid, Medicare

1,813.4 1,729.9

4.8

937.6 941.4

2,596,931 2,633,565

929.6 G 902.6 G

3.0

NA NA

186,387 203,942

HMO, POS, Medicaid, Medicare Advantage

420.0 NA

420.0 302.9 H

NA NA

340.2 G 282.1 G

20.6

NA NA

52,064 48,094

283.6 G 248.1 G

14.3

NA NA

47,852 47,112

Medicaid, Medicare

177.4 G 162.9 G

8.9

NA NA

36,158 33,972

138.6 NA

NA 133.5

3,762,860 1,800,550

136.4 162.1

-15.8

136.4 162.1

32,787 40,800

31,590

1,197

HMO

115.1 G 80.1 G

43.7

NA NA

30,074 17,011

51.8 G 36.6 G

41.5

51.8 36.6

10,162 6,638

Medicaid, HMO

46.9 60.5

-22.6

46.9 60.5

4,125 7,540

Medicare, Medicaid, HMO

302,665 HMO/POS/PPO/EPO/EPA/ASO/TPA

61,454 2,425,552 109,925 Delta Dental Premier, PPO

This list of leading Michigan insurers/managed care plans encompasses medical, dental, optical and other health care organizations. It is not a complete listing but the most comprehensive available. Unless otherwise noted, information was provided by the companies or the Michigan Office of Financial and Insurance Regulation. Companies with headquarters elsewhere are listed with the address and top executive of their main Detroit-area office. NA = not available. Health care plan types include: Exclusive Provider Organization (EPO) - Members must use the EPO provider network exclusively and medical services received outside of the EPO network are not covered except for emergencies. Exclusive Provider Arrangement (EPA) - Similar to an HMO. Members must choose a physician who authorizes referrals and arranges hospital admissions. Point of Service Plan (POS) - Members designate a primary care physician but can go outside the network for services. Administrative Services Only (ASO) - Offered by insurers to self-insured employers.

B Revenue includes premiums and premium equivalents of both fully insured and self-funded business. C Does not include members that are part of Michigan-based groups but reside outside of Michigan. D Includes Blue Care Network members. E Merger of HealthPlus of Michigan in Flint and Health Alliance Plan in Detroit was approved in February 2016. F Figures include Health Alliance Plan (HMO), Alliance Health & Life Insurance Co. PPO and EPO; Medicare HMO and PPO; HAP Midwest Health Plan (Medicaid HMO), HAP Preferred Inc Ð Network Leasing, ASR (TPA)

G From Department of Insurance and Financial Services. H Crain's estimate. I Effective April 1, 2017, Fidelis became Michigan Complete Health Inc. An expanded version of this list is available with a Crain’s data membership at crainsdetroit.com/lists

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

SPECIAL REPORT: HEALTH CARE

BEAUMONT FROM PAGE 8

This year, Beaumont plans to open a new ER center and proton beam cancer center in Royal Oak and a new patient tower at Botsford Hospital in Farmington Hills. It also will break ground on a new shopping village with a hotel, shops and food services adjacent to its 1,100-bed hospital complex on Woodward Avenue and 13 Mile Road. While individual merger cases may vary, Robert Burns, chair of the health care management department in the Wharton School at the University of Pennsylvania, said research on hospital mergers shows long-term results show little improvement in cost reduction and quality compared with nonmerged competitors in markets they share. "Hospitals that merge to become one reduce costs a little bit (estimated 2.5 to 5 percent) but don’t improve quality" compared with competitors, Burns said. “The systems that coalesce under one roof, they don’t reduce costs or quality. Most studies show that.” Burns said merged hospitals, especially those who form larger systems like Beaumont, first tackle administrative and staffing costs. “Centralizing financial, human resource, back office, that is the easy stuff, the chump change, the

low-hanging fruit, because it doesn’t require buy-in from doctors,” Burns said. “The administrative side is a small portion of total costs. They get some savings there, but it will not take you very far. Merger costs tend to slow and stop in the intermediate term (five years).”

Staff buy-in critical After the failed merger deal with Detroit-based Henry Ford Health System in 2013, which primarily was terminated because physician and executive cultures didn’t mesh, the Beaumont board and executives realized they needed more like-minded partners, especially on the physician side. The culture of Henry Ford’s employed physicians and Beaumont’s mostly independent medical staff were never going to mesh, sources have told Crain’s. Administrators also differed on a variety of other policy issues, including location of corporate headquarters and the fate of the historic Henry Ford Hospital in Detroit. While supportive of the Beaumont Health merger, five veteran physicians at Beaumont’s three legacy hospitals told Crain’s they are becoming disenchanted with some of the changes underway. They increasingly view the merger as a business deal and haven’t yet seen much of an effort by management to integrate the three

DETROIT

SP legacy partner cultures. Fox understands physician frustrations at the pace of change. He often listens to physician concerns and meets monthly with all eight hospital medical staffs, physician leaders, directors and managers. “We are very open with physicians. I meet one-on-one with clinical leaders and hear their concerns (that) depend on their area of specialty,” Fox said. “Whether you are employed or in private practice, it is hard to be a doctor in American health care. It pulls on you in ways not there 10 or 20 years ago.” To ease external medical practice pain, Fox said Beaumont is trying to help physicians adjust to coming value-based payment reimbursement changes, which tie payment increases to quality improvement, coming in 2019. “We have presentations going on with private practice doctors and office staffs. We want them to know how to manage that and do well in the environment of health care.” But one recurring complaint he hears is that physicians don’t think Beaumont has enough support staff. “They want more experienced people. It is a two-way street,” Fox said. “We have to be competitive with salaries and be attractive for nurses, physical therapists” and other clinicians. For the five Beaumont physicians, who asked for anonymity because of their positions, they agreed that one of

BEAUMONT HEALTH

The newly renovated Neonatal Intensive Care Unit pod at Beaumont Hospital, Dearborn, formerly Oakwood Hospital. the more disturbing changes at Beaumont occurred earlier this year when each local hospital chief medical officer was asked to report directly to the local hospital president. Before, local CMOs reported directly to the system’s chief medical officer, David Wood, M.D. “Beaumont operated under the theory that two people were jointly responsible for the hospital, the CMO and the president,” Fox said. “That can be a difficult situation and very confusing in a crisis, having two people decide.” Fox said the three legacy Beau-

mont hospitals only had this reporting relationship. Most hospitals in health care systems, including those in the old Oakwood system, do have medical directors report to the hospital president. “It was very unusual. We tried to provide clarity around that,” Fox said. “Hospital CMOs still talk with Dr. Wood. ... The hospital president and CMO have to be on the same page. When they are not, we have a real problem.” But Beaumont doctors told Crain’s that the reporting change from Beaumont’s once-independent medical

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

SPECIAL REPORT: HEALTH CARE administration has led to a more rigid structure that is less appreciated by physicians because they often feel left out of decisions. From his perspective, CMO Wood said he believes the impact to physicians and the hospitals from the reporting change has been minimal, although at first some doctors expressed surprise and concern. “We have excellent working relationships. The change didn’t really change practically how things are run,” said Wood, who added he meets with all eight local CMOs every two weeks. “The hospital presidents, if they are to be effective, have to have physicians behind them.” Wood said Beaumont has formed an 18-member clinical leadership council composed of elected and appointed physicians to work on common issues, problems and projects. Beaumont physicians are concerned about the possibility that medical staffs of the hospitals will be merged into one and that the system is developing a single physician credentialing process. The Beaumont Royal Oak specialist told Crain’s he and other legacy Beaumont doctors would oppose any such decision. “We don’t want Oakwood and Botsford doctors getting automatic system privileges,” he said. Wood said a systemwide medical staff credentialing proposal is not under discussion by the clinical leader-

ship council, but he added that there would be some minimum criteria and some shared bylaws across the system. “By regulation, each hospital has a separate medical staff. With all the mergers (going on nationally), that system is somewhat archaic,” he said. “We are merging the back offices of credentialing to be more efficient. We will have one credentialing system, but the (privileges) criteria will be a local decision.” But Wood said David Wood: decisions of who Excellent working will be on each relationships. hospital medical staffs “will be a hospital decision” because the needs of each hospital are different. Despite hearing some grumbling, Wood said he believes overall physicians are doing well with the merger. “Health care is at very turbulent times for hospitals and physicians. I think considering all the turbulence, they are doing well. They are seeing the value of the new size, scope and geography and feeling positive about it.” However, Wood acknowledged physicians can have positive and negative feelings depending on their spe-

cialty, location and time spent in the system. “Many of the legacy Oakwood physicians enjoy (being part of) the Beaumont brand and feel very positive about that. Many of the legacy Botsford doctors feel a lot of stability because they are in a larger system,” Wood said. “The legacy Beaumont physicians, they are enjoying size and stability. Then went through a period of time where there was quite a bit of merger talks and uncertainty.”

Priority list Over the past two years, Beaumont has taken steps to improve clinical care programs — primarily quality, patient safety and outcomes — across the system, Fox said. Wood said the goal is to ensure quality and customer experience is consistent. Depending on the service line, programs at smaller hospitals will be enhanced, Fox said. “Orthopedics is constrained in Royal Oak (Beaumont’s 1,100-bed flagship hospital). We are looking at (Beaumont Hospital) Taylor to be a platform. Taylor has four to five ORs that can open quickly. We will hire more spine surgeons for orthopedics,” Fox said. “It is a way to vector out more to the west. ... We need to offer more programs to more markets.” Wood said the Taylor hospital is known for its excellent physical medi-

WE’VE GOT SOMETHING SPECIAL TO BRING TO THE TABLE

cine program and Beaumont recently added more residents to support the hospital and orthopedics. “Our market share in orthopedics has increased. I can’t say it is entirely due” to clinical care improvements, but Wood said there has been growth. One project that began last year will clinically integrate three Beaumont departments — mothers and children, oncology and orthopedics and spine — across all eight hospitals. “What we are trying to do is get an identity for each clinical program” that reflects Beaumont health instead of individual Beaumont, Oakwood and Botsford hospitals, said Fox. “We will have the services (in place) to support them: emergency, pain management, imaging, pharmacy, infection control, palliative care and laboratory,” he said. “The real message is we need these clinical programs talking with each other.”

Other changes In March 2015, Fox began CEO duties at Beaumont. But he didn’t report for work at the Beaumont Royal Oak campus, as had the five previous CEOs in the hospital’s 62-year-old history. “I have never worked in this kind of building. It was done before I got off the plane,” said Fox, adding he misses rubbing elbows with doctors, nurses and patients. “You can’t do this job unless you listen to people from the

ground up.” So, Fox said he also is looking for a new corporate headquarters location, one that he called “a shared services building.” He declined to specify an area, but said it could be multiple locations. “I don’t want to increase real estate speculation” and drive up costs, he said. But it is clear Fox wants the new corporate HQ to be located closer to one of Beaumont's hospitals. This year, Fox said Beaumont also plans to expand the number of patient and family advisory councils. “We will have hundreds of advisers,” he said. “Patients use the ER a lot. They have a feel for it. They have been involved in our ER redesign. They will see things that you don’t.” Patients and families also helped design the waiting room area in Beaumont’s new proton beam center, which will become operational this month. “They are in your facilities every day. Whatever we are doing, we want to get their perspective on this,” Fox said. Fox said Beaumont will invest in other therapies that include transaortic valve replacement, deep brain stimulation and urological advances. “There are new disruptive technologies that will truly add value and advance patient health better than anything in the portfolio,” he said. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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

DETROIT 1917 / 1967 / 2017 PART 1: PRELUDE TO ’67

It’s difficult to draw a straight line connecting the demolition of Paradise Valley and Black Bottom to the violent summer of 1967. But some of the businesses that relocated to 12th Street from the bustling commercial heart of black Detroit were destroyed — twice.

Hastings Street Blues Editor’s note: This story is first in our two-part series about the 1967 uprising — an exploration of economics and business in Detroit in the 50 years before the summer of ’67 and the 50 years since. In next week’s issue, we’ll explore the impact of the riots on three generations of entrepreneurs. For more on the language we use to describe what happened in 1967, see Ron Fournier’s column on page 6.

By Kirk Pinho | kpinho@crain.com

t one point, Joe Von Battle’s record store in Detroit had an inventory of 35,000 albums and the equivalent of almost $2.5 million in revenue. ¶ That was in the late 1940s, when Joe’s Record Shop on Hastings Street was just one of the mainstay businesses for African Americans who made their homes in the now demolished Black Bottom and Paradise Valley neighborhoods. ¶ It’s difficult to draw a straight line connecting the years-long demolition of the commercial Paradise Valley enclave, and also Black Bottom adjacent to the southeast, to the uprising against police brutality of July 23-28, 1967. ¶ Not only did the violence those six days claim 43 lives — it also claimed Von Battle’s store, which was founded in 1945. ¶ Would Joe’s Record Shop still be around had it not been forced to move in the early 1960s to the 12th Street area from Hastings, the main north-south artery running through Paradise Valley and Black Bottom?

That’s a question Marsha Battle Philpot, Joe’s daughter who goes by the name Marsha Music, likely wrestles with. But it’s not just Von Battle’s store that suffered at the hands of what was then called “urban renewal,” a sterilized term to describe what in reality was the forced relocation of black residents and businesses from the neighborhoods they called home. “In a rout like that, some businesses weren’t able to survive,” she said.

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

DETROIT HISTORICAL SOCIETY

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

COURTESY MARSHA MUSIC

Joe Von Battle’s record shop on Hastings Street once had an inventory of 35,000 albums and almost $2.5 million in revenue. the city in the two decades prior to 1967. Seven decades ago, a very similar word, “renewal” — more precisely, urban renewal — nebulously referred to what would become the government-sponsored forced exodus of tens of thousands of people from densely-packed Black Bottom and later, the destruction of hundreds of businesses in lively Paradise Valley.

Vibrant business district

An exodus The prefix “re-” generally means to occur again, that something is happening anew. Detroiters have been hearing those two letters a lot lately. Revitalization. Rebirth. Resurgence. Renaissance. Today, these terms are liberally and practically interchangeably used by city and business leaders to

describe both incremental and marked progress made in Detroit this decade — asterisked though it may by the nation’s largest-ever Chapter 9 municipal bankruptcy case until Puerto Rico just a few weeks ago and convictions in one of the most scintillating public-corruption cases in recent memory. But those words hold a different meaning for some long-time Detroit residents, particularly if they were in

Paradise Valley, the commercial district, covered the area approximately where Comerica Park and Ford Field are today downtown, said Detroit historian Ken Coleman. His book, Million Dollars Worth of Nerve, profiles the power-players of Paradise Valley and Black Bottom, a residential neighborhood that existed generally where Lafayette Park is now, bounded by Gratiot Avenue to the north, Congress to the south, the Grand Trunk Railroad (the present day Dequindre Cut) to the east and

Brush Street to the west. Exactly where the neighborhoods started and ended is up for debate, Coleman said. “It’s not like these communities were codified in boundaries at City Hall. They were loose in general.” Still, what’s clear is that the two areas were vibrant, bustling with activity. Joe Louis co-owned a restaurant, the Brown Bomber’s Chicken Shack, with Sunnie Wilson on East Vernor (it reportedly lost the legendary boxer $40,000, according to LIFE magazine). Charles Diggs, later the state’s first black state senator, was a leading funeral home owner there, as was James Cole, whose funeral home business survives to this day. (Two months ago, the funeral home provided services for Orsel McGhee, who along with his wife, Minnie, were part of a landmark court case in 1948 that helped ban restrictive covenant deeds nationwide following an attempt to remove them from their house on

Seebaldt Street near Grand River and Tireman.) A pair of small black-owned hotels, the Norwood and the Biltmore, each with about 30 to 40 rooms, were in Paradise Valley. Ed Davis, who in 1963 became the first African American to get a Big Three auto dealership from Chrysler-Plymouth, had a Studebaker Corp. dealership at Vernor and Brush. There were also doctors, lawyers, real estate brokers, drug stores, restaurants, numbers-running operations and even a candy shop. During the Prohibition Era, Paradise Valley also had speakeasies, becoming “a place where you can go into a saloon and drink whiskey out of a Dixie cup,” Coleman said. Some, like John Roxborough, Louis’ co-manager and a numbers-runner, began to accumulate substantial wealth. “He was certainly thought to be a millionaire,” Coleman said. Others saw success in Paradise Valley, too. “For the first time, African Americans became either managers or owners of some of these places.” More than 300 businesses in Paradise Valley in all, and well over 100,000 residents in Black Bottom, living in increasingly cramped quarters as racially-based housing restrictions kept them in the neighborhood. “Because of restricted covenant deeds, it (Black Bottom) was very, very dense,” Coleman said. “Some of those second-floor residential living quarters, on top of bars and restaurants and bakeries, where an owner might put a wall partion up in a bedroom and make it two bedrooms, or take the living room and slice that in half, until you get a couple different families living in the same 400 or 500 square feet, or probably even less.” CONTINUES ON PAGE 16

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

DETROIT 1917 / 1967 / 2017 PART 1: PRELUDE TO ’67 FROM PAGE 15

“Slum removal” The beginning of the end for Black Bottom came during the administration of then-mayor Edward Jeffries, who ran the city from 1940-48, Coleman said. During the previous decade, federal financing through Franklin D. Roosevelt’s New Deal was made available for so-called “urban renewal.” Several years later, in 1944, a New York City developer, Eugene Greenhut, proposed what became known as the Detroit Plan, which involved the razing of Black Bottom and a mostly white neighborhood west of Woodward in the name of “slum removal.” “It was intriguing to Jeffries, and he begins to float the idea,” Coleman said. “White folks in the community go ballistic. The black folks, you hear a little bit of noise, but not so much because they don’t have the political power that the whites do.” At $50 million ($695 million today), the plan proposed clearing two sprawling areas: One, bounded by Myrtle, Trumbull, Henry and Fourteenth streets; the other, Black Bottom, bounded by Hastings, Macomb, Dequindre and Larned, according to a 1944 Detroit Free Press article outlining the plan. As proposed, Greenhut would pay $8 million (about $111 million) for 98 acres of east side land and 120 acres of west side land for the project, which would have brought almost 31,000 “rooms” to the market for an average rent of $10.50 (about $146 today) per month, the article says. Eventually, the western portion of the development plan was abandoned. The plan sat until the fall 1946, when the council approved it. Demolition didn’t begin until 1950 under then-mayor Albert Cobo. But he did not want to take federal funding, so he put the land that was cleared through the condemnation process out to the private sector in a request for proposals, Coleman said. It’s not known exactly how much was paid to property owners for the land, but Coleman said some were satisfied while others felt it was not enough. Still, the land sat for years, for the duration of the Korean War and be-

1. J 3530 JACOB LEWKOW FOR CRAIN’S

Above, Marsha Music, outside her Lafayette Park home. Below, Marsha as a young girl in front of her father’s record store. yond due to little interest from developers, Coleman said. “They begin to call it ‘Cobo’s Ragweeds.” That is, until October 1956, when ground broke on the area’s first development, The Pavillion. Lafayette Park, the residential area that now stands, was born, and Black Bottom was dead.

Links to 1967 Housing availability and conditions were among the concerns during the unrest in 1967, said Jeffrey Horner, a senior lecturer and director of the Urban Studies Program at Wayne State University. “There were some people who were still very upset about the loss of their old neighborhood, as any person would be. It’s very difficult to disentangle what the exact motiva-

tions were for the 1967 riot, but police brutality seems to be the plurality reason, if there is such a thing.” “But a lot of it is being moved around, people literally being kicked out of their homes and having to find somewhere else to live,” Horner continued. “There is a lot of evidence that a lot of people who were in the Black Bottom area moved to the 12th Street area, so there is some linkage there.” As people and businesses were scattered throughout Detroit from Black Bottom and Paradise Valley, which began to be demolished in 1959 to make way for the Chrysler Freeway, they also ended up in the 12th Street and Clairmount Avenue area, among others. The Michigan Chronicle moved to Eliot Street from East Vernor in 1948 and survives to this day, publishing a weekly newspaper. The Diggs and Cole funeral homes moved before

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COURTESY MARSHA MUSIC

Detroit 1967 timeline: 1917 to 1967

Between 1910 and 1920: Detroit’s population more than doubled, growing from 465,766 people in 1910 to 993,678 people by 1920. In that time, the black population of Detroit grew from a little over 5,000 in 1910 to over 40,000 in 1920, jumping from just over 1 percent of Detroit’s population to over 4 percent.

Detroit population

1917: In May and again in July, simmering racial tensions between white and black laborers boiled over in East St. Louis, Ill. in two deadly race riots. Though the death toll remains unclear, as many as 200 people, most of them black, may have been killed. In the aftermath of the violence, the Burlington Free Press pointed to Detroit as an example of a city that had figured out how to peacefully integrate an influx of black workers, pointing to the Detroit Urban League’s efforts to help black migrants find gainful employment and to collaborate with the Detroit Board of Commerce to form a commission on worker housing. 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

Total population Black population

TOTAL POP. HIGH: 1,849,568

BLACK POP. HIGH: 777,916

1925-1926: Dr. Ossian Sweet, along with his family and some friends, were acquitted in a series of trials after they defended themselves when a mob tried to force the Sweet family from the home they had bought in an all-white Detroit neighborhood. 1940-41: An influx of about 400,000 migrants — largely Southern blacks and Europeans — move into the city seeking wartime production work, a wave that inflames social and housing tensions. Integrated federal housing projects built in the city for defense workers fueled backlash, especially from white Polish residents. White supremacist groups such as the Ku Klux Klan also had support in the city at the time.

>> June 20-22, 1943: A brawl among teens on Belle Isle spills over into citywide racial violence, as false rumors spread of attacks by both whites and blacks. Both white and black mobs attack residents and businesses. The violence is suppressed by 6,000 federal soldiers. Most of the 34 people killed are black, and most are killed by police or soldiers. Most of the 433 injured are black. Property damage is valued at $2 million, much of it sustained in the city’s black business corridor, Paradise Valley.

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1950: Detroit’s population peaks at 1,849,568, of which 84 percent is white. April 8, 1956: Streetcar service ends in Detroit in favor of buses.

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Detroit River CRAIN’S MAP

1. Joe’s Record Shop 3530 Hastings St.

At one point in the late 1940s, Joe’s Record Shop, owned by Joe Von Battle, had an inventory of 35,000 records and $100,000 per year in sales (almost $2.5 million today). The business moved to 12th Street after Black Bottom was razed and was destroyed in the uprising in 1967.

2. Brown Bomber’s

Legendary boxer Joe Louis co-owned this restaurant with Sunnie Wilson on East Vernor. It reportedly lost him $40,000, according to LIFE magazine article at the time.

3. James H. Cole Home for Funerals 3515 St. Antoine, Detroit MI

James Cole Sr. founded his funeral home in the Black Bottom neighborhood in 1919. After Black Bottom was cleared, the funeral home moved to E. Warren and then to the 2600 block of W. Grand Boulevard, where it still operates today. The funeral home is owned by Karla Green, James Cole Sr.’s granddaugher.

4. Davis Motor Sales

Ed Davis opened a used car dealership at Vernor and Brush in 1939. Studebaker offered Davis a franchise in 1940. After Black Bottom, in the 1960s, Davis became the first African-American to get a Big Three auto dealership when Chrysler-Plymouth offered him a new car franchise. It sold more than 1,000 new cars per year, according to the Detroit Historical Society, but he closed the business in 1971 as the neighborhood around him deteriorated.

Chicken Shack 424 E. Vernor

Intersection of Vernor and Brush

5. Norwood Hotel

A small black-owned hotel in Paradise Valley between Beaubien and St. Antoine with 30-40 rooms. In the basement of the Norwood was a jazz club called the Congo Room.

6. Biltmore Hotel

A 22-room hotel in Paradise Valley, according to historian Ken Coleman.

7. The Michigan Chronicle 1727 St. Antoine

Established as The Detroit Chronicle in 1936 to serve the African American community, the Michigan Chronicle became known for politics radical for its time, including advocacy for organized labor and the Civil Rights movement. In the 1940s, the Chronicle moved to East Vernor Street and later to Eliot Street. In 2013, the Chronicle announced that it was relocating its headquarters to Harmonie Park, site of a planned downtown black business and cultural district.

550 E. Adams

1926 St. Antoine

Jan. 30, 1959: Construction of the Chrysler Freeway begins. Its southernmost leg cuts through Black Bottom, the poor working-class neighborhood that had become the residential and cultural heart of black Detroit by the mid-20th century. The highway was built through the area as part of the city’s “urban renewal” efforts, which also included creation of the Lafayette Park neighborhood. The highway opened June 12, 1964. A portion of Black Bottom’s population and business had relocated to the 12th Street area of the Virginia Park neighborhood that became the 1967 riot’s epicenter. 1960: The city’s population has declined to 1,670,144.

the Black Bottom razing, with Diggs moving to 689 Mack in the 1940s and Cole to 446 E. Warren Ave. in the 1930s, Coleman said. Sunnie Wilson, who co-owned the chicken restaurant with Joe Louis, had hotels on Garfield Street and Grand River Avenue, and in the 1980s had a nightclub downtown. He died in 1999 at age 90. Ed Davis’s Studebaker dealership in Paradise Valley went out of business in 1956. His Chrysler-Plymouth dealership on the west side was a success in the ‘60s, and sold more than 1,000 new cars per year, according to the Detroit Historical Society — and twice that in used vehicles. But the neighborhood declined after 1967 and Davis closed up shop in 1971. Coleman said after Hastings Street, the main business artery, was demolished, much of the illegal activity — drug dealing and prostitution, for example — moved to the 12th Street area. “A lot of people will tell you that 12th Street became the new Hastings,” he said. “With vice and drugs and illicit behavior comes a lot of police presence, and that ended up building tension between the police and the neighborhood.”

“Gone forever” Joe Von Battle, Marsha Music’s father, picked up his gun. It was the middle of the night in July 1967. The U.S. was mired in the Vietnam War. And 12th Street, where he relocated the record shop from Hastings Street, was broiling, brimming with tension. In an interview last month, she

AUTOMOTIVE NEWS

Edward Davis (left) receives a Small Businessman of the Year award from the Small Business Administration of Michigan. Davis opened his west side Chrysler-Plymouth dealership after his Studebaker dealership in Paradise Valley, went out of business. said she didn’t think much of her father leaving the house with a weapon. So she and her family started watching television and, eventually, succumbed to sleep. They woke up to something they couldn’t have foreseen. “We can look over the horizon to the west side, from Highland Park, and see these clouds of black smoke.” Not long after that, Battle’s record shop, whose original location had been forced to close and demolished less than 10 years earlier, was destroyed for the second time. Her father tried to protect his shop, Marsha said, but after the first day of violence, the police cleared

Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

Housing discrimination stokes tension By Tyler Clifford tclifford@crain.com

As millions of African Americans fled the Jim Crow south during the Great Migration’s first wave, tens of thousands sought refuge in Detroit. The city’s black population swelled by nearly 2,000 percent between 1910 and 1930. But racial covenants, often written into home deeds, barred black residents from buying or renting homes in many of Detroit’s white neighborhoods; some who tried to integrate communities were

met by white mobs. In turn, most were relegated to substandard neighborhoods, most notably in Black Bottom on Detroit’s lower east side. Housing segregation was later reinforced when the Federal Housing Administration, created in 1934, and Home-Owners Loan Corp. began granting low-interest loans and mortgages. While white residents took advantage of the opportunity, African American neighborhoods were outlined in red by the agency, which denoted the habitants as high-risk for lenders.

From 1930 to 1950, Detroit’s black population more than doubled during the second wave of the Great Migration, which was powered largely by World War II. Housing segregation still persisted as the city’s black population reached more than 300,000 and made up more than 16 percent of the city. When racial covenants were banned in 1948 in the Shelley v. Kramer U.S. Supreme Court case, it served as an early sign of the looming movement for Civil Rights. Yet the city’s segregation would persist until after 1970.

>>April 14, 1960:

March 8, 1965: The first U.S. ground troops land in South Vietnam, beginning the escalation of a war that soon would become a central element of American society.

>>1960: Cobo Hall

Aug. 11-16, 1965: Riots erupt in the Watts neighborhood of Los Angeles over allegations of police brutality. Snipers battle police, and looting and arson are widespread. The violence claims 34 lives.

Music executive Berry Gordy, Jr. incorporates the Motown Record Co.

STEVEN MIRIC VIA ISTOCK

business owners out. “He never shook the feeling that by halting his efforts to protect his store, they had guaranteed its destruction,” she wrote in an essay, “Joe’s Record Shop,” in Detroit ‘67: Origins, Impacts, Legacies. She says on her website that he returned after the unrest to find “mounds of charred and melted records and fire hose-soaked reel-toreel tapes, unwound and slithering like water snakes; thousands of songs, sounds and voices of an era, most never pressed onto records — gone forever.”

and Cobo Arena open at a cost of $56 million. A $225 million expansion in 1989 doubles the size of the exhibition hall to 723,000 square feet. In 2015, work is finished to turn the arena into an exhibition and event space at a cost of $279 million.

July 18-23, 1966: Cleveland’s densely populated Hough neighborhood, which is 90 percent black, explodes into violence over inequality, racism, segregation, poor city services and other problems. DETROIT HISTORICAL SOCIETY

Cobo Hall and Arena being built in the late 1950s .

July 12–17, 1967: The arrest of a black cabdriver sparks a riot that leaves 26 dead in Newark, N.J.

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

CALENDAR WEDNESDAY, JUNE 21

Social Media for Business Growth Workshop. 9-11:30 a.m. Oakland County.

Using LinkedIn, YouTube, Facebook, Instagram and Twitter to grow any business. Terry Bean, Motor City Connect, on “Is social media a waste of time or an essential power tool for business in a post phonebook world?” Oakland County Executive Office Building Conference Center. $40. Contact: Karen Deaver-Lear, phone: (248) 858-0783; email: smallbusiness@oakgov.com; website: http:// www.advantageoakland.com/businessworkshops

INSPIRING DESIGN

THURSDAY, JUNE 22

Critical Hires for Your Startup Venture.

5-7:30 p.m. New Enterprise Forum. Panel discussion on understanding importance of hiring the right people for the success of a venture. Panelists include: Bill Crane, founder and CEO, IndustryStar Solutions LLC; Jeff Mason, founder and CEO, Groundspeed Analytics; Stewart V. (Stew) Nelson, CEO of Mayasil LLC; Steve Schwartz, co-founder and CTO, Genomenon. Moderator: Helen Ewing, president, The Ewing Group LLC. Ann Arbor Spark. Free. Event email: info@NewEnterpriseForum.org; event website: http://www.NewEnterpriseForum.org

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UPCOMING EVENTS

Five Keys to Maximizing Your Personal Brand. 7:30-8:45 a.m. June 28. JVS.

Guest speaker Priscilla Archangel, ex-

SPOTLIGHT

ecutive coach and leadership consultant, will explain the five keys to developing and managing a brand: presence, purpose, strengths, learning and personality. JVS, Southfield. Free. Contact: Angela Bevak, email: abevak@jvsdet.org; phone (248) 2334482; website: http://www.jvsdet.org How the Industrial IoT Can Transform Business. 8:30-10:30 a.m. July 12. LHP

Engineering Solutions. More and more companies are looking to leverage the Industrial Internet of Things as a means of competing globally. The speaker is Michael King, president, Data Analytics & IoT at LHP Engineering Solutions. Topics will include: The business value of IIoT, case studies of successful IIoT implementations and predictive maintenance solutions and how IIoT can help manufacturers meet ISO 26262 Automotive Functional Safety standards. Automation Alley, Troy. Free for members. $20 nonmembers. Phone: (800) 427-5100; website: automationalley.com Calendar guidelines. Visit crainsdetroit.com and click “Events” near the top of the home page. Then, click “Submit Your Events” from the drop-down menu that will appear. Fill out the submission form, then click “Submit event” at the bottom of the page. More Calendar items can be found at crainsdetroit.com/events.

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DTMB director to join La-Z-Boy David Behen, who is leaving Gov. Rick Snyder’s administration, will become vice president and chief information officer for LaZ-Boy Inc., the company said. Behen, 48, David Behen most recently served as director of the Michigan Department of Technology, Management and Budget. His last day will be Friday. Monroe-based La-Z-Boy (NYSE: LZB) said Behen will lead all information technology functions for the furniture producer, including expanding and developing such areas as cybersecurity and new technologies. Behen will report to Kurt Darrow, the company’s chairman, president and CEO. “In this critical role, he will ensure optimal technology performance for the company to support La-Z-Boy's future growth and success across our manufacturing and retail operations,” Darrow said in a statement. “He brings a wealth of experience to La-Z-Boy and will undoubtedly make a significant contribution as we continue to expand and enhance our technological footprint.”

American Society of Employers replaces CFO The American Society of Employers has hired Tracy Neil to replace its retiring CFO. Gary Lovio retired from the Livonia-based nonprofit June 2 after 12 years there, CEO Mary Tracy Neil Corrado announced in a news release. Neil, 54, officially took over June 5 in the Livonia office after a month working with Lovio as part of the transition. Before joining ASE, which helps Southeast Michigan employers with human resource needs, Neil served as vice president of finance for Quebec-based GDI Integrated Facility Services Inc., which has an office in Southfield. He received his master of business administration from Walsh College, a bachelor’s degree in management from Saint Mary’s College of California and a master’s degree in taxation from Golden State University.

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

TEACHERS FROM PAGE 1

There’s little wiggle room because the collectively bargained contracts set salaries exclusively by experience and education. Critics say the restrictions put teachers’ interests ahead of students. “School districts that want to attract the best teachers … for their students would not want these kinds of policies,” said Ben DeGrow, director of education policy at the Mackinac Center, a free-market think tank based in Midland. It has been a frequent critic of teachers’ unions. Ivy Bailey, president of the Detroit Federation of Teachers, said the language has been in the contract for years and acknowledges those teachers who’ve suffered through years of pay cuts and freezes. “You have teachers who stayed here and endured it all,” she said. “They care about the children and they’ve stuck it out.” Bailey said the contract allows the district more latitude when trying to hire teachers in critical areas such as special education. Those specialty areas can receive salary credit for up to eight years’ experience. But if it’s not in a critical area, no dice. And that’s been a problem for principals wanting to fill vacancies such as Jeffrey Robinson, principal at Paul Robeson Malcolm X Academy on Detroit’s west side. “On three separate occasions, we got people who got past the onboarding process, right to the point where they were ready to sign the contract. Then they took a better offer because the salaries are just not competitive,” Robinson told Detroit Journalism Cooperative reporting partner Chalkbeat Detroit recently. Despite the obstacles in pay and a push by officials some to consider uncertified teachers, district spokeswoman Chrystal Wilson said the district “is committed to hiring certified teachers.” Detroit is not the only district with restrictions. They are found in union contracts Page 2 at districts large and small,

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wealthy and poor, urban and suburban and are the result of the anger stemming from pay cuts and freezes that have taken a chunk out of the earning power of teachers who have worked for years in troubled districts.

Not found everywhere Bailey said it’s common for teachers who change districts to get less than full credit for their experience. “We can’t do it when we go to another district, either,” she said. “Nobody’s going to give you all of your time.” But a survey of teacher contracts from more than 40 districts around the state show that many allow district administrators to grant full credit. In Ann Arbor, Kalamazoo, Ferndale, Warren Fitzgerald, Warren Van Dyke, South Redford, Utica and others, a teacher could jump to the top of the scale without the teachers union contract prohibiting it. In the Grosse Pointe schools, which pays among the best in the state, new teachers can be hired at the 13th of a 14-step salary schedule. Yet in other places, teachers have put the brakes on salaries. Those that have are communities suburban and urban, wealthy and poor. In Oak Park, the teachers’ contract has a provision that says all new hires should be hired at beginners’ wages. Hiring at higher levels “puts financial pressure on the district and creates an environment which disenfranchises staff currently restricted by contractual step freezes,” according to the contract. The Walled Lake schools, the 10th largest district in the state, had restrictions in prior contracts. But the union agreed to take them out a few years ago even though they continue to encourage the district to hire teachers at as low a step as possible. Still, the union recognized the need to give the district more flexibility. “It makes it really hard to have one blanket policy for every opening,” said Daryl Szmanski, president of the teachers’ union in Walled Lake. “As a teacher shortage looms, it’s going to be harder and harder to get good candi-

Teacher pay In a number of Michigan school districts, teachers have negotiated to limit the pay of new hires, ensuring they cannot get full credit for prior teaching experience. In other districts, those decisions are left to the administration. In most cases “max pay” refers to salaries of teachers with master’s degree plus 30 additional hours of graduate education who have the maximum number of years of experience. Below are the 25 largest districts in the state. The restrictions were more common among the 21 districts that surround Detroit, with more than half calling for limits on credit for teaching experience.

District

Maximum years of credit

Years to top of scale

Max pay

Detroit

$65,965

Utica

full

$89,563

Dearborn

$82,006

Plymouth-Canton

$81,049

Ann Arbor

full

$80,769

Chippewa Valley

full

$89,443

Grand Rapids

$68,042

Rochester

full

$86,420

Warren Consolidated

full

$94,700

Walled Lake

full

$90,362

Livonia

$84,595

Troy

full

$92,400

Kalamazoo

full

$76,881

Wayne-Westland

$76,839

Lansing

$76,850

L’Anse Creuse

full

$84,386

Farmington

$86,830

Forest Hills

full

$84,590

Traverse City

full

$74,819

Waterford

$78,351

Huron Valley

$75,915

Port Huron

full

$69,831

Kentwood

full

$80,403

Portage

full

$88,808

Grand Blanc

full

$73,588

Source: Collective bargaining agreements *In some cases, union contracts allow districts to acknowledge additional years of experience.

dates.” To be sure, restrictions on teacher pay for outsiders is hardly the only factor in teacher shortages in parts of the state. It’s difficult to say if it’s even a major factor. Stagnant state funding for education, a steep drop in enrollment Cin teacher preparation proRAIN’S DETROIT BUSINESS

grams, and sometimes harsh public and political rhetoric directed toward public education almost certainly also play a role in the shortage. So too, there are far fewer substitute teachers available to fill in when permanent teachers are absent. But for unions, the teacher shortage

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Brad Banasik, director of labor relations for the Michigan Association of School Boards, said he’s not heard complaints about the contracts, but noted that he thinks “administrators would like the ability to hire some on the higher step (pay level).” Some unions agree. Doug Hill is a veteran teacher who’s now president of the Rochester teachers’ union in Oakland County, and he said he’s aware of painful cuts at other districts. Hill’s union decided in a recent negotiation to remove a restriction on pay for counselors who held teaching certificates. The district had seen positions go unfilled but now can hire teachers in at whatever level experience they want. “I can see both sides of this,” Hill said, but added “we’re trying to get the best teachers to put in front of students.” Union officials say they asked for — and got — the restrictions because they say without it their veteran teachers would be demoralized by having new hires, who had not endured the same pay cuts and freezes, make more money doing the same work. It would be hard to determine how often these provisions have hurt districts like Detroit and Dearborn. If teachers know they’d have to take a $20,000 or $30,000 pay cut, would they even apply? And they’d likely know: All Michigan districts are required to post teacher contracts online; Bridge did its survey using this easy-to-access information. “I think they’re very aware of what’s out there,” Rochester’s Hill said. For Detroit and other districts, that may be a problem. June 19, 2017

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presents two bad choices: Be unhappy about crowded classrooms or be unhappy that new teachers make more. For Mackinac Center’s DeGrow, the decision should be easy: Door No. 2. “This kind of policy is just an obstacle for getting the best talent in the classroom,” DeGrow said. “The kids (in Detroit) are already at a disadvantage. Why would we want to make it harder to bring qualified teachers in?”

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

Startup Nation founder launches business-to-consumer app By Vickie Elmer

Special to Crain’s Detroit Business

Jeff Sloan, founder of Startup Nation and several other small business ventures, is launching a business to consumer app that borrows from email marketing and aims for a national rollout by next year. Wantify Inc. is testing its app that connects local merchants to their best customers, and shares insider information and special sales. Since January, the beta is being run in 15 Birmingham merchants and now is being expanded. The first merchants in Lake Orion signed in on Friday, and others will follow in Oxford, Holly, Flint and Lapeer over the next 30 to 45 days, Sloan said. Backed by $2 million in venture capital funding, the Birmingham-based company will have expanded throughout Michigan by year-end, Sloan told Crain’s. “We want to be able to … scale rapidly in the most efficient way,” he said. He expects a $5 million second-stage venture capital infusion to support the national rollout, with investors already interested. He declined to name current or potential funders, adding many are individuals who have worked for

CLARK FROM PAGE 3

“I would like for us to be thoughtful … and smart about whether there’s a policy lever to pull,” in all of the foundation’s work, she said. “I’d like to see us lean into investments that support the policy work that can move the needle.” Before joining the foundation last August, Clark served as the White House Domestic Policy Council’s senior policy adviser focused on criminal and juvenile justice reform and civil legal aid during the Obama administration, beginning in the spring of 2013. After a year on the job, Clark, who was pregnant at the time with one of her two young children, thought a move to the U.S. Department of Justice as chief of staff of the Office of Community Oriented Policing Services, or COPS, would offer a little slower pace. But shortly after she took the role, 18-yearold Michael Brown was shot by a white police officer in Ferguson, Mo., early in August 2014. Clark worked to devise creative funding strategies and partnerships to advance community policing and police reform and, in connection with the department’s Access to Justice Initiative, implemented a strategy to increase legal counsel for homeowners facing foreclosure and working with HUD’s International and Philanthropic Affairs Office to engage a group of foundations around opportunities for philanthropic support. Earlier in her career, Clark led public policy and civil rights orga-

“We have seven figures into this app in total. We’re in the throes of getting some traction right now.” Jeff Sloan

tech companies including Apple and eBay. Sloan and his team have launched or assisted with the launch of such companies as Rubicon Genomics and Clarity through his Aria Ventures. He’s been working on Wantify on and off since 2012, with a few pivots in focus and direction. Since the new app launched at the end of January, Sloan and his team of five have signed up around 60 Birmingham merchants, and around 250 consumers, all through word of mouth. It’s been “test and tweak, test and tweak, all under the radar,” he said. Wantify put itself on the radar recently by sponsoring the Michigan Downtown Association conference in Dearborn, where Sloan shared details of the company’s plans. The company expects to expand by

working with local downtown associations and chambers of commerce as the “local champion” for the mobile phone based app. “We have seven figures into this app in total. We’re in the throes of getting some traction right now,” he told the downtown association. Yet some experts say traction may be difficult in the crowded small business and consumer communications app world. Businesses already rely on tools such as Constant Contact or MailChimp — email programs — or social media to stay in touch with shoppers. “There’s a lot of these out there — intermediaries between restaurants and retail and consumers,” said Ron Stevens, associate regional director of the Michigan Small Business Development Center. Many of the retailers and boutiques he works with use Pinterest, Instagram and Face-

nizations including the NAACP Legal Defense and Education Fund. Her career has been aligned with identifying and litigating inequities and policy work around them. She’s viewing the next iteration of Hudson-Webber’s work through the same social justice lens. “The thing that is so exciting about being in this position and particularly coming from the Justice Department where you had a national scope … (is) you can wrap your arms around it. It’s so exciting to think we’ve got these broad portfolios that inform each other. And I’m finally in a place where it’s not siloed,” Clark said. In thinking about the foundation’s work into the future, Clark said it’s unlikely to abandon its place-based work in downtown Detroit and for over 20 years in what is now Midtown. There’s work yet to be done and the recovery is still fragile. The financing gap is creeping down, but it’s not yet zero, she said, quoting her husband, Moddie Turay, who was hired as executive vice president of real estate and finance for the Detroit Economic Growth Corp. in December 2015. At the same time, there are so many more foundations in town than there were even 10 or 20 years ago and a lot of dollars for the types of physical improvements the foundation has funded in the past, Clark said. And the city of Detroit now has an economic development capacity it didn’t have before Mike Duggan was elected, giving Hudson-Webber the opportunity to think about expanding its strategy. “I think that what is most important to me, and I’ve been talking

to the board about this, is how do we get to a place of shared prosperity?” Beyond an advocacy approach, the new strategic plan is likely to include an increased focus on expanding opportunities for Detroiters, Clark said. “Part of that, to make sure that we’re doing this right, is to also be really explicit about acknowledging that there are racial inequities and structural barriers to opportunity.” On the safety front, last summer Hudson-Webber funded the launch of pilot of the national renowned “ceasefire” violence prevention program targeted at violent criminals, in the city’s 12th precinct, in partnership with the Detroit Police Department. Ceasefire’s power lies in its effectiveness in getting groups and gangs to pressure their own members to stop shooting, Clark said. Coordinated community meetings known as “Call-Ins” are held regularly in which agreements are formed between gangs, law enforcement and the community. The agreement establishes harsh consequences from law enforcement to the next group to shoot or kill someone. Community members, faith-based leaders and wraparound services providers deliver a message focused on resources and support for pursuing constructive alternatives. Having safe neighborhoods would improve the quality of life for residents in the neighborhoods. At the same time, it would set the stage for business and people from the suburbs to come back into them. “The most recent push of the

book to connect, and he’s seen a few people with ideas similar to Pinterest or Wantify in his office in Ann Arbor, on average two a year. “Wantify has to have good marketing — maybe marketing in the stores” to compete with larger social media platforms, Stevens said. Wantify faces other challenges. It’s hard to develop an app without signing up a lot of consumers or a lot of stores — and each wants to see the other participating before they join, Stevens said. Wantify has that worked out: It will emulate the email marketing services such as Constant Contact. “It’s the businesses responsibility to get the consumers on board,” he said. The app gives merchants a direct way to share updates — hard-tofind toys or a special menu item — to consumers who opt in, cutting through the clutter in Facebook and Instagram. Businesses download a merchant version of the app, available for iPhone and Android; they send updates, almost like a text message, Sloan said. He acknowledges it will be tough to develop a successful small business “loyalty app” but believes it is important to support small businesses. “This is not going to be easy. foundation was about attracting and retaining new people who come into the city. We can’t abandon that because that’s vital ... we need the taxbase,” Clark said. In another example of an area that could see new attention from the foundation, Clark believes taxpayers aren’t getting the right return for dollars invested in the criminal justice system. “We are putting people under supervision, which is super expensive, and not putting investments in the system in the right places for us to get the outcomes that presumably we would want,” she said. In Michigan, counties are reimbursed for juvenile services only after juveniles hit the justice system, Clark said. Research shows the best outcomes in areas such as educational attainment and keeping ex-cons from returning to prison are achieved through early intervention. Offenders are referred to rehabilitative programs by the police on their first, nonviolent offense, not after a string of offenses that put them into the system. “We’ve got a policy and funding mechanism that incentivizes programs that pick you up after you’ve been through all of those things,” Clark said. Perhaps there’s a policy lever where legislation could get passed to provide additional state funding before the juvenile is in the system for prevention, she said. “We would have moved the needle further by working on changing that policy lever than just funding the difference,” she said. Sherri Welch: 313 (446-1694) Twitter: @SherriWelch

We are a values driven business” intent on helping Main Street businesses, he said. The app will carry no paid advertisements. “We don’t want any advertising on it at all. Consumer crafts the experience based on what they’re interested in,” he told the downtown association members. Instead revenue will come from merchants who after an initial free trial, will pay $29 a month to connect to consumers, plus some premium add-ons. Wantify also will test some other revenue streams, but Sloan declined to discuss those. From the current 15 businesses using Wantify, the business base will grow to 100 within 45 days and 200 by the fall and 500 merchants by year end, when it covers the entire state, Sloan said. Axis Music, one of the test businesses, is sold. “We love the platform — the instantaneous nature of notifications,” said Donny Klemmer Jr., marketing manager. Because consumers get a message similar to a text, they’re “guaranteed to see it” and on a good promotion, Wantify may generate up to half of a day’s revenue for Axis, which provides music and voice lessons and classes.

Detroit looks for ideas to fill Rosa Parks Transit Center space By Kurt Nagl knagl@crain.com

The City of Detroit is trying to fill unused space at the Rosa Parks Transit Center with farmers’ markets, entrepreneurial vendors or anything else beneficial that residents can think up. On July 6, the city is issuing a request for proposals to fill the three-story, 26,000-square-foot transit hub at the corner of Cass and Michigan avenues. “The city is highly interested in proposals that complement the high-traffic, high-energy, grab-and-go culture of Downtown Detroit,” according to a city news release. One idea it proposed was a support services shop offering helmet rentals and bike repairs for Detroit’s new bike share program. Proposals are due by 5 p.m. on Monday, Aug. 7, and can be submitted via www.bidsync.com after registering for an account on the site. Winners will have the opportunity to negotiate a lease with the city for up to five years, the release said. The RFP is part of the city’s Enhancing Detroit’s Transit Center Challenge — the challenge being to fill vacant space on all three floors of the transit building. It serves 6,000 transit riders per day, according to the city’s website. Funded by state and federal grants, the transit center opened in 2009.

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Alibaba’s Group corporate campus in Xixi, Hangzhou, China.

GATEWAY FROM PAGE 3

electronics, cosmetics, personal care goods and health products. How does Michigan help address this issue? We’re a large ag exporter, but not the largest. Detroit is an ideal location for several reasons. There are many great small businesses and agriculture producers in the Midwest that are ideal candidates for selling on our platforms. Agriculture for sure, but also consumer products It’s also a location — in the middle of the country — that is easy for businesses and agriculture producers to reach. We have received tremendous support from Mayor (Mike) Duggan, Lt. Gov. (Brian) Calley and Gov. (Rick) Snyder. They have really activated local business associations and agriculture co-ops to join us and learn about the opportunity. What will you consider a successful Gateway event? Our metrics for success are fairly straightforward: Alibaba’s business strategy in the United States is focused on helping the U.S. businesses sell to the China market. So, our objective for this event is to help educate participating small businesses, entrepreneurs and agriculture producers on the China market opportunity and how Alibaba can operate as a gateway to help them reach Chinese consumers with a level of ease that has never before been possible. We set out to have 1,000 attendees at this inaugural conference. And, I am delighted to say we now have well over 2,000 already registered to attend. It is our intention for attendees develop a clear understanding of how they can begin working with us, if it makes sense for their businesses. This is how we will scale with U.S. businesses on our platform over the next five years and beyond. What are Alibaba’s plans to expand into the U.S.? We have made our U.S. business

strategy very clear. Simply put, we want to help the American businesses sell to the China market. This is a massive opportunity, which is good for U.S. businesses and good for Chinese consumers. Is Michigan, specifically Detroit, being eyed as a potential area of investment? Detroit is an important market for Alibaba’s long-term globalizations plans, with its proximity to small businesses and agriculture, and we are honored to be holding our first Gateway conference here. That said, we don’t have any plans to open a Detroit office. Is there a timeline for Alibaba’s entrance into the U.S. market? We are already very active in the U.S. market today, with offices in California, Washington State, New York City and Washington, D.C. We are here to help the American businesses sell to the China market. Are you facing any challenges in the U.S., given our current antiglobalism climate? Alibaba and our founder Jack Ma has been very clear in its support for “inclusive globalization” — an open global trade environment that allows for more and more opportunities for small business everywhere. Specifically, there is a big opportunity for U.S. businesses to sell to China through Alibaba today. Despite some concerns about U.S. engagement in various trading agreements, it’s clear that the U.S. will be focused on increasing exports to other countries. We think Alibaba is well positioned to support such a trend by helping to build the commerce infrastructure for the future which is beneficial for business, economies and Alibaba alike. What makes Alibaba unique for businesses that are used to more traditional supply channels? Alibaba’s mission is to make it easier to do business anywhere. We started out 17 years ago helping small businesses in China sell to Chinese consumers. Today there are nearly 10 million merchants on our

SOURCE: WWW.ALIBABAGROUP.COM

platforms selling to nearly 500 million Chinese consumers. It’s not an overstatement to say that most middle class Chinese literally live their lives with Alibaba. They chat with friends and shop — often daily — on our marketplaces; they entertain themselves watching original and user-generated content on our media properties, they pay for nearly everything — not just online purchases, but everyday real world transactions like taxi rides, utility bills, restaurant checks and movie tickets, using our payments solutions. It’s the tremendous scale of this captive audience of active Chinese consumers that we provide access to which sets Alibaba apart.

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INSURE www.crainsdetroit.com Editor-in-Chief Keith E. Crain Executive Vice President KC Crain Publisher/Editor Ron Fournier, (313) 446-1674 or rfournier@crain.com Group Publisher Mary Kramer, (313) 446-0399 or mkramer@crain.com Managing Editor Michael Lee, (313) 446-1630 or malee@crain.com Director, Crain Custom Content Kristin Bull, (313) 446-1608 or kbull@crain.com Product Manager/Marketing and Events Kim Winkler, (313) 446-6764 or kwinkler@crain.com Digital Product Manager Carlos Portocarrero, (313) 446-6056 or cportocarrero@crain.com Creative Director David Kordalski, (216) 771-5169 or dkordalski@crain.com News Editor Beth Reeber Valone, (313) 446-5875 or bvalone@crain.com Special Projects Editor Amy Elliott Bragg, (313) 446-1646 or abragg@crain.com Design and Copy Editor Beth Jachman, (313) 446-0356 or bjachman@crain.com Research and Data Editor Sonya Hill, (313) 446-0402 or shill@crain.com Newsroom (313) 446-0329, FAX (313) 446-1687, TIP LINE (313) 446-6766

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“The political climate continues to make it difficult to price and the uncertainty over the future of the subsidies creates the largest reason for significant rate increases,” said Danielle Devine, MeridianHealth’s Michigan director of operations. Insurers say the need for the second set of rates is primarily because the Trump administration has delayed deciding whether it will pay for the subsidies that help lower-income people pay for out-of-pocket expenses. The proposed increases are steep even if the subsidy is continued, because customers are using more health care services, fewer younger people are purchasing policies without an enforced individual mandate and prices are sky-high for specialty cancer and antiviral drugs, insurance experts say. The majority of the state’s under age 65 insured population, about 57 percent, purchase health insurance through their employers. Most of the rest are either on Medicaid, Medicare or are uninsured. The increases in the individual market for 2018 are expected to be much higher than the average 16.7 percent increase insurers approved by the state this year, according to several health insurance executives contacted by Crain’s. The uncertainty over federal cost-sharing subsidies prompted state insurance regulators to request that insurers submit two sets of proposed rates — one including the subsidies and one without. President Donald Trump has publicly threatened to withhold the payments to cause the Obamacare markets to collapse and force the Democrats to compromise on the Republican-backed American Health Care Act, which the House approved last month. Trump now says he supports a “more generous” Senate version of a Obamacare replacement bill. Nationally, some insurers, including United Healthcare, Anthem, Humana and Aetna, have already announced they will drop out of the individual market, citing the uncertainty of the federal subsidies and individual market financial losses. Other health insurers have said their proposed rates could be 15 to 20 percent higher without the federal subsidies. Last week, Trump said for-profit Anthem leaving Ohio and causing nearly 11,000 people to seek another carrier on the exchange was more proof that insurers are “fleeing and leaving” the individual exchanges. He said Congress needs to pass a compromise bill repealing Obamacare this summer that he implies will stabilize the individual markets. But neither House-approved AHCA legislation nor the Senate bill still under development provides the cost-sharing funding to stabilize the individual market, experts say. The Senate bill contains some funding intended to subsidize premiums for certain customers based on age and cover some high-cost patients with

pre-existing conditions, but not enough to stabilize the individual markets for 2018, especially by this August when insurance commissioners make final decisions on prices, experts say.

Group markets stable While the individual health insurance market has always been prone to premium spikes because of its relatively small size, the much larger employer-sponsored health insurance market historically has been more stable, increasing under 7 percent annually the last five years in Michigan. Michigan’s midsized employer average health care costs were projected to increase by 5 percent in 2017 after benefit plan changes, a slight uptick from last year’s 4 percent expected rate and higher than the projected national rate of 4.1 percent, Troy-based Marsh & McLennan Agency LLC reported last month.

ucts if the cost-sharing subsidy is approved by Trump, Blue Cross Blue Shield of Michigan is asking for a 26.9 percent average rate increase, and a 13.8 percent hike for Blue Care Network’s more closely managed HMO plans. However, if the federal subsidies — that lower-income people under 250 percent of the federal poverty level receive by insurers to help pay out-of-pocket claims — are discontinued, Blue Cross is asking the state to approve an increase in average rates of 31.7 percent and 22.6 percent for Blue Care. Blue Cross is the state’s largest health insurer. In 2017, Blue Cross has sold about 215,000 individual policies, down 100,000 from 2014, Andy Hetzel, vice president of corporate communications, said. Blue Cross’ total membership in 2016 was 4.61 million in Michigan and 5.34 million nationwide. With the rate increase proposals, Hetzel said Blue Cross expects indi-

“The political climate continues to make it difficult to price and the uncertainty over the future of the subsidies creates the largest reason for significant rate increases.” Danielle Devine, MeridianHealth Michigan

Michigan’s small-group employer market of 50 or fewer workers also has been a source of some volatility the past few years as the Affordable Care Act forced some changes in policy designs. However, rates in the small group market averaged a 2.5 percent increase from the previous year. For 2018, an early analysis by Crain’s of the 17 plans that filed with the state to sell health insurance to small employers showed many were requesting under a 5 percent rate request hike for 2018. For example, Total Health Care of Detroit is proposing to increase small group rates in 2018 by 4.55 percent. McLaren Health Plan of Flint is asking for a 4.22 percent increase. Priority Health Insurance Co. requests an 8.3 percent increase for PPO plans; Blue Cross a 5 percent increase in PPO small group rates. Other plans are asking for a cut in small group rates. They include: Priority Health, down 0.9 percent average decrease for HMO products; down 0.62 percent decrease for point of service. Blue Care Network, -3.1 percent decrease for HMO rates. HAP has three HMO products; one could go up 4.59 percent and the other two could go down 1.8 percent each. Blue Cross covers more than 250,000 of the estimated 360,000 people in Michigan who participate in the small group market.

Proposed increases Insurance executives in Michigan privately say they don’t expect a miracle in Congress that would mitigate the record-high premium increases coming for 2018 if the subsidies are not paid. For its more expansive PPO prod-

vidual enrollment to decline further. He did not estimate the drop. Last year, for 2017, Blue Cross won a 18.7 percent rate increase for the individual market. Blue Care Network won a 14.8 percent increase. While the overall state average was 16.7 percent, those numbers were an average and did not include federal subsidies that lowered the overall increase for those eligible to an effective rate of less than 8 percent. Meridian Health Plan of Michigan said its average 2018 rate increase request with cost-sharing subsidies intact is 8.3 percent, but it jumps to 59.4 percent without the subsidies. HAP is proposing a 16.1 percent average rate increase with cost-sharing subsidies, or 24 percent without the subsidies, said Lee Ann Welsh, a HAP spokesman. The increase would affect 17,000 members of HAP, which is owned by Henry Ford Health System. “The primary driver of the rate increase is the continued rise in the cost of health care, which includes increases in the price of services (unit costs) from hospitals, physicians and pharmaceutical companies,” the HAP statement to Crain’s said. HAP said factors driving its premium increases include higher medical

utilization, prices of services, technology advances and inflation. Other contributors to health care costs may include taxes, fees and other Obamacare requirements. Priority Health filed for 17.7 percent rate increase with cost-sharing subsidies and is requesting a 19 percent increase without the subsidies, said spokesperson Amy Miller. “With market challenges and uncertainty in federal funding, Priority Health has had to make significant changes to its plan offerings,” said the Priority statement. “For 2018, Priority Health will offer new plans and new narrow network options designed to lower costs and continue to help individuals across the state access high quality health care.” Total Health Care, a Detroit-based HMO, also filed a 27.59 percent rate increase that assumed no federal cost-sharing subsidies, according to its state filing. Of the health insurers participating in the Obamacare individual marketplace, only Blue Cross is offering an individual PPO product next year, Hetzel said. The other estimated eight health insurers are offering a variety of HMO plans on the exchange. Blue Cross also is the only insurer to offer plans in all 83 Michigan counties. Obamacare has four types of “metal” policies — platinum, gold, silver or bronze (catastrophic) — that include the same 10 essential health benefits but have different networks and cost-sharing arrangements. For example, the most popular plan is a high-deductible silver metal plan that pays 70 percent of the typical costs of that plan. Enrollees cover the remaining out-of-pocket costs. “There are a lot of dynamics affecting market,” Hetzel said. “Our commitment is to membership. We understand premium increases impact family budgets significantly. Our goal is to try our best to get health insurance to people as best as we can and help (them) afford coverage.” While Hetzel said prices on the Obamacare exchanges in Michigan are “volatile,” the individual market is not the “complete disaster” it was before 2010 when Obamacare was approved. For years in Michigan before Obamacare, Hetzel said people with health conditions were subjected to medical underwriting and routinely rejected by other health insurers. Prices in the individual market also routinely jumped 10 percent to 20 percent each year. The Michigan Blues were mandated by a 1980 state law to sell policies to anyone, and the state insurance department approved rates far below what Blue Cross requested. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

INDEX TO COMPANIES These companies have significant mention in this week’s Crain’s Detroit Business: Alibaba

Henry Ford Health System

American Center for Mobility

Hudson-Webber Foundation

Beaumont Health

Little Caesars Arena

Blue Cross Blue Shield of Michigan

Meridian Health Plan of Michigan

Detroit Tigers

Priority Health

Hayman Co.

Total Health Care

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THE WEEK ON THE WEB

RUMBLINGS

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

Spirit of Detroit Plaza opens downtown

he Spirit of Detroit Plaza test is now open for business, lunch, entertainment, lounging and other uses. The downtown stretch of Woodward Avenue at Jefferson Avenue was shut down to traffic last week, and Mayor Mike Duggan and city and community leaders cut a ribbon Monday morning to open the new public space to accompany Marshall Fredericks’ iconic Spirit of Detroit statute. Sandwiched between Campus Martius and Hart Plaza, the 20,000-square-foot plaza offers picnic and dining tables, games and space for public activity. The goal is to create a more walkable downtown and civic, culinary and cultural center. Three food trucks will park along Woodward to serve guests Monday-Friday. The project’s collaborators — the city of Detroit, Downtown Detroit Partnership, Detroit Public Works and other agencies — will test the concept for the next 90 days and accept public feedback into how the space could be used and improved, or if the idea should be scrapped. “It’s a network, but they are all complementary,” DDP Director of Public Spaces David Cowan said when asked how the plaza would compete with Hart Plaza and Campus Martius. “We try to make them all unique places. A lot of city workers were having difficulty getting to Cadillac Square in the amount of time they have for lunch.” The plaza is inspired by spaces such as New York City’s Times Square and its planners, such as DDP planner James Fidler, hope it can spark civic engagement and one day rival the popular tourist destination. New York City-based Bloomberg Associates, which created public spaces in The Big Apple, was enlisted to design the fledging center in Detroit.

BUSINESS NEWS: A pair of early 20th century apartment buildings in Detroit’s Midtown at 3525 Cass Ave. and 624 Charlotte St. have been put up for sale for $6.35 million. J The four-county metro Detroit region saw a 3.4 percent increase in the number of home and condominium sales last month, rising to 5,556 from 5,373 in May 2016. The median sale prices also climbed 6.7 percent to $176,000. J Discount supermarket chain Aldi expects to open three more new stores in Michigan in 2017 as part of its plan to build 900 new stores by the end of 2022. J An entity tied to Bingham Farmsbased real estate company Core Partners LLC purchased a J

KURT NAGL/CRAIN’S DETROIT BUSINESS

Ethan Davidson (center) sings at Detroit’s Third Man Records as part of the release party for his 11th album, titled “Crows.”

TYLER CLIFFORD/CRAIN’S DETROIT BUSINESS

The Spirit of Detroit Plaza is sandwiched between Hart Plaza and Campus Martius in downtown Detroit near the iconic Spirit of Detroit statue.

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

$55 million

The amount Hayman Co. paid for the 732,000-square-foot Troy Officentre complex.

The number of Detroit projects that won more than $800,000 through the Knight Foundation’s Knight Cities Challenge to help attract and keep residents, expand opportunities and engage communities.

125,400-square-foot Troy office building for about $9 million. J Cobo Center is spending $2 million to upgrade its broadband technology in a bid to attract e-sporting events and exhibitions with virtual reality exhibits. J Detroit-based Ally Financial Inc.’s “Hardest Working Dollar” campaign launched, with five George Washington impersonators taking to the streets of Detroit as the company promotes special dollar bills put into circulation that are worth $100, $5,000 or $10,000. J Waterford Township-based Corporate Eagle is planning to build a new facility at the Oakland County International Airport after being selected for a 5.7-acre parcel of land there. J Automotive industry design element manufacturer I.M. Branded plans to move from its Rochester Hills headquarters to a space more than double the size in a former GM facility in Pontiac. J John Gibbs, the son of Birmingham-based retail strategist Robert Gibbs, bought The Keyes apartments and Villa Lante apartments, 63 units total, for an undisclosed price. J CEOs from Michigan-based cor-

porations including DTE Energy Co., Adient plc and Dow Chemical Co. and around the country have committed to a best-practices diversity initiative called CEO Action for Diversity & Inclusion.

OTHER NEWS: Focus: Hope is looking to lease its former headquarters building on its campus and 25,000 square feet of industrial/warehouse space across from it as part of a larger plan to produce revenue and attract more jobs to its campus. J Detroit’s three casinos reported an aggregate revenue of $120 million in May, up 1.2 percent from a year before and down 0.9 percent from April, the Michigan Gaming Control Board reported. J Mayor Mike Duggan and the Detroit Economic Growth Corp. launched Motor City Re-Store, which will provide $500,000 in matching grants each quarter to existing businesses to help improve neighborhood business districts. J The Michigan Department of Transportation plans to modernize I-94, reconstructing a 6.7-mile segment of freeway just east of the I-94/I-96 interchange to east of Conner Avenue and constructing an additional through-lane in each direction of the freeway. J Dearborn and Southfield are trying out their own short-term bicycle rental systems in the wake of the late May rollout of Detroit’s bike share dubbed MoGo. J Federal investigators have subpoenaed demolition contractors in Detroit’s troubled blight-removal program as part of an ongoing investigation, but Mayor Mike Duggan’s office says it has not received a subpoena for records. J At least three Michigan congressmen were present at a shooting scene last week and are reported safe after a gunman shot multiple people during baseball practice at a park in Alexandria, Va., outside of Washington, D.C. J

Ethan Davidson packs Third Man for release

irmingham singer-songwriter Ethan Davidson’s album release party on Tuesday night packed Third Man Records to capacity, drawing some big names in Detroit’s music scene. Davidson — son of the late Detroit Pistons owner William Davidson — and his band delivered a cosmic folk/rock performance with country twist to a crowd of about 250 at the location in Midtown Detroit, home to Jack White’s store and vinyl pressing plant. Several of the live cuts were off Davidson’s new album “Crows,” a 12-track offering that is in some ways a departure from his previous work. “Crows” is his 11th album and first since “Drawnigh,” released in 2015 on Davidson’s label, Seedsmen Co. Davidson’s wife, Gretchen, who sings, plays lead guitar and produced the album, and Warren Defever, who also helped produce the album and plays slide guitar and other backing instruments on it, put a “tight restriction on the music” for “Crows,” Davidson said. “The restriction was liberating and made it easier to write the

songs,” he said, explaining that ’40s and ’50s music were the template for his latest work. With tracks such as “My Own Bad” and “Close to the Gallows,” the album was inspired by a “lifetime of train travel” and focused on interpersonal relationships, particularly those that are problematic, Davidson said, because “those are more interesting.” For this album, Davidson did away with the horns section heard on “Drawnigh” and introduced pedal steel for a distinct country twang. The fuzz guitar and signature distortion of previous albums remain. He also throws into the mix a Civil War-era banjo and cello banjo. His main instrument continues to be electric guitar, but he hopes to eventually phase that out. Between numbers, Davidson thanked fans for support and gave Michigan Opera Theatre founder David DiChiera, who was in attendance, special recognition for “investing in Detroit when no one else was.” “Crows” was released Friday on vinyl, CD and via digital download from the album’s label, Cleveland-based Blue Arrow Records.

Simoncini namechecks competitors at benefit

att Simoncini cupped his mouth in his hands and shouted above the noisy crowd at a fundraiser he was sponsoring Thursday night for the Motown Museum. “Delphi! Delphi! Anybody here from Delphi!” The Lear Corp. president and CEO was trying to shame his auto supplier competitors into matching his $200,000 donation toward the museum’s $50 million expansion plan. Hearing no takers, Simoncini turned his attention to another competitor. “Anybody here from Adient?” The audience roared with laughter as the hyper exuberant Simoncini twisted the knife. “You want to be Lear when you grow up? Write a check!” Kidding aside, it was quite a night.

Beneath a huge tent with a clear ceiling, hundreds of Motown fans were entertained by the Four Tops after a live auction that raised tens of thousands of dollars for the cause. “We were raised on Motown,” Simoncini told the crowd during brief remarks during dinner. “It was the song track of my life.” He said the Motown brand represents creativity and entrepreneurship, and linked the 1960s music revolution to the blossoming of modern Detroit. “This brand represents what we are.” UAW Vice President Jimmy Settles Jr. urged the crowd to help make the museum a global destination. “The ask is easy,” he said. “Please dig deep tonight.” Speaking last, Mayor Mike Duggan joked, “I’m the third-best politician on stage.”

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