Crain's Detroit Business, Aug. 14, 2017 issue

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AUGUST 14 - 20, 2017

Driver fee problem worse than previouly reported

UM Professor Gary Glick's big deal.

State corrects data, total hits nearly $600M. Page 5

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Health Care

Real Estate

An industry facelift

Beaumont Health zeroes in on Southfield for new HQ

As dentists, doctors and private businesspeople invade their turf, plastic surgeons say they’re increasingly fixing others’ shoddy work By Jay Greene jgreene@crain.com

As celebrities drive up demand for plastic surgery and other cosmetic procedures, more doctors, dentists and even businesspeople who aren’t plastic surgeons are getting in the game. That’s raising questions about whether the procedures are properly supervised and complaints from plastic surgeons that they’re increasingly being called on to fix others’ shoddy work. The “increasing democratization of cosmetic surgery” is causing problems in plastic surgeons’ business models and bad medical outcomes for some patients, said Vikram Reddy, M.D., a plastic surgeon and chief of clinical integration at Henry Ford Macomb Hospital. In the 1980s and 1990s, plastic surgeons conducted the vast majority of all cosmetic surgery — reaching a re-

STRAIGHTEN

cord high 17 million procedures in 2016, up 3 percent from 2015. But the past decade has seen an increase in gynecologists performing vaginal rejuvenation, general surgeons conducting body contouring procedures after bariatric surgery, emergency physicians doing breast reconstruction, and ear, nose and throat doctors performing facelifts, Reddy said. “There is nothing inherently wrong with this, but, while there are strict standards for surgeons performing something like joint replacements, the oversight on cosmetic surgery is minimal to none,” Reddy said. “Infections or emergencies happen quite often. If a doctor doesn’t have hospital privileges, for a tummy tuck or rhinoplasty, patients can get infections, and go to a hospital or ER for care.”

By Kirk Pinho and Jay Greene kpinho@crain.com jgreene@crain.com

Duggan command attention and campaign cash from unusual donors for a Democratic big-city mayor — including prominent Republicans — as he gears up for his re-election bid against state Sen. Coleman Young II, son of a legendary former mayor.

Beaumont Health is in the market for at least 360,000 square feet of office space in Southfield for a new corporate headquarters with 2,500 employees. Details of the long-discussed plans for a so-called “shared services building” are revealed in a request for proposal obtained by Crain’s last week that says the health system is in the market to do a $60 million-plus project. The move would cap a consolidation effort for Michigan’s largest hospital chain following its 2014 three-system mega-merger. And more formal moves could come soon, as the RFP says interviews of prospective contractors to design the space are scheduled for Aug. 21 and the project is expected to be awarded by the end of the month. While the specific location is not discussed in the RFP, dated Aug. 2, four real estate sources familiar with the negotiations have said Beaumont is strongly considering a deal to lease 350,000 square feet of available space or outright buy the First Center Office Plaza on Northwestern Highway and move employees there. The sources requested anonymity because the deal is not complete. That comes after backing away from previously considered locations such as the former Federal-Mogul Corp. headquarters and Raleigh Officentre as possible locations because they were too small, the sources said. At one point, Beaumont had the Federal-Mogul buildings under contract. Beaumont declined to make its CEO, John Fox, or another executive available for an interview for this story and only issued a short statement: “Beaumont Health is looking at multiple sites in Oakland County. Our leadership says, ‘We are looking at lots of options,’” Robert Ortlieb, a spokesman for Beaumont, said in a statement.

SEE DUGGAN, PAGE 16

SEE BEAUMONT, PAGE 16

SEE SURGERY, PAGE 10

A D D V O LU M E R E M OV E L I N E S

DERMABRADE

ILLUSTRATION BY WACOMKA VIA ISTOCK

Detroit

Duggan’s bid draws support from unusual quarters By Chad Livengood clivengood@crain.com

Forty-four west Michigan residents gathered May 22 at a home on a semi-secluded lake on the outskirts of Grand Rapids to meet and give money to a politician from the east side of the state they can’t vote for. crainsdetroit.com

The crowd peppered Detroit Mayor Mike Duggan for 45 minutes with questions about the economic turnaround in Michigan’s largest city and his plans for improving life and commerce in Detroit’s neighborhoods, according to the Grand Rapids businesswoman who organized the fundraiser. Vol. 33 No. 33

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“A lot of people came up to me afterwards and said, ‘This really isn’t a fundraiser. This is a symposium,’” said Marge Byington Potter, a real estate developer with projects in Detroit who hosted Duggan and the outstate supporters at her home on Mid Lake. Detroit’s revitalization has helped

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CARE SPECIAL REPORT: HEALTH

The changing business of plastic surgery

HEALTH CARE – The changing business of plastic surgery, Page 8 BROUGHT TO YOU BY:

LARRY PEPLIN

William Stefani, M.D., a private practice

plastic surgeon and president of three-physician

Spa Renaissance & Renaissance Plastic

procedure. Surgery in Troy, prepares to perform a

c Specialized field mixes private-pay cosmeti res procedu and insurance covered reconstructionspecializing in face, hands and body By Jay Greene jgreene@crain.com

Many plastic surgeons ply their or highly skilled trade at hospitals outpatient surgery centers, performing emergency reconstruction surgeries for patients who have accidents, cancer or for other medically necessary reasons, including limb transplants or reattachments. But the busitic sur-

have it any other way. His father, Sureconstruction and because of techdarshan, also employed at Henry nology and insurance reimburseFord, focuses on body contouring ment changes, said William Stefani, and breast surgery and loves hospiM.D., a private practice plastic surtal-based work. geon and president of three-physi“Plastic surgery is unlike any other cian Spa Renaissance & Renaiscash a of field” with the combination sance Plastic Surgery in Troy. business for cosmetic services and “We do a variety of procedures in reinsurance-covered surgeries for our practice. I used to do a lot more construction and trauma, said Redreconstruction, ER on-call, but now dy, who is one of 11 employed plastic I do more cosmetic,” Stefani said. surgeons within six-hospital Henry e thinking

LARRY PEPLIN

Spa Renaissance & Renaissance Plastic variety of procedures.

Surgery in Troy has three physicians and

offers a

econstruction


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MICHIGAN BRIEFS

INSIDE

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

31 Michigan hospitals ranked on U.S. News list University of Michigan Hospitals in Ann Arbor was again recognized as the best hospital in Michigan by U.S. News and World Report in its 28th Best Hospitals Report. The state of Michigan placed a total of 31 hospitals overall in the listing. UM Hospitals ranked No. 6 in the top 20 “honor roll,” with the Mayo Clinic in Rochester, Minn., taking the top spot for the second consecutive year. U.S. News also ranked 535 hospitals by region, including 14 in Southeast Michigan. They include UM Hospitals; Beaumont Hospital, Royal Oak; DMC Harper University Hospital, Detroit; Beaumont Hospital, Troy; St. Joseph Mercy Hospital, Ann Arbor; and Henry Ford Hospital, Detroit. Hospitals in greater Michigan placing in the list include Spectrum Health-Butterworth and Blodgett Hospitals; Munson Medical Center; Bronson Methodist Hospital; Mercy Health St. Mary’s Campus, McLaren Northern Michigan Hospital; MidMichigan Medical Center-Midland; Sparrow Hospital; and McLaren Greater Lansing Hospital. U.S. News compared nearly 5,000 medical centers nationwide in 25

CALENDAR

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CLASSIFIEDS

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DEALS & DETAILS

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specialties, procedures and conditions. Measures include patient survival, number of patients, infection and adequacy of nurse staffing.

KEITH CRAIN

6

OPINION

6

OTHER VOICES

7

Plan to block spread of Asian carp outlined

PEOPLE

A federal report released last week proposes a $275 million array of technological and structural upgrades at a crucial site in Illinois to prevent invasive Asian carp from reaching the Great Lakes and its vulnerable fish populations, the Associated Press reported. The U.S. Army Corps of Engineers outlined its tentative plan in a report that had been scheduled for release in February but was delayed by the Trump administration, drawing criticism from members of Congress and environmental groups. It analyzes options for upgrading the Brandon Road Lock and Dam near Joliet. The complex is considered a bottleneck where defenses could be strengthened against fish swimming upstream toward openings to the lake at Chicago. Among technologies the report endorses is using sound systems to create “complex noise” underwater, plus placing an electric barrier at its downstream end that would repel fish and stun them if they get too close. Scientists said if the large, voracious carp became established in the

RON FOURNIER

ASIAN CARP REGIONAL COORDINATING COMMITTEE

Silver (top) and bighead (bottom) carp are two species of Asian carp threatening the Great Lakes.

Great Lakes, they could devastate the region’s $7 billion fishing industry by out-competing native species. Other measures would include installing water jets to wash away “small and stunned fish” that might be caught up around barges, plus a new lock where floating invasive species could be flushed away and rapid-response boat mooring and launch spots.

CRAIN’S SEPT. 11 DUAL COVER

The report said the federal government would pay 65 percent of the project’s costs, with the rest coming from an unidentified “non-federal sponsor,” which Illinois officials said probably meant their state.

Farmers eligible for flood loans

Farmers and ranchers in 14 Michigan counties are eligible for emer-

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RUMBLINGS

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WEEK ON THE WEB

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gency loans due to widespread damage amid severe storms and flash flooding in June, the Associated Press reported. The update from the U.S. Department of Agriculture came after President Donald Trump last week made a disaster declaration for four Michigan counties. Trump’s declaration made federal funding available to residents and business owners in Bay, Gladwin, Isabella and Midland counties for things such as temporary housing, repairs and low-cost loans to cover uninsured property losses. The assistance also aids the Saginaw Chippewa tribe within Isabella County. Last week’s announcement includes those four counties and the Indian tribe, as well as other counties declared contiguous disaster areas. Those counties include Arenac, Clare, Gratiot, Mecosta, Montcalm, Ogemaw, Osceola, Roscommon, Saginaw and Tuscola.


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Nonprofits

Biotech

UM’s Glick talks drug discovery, investment and working the day after a big deal By Dustin Walsh dwalsh@crain.com

GLEANERS COMMUNITY FOOD BANK OF SOUTHEASTERN MICHIGAN

Ryan Hoyle, chief development officer, Gleaners Community Food Bank of Southeastern Michigan, with CEO Gerry Brisson.

Gleaners pilots programs to prove return on investment of ending hunger By Sherri Welch swelch@crain.com

Can feeding the hungry also be good for business? Gleaners Community Food Bank of Southeastern Michigan has set out to prove it can. The food bank is rolling out test projects with local companies aimed at showing providing food for those in need can have a measurable return by improving health and educational outcomes — and company bottom lines. If the pilots succeed, they could give food banks around the country a new way to bridge the hunger gap. The first pilot is set to launch this fall with Henry Ford Health System, and Gleaners is discussing similar

projects with Beaumont Health, DTE Energy Co. and Consumers Energy Co. “We think we’re solving about half of the food insecurity problem in Southeast Michigan” with Oak Parkbased food rescue Forgotten Harvest, said Gleaners CEO Gerry Brisson. The return on investment model “is a big idea … that can get us a nice chunk of the way to the rest.” And when you solve food insecurity for some households, that’s all the help they need, he said. Once they’re fed, people can focus on the other things they need to do to improve their life. “If you look to solve hunger as if

it’s a root cause, because it is, maybe that helps people become successful,” Brisson said.

Health care savings There are just under 1.5 million “food insecure” people in Michigan, or about 15 percent of the state’s population, according to Feeding America, a Chicago-based national association for food banks and food rescues. More than half of those, or 672,780, were in southeast Michigan (Wayne, Oakland, Macomb, Livingston and Monroe counties). Through its annual Map the Meal Gap project, Feeding America estimates it would take $739.2 million to

feed all of Michigan’s food insecure people. Brisson and his senior management team began brainstorming about what it would take to close the gap. They landed on a conversation about who, besides the people getting food, could benefit from providing it to them. Health care and education were the first two things that came up. Research has shown that children can’t learn when they’re hungry. And adequate nutritional food can stave off many health concerns, lowering the incidence of chronic diseases like diabetes and the long-term treatment associated with them. SEE GLEANERS, PAGE 17

Economic Development

Five questions about ... Foxconn

Crain’s Detroit Business/Bridge Magazine

LANSING — Wisconsin lawmakers are set to debate $3 billion in incentives for Foxconn Technology Group as the Taiwanese electronics manufacturer prepares to invest $10 billion and create at least 3,000 jobs to make liquid-crystal-display screens in the southeastern corner of the state. The Foxconn incentives deal, which Washington, D.C.-based nonprofit Good Jobs First has pegged at one of the largest in U.S. history, is already struggling for support. Aside from being expensive, a new legislative analy-

MUST READS OF THE WEEK

sis suggests it could take 25 years — until at least 2042 — for the state to break even, longer if the company does not create 13,000 jobs, as it proposed. The Republican leader of the Wisconsin Senate has said he doesn’t yet have the necessary votes to approve the incentives legislation, leading Gov. Scott Walker to defend the package and project as “transformational” recently to The Wall Street Journal. What does all of that mean for Michigan, in its own hunt for a Foxconn project? How does the state’s “Good Jobs for Michigan” income tax incentive stack up against Wisconsin’s

offer? Below, five things to know this week about Foxconn.

BLOOMBERG

Lindsay VanHulle

First, Foxconn said it would build an automotive research facility in Michigan, and days later it said it wasn’t. What’s really happening?

Gov. Rick Snyder met with Foxconn Chairman Terry Gou during his recent trade trip to China, which included a tour of a Foxconn manufacturing plant.

Foxconn Chairman Terry Gou

SEE FOXCONN, PAGE 18

Earlier this month, Gary Glick, an emeritus professor of chemistry at University of Michigan and CEO of Boston-based IFM Therapeutics, sold his company in what’s expected to be one of the biggest biotech deals of the year. The next day, he went in to work. Now officially a serial entrepreneur, Glick is at the heart of a newage race in drug research that holds potential to effectively treat some of the world’s most notorious diseases, like cancer, lupus and arthritis. Taking a day off, even after a deal that could wind up valued at more than $2 billion, wasn’t in the cards. “We believe that the auto-immune space is just opening up in drug discovery,” he said. “We wanted to be able to continue to work in that regard. So, I went to work the next day.” Drugmaker Bristol-Myers Squibb Co. agreed to acquire IFM Therapeutics and two of its drug programs. Bristol-Myers will pay $300 million with additional contingent payments to Glick and other shareholders worth up to $2.01 billion Gary Glick: Sold when the compa- company to IFM ny’s products Therapeutics. reach certain milestones. Further payments are also possible under the deal if new products are formed, according to a news release. It was the second big deal for Glick. His previous company, Ann Arbor-based drug developer Lycera Corp., made a deal with drugmaker Celgene in 2015 to license its compounds that could be worth more than $100 million. Celgene also received an option to buy Lycera outright. The deal is expected to close in the third quarter. Glick also gets to keep his company as part of the deal. It will now operate as IFM Therapeutics LLC. Funding for IFM is venture-backed, from firms such as Atlas Venture of Cambridge, Mass., and Boston-based Abingworth and drug company Novartis. It raised $27 million in series A funding in 2016, creating a 10-times return for investors just on the up front closing of the deal with Bristol-Myers. That’s considered a home run in venture capital investing. SEE GLICK, PAGE 15

Targeting pain management

Key to labor shortage

The mystery of the millennials

Straith Hospital expands into interventional pain center program. Page 4

Dustin Walsh: Businesses can do something to address the labor shortage and skills gap — pay more and provide training. Page 6

Lindsay VanHulle: Wondering how to keep a millennial with your company? It ain’t the pingpong table. Page 14


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STRAITH HOSPITAL

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Founded in 1954, Straith Hospital is a family-founded tax-exempt hospital that historically focused on plastic and reconstructive surgery. Straith now focuses on medical rehabilitation, eye surgery and general inpatient services.

Straith Hospital expands into interventional pain center program By Jay Greene jgreene@crain.com

Straith Hospital for Special Surgery in Southfield is hoping a new pain center focused on procedures and physical therapy instead of medication management will generate 1,300 procedures and a projected $1.5 million in billable revenue its first year of operation, the hospital said. One of the goals is to ensure that patients limit their use of opioids, a serious problem in Michigan that led to more than more than 1,300 deaths in 2015. “We looked at the community and saw there was a need,� said Jan Rys, Straith’s CEO. “There are a lot of people with pain out there. We noticed that from our rehab and geriatric population. Our program will be more focused on procedural intervention as opposed to medication management.� Rys, a former nurse, said patients served will be those with pain in their spines, neck and knee areas. “These procedures are for people who aren’t really surgical candidates. They might need steroid injections to reduce swelling and reduce pain.� Founded in 1954, Straith Hospital is a family-founded tax-exempt hospital that historically focused on plastic and reconstructive surgery. Straith now focuses on medical rehabilitation, eye surgery and general inpatient services. The other four independent hospitals in metro Detroit are for-profits: Oakland Regional Hospital, also in Southfield; Michigan Surgical Hospital in Warren and Pontiac General Hospital. Kindred Hospital, a 77-bed long-term care hospital in Detroit, has announced it will close by Sept. 30. Last week, newly hired anesthesiologist Michael Drelles, D.O., medical director of Straith’s new pain center, saw his first patients in the still under construction four-room pain center, next to the 34-bed hospital’s outpatient surgery center. “We can do many procedures with

Jan Rys: Saw there was a community need.

Brad Bescoe: Straith renovation to cost $100,000.

medical management. We are trying to get across the idea of a multi-modal pain practice, with physical therapy, injections and interventions,� said Drelles, who trained at the University of Michigan.

The opioid epidemic In 2016, Michigan providers wrote 11 million prescriptions for opioids, up from 8 million in 2009. Nationwide, 33,000 died from prescription opioid or heroin use in 2015. “Given the circumstances in our society, the majority of physicians in the U.S. are trying to wean patients off of use,� Drelles said. “We really weren’t concerned with dosages until the last few years.� Last fall, Rys and CFO Brad Bescoe approached Drelles, who was employed with Wayne State University Physician Group. Based at UPG’s corporate office and outpatient center in Troy, Drelles said he was looking for a change and the match was made. “We wanted to create a straight (hospital-based) program to bring patients in,� Bescoe said. “We have rehabilitation, (eye surgery and general inpatient services) where we use independent doctors for referrals. (Drelles) will be our first employed physician.� Overall, Rys said patient volume is growing at Straith. Average daily census has risen to about 17 patients, up from 14 last year, Rys said. “We are also up about 100 surgical cases and

doing about 1,350 procedures per year,� she said. Bescoe said Straith will spend about $100,000 to renovate an area next to its outpatient surgery department to create four examination rooms. The renovation is expected to be completed by Labor Day. Drelles said it is challenging to open a new program, but the key to success is having experienced staff, support services, equipment and space. Pain center staff will include a practice administrator, assistant, scheduler and medical assistant. In each initial visit, Drelles said patients will be closely evaluated to determine the extent of their pain. “Every patient is different. You see what a patient needs to control their pain. We use physical therapy to alleviate symptoms. You can’t say ‘do one, two or three.’ You have to monitor them,� he said. Drelles said 70 percent to 75 percent of patients have low back and neck pain. “We may start with physical therapy and then use drugs, depending on their treatment plan,� Drelles said. “The more invasive procedures are done with needles.� For example, arthritis pain sometimes is treated with epidural steroid injections. Nerve pain in the spinal cord can be treated with a rhizotomy, a neurosurgical procedure that can relieve symptoms of neuromuscular conditions that include spastic diplegia and forms of cerebral palsy. For spinal fractures, kypoplasty is used to place medical cement in breaks. Drelles said the key to generating patient volume is building relationships with primary care physicians, internists, physical medicine doctors, neurologists and orthopedics and spine surgeons. “I have good relationships with physicians I have built up over the years from my practice in the community,� Drelles said. Jay Greene: (313) 446-0325 Twitter: @jaybgreene


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Corrected state data shows driver fee problem worse than reported By Chad Livengood clivengood@crain.com

The Michigan Department of Treasury on Friday released corrected data about unpaid driver fees that shows the magnitude of accumulated debt is bigger and more widespread among motorists than Crain's originally reported last week. Approximately 317,048 Michigan drivers owe about $594.8 million in unpaid Driver Responsibility Fees at a statewide average of $1,876 per driver. For Detroit, the corrected data shows more than 70,000 Detroiters owe about $114 million of the statewide total in accumulated unpaid fees at an average of $1,623 a driver. The new figures are vastly different than the Treasury Department originally provided Crain's upon request in June. Crain’s reported Aug. 6 that state

data showed 113,776 drivers owed $146.9 million in fees that are tacked onto local fines for traffic infractions. Ron Leix, spokesman for the Treasury Department, said the agency inadvertently omitted more than 200,000 drivers from a database search that didn’t include the four-digit extensions on five-digit ZIP codes. Crain’s had requested a spreadsheet of Driver Responsibility Fees by ZIP code. When Treasury employees queried the department’s database for the information, ZIP codes that had the four-digit extension were inadvertently left out, Leix said. “We’re reworking our processes here to ensure this doesn’t happen again,” Leix said in an email to Crain’s. Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

Kefallinos puts 30 Detroit properties up for sale By Kirk Pinho kpinho@crain.com

Detroit landlord Dennis Kefallinos is marketing most of his nonresidential properties in the city for sale or lease, Crain’s has learned. An offering memorandum obtained by Crain’s last week shows dozens of properties in Detroit and Hamtramck being offered, including the Harvard Square Centre high-rise, Michigan Theater Building and 28 others. All told, they total more than 2.3 million square feet and sit on more than 100 acres. The offering memorandum does not include any of Kefallinos’ residential properties, which are the subject of a long-running class action lawsuit because they did not have certificates of occupancy and were allegedly in substandard condition. It also does not include the Russell Industrial Center property, which had been ordered vacated this winter. A voice mail was left for Kefallinos, who is out of the country. “The offering memorandum speaks for itself,” said Tom Arbaugh, the Bancroft Partners representative listed on the OM. “We are letting the market know the extent of the industrial and commercial properties in the Kefallinos portfolio.” Kefallinos has been investing in Detroit real estate for decades. However, he has been the target of criticism for delayed renovations or improvements to a slew of buildings he owns. Some of the other buildings included in the OM are the Roosevelt Hotel at 2250 14th St., which Kefallinos bought in 2010 for just $37,500 at a tax-foreclosure auction, and Shapero Hall, a former Wayne State University pharmacy school building that he purchased in 2010. The city had targeted that building for demolition, but Kefallinos staved off the wrecking ball and planned to create microapartments there. Kefallinos’ lieutenants have long talked about plans for Harvard

A sample of properties JJThe Michigan Building and former Michigan Theatre, 220 Bagley St. JJHarvard Square Centre, 1346 Broadway JJ227 Adelaide St. JJShapero Hall, 1401 Rivard St. JJRoosevelt Hotel, 2250 14th St. JJFormer Burton International School/ Franklin Elementary School, 1333 Pine St.

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JJFormer Caesar Chavez school, 1548

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JJ1.5 acres of vacant riverfront property,

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JJIndustrial building, 1221 Rosa Parks Blvd.

Square Centre and Shapero Hall. None of them have come to fruition. In an interview with Crain’s last month, Kefallinos discussed the status of his redevelopment of a former Thorn Apple Valley slaughterhouse at 2902 Orleans St. on the edge of Eastern Market. Kefallinos had windows installed on the first two floors of one side of the abandoned meat processing plant that face the Dequindre Cut greenway walking path. “I’ve got the windows for the other half, I just haven’t had time to get to it,” Kefallinos told Crain’s. “Sometime this summer I’m sure we’ll come back in for the windows.” Kefallinos said the 114,000-squarefoot building would be ideal for a chain grocery store or restaurant and brewery. “Right now, our objective is to restore it,” he said. But Kefallinos hedged a bit and acknowledged he was waiting for other developers to begin expanding the Eastern Market footprint before he makes a move. “I just wait for the cranes to go up in Eastern Market,” Kefallinos said. “I don’t want to be first.” — Senior reporter Chad Livengood contributed to this report.

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OPINION

COMMENTARY

Businesses have key to labor shortage — higher wages O n the skills gap and labor shortage, it’s time for business to put up or shut up. Business executives have lamented since 2010 that workers, skilled and unskilled, are hard to find. Yet they hold the key to open their doors to hiring — and it’s hiding in the record profits most Southeast Michigan industries have been churning out in the post-recession economy. Pay more in wages and pay more in training. Difficulty in finding workers in a strong economy should result in rising wages. It hasn’t. Average hourly earnings are only up 2.4 percent over a year ago across the U.S., and down nearly half a percent in Michigan between June this year and last year. Wage stagnation in the midst of an eight-year economic recovery has befuddled economists. Some point to the lasting impacts of the Great Recession — where employers inflated job requirements because they could, as more and more talented unemployed were on the market or, in many cases, workers considered themselves lucky to have a job at all. Others speculate that the culprit is mass retirement by high-earning baby boomers (roughly 10,000 retire each day), who are being replaced by lower-wage, younger workers. The Federal Reserve said as much in a recent report, coupling that trend with the return of lower-wage workers to the workforce, in low-wage jobs, as the economy has recovered.

DUSTIN WALSH dwalsh@crain.com

“Together these two changes have held down measures of wage growth.” That may be true — but it’s not evident in the data. Look no further than the tool-anddie industry — where staffing is the top concern, according a recent report by consulting group Harbour Results Inc. “It’s off the charts by big percentages: labor, finding skilled labor, getting skilled labor,” Laurie Harbour, president and CEO of Harbour Results, said at an auto industry seminar in Traverse City earlier this month. Inflation-adjusted wages for tooland-die workers in car assembly and parts manufacturing have fallen at every level since 2009, according to data from the U.S. Department of Labor prepared by the Center for Automotive Research. While wages in the 10th percentile of earners, usually new hires, dropped more than 12 percent between 2009 and 2016, workers in the 90th percentile of earners, usually veteran employ-

A good lesson for everyone

O

ne of the men I admired greatly was the late Sam Williams, who built a huge company in spite of the fact that he was blind. When he was a young man, he made a bet that he could stare at the sun longer than his friend. Sadly, he won the bet. He lost 90 percent of his vision, but it did not stop him from building a huge company that developed and built small jet engines. Williams was a smart engineer who built Williams International right outside Detroit. The company developed smaller jet engines at just about the same time the rocket fellows needed an engine for cruise missiles. His company is still manufacturing small jet engines for private and defense work. Sadly, Sam died a while back, but not before he had built a huge and mostly invisible company here in Detroit. Today, my guess is that you can’t get within half a mile of his company because of security, which has helped make his company even more invisible over the years.

KEITH CRAIN Editor-in-chief

He was a great lesson to young people not to do crazy stunts, although as anyone will tell you, his disability did not slow him down. That made him a lesson in perseverance. (And incidentally, Williams’ story is also a reminder that as we approach the day of our sun’s eclipse, it is important to make sure that kids don’t look directly at the sun during this rare event. There are plenty of safe ways to view the eclipse without risk to our eyes.) Sam Williams was only one of many quiet success stories in Southeast Michigan. We all should learn more about him and others like him.

ees, fell by ... 12 percent. Plus the average age for a tooland-die worker today is 55, Harbour said. Staffing was also the top internal production concern for U.S. auto suppliers, according to the second quarter Supplier Barometer released by Troy-based Original Equipment Suppliers Association. Maybe the answer is that the labor market isn’t as tight as employers’ complaints make it seem, and slow wage growth is reflecting that. While employers did add 209,000 jobs in July, dropping the national unemployment rate to 4.3 percent, and the Michigan jobless rate was 3.8 percent in June, the lowest since 2000, more and more people are working multiple jobs. The Labor Department reported 7.6 million workers held multiple jobs in July, up 2 percent from July 2016 and higher than it’s been in 20 years. The primary, and obvious reason, people are working multiple jobs is that one job is not providing enough income. For example, thousands of applicants lined up last week to get warehouse jobs at Amazon — some waiting more than eight hours to get an interview — as part of a one-day effort by Amazon to fill 50,000 jobs across the country. The online retail hub is opening several distribution facilities in Michigan. Those jobs range between $12 per hour and $15 per hour.

Underemployment is still rampant and the growing opioid crisis is keeping more workers out of labor force. Then there’s the dreaded skills gap, a constant complaint of companies who need trained electricians or welders and other skilled trades. Apprenticeships are expensive — one apprentice can cost an employer from $25,000 to $250,000 — so companies have turned to government to train workers. But it’s hard to see government as the solution. The programs have proven lukewarm at best and ineffective at worst. While training is not a zero-sum game for governments (new taxpayers!), tax revenue is spread thin. Too thin. Michigan has run a deficit eight out of the past 14 years, according to data by The Pew Charitable Trusts. This all adds to the wage conundrum, says Charles Ballard, an economist at Michigan State University. But companies can fix it with their cash reserves, he said. “I do think it’s still true that there are too many workers who don’t have the skills that are necessary to fit with the jobs that are available, and I think the numbers with substance-abuse problems are probably larger than they used to be,” he said. “However, except in really extreme cases, the problems of low skills and substance abuse are problems that can be fixed with the right package of wages, on-the-job training, etc.”

Please don’t mistake this for an altruistic argument. Wage suppression will limit profits, eventually. Americans are saving less. The personal savings rate was just 3.8 percent of income in the second quarter of 2017, down from 5.1 percent in in the first quarter and down more from last year’s rate at 6 percent, according to the labor department. What this means is that consumers are at or near peak spending. If a recession hits, no matter how small, businesses can expect consumers to slam shut their wallets because they have little wiggle room on bills with minimal savings. Car sales are already slowing. Raising wages may push the economy further into its recovery as well as solving labor shortages. Economists, like Ballard, hope the labor market forces employers’ hands. “It may be that some employers are not yet willing to offer the wage increases that would get them the workers they need, and so they rely on excuses. My hope is that the labor market will continue to tighten, and that more and more employers will feel compelled to raise wages,” Ballard said. “By this time in the expansion of the 1990s, wages were rising rapidly. I hope we’ll see faster wage growth in the next year or two. Stay tuned.” The longer you wait to raise wages, the greater damage you’ll do to your workforce and sales.

opinion on what color to paint the walls. John C. Mozena Vice President for Marketing and Communications, Mackinac Center for Public Policy, Midland

an urgent imperative for every manufacturer in the state, regardless of size or industry served. There are other key states with the brainpower and private money to happily take on this role — but only if we let them. Tom Kelly Executive director and CEO Automation Alley, Troy

LETTERS

MEDC CEO wrong to say he has blueprint To the Editor: I was disappointed to see Crain’s front page say the new CEO of the Michigan Economic Development Corp. has a “blueprint for Michigan’s economy.” A publication that has been the paper of record for our region’s business community for almost 30 years should know full well that a state’s economy is not something that can be planned and laid out about ahead of time in “blueprint” fashion. Rather, logic and experience are clear that the political selection of favored businesses we call “economic development” simply does not develop the economy as a whole. In fact, even the MEDC’s own most optimistic claims don’t show a noticeable economic impact, other than costing us more than we spend on worthwhile government services such as food safety or state police. Their most recent annual report took credit for 267 business starts — in a state with more than 834,000 businesses. It said they were responsible for 29,774 jobs — in a state with 4.6 million jobs. That’s 0.03 percent and 0.6 percent, respectively, of those metrics. That’s not owning the blueprint for the economy; that’s barely having an

Time to adopt Industry 4.0

To the editor: I found myself nodding when I read Keith Crain’s editorial on disruption in the auto industry — and beyond. (“It sure isn’t just the automotive industry,” Aug. 7) I’d like to continue the economic disruption conversation by adding in the phrase Industry 4.0. Think digital transformation or, as I like to say, “The digitization of everything.” Industry 4.0, also known as the Fourth Industrial Revolution, includes technologies like virtual and augmented reality, the Internet of Things, the cloud, 3-D printing, autonomous robotics, cybersecurity, advanced materials, big data and AI. Singularly and collectively, they are disrupting all industries. Automotive indeed, but also all of manufacturing. If Michigan is going to maintain its clout as the nation’s manufacturing leader, the need to acknowledge and adopt Industry 4.0 strategies must be

Learning to reason fosters civility To the Editor: Regarding Keith Crain’s July 24 editorial “The daily paper got it right,” there’s something more important than moving to the middle, and that’s striving to put our passions, attractions, and affiliations aside, and learning (or re-learning) how to reason, which also fosters civility. As to the obsession with Russian meddling, evidence, history, and reason tell us this is what the Soviets/Russians have been doing every day for a hundred years since the Bolsheviks assumed power, with greater or lesser success, and using the assets appropriate to the times. By no means should we ignore it, but to claim Russian meddling is something new and outrageous is irrational. Tom Doran, Plymouth


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Detroit now has chance to get public transit right Detroit’s historic Woodward Avenue became the world’s first concrete highway in 1909, along a one-mile stretch from McNichols to Seven Mile. In 1916, the thoroughfare was paved from the Detroit River to the city of Pontiac, a 27-mile route, causing nearby neighborhoods and shopping strips to thrive. More than 100 years later, Detroit once again finds itself looking to upgrade its transportation infrastructure, including public transit, as part of the city’s nascent revitalization. If we fail to get it right, we will fall behind faster as rapid innovation continues to accelerate the pace of change. Thanks to local universities, major automakers and assistance from the State of Michigan, our region is leading the way in autonomous mobility research and development. We should leverage this position and relevant resources to create a 21st century transportation system in our state’s largest city to drive economic growth, enhance aesthetic appeal and improve access across the region. Still, in Detroit today, we see a hodgepodge of transportation modes such as pre-arranged shuttles and short-distance trains, but no overall mobility plan that serves the entire region. Municipal and county buses are now running more reliably, but riders still face long commutes for longer distances to inner-ring suburbs. If available mobility options seem inconvenient and disconnected, many residents who own a car will just continue to drive. When the city reaches desired population density levels, parking will become costlier, driven by greater demand for finite space. More parking structures will be needed if we remain dependent on cars. But do we really want to use desirable real estate for parking, especially since we are already beginning to see a shortage of office space? The answer is obviously no. As Detroit restructures, however, the city has a unique opportunity to design a cohesive and tiered modal mix for the convenient and fluid movement of people, goods and vehicles, nonmotorized or motorized, whether driver-dependent or autonomous, creating significant opportunities for diverse communities, demographically and geographically. A 21st century transportation infrastructure vision should deliver an environmentally responsible, safe, convenient, quick, affordable and comfortable mix of options, as we look to encourage interaction between city and suburbs. It should address different needs to feed the central business district and local airports, while minimizing congestion in and around the city, extending access within a 50-mile radius and helping to eradicate the “us versus them” social dynamic. The region could accommodate a seamless public transportation system that augments and integrates existing services, such as DDOT, SMART, People Mover and QLine. This new system also could be expanded with additional routes to service areas in Livingston, Macomb, Oakland, Washtenaw and Wayne counties, similar to the Metrorail that connects the District of Columbia, Maryland and Virginia. Importantly, an effective transportation system would stimulate eco-

OTHER VOICES Regine Beauboeuf

nomic growth. For every dollar spent for affordable access to educational opportunities, jobs and commercial districts, particularly in a megalopolis such as Metro Detroit, $10 is added to local and regional economies.

Governments and economic development entities in the U.S. and other industrialized countries are paying close attention to transportation planning in Detroit, because they realize the city has a rare chance to start anew. They are examining not only what will be developed, but also how it will be developed and, ultimately, the nature and impact of social and economic outcomes. The M-1 Rail is the best recent example of collaboration between public agencies, private enterprises, elected officials, major employers and citizens. Woodward Avenue was almost entirely reconstructed to cre-

The M-1 Rail is the best recent example of collaboration between public agencies, private enterprises, elected officials, major employers and citizens.

proved, but the process that led to its development is worth replicating for future transportation infrastructure initiatives. The City of Detroit and the State of Michigan appear to be collaborating and gleaning feedback from residents to develop a new plan that is forward-looking and inclusive. History will likely record the city’s approach to recreating its multimodal mix as a revolution, but only if we get it right.

ate a public transit option without disenfranchising existing dwellers or disrupting local landscapes. The new rail line is still being tested and im-

Regine Beauboeuf is head of the Detroit office for the Grand Rapidsbased architectural engineering firm Fishbeck, Thompson, Carr & Huber.

ADDITIONAL SPEAKERS ANNOUNCED Crain’s Health Care Leadership Summit returns in October. This signature health-focused event continues to serve as catalyst for networking among industry professionals and a means to discover ways to manage healthcare in a time of continued uncertainty. KEYNOTE SPEAKER

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SPECIAL REPORT: HEALTH CARE

THE CHANGING BUSINESS OF PLASTIC SURGERY

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William Stefani, M.D., a private practice plastic surgeon and president of three-physician Spa Renaissance & Renaissance Plastic Surgery in Troy, is assisted by Tiffany Olis, R.N., as he prepares to perform a procedure.

LARRY PEPLIN

Specialized field mixes private-pay cosmetic and insurance-covered reconstruction procedures By Jay Greene jgreene@crain.com

Many plastic surgeons ply their highly skilled trade at hospitals or outpatient surgery centers, performing emergency reconstruction surgeries for patients who have accidents, cancer or for other medically necessary reasons, including limb transplants or reattachments. But the business of plastic surgery has exploded the past few years with women and a growing number of men seeking a variety of popular elective facial and body cosmetic procedures. A variety of physician Vikram Reddy: specialties and Plastic surgery unlike other fields. n o n p h y s i c i a n s also are competing for this growing pie of patients. Vikram Reddy, M.D., an employed plastic surgeon and chief of clinical integration at Henry Ford Macomb Hospital in Clinton Township, works the majority of his time on reconstructive surgical cases and wouldn’t

have it any other way. His father, Sudarshan, also employed at Henry Ford, focuses on body contouring and breast surgery and loves hospital-based work. “Plastic surgery is unlike any other field” with the combination of a cash business for cosmetic services and insurance-covered surgeries for reconstruction and trauma, said Reddy, who is one of 11 employed plastic surgeons within six-hospital Henry Ford Health System and also the system’s associate medical director of population health. Because of the demand and cash payments, Reddy said a growing number of plastic surgeons, physicians and some nonphysicians are specializing in office-based cosmetic procedures. (See Page 1.) “You don’t have to go through insurance as much with cosmetic. It’s mostly private pay” and physicians like cash payments because it usually is less hassle than dealing with insurance companies, Reddy said.

A changing business Plastic surgery also has evolved over the years with doctors further

specializing in face, hands and body reconstruction and because of technology and insurance reimbursement changes, said William Stefani, M.D., a private practice plastic surgeon and president of three-physician Spa Renaissance & Renaissance Plastic Surgery in Troy. “We do a variety of procedures in our practice. I used to do a lot more reconstruction, ER on-call, but now I do more cosmetic,” Stefani said. “Reality TV has shifted the thinking of patients and some doctors.” Mark Komorowski, M.D., a solo plastic surgeon in Bay City, practice s in and out of the hospital with half of his surgeries in a hospital and the other half in an ambulatory surgical center. A former trauma surgeon from Oklahoma, he has practiced in Bay City since 1993 and has his busy office practice with one nurse. Board certified in plastic and general surgery, Komorowski practices at a variety of area hospitals that include MidMichigan in Midland, McLaren Bay Region in Bay City and Covenant Healthcare in Saginaw. “I do general plastic surgery, the lumps and bumps, skin cancer and

LARRY PEPLIN

Spa Renaissance & Renaissance Plastic Surgery in Troy has three physicians and offers a variety of procedures.

breast or hand reconstruction,” said Komorowski, who also is chair of the health policy committee with the Michigan State Medical Society. He also is president of the physician organization in Bay County, Midland County and Isabella County. Nowadays, plastic surgeons in Michigan like Reddy, Stefani and Komorowski can take very different career paths, depending if they want to go into a more lucrative office practice with cosmetic surgery and private pay or become employed by hospitals with benefit perks and do more reconstructive surgery coupled with on-call emergency trauma cases.

“I enjoy doing reconstruction surgery,” Reddy said. “Employed doctors do a lot” and are often oncall at hospitals to cover for such emergencies as auto accidents and injuries where limbs and faces need repairing. “The higher margins are in cosmetic surgery, and a lot of people have gone into private practice and don’t have hospital privileges anymore,” he said. “Hospitals are having a hard time getting plastic surgeons to perform trauma, reconstructive procedures and ER call. ... Health systems are both employing physicians and offering stipends to private docs for support.” SEE CHANGE, PAGE 9

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SPECIAL REPORT: HEALTH CARE

Payment challenges multiply for plastic surgeons By Jay Greene

Because of high-deductible health insurance policies and rising co-payments for services, patients are digging into their pockets a lot deeper the past few years. For physicians and hospitals, collection of standard medical bills now looks a lot more like the cash business that dominates the plastic surgeon business model. “When someone comes in to see me for a breast augmentation, I can offer them a single price which captures my fee, the anesthesiologist’s fee, and the facility fee,” said Vikram Reddy, M.D., an employed plastic surgeon at Henry Ford Macomb Hospital in Clinton Township. “With the advent of high-deductible health plans, patients are increasingly trying to ask what things cost, and hospitals are struggling to meet this demand.” With the growing number of high-deductible policies, Reddy said, doctors and hospitals need to carefully explain out-of-pocket costs to patients so there won’t be surprises down the line. “I know my total cost, but for a breast reconstruction, patients need to know their insurance costs. For (some health insurers), 50 percent is out of pocket,” Reddy said. But for non-hospital employed, office-based plastic surgeons like William Stefani and Mark Ko-

The social influence

SEE CHANGE, PAGE 10

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morowski, collecting out-of-pocket payments for elective cosmetic procedures has been a way a life. They have always operated mostly on a cash, or private pay, basis because health insurers often limit coverage to reconstructive and non-cosmetic emergency services, with some exceptions. Over the past several years, Komorowski said overdue bills from patients also have been growing because of movement to higher-deductible policies. “If I don’t collect up front, I probably will never see it,” Komorowski said. “They will go into collections, but there is a time limit on that. We are forced to collect up front. Insurers should be required to collect that because they have contracts with patients. I don’t make anything on the premium they collect. I shouldn’t be obligated to collect the deductible.” “I want to collect what is owed to me. I’m not asking for more,” he said.

For example, several health insurers in Michigan have recently cut reimbursements up to 20 percent for breast reduction surgery, one of Komorowski’s most popular surgeries. “If I do a breast reduction, I am paid for one side. Insurers pay 50 percent for other side,” he said. At Priority Health, James Forshee, M.D., senior vice president of medical affairs and chief medical officer, said the Grand Rapids-based health insurer hasn’t changed its reimbursement policies for plastic surgery in at least 10 years. In 2007, Priority moved to a strict prior authorization policy for physicians, including plastic surgeons, to give them greater understanding of what will be covered and what won’t. “What we do here at Priority is pretty straightforward. Prior authorization for plastic surgery. Doctors submit (request for authorization) beforehand, excluding ER work,” Forshee said. “They know before the surgery, and the hospital knows if it is covered. We avoid that problem. There is little risk for them.” In 2010, the Affordable Care Act mandated that breast surgery for cancer must cover all breast reconstruction. But Komorowski said ACA never specified minimum payments. “We have to fight and spend time with insurers to get paid,” he said. Some health insurers cover up to $15,000 for breast reconstruction

with a $1,000 co-insurance requirement, Reddy said. “Patients ask us to take $100 in cash” to cover the co-insurance. “Reimbursement is not going up, but drug costs and biologics are,” he added. While health insurers often delay payments more than 90 days, Komorowski said, auto insurers are the biggest offenders. “It takes six to nine months to get paid on an auto claim,” he said. Another change in insurance reimbursement has to do with skin lesion removal that is cancerous. “If there are four I remove, they pay for first one at 100 percent, the second one at 50 percent and the others are 25 percent,” Komorowski said. Forshee said it has been standard practice for years for health insurers and government payers to charge a declining fee based on number of procedures rendered during the same operation. He said overhead costs are covered usually for the first lesion removed or breast reconstructed. “Insurance companies don’t want to pay you for office procedures. They pay me $100 in office, but that $100 doesn’t cover suture, gauze, instruments and staff,” Komorowski said. “What doesn’t make sense is they pay the hospital $900 a room for the same procedure.”

Approved by Scott- 4/

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

FROM PAGE 8

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Mark Komorowski

Komorowski said submitting claims to health insurers also has become more of a challenge in recent years. “When you bill, you put in a code, sometimes they will decide it is cosmetic and you won’t get paid. Sometimes they pay,” he said. Of all claims filed, Komorowski estimates about 10 percent are rejected. Another 75 percent need to be resubmitted before they are paid. Some elective procedures he expects won’t be covered because of the cosmetic nature. They include breast augmentation, abdominal reduction and most liposuction. “I do about 10 or 12 per month,” Komorowski said. Sometimes health insurers have a specific reason for considering the surgery cosmetic. But it often is a guessing game, Komorowski said. Take, for example, children born with prominent ears. Some insurers cover surgery based on a congenital anomaly. But some insurers don’t. “They would rather pay for psych services than child with big ears. They pick and choose like this.” “Whether it is cosmetic or not, all insurers are cutting back,” Komorowski said.

CHANGE

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EPLIN

“When you bill, you put in a code, sometimes they will decide it is cosmetic and you won’t get paid. Sometimes they pay.”

jgreene@crain.com

Stefani said he is seeing a growing number of plastic surgeons who are using social media to market their services by blogging, using Instagram to share photos or videos or just putting their name out there through traditional advertising and marketing. “Used to be you would get your name out there by covering ERs and doing the grunt work at the hospital,” he said. “Some guys still work at hospitals to stay board certified. You have to take calls. We do that. Others just have office practices.” Reddy said many hospitals are hiring plastic surgeons because of the difficulty in getting doctors to perform on-call coverage. “They (hospitals) are hiring you to take calls so they can keep trauma certification,” Reddy said. Stefani said non-hospital-based surgeons either own or share outpatient surgery centers or use hospital-owned surgery centers to do some surgeries like tummy tucks and breast reduction where patients can recover within 23 hours. Other popular types of cosmetic surgery include male and female breast reduction, nose jobs, facelifts and eyelid correction. Facial injectables for the younger look include Botox and Juvederm, and also microdermabrasion, chemical peels and laser hair removal. But unlike like large markets for plastic surgery like Los Angeles, New York, Orlando, Miami or Phoenix, plastic surgery practices in Michigan

EPLIN

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SPECIAL REPORT: HEALTH CARE Google is the lady on the bus” and land County Circuit Court. SURGERY prospective patients are getting medThe Oakland County trial court FROM PAGE 1

Reddy regularly sees patients in the St. John Macomb emergency room for botched plastic surgeries. Some are performed by physicians in their offices and some by nurses or technicians working for nonphysician owners of medical spas. It’s legal in Michigan for nonplastic surgeons to perform these procedures. Physicians are licensed to perform a wide variety of medical services and can legally treat patients for any condition in office-based settings. Hospitals can limit physicians for inpatient services based on board certification or other professional reasons. Paul Cederna, M.D., chief of plastic surgery at Michigan Medicine, said physicians who want to become plastic surgeons should become board-certified, a process that includes seven years of residency training, followed by oral and written examinations. “When you have other (physicians or nonphysicians) coming into the space without the appropriate level of training, the risks to patients are substantially higher,” said Cederna, who also is on the board of the American Board of Plastic Surgeons, which certifies plastic surgeons. “The reality is that someone trained in emergency medicine may be exceptionally good in their specialty, but no matter how gifted and how good their hands are, they have areas of deficiency and inexperience when it comes to plastic surgery,” Cederna said. And using nurses, medical technicians or non-plastic surgeons to conduct cosmetic procedures or minor surgeries can sometimes cause problems for patients, said Mark Komorowski, a plastic surgeon in Bay City and chairman of the health policy committee with the Michigan State Medical Society, especially when providers stray from their main area of expertise. “There is a buyer beware attitude out there. We need a ‘truth in training’ bill,” said Komorowski. “To be able to do an office procedure, you need privileges at a hospital to do it; you need to be board certified.” “Before there was the lady on a bus who told me about” a plastic surgeon and a hot new procedure. “Now,

CHANGE FROM PAGE 9

are small, ranging from solo to three or four partners, said Joe Spallina, a consultant with Arvina Group LLC in Ann Arbor. “Years ago, there weren’t a lot of plastic surgeons. Today, the market is saturated with plastic surgeons and to go out and start your own business is pretty futile,” Spallina said. “You need access to your own OR to do complicated microvasular procedures. It is more common for them to buy into practices.” Many younger plastic surgeons, however, want to go into office-based practices and avoid taking hospital calls, Stefani said. “The newer residents want to be employed with set hours. They do more and get a percentage if they hit quota numbers,” Stefani said. “We tried to hire someone and couldn’t

ical procedures done based on advice of online advertisements or paid news stories, he said. William Stefani, a plastic surgeon and owner of Spa Renaissance and Renaissance Plastic Surgery in Troy, said he could be in favor of some rules to control types of surgery performed in offices by physicians not on a hospital medical staff. “I see some patients, not a whole lot, who require revisionary work” because of bad outcomes, Stefani said. “I feel bad for the patients, because they are facing double or triple the costs of the original surgery.” M. Azhar Ali, M.D., a plastic surgeon at Amae Medical Spa in Bloomfield Hills, said medicine and state regulators need to focus more on the concerns of the well-being of patients instead of protecting clinic business owners. “This is a very sore subject,” Ali said. “I see nonphysicians conducting procedures that cause problems, but recently one lady went to an ENT surgeon for liposuction. He (accidentally) made five holes in her intestines. She had to go to the ER and was in ICU for a week.” Ali said because of the cash nature of cosmetic procedures, nonphysicians and physicians alike are “enticed into business.” He said insurance-covered procedures have more safeguards and rules on who can do them. “I tell people to ask the doctor (or technician) if they can do this procedure in the hospital. If they make up excuses, go elsewhere,” Ali said. Ali said another concern of his is the growing number of businesspeople who are opening medical spas. “My biggest issue is patient safety. (Businesspeople) hire a physician as medical director who has never been to the office. They have nurses doing procedures without (physician) supervision,” he said. “Michigan needs to change or enforce their laws.”

Big money Over the past several decades, dozens of medical centers have sprung up under the ownership of nonphysicians and are billing Medicare, Medicaid, private payers and individuals for medical services, according to the Michigan Radiological Society in a lawsuit filed last year against Oakland MRI Center in Oakfind anybody to take calls. They all had demands and wanted certain weekends off.”

One-stop shops But Stefani isn’t giving up on adding another plastic surgeon to his practice. He plans on recruiting a fourth partner next summer and possibly opening a second satellite clinic. A second-generation plastic surgeon who was born in Detroit, Stefani practices with Jeffrey Williams, M.D., and George Miguel, D.O. Stefani’s late father, Andrew, practiced the old Mt. Carmel and Grace hospitals from 1955 to 1995. “As I brought in partners, I didn’t want us stepping on each other’s toes. Each one specializes in something a little different,” said Stefani, adding: “We have a nice family practice with employees who have been here for many years. We keep our ethics pretty high. We don’t want to

ruled in favor of Oakland MRI last December, and the case is before the Michigan Court of Appeals. A decision in favor of the radiologists could spur massive regulatory and enforcement changes in Michigan and possibly the nation, legal experts said. Although the Michigan State Medical Society does not advocate limits on physician scope of practice for any medical specialty, the MSMS in 2016 issued a statement demanding Michigan enforce the state’s corporate practice of medicine laws for nonphysicians who own medical clinics and employ physicians or advanced practice nurses. Under several state laws and attorney general opinions, only licensed physicians may own and manage medical service businesses, several health lawyers told Crain’s. Hiring physician contractors at these businesses is also not allowed. There is an exemption for nonprofit hospitals. “If you are a lay, for-profit corporation, you cannot employ physicians to furnish medical services,” said Mark Kopson, chair of the health care practice at Plunkett Cooney P.C. in Bloomfield Hills. “The public policy behind the prohibition against the corporate practice of medicine is to prevent profit motives of for-profit corporations from affecting how medical care is delivered.” Kopson said, however, Michigan laws are unclear on whether business owners can hire advanced practice nurses to conduct procedures at their businesses. For some procedures, such nurses must affiliate and have a practice agreement with a licensed physician. “If a business employs other types of mid-levels or advanced practice providers, such as PAs, who may legally require physician supervision, it raises the question,” said Kopson: “At what point, if any, does the involvement of the physician cross the line into the corporate practice of medicine?” Jason Moon, a spokesman for state Department of Licensing and Regulatory Affairs, said the state encourages anyone who believes there is a violation of the law to file a complaint with LARA. Moon said LARA has not taken a position on the Michigan Radiologi-

operate on people unless we can get a nice results.” All three doctors have hospital medical staff privileges and take oncall trauma, but Stefani does more facial, body and breast cosmetic surgeries, Miguel more rhinoplasty and facial surgeries and Williams takes on the bulk of reconstructive breast surgeries. They have medical staff privileges at St. John Hospital and Medical Center in Detroit and Beaumont Hospital Troy. Spa Renaissance is a full-service plastic surgery center, medical spa, hair and nail salon. Like many practices, Stefani employs a range of providers, including physician assistants, nurses, estheticians and stylists. The practice plans on adding another 20 employees this year to its staff of as it continues growing a cosmetic center. “As a plastic surgeon, we are considered sub-specialists, but we have a moniker that we are cosmetic and

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cal Society case. “To help protect Michigan consumers and grow the economy, LARA works to ensure that businesses offering covered medical services are incorporated according to state law,” Moon said in a statement to Crain’s.

“When we discover or receive information that a business entity has unlawfully incorporated, we first attempt to bring the business into compliance,” he said. “LARA may then refer the matter to the Michigan Attorney General’s office, which has enforcement authority on these is-

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“I don’t hear hospitals have trouble with oncalls” for trauma cases, Spallina said. “ER doctors use their discretion when to call them in. If they have a (wrist, arm or leg) cut off, many go to the University of Michigan for a limb reattachment” or other level one trauma centers. At Michigan Medicine in Ann Arbor, Paul Cederna, chief of plastic surgery, said the University of Michigan’s hospitals and its 16 board-certified plastic surgeons take patients from all over Michigan and the nation for a variety of adult and pediatric trauma and reconstruction cases. “We do more than 4,000 surgeries each year and see 30,000 patients in our offices. We are one of the biggest

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“As I brought in partners, I didn’t want us stepping on each other’s toes. Each one specializes in something a little different.” William Stefani

private pay,” Stefani said. “Maybe it is covered by insurance carriers, maybe it is not.” Komorowski said some hospitals have started paying groups of surgeons for trauma calls. “There is no money to be made in the ER that would justify the salary,” he said. But whether it is during the day or the middle of the night and a patient is in an automobile accident and is ejected into the front windshield or receives some other trauma, Spallina said ER doctors will call for a plastic surgeon.


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SPECIAL REPORT: HEALTH CARE

“When you have other (physicians or nonphysicians) coming into the space without the appropriate level of training, the risks to patients are substantially higher.”

LID

Paul Cederna, M.D., chief of plastic surgery at Michigan Medicine

R E M OV E M O L E

B OTOX S M I L E L I N E S

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sues. We encourage anyone who believes that business is incorporated unlawfully to file a complaint.” Charles Mok, D.O., founder of Allure Medical Spa in Beverly Hills, said he knows of many medical clinics owned by businesspeople that are in clear violation of the state’s corporate

practice of medicine laws. Mok completed his residency training in emergency medicine and runs one of the largest physician-owned cosmetic surgery practices in the state with five clinic locations and a sixth opening this fall in Beverly Hills.

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and busiest groups in the nation,” said Cederna, who also is the former president of the Michigan Academy of Plastic Surgery and currently on the board of the national society. Surgeries range from hands to pediatric craniofacial surgery out of Mott Children’s Hospital to microsurgery to reattach fingers or limbs and burn reconstruction. “We see the full breadth of plastic surgery in all areas,” he said. “One goal is to make sure we provide services that the local community needs from standard plastic surgery to the Beverly Hills facelifts.” But Cederna said the plastic surgery field is much more than cosmetic. “I do devastating limb injuries, some that require amputation. We treat the pain they have and the nerves that connect to neuroprosthetic devices,” Cederna said. Although UM has offered comprehensive gender services for 25 years, Cederna said recent societal acceptance of transgender-type opera-

tions, hormonal treatment and medical care has led to increased patient demand. “A lot more people are looking into it,” he said. “The (World Professional Association for Transgender Health) sets up the criteria for diagnosis for people considering gender affirming surgery. There is required age for certain operations.”

Arastic chiertients nadiatses. ries s in gest

Women still 92 percent of patients Over the past 17 years the number of procedures on men have increased by 115 percent, especially breast reduction and nasal reshaping, according to the American Society of Plastic Surgeons report on male procedures. The ASPS represents 94 percent of all U.S. board-certified plastic surgeons and more than eight thousand plastic surgeons worldwide. M. Azhar Ali, M.D., a plastic surgeon at Amae Medical Spa in Bloom-

Nurses are often employed at medical spas that are owned by nonphysicians and many work under the medical license of a physician who may not be present at the clinic, Mok said. Stefani said he often gets offers from businesspeople who own cosmetic clinics asking him to serve as their medical director. “We don’t have time for it. They sometimes hire retired doctors, but I don’t believe they can offer effective supervision of the practice. They aren’t there all the time like we are if there are questions about a procedure or problem,” Stefani said. At Spa Renaissance, Stefani said three trained nurse practitioners and a physician assistant perform various Botox injections and other minor cosmetic procedures, all with onsite physician supervision. “Many doctors do cosmetic and usually not bad,” he said. “They don’t do as many as we do. You develop an expertise over time.” Michigan laws are clear in that only physicians can own a medical practice and hire or contract with other doctors, Mok said. “Hiring a medical director cannot overwhelm that,” he said. “It is done because physicians are trained to treat people and know what it takes to maintain good quality care.” Mok said non-physician-owned clinics hire physicians as medical directors to write prescriptions for patients like for Botox. “When something terrible happens in our state, then the AG will look into it,” Mok said. But Stefani, Mok and Ali said unsupervised nonphysicians can sometimes run into trouble and patients end up desperately searching for help. “Each one of us gets three to four (patients) we have to clean up for folks that don’t do the procedure right,” Stefani said. Ali, Reddy and Komorowski also say they see several patients each month for botched procedures. For example, earlier this year a woman in Dearborn Heights responded to an advertisement for a Juvederm lip injection from a local spa, the European Tanning Club and Hair Design, according to WXYZ. The injection to enlarge her lips was less than half the price a typical plastic surgeon charges. No wonder; the woman’s lips were injected with silicone. Almost immediately, the

woman began having problems and soon had to have the silicone injection surgically removed. Crain’s withheld the name of the patient. Moon told Crain’s that the European Tanning Club investigation is still open. He said LARA may have received a few similar complaints, but the department doesn’t track complaints by that issue. Stefani, Ali and Komorowski said they feel bad for patients who had a poor outcome, but they will evaluate those patients and come up with a plan to fix their problem. “We used to use silicone, but we went away from it years ago because it is prone to contamination,” Stefani said. “There are much better fillers now where you don’t get bumpy lips or face.” Mok said his practice treats patients who have received botched procedures all the time. “We are the No. 1 injector of Botox in the Michigan. We get all the complications and take care of them at no charge,” Mok said. Mok, who said he limits his own practice to unusual cases, supervises a team of eight nurse practitioners and physician assistants, two general surgeons, a family physician, a vascular surgeon, a dermatologist and a plastic surgeon. Some fellow physicians have criticized Mok’s practice for the volume and outcomes of some procedures, but he says he is proud of the clinic’s patient quality and safety record. He said his practice is often criticized for its rapid growth, but he said many patients have given his practice good reviews. But Mok said he understands why some plastic surgeons feel like too many cosmetic and plastic surgery procedures are performed by other physician specialists. The bulk of work at Mok’s Allure spa is performed by advanced practice nurses and general surgeons, he said. “Parts of their business are being picked away from their specialty,” he said. “Physicians and surgeons are allowed to change our specialties. A radiologist can change into an emergency physician by taking boards or by going into urgent care.” For instance, Mok said general surgeons routinely conduct mastectomies. “Plastic surgery is to correct anomalies. Cosmetic surgery is to improve physical appearances. It is not a stretch for a general surgeon to do a breast lift. It happens all the time” at Allure, he said.

field Hills, said the number of men coming in his practice for a variety of procedures has increased, especially for certain job categories and age groups. In 2016, cosmetic procedures on women increased 1 percent to 14.2 million, but 3 percent for men to 1.3 million, said the ASPS. “There is increased competition in our lives, especially in the sales department. Some of the older men at times feel left out and threatened with younger people coming in. They worry about their jobs,” said Ali, who has staff privileges at several hospitals, including Beaumont Hospital Troy. Second, both men and women are concerned about the quality of their lives. “A 50-year-old is no longer an old age. People are more conscious with well-being, eating right, exercise and working out. They feel younger and want to look younger,” Ali said. While women receive more facelifts, more men are coming in for those procedures, Ali said.

For example, a 68-year-old physician Ali knows recently retired. He wanted a facelift. “He told me, ‘I jog and exercise. I feel so youthful, but when I look in the mirror it doesn’t reflect who I am. He underwent surgery and is extremely happy,” Ali said. Finally, Ali sees more men coming in for cosmetic procedures because new technology is reducing pain involved in the changes. “Men don’t tolerate pain very well. We have new procedures using cool sculpting. For love handles, we freeze the skin and can get 20 percent fat reduction in one procedure. No anesthesia. No pain. Men love this. They don’t have to take time off work,” Ali said. Patients increasingly come from all income levels and ranges, with more than 70 percent of patients reporting a household income between $30,000 and $60,000, said ASPS.

Beware of low prices It is usually a good idea to shop around for lower-priced medical procedures, but physicians warn quality and experience of the practitioner must be taken into account. And shopping for medical services is not the same as shopping for cars or refrigerators, plastic surgeons say. “Quality is very important. Because of high-deductible health plans, people are shopping around. I don’t give prices over the phone. I give a free consultation if they come in. My price is good for six months once they walk out the door,” Komorowski said. “I try to give them an education on my dime and hopefully they are convinced of my truthfulness. They may go to another person. That is fine,” he said. Komorowski said patients often come in with incomplete or misleading information they have found on the Internet. “Sometimes (patients play a game called) ‘Stump the Chump,’” Komorowski said. “I sit down with them and go over the pathology.” Stefani said too many people are using the Internet for price shopping cosmetic procedures and end up at nonmedical-oriented clinics with staff who lack the proper training and experience. “I know of a (woman) who went to Mexico to get her breasts done. She went there for the low price,” said Stefani, adding that the woman ended up with an infection and many medical problems that required additional medical procedures to fix. Komorowski said he often is asked to fix problems caused by patients who have traveled a distance to get a lower price. “But what if they get an infection? I am the one who sees them,” Komorowsky said. “I ask. ‘Who did this? Is it a general surgeon or a bariatric surgeon you went to for a lowball price?’ Insurance will cover it.” “We are seeing the same guys having the same issues,” Stefani said. “I don’t know how they survive.” Sometimes physicians and nonphysicians will take weekend or online courses and then call themselves experts, Komorowski said. “How can they take a weekend course and know how to do liposuctions or labiaplasties to remove lesions?” he asked. “It takes more than a weekend to learn how to do it.” Jay Greene: (313) 446-0325 Twitter: @jaybgreene Despite increases in certain procedures, Stefani said men seeking plastic surgery is still a relatively small part of a market dominated by women. “There may be a few more, but the number is still about 5 percent and pretty much the same stuff: Botox and filler, rhinoplasty, facelifts and breast reductions," Stefani said. Women have always been and always will be the plastic surgery customers, he said. Because of reality TV shows, Stefani said women in an increasing number are coming in for “fat grafting” to their buttocks. “People used to want to look like Twiggy (British model in the 1960s),” Stefani said. “Because of rappers and some actresses, the popular thing is to take the fat from hips, suction it down, and volumize it on the buttocks for a nice full buttocks.” Jay Greene: (313) 446-0325 Twitter: @jaybgreene


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CALENDAR THURSDAY, AUG. 17 Asian Pacific American Chamber of Commerce Symposium. 7:309:30 a.m. APACC. Peter Sorrentino, Comerica’s chief investment officer, talks about current economic trends with a focus on the changing nature of the U.S. global trade and its impact on currencies, commodities and productivity. Comerica Bank, Livonia. $10 members; $20 nonmembers. Contact: Leonie Teichman, phone: (248) 430-5855; email: leonie@apacc. net; website: apacc.net American Society of Employers Employment Law Workshop. 7:30 a.m.-3:30 p.m. ASE. Workshop will address employee relations. Attorney-led panels and specialized breakouts will review a number of everyday laws and regulations that impact the employer-employee relationship. Schoolcraft College VisTaTech Center. $159 members; $179 nonmembers. Contact: Wendy LoCicero, email: wlocicero@aseonline. org

UPCOMING EVENTS Filling the Supervisory Gap. 8:3010:30 a.m. Aug. 22. Michigan Manufacturing Technology Center. Event discusses effective leadership and bridging the gap between newer and seasoned workforces, senior and junior staff, and front office and plant floor associates. Free, but registration required. Michigan Manufacturing Technology Center, Plymouth. Contact: Gary Marley, email: gmarley@the-center.org Trends Impacting Automation Companies. 8:30-10:30 a.m. Aug. 23. Automation Alley. Info session to discuss Industry 4.0 trends, address systems integration challenges and offer solutions to issues impacting the current business climate. Speakers include: Tim Finerty and Sarah Russell, CPA shareholders, Clayton & McKervey. Automation Alley, Troy. Members free; nonmembers $20. Phone: (800) 427-5100; email: events@automationalley.com Executive Briefing: Cybersecurity and Third Party Providers. 8-9:30 a.m. Aug. 23. UHY LLP. Norman Comstock, managing director, and David Hartley, principal of UHY Advisors, will lead a discussion. Topics include: What are current trends regarding use of third party partners in technology? What due diligence should you consider when on-board-

ing a third party service provider? What security requirements should companies expect from a third party service provider? What control responsibilities remain with the company when contracting with a third party service provider? Free. UHY, Sterling Heights. Contact: Chris Clark, phone: (586) 843-2637; email: cclark@uhy-us.com. Navigating Security and Privacy in Next-Gen Mobility. 8:30-10:30 a.m. Aug. 30. University of Michigan-Dearborn. A panel of academic researchers at University of Michigan-Dearborn and industry leaders from Ford Motor Co. will discuss security and privacy challenges, solutions and recommendations in the next generation of mobility. Topics will include: an overview of the smart mobility trend, security risks and privacy implications in the next generation of mobility era and recent research advances in security and privacy protection. Speakers: Di Ma, associate professor of Computer and Information Science and founder of the Cybersecurity Center for Research, Education and Outreach, University of Michigan-Dearborn; Pramita Mitra, mobility research engineer, Ford Research and Innovation Center; Brahim Medjihed, associate professor of Computer and Information Science, University of Michigan-Dearborn. Automation Alley, Troy. Free members; $20 nonmembers. Phone: (800) 427-5100; email: events@automationalley.com September Economic Development Forum. 8-9:30 a.m. Sept. 13. Troy Chamber of Commerce. Speaker: David Johnson, vice president of Customer Service and Economic Development, DTE Energy, DTE Energy, on economic development initiatives. Rehmann, Troy. Free, Troy chamber members; $10 nonmembers. Contact: Jessica Hruska, phone: (248) 641-1606; email: jessica@troychamber.com; website: troychamber. com/events/september-2017-economic-development-forum/ Washtenaw Economic Club Luncheon. 11:30 a.m.-1:30 p.m. Sept. 14. Washtenaw Economic Club. What will the world look like in five years? Journalist and innovation speaker Leah Hunter draws on her research and background as a corporate innovation consultant for companies like Apple, Pepsi and Cisco. 4800 E. Huron River Drive, Ann Arbor $77.50 nonmember. Phone: (765) 677-5060; email: washtenaweconclub@

wccnet.edu; website: aweconclub.org

washten-

CEO Breakfast: Tony Michaels, President and CEO, The Parade Company. 8-9:30 a.m. Sept. 19. Troy Chamber of Commerce. A behindthe-scenes look at America’s Thanksgiving Parade. Hilton Garden Inn, Troy. $24 Troy chamber members; $34 nonmembers. Website: troychamber.com/events/ceo-breakfast-tony-michaels/

Les Gold

Seth Gold

Inside the CEO Mind. 8 a.m. Sept. 19. Detroit Regional Chamber. American Jewelry and Loan’s Leslie “Les” Gold and Seth Gold will share their perspectives as business owners and reality television stars. The Golds will discuss how their company separates itself from competitors. American Jewelry and Loan, Detroit. $30 members; $50 nonmembers. Contact: Marianne Alabastro, phone: (313) 596-0479; e-mail: malabast@detroitchamber. com; website: detroitchamber. com/events/ 2017 Entrepreneur and Small Business Conference: Pathways to Success. 8:30 a.m.-4:30 p.m. Sept. 22. South East Michigan Entrepreneurs Association. Speakers include: Ryan Mack, CNN Commentator, Irene Spanos, director of Economic Development and Community Affairs Oakland County, and Edward Foxworth, Foxworth Marketing Group. Event also includes panel discussions, breakout sessions, breakfast, lunch and networking opportunities. University of Phoenix Southfield Campus. $49 until Sept. 8; $59 after Sept. 8 until Sept. 20; $79 late/onsite registration. Email: administrator@semea.info; website: semea.org/ Top of Troy: Women of Influence. 8-9:30 a.m. Sept. 28. Troy Chamber of Commerce. Panel discussion with Joan Budden, president and CEO, Priority Health; Kendra Corman, managing director, H2H Consulting; Ruthanne Largent, chief informa-

tion officer, Horizon Global; Nancy Susick, president, Beaumont Hospital, Troy. Learn about the challenges they faced on their paths to success, the key tools they have used to Joan Budden remain focused along the way, the hard decisions they are faced with on a daily basis and how being a woman has affected the choices they made. MSU Management Education Center, Troy. $20 Troy chamber members, $35 nonmembers. Contact: Jessica Hruska, phone: (248) 641-1606; email: jessica@troychamber.com; website: troychamber.com/events/ top-troy-2017/ Informational Meeting for Women Entrepreneurs. 5:30-7 p.m. Sept. 28. Michigan Association of Female Entrepreneurs. Learn about the nonprofit’s current and future initiatives, entrepreneurship training and leadership development programs, business resources and support services. Free. Orion Township Public Library. Contact: Tonya McNeal-Weary, phone: (844) 4906233; email: info@mafedetroit.org; website: mafedetroit.org ASE Talent Acquisition Symposium. 7:30 a.m.-4:30 p.m. Sept. 28. American Society of Employers. ASE’s third annual symposium to discuss talent acquisition, management, and development practices. Participants will receive guidance on how to implement effective talent-related practices along with tools to use in the process. MSU Management Education Center, Troy. Price through Aug. 25: $179 ASE members; $219 nonmembers. After Aug. 25: $219 ASE members, $259 nonmembers. Contact: Dan VanSlambrook, phone: (248) 2238008; email; dvan@aseonline.org; website: https://www.aseonline. o r g / C o n f e r e n c e s - E v e n t s / Ta l ent-Symposium 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.

J JW Design LLC, Royal Oak, which offers architectural and interior design services, has been retained by the Wellbridge Group, Howell, for interior and exterior design of a 128-bed rehabilitation center in Grand Blanc. Website: jwdstudio. com.

EXPANSIONS J Hagopian Cleaning Services, Novi, a rug cleaning service company, opened a drop-off depot at 7073 Dixie Highway, Clarkston. Phone: (800) 424-6742. Website: originalhagopian. com.

J Athletico Physical Therapy, Oak Brook, Ill., a physical therapy franchise, has opened at 26571 Evergreen Road, Southfield. Phone: (248) 6394804. Website: athletico.com. J Dickey’s Barbecue Restaurants Inc., Dallas, Texas, has opened a Dickey’s Barbecue Pit franchise at 4761 South Baldwin Road, Lake Orion. Phone: (248) 499-8732. Website: dickeys.com. J Hubbell, Roth & Clark Inc., Bloomfield Hills, a civil engineering firm, opened an office in Jackson. Website: hrcengr.com. J

Motor City Industrial LLC, Hazel

Park, an industrial distributor of specialty fasteners, has opened a 6,000-square-foot distribution facility at 40 Engelwood Drive, Suite A, Lake Orion. Website: motorcityindustrial.com. J TPS Logistics, Troy, a third-party logistics management company, has launched Beauty Logistics, Troy, a subsidiary company to provide logistics expertise and operations to the luxury health and beauty industry. Websites: tpslogistics.com, beautylogistics.com.

NEW PRODUCTS J

Equature, Southfield, an interna-

United Wholesale Mortgage rolls out all-digital closing option By Kurt Nagl knagl@crain.com

United Wholesale Mortgage announced Wednesday that it is rolling out the nation’s first e-closing, allowing buyers to complete the full mortgage transaction digitally. The Troy-based mortgage company — a subsidiary of United Shore — is introducing the new service following the March launch of Blink, a digital loan portal allowing consumers and brokers to use mobile devices to start the loan application process, pull their credit score, verify assets, e-sign documents and track loan status. Notarizing documents was the only action preventing digital closing, as person-to-person contact was required, according to a company news release. Now, buyers can use the mobile Face Time app to coordinate with a notary remotely. “The days of being bombarded with reams of paper at the closing table are over,” said Mat Ishbia, president and CEO of United Shore. “Independent mortgage brokers will have an even stronger competitive advantage over retail competitors and large banks.” Each state has different legislation regarding notarizing of documents. The service is available to brokers in Illinois, Montana, Virginia and Washington. It can only be used to refinance mortgages that have no more than two buyers.

“The days of being bombarded with reams of paper at the closing table are over.” Mat Ishbia, United Shore

J OpTech LLC, Troy, an IT, engineering and health care talent management firm, has launched Bionic System Analytics, a workflow and process automation solution. Website: optechus.com.

The company anticipates the service becoming available in 15 more states in the near future, a company spokesman said. It will be expanded to both purchases and refinances, as well as multiple buyers, but there is not yet a timetable for that. United Wholesale Mortgage issued $23 billion in mortgage loans last year and is on pace to surpass $30 billion in 2017. It is the largest wholesale mortgage lender by volume in the U.S.” United Shore announced in July its intentions to move headquarters from Troy to Pontiac. The lender has purchased the 600,000-square-foot Hewlett Packard Enterprise building at 585 South Blvd. in Pontiac. United Shore will pay $40 million for the building and 60 acres of property and another $40 million on renovations. Construction on the new headquarters was expected to begin this month.

Deals & details guidelines. Email items to cdbdepartments@crain.com.

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

DEALS & DETAILS CONTRACTS

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tional technology company for public safety, has launched Interactive Policing, a software that allows bodyworn cameras to be turned on by police management or 911 dispatch for first responders. Website: equature. com.

NEW SERVICES


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How to keep a millennial with your company? It ain’t the pingpong table LANSING — They’re accused of being entitled. They’re constantly on their phones. They switch jobs too frequently. They’ve killed everything from golf to department stores to cable. Now millennials are disrupting American workplaces with their technological savvy and 21st-century value systems, which favor collaboration and work-life flexibility over hierarchy and a 9-to-5 work week. That’s not a bad thing. For all their bad press, millennials — the 20- to 30-somethings born roughly between 1980 and 2000, the generation that has now surpassed baby boomers in number — are the future of work. And companies have a retention problem. “It’s like with any generational change — you have to adjust and evolve to meet that generation’s needs and desires,” said Wendy Block, senior director of health policy, human resources and business advocacy for the Lansing-based Michigan Chamber of Commerce, herself a Gen Xer. “In a tight job market, it’s tough to get millennials to stay for the long term, and (companies are) having to take a look at how to incentivize them to stay,” Block said. “Their value system is slightly different than previous generations. They want a good work-andlife balance. They want a flexible work schedule and they really want to feel valued more than previous generations — meaning they want more openness with management, equality, a sense of purpose.” Businesses around Michigan seem to have an unquenchable demand to understand this mysterious species. The state chamber is in the middle of hosting a three-part webinar series on millennial psychology, from the impact of technology on their lives to the ways slang can impede intergenerational communication, to help human resources professionals and other managers learn ways to mentor, develop — and keep — their best young workers. Block says training programs

LINDSAY VANHULLE lvanhulle@crain.com

related to millennials are among the chamber’s most-requested courses. A Gallup report from 2016 estimated that millennial employees leaving their jobs sends a $30.5 billion annual shock to the U.S. economy in turnover costs. Here’s the question, though: Is the millennial generation gap really so much wider than past generations that it takes special training? Yes and no. On one hand, it paints the challenge with a broad brush. There isn’t a onesize-fits-all strategy, in part because the millennial generation (also called Generation Y) is simply too big. The oldest millennials are 37, perhaps married with kids and taking on management roles at work. The youngest are 17, barely old enough to remember a world without the iPhone. Recent college graduates entering the workforce view the world much differently than someone who took his or her first job in the mid- to late-2000s. (Full disclosure: I’m a millennial, born in the early to mid-1980s solidly after the Generation X window closed but before tech was mainstream. My first cellphone had an antenna. I’ll be forever grateful to have graduated from high school before social media was invented. I’ve never used Snapchat. I love the flexibility of working remotely, yet often find coworking spaces distracting. I was hired for my first reporting job mere months before the start of the Great Recession. I don’t expect it’s realistic to assume someone my age will put in 30 years at one company.) One thing never changes: People in

every generation eventually will have to interact with people younger than them, and young people will have new ideas about how to do things. (Remember when Gen Xers were supposedly a bunch of slackers?) But the 24/7 flood of information at millennials’ fingertips, and the technological advances that enabled it, seemingly accelerated the chasm between young and old, said Jay Johnson, a 35-year-old board member of the Michigan Junior Chamber and a partner at Livonia-based Coeus Creative Group LLC, which provides training programs related to — you guessed it — the generation gap. It’s also hard to overstate the impact of the late 2000s recession on how millennial employees perceive work today. Older millennials who graduated from college before or during the recession entered a job market at a time of mass layoffs and buyouts, frozen wages and shredded retirement plans. Some college grads, staring down five or six figures of student loan debt, couldn’t find jobs in their chosen fields or took jobs that didn’t require a degree, perpetuating the image of the barista with a bachelor’s degree. Younger millennials might have experienced their baby boomer parents, who are more likely than their children to have made their careers with a single company, being laid off. “Here’s one of the common things that’s always asked: ‘It feels like the millennial generation has no loyalty,’” Johnson said. He thinks that’s less because millennials lack a sense of loyalty, and more because they lived through an economy that made it difficult for companies to be loyal to their employees. “All of that has a psychological impact on the up-and-coming workforce that saw their parents lose some of those benefits that they were promised,” he said. “They come into the workforce with a little bit of skepticism.” The Michigan chamber’s webinar series bills itself as a tool to break down

those perceived differences. A session this week will explore how the meaning of particular phrases could be misinterpreted — like what millennials hear when boomers and Gen Xers say, “You have to earn it,” and what the older generations hear when millennials say, “The struggle is real,” or “I can’t even.” Even using the phrase “managing millennials” could be problematic for the negative connotation it implies — that there’s a problem in the workplace that needs to be managed or controlled, Johnson says, adding: What would it suggest if the word “millennials” was replaced with “women” or some other subgroup? What millennials want are collaboration and mentoring, he said. “There’s a fundamental difference between managing somebody and mentoring them,” Johnson said, adding that employers should ask themselves whether the goal is to make the life of the manager easier or about fostering better cooperation and results for the organization. “That simple twist of language really ... makes it appear much more neutral, that it’s a dialogue about understanding those differences.” He believes the companies that best encourage collaboration are the ones best poised to take advantage of millennial employees’ ideas. That comes back to employers knowing their employees well enough to understand what types of things — benefits packages, work culture, flexibility, mentorship and professional development opportunities, the ability to contribute their knowledge of social media, being given challenging work — they could offer to help millennials stay and grow with their company, said Block, of the Michigan chamber. “It isn’t the pingpong table in the break room, necessarily. It’s about helping people find that balance,” she said. “If an employer isn’t meeting the millennials’ job culture requirements, they’re going to have a harder time with retention.”

ADVERTISING SECTION To place your listing or for more information, please call Lynn Calcaterra at (313) 446-6086 or email lcalcaterra@crain.com

www.crainsdetroit.com/onthemove

INSURANCE Daniel J. Kaufman Senior Vice President, Corporate Growth

H.W. Kaufman Financial Group H.W. Kaufman Financial Group, Michigan’s largest insurance company, announced that Daniel J. Kaufman will assume a broader leadership role as Senior Vice President, Corporate Growth at company headquarters in Farmington Hills. In this role, Daniel will lead the sales and marketing function and work closely with the IT team on corporate growth and development initiatives. Additionally, he will collaborate with the human resources function to create industry-leading employee engagement programs.

HEALTH CARE

CONSULTING

Terry Kowalenko

Steve Arwood

President of the American Board of Emergency Medicine

CEO

Beaumont Health Terry Kowalenko, M.D., was elected President of the American Board of Emergency Medicine. He is Professor of Emergency Medicine at the Oakland University William Beaumont School of Medicine and Chairman of Emergency Medicine at Beaumont Hospitals in Royal Oak, Troy and Grosse Pointe. Dr. Kowalenko graduated from the University of Chicago Pritzker School of Medicine and completed a residency in Emergency Medicine at the University of Cincinnati Medical Center.

Miller Canfield Consulting LLC Steve Arwood is the CEO of Miller Canfield Consulting, a subsidiary of the global law firm Miller Canfield. He assists clients in navigating the complex process of identifying and securing incentives, financing and other opportunities for public-private partnerships. Formerly the CEO of the Michigan Economic Development Corporation and director of the Michigan Department of Licensing and Regulatory Affairs, Arwood has more than 30 years of private- and public-sector experience.

KNOW SOMEONE ON THE MOVE? For more information or questions regarding advertising in this section, please call Lynn Calcaterra at (313) 446-6086 or email: lcalcaterra@crain.com

SPOTLIGHT

AxleTech International appoints CFO AxleTech International has appointed Jonathan Ball as its chief financial officer. Ball, 56, began last week in his new role with the Troybased supplier of vehicle drive train systems and components. He has previously run Jonathan Ball his own consulting firm, Spherical Consulting, and was also CFO of Key Plastics LLC. Ball replaced Bakhus Isaac, who will “work closely with (Ball) to drive execution of AxleTech’s growth initiative,” company spokeswoman Cynthia Norris said.

Palace Sports promotes Metzger The Detroit Pistons and Palace Sports & Entertainment promoted Charlie Metzger to a newly created job: chief revenue and marketing officer. He had been executive vice president and chief marketing officer. The Charlie Metzger job change is effective immediately. Metzger, 53, will lead sales and marketing operations across the company and report to Vice Chairman Arn Tellem, according to a news release. Metzger joined the company in 2012. He takes on the new role about a month before the Pistons’ new downtown Detroit home, Little Caesars Arena, is set to officially open.

Children’s Fund names executive director The Detroit Children’s Fund has named Jack Elsey, chief schools officer for the Education Achievement Authority of Michigan, as its first executive director. With Elsey at the helm, the new fund plans in the coming months to fiJack Elsey nalize its strategy to ensure Detroit youth have learning and developmental opportunities, inside and outside the classroom. The fund also plans to announce its first grants this fall, said Natalie Fotias, communications officer for the Skillman Foundation, which is supporting the fund during its formation. Elsey, 35, brings 13 years of public education experience to the new role. He succeeds Skillman education program director Punita Thurman, who served as interim executive director.


SD BUSINESS C R A I N ’ S D E T R O ICTRAIN B ’U SETROIT INES S // A U G U S T 1 4 , 2 0 1 7

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August 14, 2017 15

Ballmer Group opening a Detroit office for its foundation By Sherri Welch swelch@crain.com

Former Microsoft CEO Steve Ballmer and his wife Connie are opening a Detroit office for their charitable foundation, the Ballmer Group. The news was announced in a job posting for an executive director with strong Detroit roots and networks across the public, private and social services sectors. The move comes less than a year after the pair said they plan to donate large amounts of their now $32.3 billion fortune to help eradicate intergenerational poverty in Detroit.

GLICK FROM PAGE 3

Glick stepped down as chief scientific officer at Lycera to co-found IFM in 2015. Lycera was founded in 2006 and also focused on immunotherapy, which seeks to cure diseases by manipulating the body’s own immune system to fight cancer and other conditions. In 2009, it stunned the local investment community when, at the bottom of the recession, it raised a venture capital round of $36 million, one of the largest in state history at the time, which included funding from Ann Arbor-based EDF Ventures; Menlo Park, Calif.-based InterWest Partners LLC; Chicago-based ARCH Venture Partners; and Boston-based Clarus Ventures LLC. Lycera’s deal with Cranbury, N.J.based Celgene Corp., which included an option for Celgene to eventually buy the company. Celgene paid Lycera $82.5 million for an exclusive option to license Lycera compounds, with the potential of another $22.5 million in licensing milestones. Crain’s reporter Dustin Walsh chatted with Glick via phone from London, where he is meeting with investors and researchers. Did you know you were going to hit a home run with IFM?

Yes and no. I did think based on the assets we were developing and the preclinical data that there would be significant interest. I sort of knew what the comparable (deals) were for these assets, but I clearly didn’t know the exact numbers. I had no real idea going in how valuable this was. We were very fortunate that the quality of the data and the marketplace is where it is today. Were you surprised to be able to keep IFM in your hands and continue your work?

(Bristol-Meyers) was very flexible. We were able to craft a deal, that just gives them the first foundational program (for two immunotherapy drugs). When the deal closes, they will be in the hands of BMS to advance or not. We’ll obviously do anything they ask as a good partner, but it’s contractually theirs. Moving forward they have right to first refusal and opportunity to provide additional funding to new programs and we have other projects that are unencumbered by any partner. So, really, we have the opportunity to start over as a company. That’s exciting. You’ve amassed a self-described dream team of researchers and academics. Is it the lucrative nature

The position “is a newly created role reflecting Ballmer Group’s commitment to alleviating intergenerational poverty in a city where the Ballmer family has deep roots,” the Steve Ballmer: foundation said Attended Homecoming 2016. in the posting. Among other responsibilities, the new leader will be charged with developing and

“I know how to talk to academics and understand how to recruit them. I can speak their language, and that’s very, very important.” Gary Glick of this business that enables you to attract them to IFM?

The lucrative part has nothing to do with it. Drug discovery is the hardest (research) profession on the planet to succeed at. Perhaps in the backs of their minds, they know it could be lucrative, but it’s the challenge of the work. Plus, I know how to talk to academics and understand how to recruit them. I can speak their language, and that’s very, very important. Most academics don’t have any ideas about the business world — they have no exposure to it. Having good VC backing also helps. Quality begets quality, so when you are able to recruit a few A players, other A players follow. I am by no means at the top of the food chain for brain power in this company, but I do know how to enable them to do what they do. Will the new company be funded by any of the $300 million from Bristol-Myers?

None of that goes into the new company. It’s being distributed to investors. The new company is being recapitalized by the option fees. That’s the clever part of this deal, in terms of building shareholder value. The company had a full sale, so there’s no dilution of shares. Plus our investors are committed to put in new capital and, as you can imagine, our phones have been ringing with offers since the news hit the press. I am happy, because our investors are happy. We’re seeing more and more biotech investment. Is the industry hitting a new pace for drug discovery?

The reason why I think it’s receiving so much attention is that it has the potential to lead to a revolutionary step forward in cancer treatment. This is the first time I’ve worked in cancer. It’s kind of special. When you talk to others in the field, they say they can’t work in any other therapeutic area because you always feel one step away from a major advancement. We’re hoping our work provides a path forward. I’ve very hopeful and I think a lot of others in this field are, too, and that’s why we’re seeing so much research.

managing a multi-million dollar budget for Detroit grants, initiatives and partnerships, reporting to the foundation’s managing director and the Ballmers. The Bellevue, Wash.-based foundation supports organizations and programs aimed at helping U.S. children and families rise out of poverty and build a better life.

REAL ESTATE DOWNTOWN ROCHESTER

fall while in Detroit for the 2016 Homecoming event. Among other strategies, the Ballmer Group said it is making unrestricted, long-term grants over five to 10 years to support national and regional organizations with demonstrated impact in improving economic mobility for children and families.

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It makes grants and seeks collaborations aimed at scaling the country’s most effective interventions, accelerating place-based neighborhood interventions and improving the efficacy and efficiency of public systems and programs that support low-income communities, approaches the Ballmers discussed with Crain’s Publisher and Editor Ron Fournier last

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Notice is hereby given of a public UCC foreclosure sale of a 50% membership interest in North American Commerce Center, LLC, a Michigan limited liability company ("NACC"). The membership interest being sold is owned by Provisions, LLC ("Debtor") and is being conducted by Sakthi Real Estate Holdings, Inc. ("Secured Party"). NACC owns the real property commonly known as 6701 W. Fort, Detroit, MI 48209 (formerly the Southwest High School) which consists of an approximately 696,364 square foot building on about 9.2 acres of land. The public sale will be held on August 22, 2017 at 9:00 a.m. at the offices of Honigman Miller Schwartz and Cohn LLP, 2290 First National Building, 660 Woodward Avenue, Detroit, Michigan 48226. The membership interest will be sold to the highest qualified bidder and settlement of the purchase price must be in cash, certified check or wire transfer. To be "qualified" to bid, a party must demonstrate its financial ability to close immediately following the conclusion of the sale and must be reasonably satisfactory to the other 50% member of NACC. Secured Party may reject any bids from purchasers who are not qualified. Interested purchasers are encouraged to qualify in advance by contacting Secured Party’s counsel. Secured Party reserves the right to credit bid at the sale. All inquiries regarding the sale, including how to qualify as a bidder or to schedule an inspection of the real estate owned by NACC, should be directed to Secured Party’s counsel, Donald F. Baty, Jr., Esq., Honigman Miller Schwartz and Cohn LLP, 2290 First National Building, 660 Woodward Avenue, Detroit, Michigan 48226, (313) 465-7314.

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DUGGAN

Duggan’s financing Detroit Mayor Mike Duggan has raised money for his re-election from a variety of sources over the past nine months, including west Michigan business luminaries who typically support Republicans.

FROM PAGE 1

Duggan sailed to victory in last Tuesday’s primary, capturing 67 percent of the vote as Young finished a distant second with 26 percent. Campaign records show the single fundraiser at Byington Potter’s home generated $17,620 for Duggan’s re-election bid — about 80 percent of the $22,275 that Young raised for his entire campaign between February and late July. Among those in attendance to meet and greet Duggan were former state health director Jim Haveman, grocery store magnate Hank Meijer and Meijer Inc. Vice Chairman Mark Murray, according to the host. “I think they see what he’s doing for the city of Detroit and they’re very enthusiastic about what that means for the state of Michigan,” said Byington Potter, who paid for the $3,372.50 catering bill as her in-kind donation to Duggan’s campaign. Duggan also has received donations this year from other titans of west Michigan’s business community who are considered members of the Republican Party’s donor class: Grand Rapids businessmen Mark Meijer and Peter Secchia, former Perrigo Co. Chairman Mike Jandernoa, Amway Chairman Steve Van Andel and Amway President Doug DeVos. “If I had a big city Republican candidate for mayor, I might have contributed to him,” said Secchia, a retired forest industry executive. “But this is the best they’ve got to offer.” Secchia said Duggan has met with him in Grand Rapids to study how Michigan’s second-largest city was revitalized over the past 30 years. “He seemed genuinely interested in helping Detroit capture the same magic that Grand Rapids had,” Secchia said. “The people over on the west side of the state truly do watch what goes on on the east side of the state,” said Byington Potter, who was a top aide in former Mayor Dennis Archer’s administration. “It’s very important to the state of Michigan and how people do business.” Duggan’s campaign donations are emblematic of a mayor who has engendered deep support from corporate interests for his initiatives making Detroit appear friendlier businesses and economic development. The cash from business titans also has allowed Duggan’s opponent to paint him as a tool of corporate interests. “I'm unbought and unbossed. We’re going to continue that message,” Young said in an interview before the Aug. 8 primary. “And I think the people want someone that’s going to stand up for them ... who’s not going to be restrained by special interests and a Wall Street agenda — and that’s what my opponent represents.”

Other fundraisers Between late October 2016 and late July, Duggan’s campaign held 26 fundraisers, 14 of which were in Detroit and seven in the suburbs. The mayor was quick to boast about the out-of-town fundraisers when asked about them Thursday following an event kicking off a citywide effort to board-up abandoned houses. “I’ve had a couple of big fundraisers in New York,” Duggan told reporters. “It’s remarkable that people across the state and across the country believe in Detroit and are supporting our comeback, and I’m proud to have their support.” Duggan’s fundraisers outside of Southeast Michigan have included a reception with former Detroiters at Shino-

Blue Cross Blue Shield PAC and employees

$116,198

Daniel Loepp, CEO, Blue Cross Blue Shield of Michigan

$6,800

DTE Energy PAC and employees

$47,000

Honigman Miller Schwartz & Cohn PAC and employees

Malik Ikram Ul-Haq, owner of EZ Parking

$6,800

$36,000

Miller Canfield PAC and employees

John Stroh, The Stroh Companies Inc.

$6,800

$31,300

Quicken Loans and family of companies employees

Eugene Gargaro, vice president of Masco Corp.

$6,000

$31,004

Michigan Regional Council of Carpenters

Michael McGee, CEO of Miller Canfield

$5,900

$20,000

Ronald Rodorgio, owner of Engineered Comfort Solutions in Taylor $5,000

JP Morgan Chase employees

$18,019

General Motors employees

$12,788

James Forrest, chairman of Shore Capital Partners

$5,000

$9,500

Rich Baird, top aide to Gov. Rick Snyder

$4,000

Detroit Regional Chamber PAC

$5,000

Jay Farner, CEO of Quicken Loans Inc.

$3,400

Comerica Inc. PAC

$6,000

UAW PAC

$5,000

Martha Ford, owner of the Detroit Lions

$3,400

Red and Blue PAC (Clark Hill PLC law firm)

Ex-Gov. Jim Blanchard

$3,400

$4,000

Detroit Police Lieutenants & Sergeants

Mark Murray, vice chairman of Meijer Inc.

$2,500

$1,000

Edsel Ford II, board member, Ford Motor Co.

Hank Meijer, CEO and co-chairman of Meijer Inc.

$1,000

$6,800

Doug DeVos, president of Amway

Dickinson Wright employees

$500

Source: Mike Duggan for Detroit campaign committee records

la’s flagship store in Manhattan and a gathering of donors at the Grand Hotel’s Stroh Cottage on the picturesque western bluffs of Mackinac Island overlooking the Straits of Mackinac. The Mackinac Island fundraiser was held June 1 during the Detroit Regional Chamber’s policy conference, according to a copy of the mayor’s schedule obtained by Crain's through a Freedom of Information Act request. Ken Hayward, executive vice president of the Grand Hotel, covered the $4,301 cost of food, beverages and renting the Stroh Cottage as an inkind donation to Duggan’s campaign, a spokesman said. Four of Duggan’s Detroit fundraisers were held at the downtown offices of some of the city’s largest law firms: Dickinson Wright PLLC, Honigman Miller Schwartz & Cohn LLP, Clark Hill PLC and Plunkett Cooney P.C. At the June 29 fundraiser Honigman attorneys held for Duggan, the law firm’s political action committee picked up a $1,765 catering bill as an in-kind donation, records show. Dickinson Wright attorneys covered the cost of food and beverages for a July 11 fundraiser for Duggan differently. Records show 112 attorneys at Dickinson Wright split a $3,267 catering bill in increments ranging from $18.41 to $86.75.

Blues donations A Crain’s analysis of Duggan’s $1.6 million in campaign donations since late October shows just 3.3 percent came from individuals with Detroit residential addresses. Detroit-based organizations and business political action committees contributed an additional 6.5 percent of Duggan’s haul, the analysis shows. Campaign donations from outside of the city limits are not unusual. Previous Detroit mayors have relied heavily in the past on suburban donors. Arthur “Bud” Liebler, owner of The Whitney, said his landmark Midtown restaurant in the historic David Whitney mansion has seen a 25 percent year-to-date growth in sales.

“I’ve never seen anything like this,” Liebler said of the city’s economic activity under Duggan. Liebler, who resides in Bloomfield Hills, donated $2,000 to Duggan’s re-election campaign, and The Whitney hosted a fundraiser for Duggan in March that generated $107,000 in donations. The strength of Duggan’s support from the business community is underscored in donations from employees at Blue Cross Blue Shield of Michigan, which has a downtown workforce of 5,500 employees. Employees at the Detroit-based health insurer have donated twice as much money to Duggan’s re-election campaign as all Detroiters combined, a Crain’s analysis shows. Individual Blue Cross employees and the insurer’s employee-run political action committee donated a combined $116,198 to Duggan’s re-election campaign over the past nine months. That amounts to Duggan’s biggest contribution from a single company. Detroit residents gave the firstterm mayor about $53,845 during that period, according to a Crain’s analysis of Duggan’s July campaign finance report. Campaign finance records show 142 Blue Cross employees contributed $63,198 directly to Duggan’s campaign, with most of the donations being made in March — the same month Blue Cross CEO Daniel Loepp made an unusual pitch for donations to Duggan’s campaign during a company managers meeting. There were no Blue Cross employees among Young’s donors, 63.5 percent of whom live in the city, records show. “Our employees responded very positively to the mayor’s vision and message,” said Helen Stojic, Blue Cross Blue Shield director of corporate affairs. “And our employees are free to support whichever candidate they prefer with their personal financial contributions. Or they can choose not to participate in politics.” Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

BEAUMONT FROM PAGE 1

Fox said in a previous interview with Crain’s that he is looking for a new corporate headquarters location. During that interview, he declined to specificy an area, but said it could be multiple locations. “I don’t want to increase real estate speculation” and drive up costs, Fox said. At that time, it was clear he wanted the new single-location headquarters building close to one of Beaumont’s eight hospitals, which are in Grosse Pointe, Dearborn, Taylor, Royal Oak, Trenton, Farmington Hills, Wayne and Troy. Revealed in the RFP are details the eight-hospital system has declined to publicly disclose, including a 2018 time frame for a potential consolidation of its employees from multiple locations throughout Southeast Michigan and planned capital expenditures. “With eight hospitals, 5,000 physicians and 35,000 employees from three different founding organization [sic] the owner is reorganizing all the administrative non-campus specific staff into a single location,” the RFP reads. “The vision of Beaumont Health senior leadership is to offer an open, collaborative, supportive and flexible space that provides a healthy work environment to their staff.”

Adell property But perhaps the oddest aspect of Beaumont’s effort is a claim by a millionaire broadcasting entrepreneur that Crain’s has not been able to independently verify. Over the course of an eight-hour period Aug. 7, Word Network owner Kevin Adell told Crain’s that Beaumont wanted to build a new corporate headquarters on property he owns in Novi. He also provided a transcript of text messages he said he received from a Beaumont broker he says prove as much. Later in the day, Adell sent Crain’s a copy of a letter to the broker threatening to sue him for backing out of a deal. Adell said in interviews last week that Beaumont planned to buy 19 acres of vacant land he owns to build a corporate headquarters in Novi at I-96 and Novi Road. A spokesman said in an email that Adell “has sold 19 acres in Novi for $19 million to a major, major local business.” Carolyn Wilson, Beaumont’s COO, said in a statement last week only that it “is looking at multiple sites in western Oakland County.” But, “to date, no offers have been made on any properties.” Adell said Randy Thomas, the president and CEO of Commerce Township-based Insite Commercial who does some brokerage work for the hospital system, approached him about buying the 19 acres of his 23acre property for $19 million. However, an Adell spokesman later that day provided Crain’s a letter from Adell’s attorney, Michael Alan Schwartz of Schwartz PLLC in Farmington Hills, that was sent to Thomas threatening legal action and saying that “your client has backed out of the purchase.” “As evidence that your client was actually desirous of purchasing the property, not only did you indicate that the principals of your client were going on a site inspection of the property, but further that they were satisfied with the price, of one million dollars per acre, that you were asking,” the letter dated Aug. 7 letter reads. Thomas confirmed to Crain’s that

he received the letter but declined further comment. He is also listing close to 200 acres of Beaumont-owned land for sale in Commerce Township (34.6 acres), Independence Township (63 acres) and Canton Township (97.3 acres). It’s not the first time Adell has made claims about tenants or users for the former Novi Expo Center property. In 2013, when he held a press conference there, he said the Cleveland Clinic was interested in the site. The clinic’s director of communications at the time, Angie Kiska, however, said there were no plans for a Novi location.

Employees scattered Beaumont Health, which in 2014 merged with Oakwood Healthcare and Botsford Hospital, has corporate employees scattered throughout the region at multiple properties, including the five-tower Southfield Town Center. It’s not known how many offices it has nor how many square feet it leases from landlords. Beaumont declined to provide that information. The First Center Office Plaza is currently owned by Iron Point Partners LLC, according to CoStar Group Inc., a Washington, D.C.-based real estate information service. Iron Point paid $66 million for the 640,000-square-foot, four-building property in October 2007, according to CoStar. It is managed and leased to tenants by Bingham Farms-based Core Partners LLC, which declined comment. A message left late last month with Gene McQuown, an Iron Point executive, was not returned. Earlier this year, it underwent a multimillion-dollar renovation that brought new water features, furniture, flooring, LED lights and plants to the 34-year-old property. According to a second-quarter market report from the Southfield office of Newmark Knight Frank, the 17.2 million-square-foot Southfield office market is 23.6 percent vacant with an average asking rent of $21.31 per square foot for Class A space and average asking rent of $18.42.

Merger pays off The merger has paid off for Beaumont, which is still working to integrate the three systems. For the fiscal year 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 years to be more than $134 million. 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 past three years, Beaumont has spent an average of $218 million each year in capital projects, doubling the average annual capital expenditures of five of the six other competing health systems in Southeast Michigan. Detroit Medical Center has spent an average of $170 million per year, but that is based on a purchase agreement to spend $850 million over five years by its current owner Tenet Healthcare Corp. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB


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Court decision could clarify what makes a nonprofit charitable By Sherri Welch

Assessing a nonprofit as charitable

A recent Michigan Supreme Court decision could be good news for some of the growing number of charitable nonprofits facing property tax bills across the state. The court case, on which the court ruled earlier this summer, hinged on what defines a nonprofit as “charitable,” and thus exempt from taxes. Cities and townships are scrutinizing property tax exemptions more closely than ever as they face pressure on municipal revenue. Local tax assessors — and the Michigan Tax Tribunal and Michigan Court of Appeals in upholding assessments — have misinterpreted the factor that prevents charitable organizations from discriminating in who can receive their services, according to a June 28 Supreme Court opinion in Baruch SLS Inc. v. Tittabawassee Township. Municipalities and the lower courts, on several occasions, have interpreted the fees some nonprofits charge and qualifications they place on who can benefit from their charity as “discriminatory.” But none of the factors laid out in the 2006 case to qualify an organization as charitable were designed to require it to offer services for free or to select recipients using arbitrary criteria such as first-come, first-serve, the court said in its June 28 opinion. In fact, one of the six factors specifi-

A 2006 Michigan Supreme Court case, Wexford Medical Group v. City of Cadillac, laid out six criteria for assessing a nonprofit as charitable. Those criteria, which are relied on by municipalities in determining property tax exemptions, are:

swelch@crain.com

GLEANERS FROM PAGE 3

By extension, in the area of health care, Gleaners believes feeding the hungry can also help reduce hospital stays and admissions and improve chronic disease treatment. The costs associated with providing food are much lower than those associated with providing health care, Brisson said. If someone needs a low-sodium, high produce diet but the only place they can shop is a nearby gas station, that may impede their ability to get healthy again, he said. “We know how to get food to people. If we partner with (health care) around these issues … we can help them drive their costs down to the patients who need it, who are sort of Gleaners’ consumers.” A pilot in development with Henry Ford could prove that. “We already know the benefits of healthy eating but access to enough food — and the right nutrition — continues to be a challenge for so many people,” said Susan Hawkins, senior vice president, population health for Henry Ford. “We believe a program like this has the potential to make a significant impact on our patients’ health and healing, and having a partner like Gleaners for this program is an ideal fit.” Henry Ford plans to launch the pilot program at several ambulatory centers beginning sometime this fall, Hawkins said. Patients who meet certain criteria will be offered an “emergency kit” of nonperishable food right at the medical center and will receive additional food shipments over the next six months. The program will be backed by an approved study in partnership with Henry Ford’s Public Health Sciences department. The study will examine things like the average readmission

1.) A “charitable institution” must be a nonprofit. 2.) It must be organized chiefly, if not solely, for charity. 3.) It does not offer its charity on a discriminatory basis by choosing who, among the group it purports to serve, deserves the services. Rather, it serves any person who needs the charity it offers. The Supreme Court clarified that any reasonable restriction that is implemented to further a charitable goal as stated in factor four, below, is acceptable. 4.) It brings people’s minds or hearts under the influence of education or religion, relieves people’s bodies from disease, suffering, or constraint, assists people to establish themselves for life, erects or maintains public buildings or works or otherwise lessens the burdens of government. 5.) It can charge for its services as long as the charges are not more than what is needed for its successful maintenance. 6.) It doesn’t need to meet any monetary threshold of charity to merit the charitable institution exemption. If the overall nature of the institution is charitable, it is a “charitable institution” regardless of how much money it devotes to charitable activities in a particular year.

cally allows a charitable institution to charge an amount necessary to remain financially stable. The interpretation employed by the lower courts requires charitable institutions to operate at a loss, the Supreme Court said. Requiring them to provide their services for free, “without regard for their ability to do so, is unrealistic and unsustainable.” On the matter of qualifying who can receive its services or charity, the court noted that if a nonprofit can’t serve everyone who would benefit

from the service, “as most cannot,” it would have to select its beneficiaries in some manner. Any reasonable restriction to further a charitable goal that meets the permissible charitable purposes laid out in the original Wexford decision is acceptable, the court said. The decision has been seven years coming for Baruch, a faith-based nonprofit that operates 23 assisted-living, independent-living and memory-care facilities for seniors across the state. Baruch, a 501(c)3 charity nonprofit,

rate, frequency of emergency department use, and certain biomarkers like blood pressure and body mass index, she said. “We are actively pursuing a funding source within our own health system and hope to finalize that within the next few weeks,” Hawkins said. The program builds on another initiative Henry Ford has participated in since 2013 to get more healthy food to patients, the Fresh Prescription Program. As part of this program, Henry Ford dietitians meet with patients referred by their primary care doctors, give them a prescription to “eat more fruits and vegetables,” and help them set healthy eating goals. Patients “fill” their prescriptions at a participating farm stand or market and also receive nutrition counseling, cooking demonstrations and other educational support focused on healthy eating changes. That program’s partners include Eastern Market Corp., Detroit Food Policy Council, Community Health and Social Services Center Inc., Covenant Community Care, Mercy Primary Care Center and others.

at below-market costs. The food bank would then make the food available to DTE or Consumers’ customers at very low costs, saving them money each month. The precise distribution method — whether home delivery or established pick-up locations — is still being worked out. Gleaners purchased about a quarter of the 39 million pounds of food it distributed to local pantries and other hunger-relief agencies at deeply discounted rates, Brisson said. The business integration strategies would take that concept to the next level, he said, while also capitalizing on Gleaners’ distribution strengths.

Helping customers While the health care model Gleaners is developing would offer food at no charge to low-income patients, models in development with utility companies would provide low-cost food to the companies’ customers, Brisson said. The first tradeoff some people make when they are short money is to skip paying for utilities to buy food. DTE Energy Co. is already investing in programs to help low-income people pay their bills, Brisson said. If the company were to help subsidize the purchase of low-cost, healthy food for consumers, they may be able to pay their bills each month and avoid going into debt, he said. A contribution from the company would fund Gleaners’ purchase of food

“What we’re doing that is different is we want to draw the business case.” Gerry Brisson

“We’re not trying to replace the supermarket ... (but) if we can source food (like potatoes and green beans) cheaper than what our partners can buy it, we can certainly source cheaper than what consumers can buy.” In the same way, companies employing low-wage earners struggling to make ends meet could subsidize the cost of food provided by Gleaners and offer it as a benefit to their employees. “If you start with 300-400 people and watch what happens and start to see them succeed, maybe we can (prove) if we take hunger off the table, that’s all they need ... they’ll actually get to the next point,” Brisson said. The pilots will need to be at least six months in duration in order to see the impact of taking hunger out of the equation for people. Funding for the programs would likely range from $50,000 to a couple hundred thousand dollars, which would feed thousands of people, Brisson said. And the business investments in the pilots will be just

sought tax exemption for 2010-2012 for its Stone Crest Assisted Living facility in Tittabawassee Township in 2010. It has appeals in 14 other municipalities before the Michigan Tax Tribunal currently. While Baruch’s admission decisions are not based on an applicant’s ability to pay, its target occupants, the elderly and disabled, all qualify for social security and therefore, have some ability to pay. Baruch has never admitted a resident who did not have some ability to pay, but it has never discharged anyone for nonpayment, according to the court filings. It offers income-based subsidies for residents who have made at least 24 monthly payments. But Baruch said in court proceedings that it has provided the subsidies to residents before that point, and it has allowed more than 40 percent of its beds, above its 25-percent threshold, to go to residents living there on subsidized rates. Tittabawassee Township denied Baruch’s request for exemption, finding it did not meet its burden of proof to demonstrate that it is charitable, and the Michigan Tax Tribunal upheld that. So Baruch took its case to the Court of Appeals, which reversed part of the tribunal’s decision but ruled that Baruch was not entitled to the exemption because its entrance policy discriminated against the group it served by admitting only individuals who could afford to pay.

The Supreme Court vacated the lower court opinions on Baruch’s tax liability and sent the case back to the Tax Tribunal to be reheard. A hearing is scheduled for Sept. 19 to see if Baruch meets the criteria for the discrimination test and is exempt, after all, from the property taxes, said Terry Zabel, an attorney with Rhoades McKee P.C. in Grand Rapids, representing it in the property tax litigation. “We are very hopeful the (Tax Tribunal) will rule in Baruch’s favor,” he said. Baruch’s tribunal appeals of assessments in 14 other municipalities have been on hold pending the outcome of the Supreme Court case. Other nonprofits facing similar challenges need to look at whether they fit the revised criteria, Zabel said. Organizations challenging Tax Tribunal decisions have 21 days to file with the Court of Appeals, and that time frame has already lapsed in most of the nonprofit cases heard by the tribunal, said Jeannie Vogel, public information officer for the Michigan Department of Licensing and Regulatory Affairs, in an email. Such cases could be filed for current tax years only and would not result in retroactive decisions, she said. And cases that were previously resolved before the Tax Tribunal are final and will not be reopened. The State Tax Commission expects to release guidance on the new criteria later this year.

that — an investment. Tax deductions aren’t a consideration when a business is getting something in return. The new strategies will complement Gleaners’ charitable role of providing food to 534 area food pantries, soup kitchens, shelters and other nonprofits to feed the hungry in Wayne, Oakland, Macomb, Livingston and Monroe counties. The food bank, which is operating on a cash budget of about $20 million this year, is on track to distribute 42 million pounds of food this year, Brisson said.

Best managed nonprofit nominations due Sept. 8

A new model Food banks are moving away from pounds per year as being the primary metric of success and beginning to focus on the economic benefit feeding the hungry can bring to the household and the community, Gleaners Chief Development Officer Ryan Hoyle said. Some food banks in other cities are working with health systems to screen for food insecurity and to use that to advocate for SNAP increases, Brisson said. Other food banks such as one in Boston have long worked with health care to supply food. A Boston Medical Group facility, for example, is home to a longtime food pantry, he said. “What we’re doing that is different is we want to draw the business case,” Brisson said. The San Antonio Food Bank and Houston Food Bank are working with health care and utility providers in their communities, but their approaches are different, said Zuani Villarreal, director of communication at Feeding America. “... It looks like what Gleaners is trying to do is something new.” Sherri Welch: 313 (446-1694) Twitter: @SherriWelch

Crain’s Best Managed Nonprofit Contest this year will focus on how nonprofits are responding to shifting government and foundation funding priorities and the threat of government cuts. Examples could include, but are not limited to moves made to diversify your organization’s revenue base or advocacy efforts. Applications are due Sept. 8. Finalists will be interviewed by judges the morning of Nov. 1. Applicants for the award must be a 501(c)(3) with headquarters in Wayne, Washtenaw, Oakland, Macomb or Livingston counties. Applications must include an entry form, a copy of the organization’s code of ethics, a copy of its most recent audited financial statement and a copy of its most recent IRS 990 form. First-place winners within the past 10 years are not eligible; neither are hospitals, HMOs, medical clinics, business and professional organizations, schools, churches or foundations. The winners will be profiled in the Dec. 4 issue, receive a “best-managed” logo from Crain’s for use in promotional material and will be recognized at Crain’s Newsmaker of the Year luncheon early next year. To submit a nomination, go to CrainsDetroit.com/nominate. For information about the contest, email Senior Reporter Sherri Welch at swelch@crain.com or call (313) 446-1694.


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FOXCONN FROM PAGE 3

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The two were photographed together, and Gou told Chinese newspapers that Foxconn planned to cooperate with Michigan on new automotive technology, including self-driving vehicles. Gou told reporters “the Michigan investment will be unveiled soon.” Days later, a Foxconn spokesperson released a statement that tried to downplay Gou’s comments, saying that Michigan remains under consideration for a possible future investment. Snyder earlier released his own statement confirming his meeting with Gou, but noting he wasn’t ready to announce details of any potential project. The bottom line: All indications are something is happening with Foxconn in Michigan. The storyline sounds like a company leader who said more in public than he was supposed to, and a company trying to contain any damage. If Wisconsin’s incentive deal stalls with lawmakers, is Michigan back in the game?

Michigan may have never left the game. Foxconn reportedly was considering multiple investments in the U.S. aside from the project that the company decided to land in Wisconsin. If Foxconn is looking at opening a research facility in Michigan to capitalize on the state’s automotive talent and emerging mobility sector, then the states weren’t competing for the same project to begin with. Michigan, though, reportedly was under consideration for the manufacturing complex that went to Wisconsin. Both states have a strong manufacturing base that historically has tended to offer good wages to people who don’t have four-year college degrees, even as the industry requires more technical aptitude and education, said Timothy Bartik, a senior economist with the W.E. Upjohn Institute for Employment Research in Kalamazoo. “I would certainly think that if for some reason the Foxconn deal falls through in Wisconsin that Michigan might be discussed,” Bartik said. “I don’t think Michigan would offer the same (incentive) package, though I don’t necessarily think Wisconsin needed to offer this package to get Foxconn.” What about the corporate lures Michigan does have? If it will take a quarter-century for Wisconsin to recoup tax incentives given out to Foxconn, when would Michigan break even on the Good Jobs for Michigan income tax incentive Snyder recently signed into law? What are the incentive’s pros and cons?

A lot of the answers aren’t yet known. The Michigan Economic Development Corp., which will administer the incentives, is researching the new law as it develops guidelines for how the program will be managed. An MEDC spokesman has said details on such things as how wages would be used to calculate the amount of a company’s incentives award would be disclosed once the Michigan Strategic Fund board signs off on the guidelines. Under the law, a company could qualify for “good jobs” incentives if they create hundreds or thousands of jobs and pay at least the average wage in the region in which they do business.

CHAI HUA/CHINADAILY.COM.CN

Foxconn Chairman Terry Gou (left) and Michigan Gov. Rick Snyder after the governor toured Foxconn’s factory in the Chinese city of Shenzhen recently.

The nonpartisan House Fiscal Agency, in an analysis of the three-bill package, did not determine a breakeven date for Michigan’s incentive. It is capped at $200 million and scheduled to sunset in 2019, so no new deals could be made after that date unless legislators vote to reauthorize the program, though businesses that receive incentives under the program would be eligible to capture some or all of their income tax withholdings for five or 10 years. It’s unknown how large a company’s incentive award could be, particularly those that create at least 3,000 jobs and are allowed to capture all of their income tax withholdings for a decade. House fiscal analysts wrote that there would be no direct loss of state income tax revenue if the new jobs would not have been added otherwise, though they noted it is “technically impossible to determine” whether that would really be the case. If the jobs would have been added anyway, they wrote, Michigan would see a net loss of income tax revenue, though they couldn’t say how much. Good Jobs First, a nonprofit policy resource center that promotes transparency in economic development incentives, calls incentives like the one Snyder recently signed into law “paying taxes to the boss.” The incentives vary, but generally allow employers to keep income tax withhold-

“Anybody who thinks that they can predict where a high-tech product life cycle is going to be 25 years from now and still break even on a tax break, I’ve got a bridge I’d like to sell you. It’s a transfer of wealth from Wisconsin taxpayers to Foxconn shareholders.” Greg LeRoy, Good Jobs First’s executive director

ings without having to send them to the state, while other states reimburse employers for the income taxes paid, according to a 2012 paper. Sixteen states had some type of this incentive as of 2012, losing close to $700 million annually to the incentives, said Greg LeRoy, Good Jobs First’s executive director, adding that Michigan is the first state to enact one since then. “We think that’s a very problematic structure,” LeRoy said, in that income taxes withheld from employees’ paychecks ultimately are returned to the company, rather than helping to pay for state public services. Also problematic is trying to predict the economic and financial trajectory of an industry based on rapidly advancing technology, he said. The incentive might never break even if Foxconn loses ground to a competing company or technology. “Anybody who thinks that they can predict where a high-tech product life cycle is going to be 25 years from now and still break even on a tax break, I’ve got a bridge I’d like to sell you,” LeRoy said. “It’s a transfer of wealth from Wisconsin taxpayers to Foxconn shareholders.” A coalition of economic development agencies and municipal leaders, called Good Jobs for Michigan, was intentional and deliberate in pursuing this income tax withholding tool, said Sara Wurfel, a spokeswoman for the coalition. It is not designed to be the biggest incentive among the states, she said. Instead, it is meant to help Michigan make the short list for site selectors and companies looking to relocate or expand after taking into account its overall business climate. “If the job doesn’t come, the incentive isn’t paid. If the wages aren’t met, the incentive isn’t paid,” Wurfel said. “So it would have those safeguards built into it.” Will Michigan get a better deal than Wisconsin if Foxconn does land an R&D operation here?

Possibly. Michigan’s available incentive is worth far less than the $3 billion Wisconsin proposed, and Michigan faces budget constraints that would make it difficult to come up with $3 billion for economic development even if it wanted to.

A research facility could potentially draw higher-skilled, higher-paid positions than a manufacturing plant. And Michigan’s auto industry provides a ready talent base. From Foxconn’s perspective, an R&D facility will require a high-level talent pool, LeRoy said. Michigan may be at or near the top of a short list for such a facility because it can offer something Foxconn needs — a concentration of engineers, particularly related to the auto industry. “You have something that must be part of the deal,” he said. “The question is, how stingy can you be playing a smart game of poker because you know you’ve got the basics?” Even if Michigan’s incentives deal were better than what Wisconsin put on the table, LeRoy added: “We still dislike it.” Wisconsin economic development leaders have said Foxconn’s jobs in the state will pay an average of $53,875. The incentive on the table would work out to be close to $15,385 per worker annually over a 15-year period, which is more than the national annual average of $2,457 per job, according to Upjohn research. At that rate, the per-worker subsidy would equal close to 30 percent of wages. “They’re paying out quite a bit more than they are in Michigan,” Bartik said. “Since I think it’s plausible that the multiplier effects will be higher (for a research facility) and possibly the wage premium is higher, the answer is yes, it’s a better deal. On the other hand, Wisconsin may not be the poster child for good deals.” What would be a better approach?

LeRoy, with Good Jobs First, says states should avoid the proverbial eggs-in-one-basket approach and consider alternative incentives, such as subsidizing job training programs or investing in infrastructure that could make a state more attractive to business in general. Bartik prefers job training incentives over tax giveaways to companies, as well as programs that help small and midsize businesses improve their competitiveness, diversify their markets or access the latest industry research. He also would shorten incentives so they don’t stretch over 10 or 15 — or more — years.


C R A I N ’ S D E T R O I T B U S I N E S S // A U G U S T 1 4 , 2 0 1 7

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THE WEEK ON THE WEB

RUMBLINGS

Low housing inventory drives up sale prices, pace

Quicken Loans state PAC has gone dormant

AUGUST 4 - 10 | For more, visit crainsdetroit.com

Q

M

etro Detroit remains a seller’s market as a lack of available for-sale housing is driving up sales prices and making for quicker purchases; sales of existing homes and condominiums in the four-county region fell by 1.6 percent year-over-year between July 2016 and last month. According to a report released Thursday by Farmington Hills-based Realcomp Ltd. II, sales of existing homes and condominiums in the four-county region fell by 1.6 percent year-over-year between July 2016 and last month. There were 5,542 sales last month compared to 5,630 in July 2016. During the same time period, median sale prices climbed 5.7 percent from $175,000 to $185,000 and on-market listings fell 33.9 percent year-over-year from 19,220 to 12,695, according to Realcomp. Homes also continue to sell at a rapid pace, taking an average of just 27 days last month, a 25 percent drop from the 36-day average it took in July 2016, according to Realcomp. In July, sale prices rose 8.2 percent amid a 37.2 percent drop in available inventory. Metro Detroit’s housing market mimics a nationwide trend of falling housing supply and rising median sale prices, Realcomp said. According to data from the National Association of Realtors for June, the most recent month available, home sales in the Midwest rose 2.7 percent year-over-year from 149,000 to 153,000 and average sale prices rose from $231,000 in June 2016 to $243,800, a 5.5 percent bump. Regional data was not available for the Midwest on housing inventory, but it has fallen 7.1 percent yearover-year from 2.11 million to 1.96 million, according to the NAR.

BUSINESS NEWS J Food and beverage packaging manufacturer Dart Container Corp. plans to invest $40 million in a new technical and innovation center in a project that is expected to create at least 136 new jobs in the Lansing region. J Construction is underway on Manchester, a $38 million, 172-unit luxury apartment community in Novi on 19 acres. J Adient USA LLC plans to begin closing a seat assembly plant in Auburn Hills in October, in a move that will affect 129 employees. J Little Caesars is testing out a novel service aimed at streamlining its Hot-N-Ready pizza pickup process at a Troy location at 2993 E. Big Beaver Road and 14 stores in the Tucson, Ariz., market. J Kindred Hospital, a long-term care hospital in Detroit, will close and lay off about 145 workers over a 14-day period starting Sept. 30, according to a filing with the state Workforce Development Office. J Tucker, Ga.-based YP LLC will lay off 108 employees by Sept. 29 as it plans to close two facilities in Madison Heights as part of a “companywide reduction in force,” according

COSTAR GROUP INC.

Up to 160 Applebee’s and IHOP restaurants could be closing around the country, but the Applebee’s-IHOP restaurant in Detroit is safe. The hybrid eatery is set to open in the downtown Millender Center in March, said Amy Mason, spokeswoman for DineEquity Inc., which is the parent company of Applebee’s and IHOP.

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

50 percent

The enrollment decline Marygrove College in Detroit saw between 2013 and 2016, leading it to decide to close its undergraduate program next year.

300

The number of employees Spanish auto supplier Grupo Antolin plans to hire by the end of the year for its subsidiary's Shelby Township expansion. The supplier has signed a deal with Shelby Township-based Express Employment Professionals.

$33 million The amount for which the Wilshire Plaza office complex in Troy sold to a New York City-based real estate company, Group RMC Corp.

to a notice filed with the state. J Jolly Pumpkin Royal Oak opened last week in the city’s downtown area as part of a collaboration with the owners of Bastone Brewery. J Midland-based Dow Chemical Co. and Wilmington, Del.-based DuPont Co. have received all the regulatory approvals needed to close their historic merger, Bloomberg reported. The deal will be completed Aug. 31. J A group of developers plans to construct a $25 million mixed-use building in Royal Oak at the corner of Main and Sixth streets as demand

for downtown office space swells. J General Motors Co.’s Maven Gig, which lets drivers rent cars by the week and use them for ride-hailing and other app-based services, is coming to Detroit in October and will include its most popular rental, the Chevrolet Bolt EV.

uicken Loans Inc.’s state political action committee has gone dormant for reasons Detroit’s largest private employer doesn’t want to fully explain. State records show the Quicken Loans PAC hasn’t made a donation to a candidate for office since September 2013, during the last election for Detroit mayor and City Council. Last May, the company’s PAC issued $238,000 in refunds to 30 individuals, most of whom appear to be executives at Quicken Loans or other companies owned by Quicken founder and Chairman Dan Gilbert. The refunds included $25,000 to Quicken Loans Vice Chairman Bill Emerson, $15,000 to CEO Jay Farner and $7,000 refunded to Bruce Schwartz, the “Detroit Relocation Ambassador” for Bedrock Detroit and colorful tour guide of Gilbert’s downtown real estate empire. “The PAC’s inactivity, and its return of funds to contributors several years back, was due to a shift in political giving strategy on the local and statewide fronts,” Aaron Emerson, senior vice president of communications at Quicken Loans, said in an email to Crain’s. “We determined that a PAC was not the most ideal platform for our evolving political support strategies.” But as of July 20, there was $308,861 still in the Quicken Loans PAC’s bank account, according to a quarterly report filed with the Secretary of State’s office. It’s a sizable amount of cash for a

corporate PAC — more money than DTE Energy and Blue Cross Blue Shield of Michigan had combined in their PAC accounts last month. Quicken’s spokesman declined to reveal the mortgage giant’s new strategy for state and local political donations or whether the PAC will be disbanded. “We don’t feel it’s appropriate to comment on our internal strategies related to the methods of our political contributions,” Emerson said in an email. “Any political contributions that are connected in any way to Quicken Loans or its executives are publicly disclosed as the law requires.” While Quicken’s state and local campaign contributions have dried up, the company’s federal political action committee continues to write checks to both parties. For the first six months of this year, the Quicken Loans Inc. federal PAC doled out $232,000 to congressional committees and other federal PACs, including the Michigan Republican Party. The Quicken Loans PAC has donated this year to the re-election campaigns of Michigan Republicans Reps. Tim Walberg, Mike Bishop and Bill Huizenga and Michigan Democratic Reps. Dan Kildee and Brenda Lawrence, as well as U.S. Sen. Gary Peters. The committee has raised $151,000 this year, mostly from Quicken employees or their spouses, federal campaign finance records show.

OTHER NEWS J A group of Detroiters took a photo that they believe better represents the city’s racial diversity than a controversial one put up by Bedrock Detroit a couple of weeks ago on a downtown building it owns. J A report by the Chicago-based Woodstock Institute found that businesses in low-income census areas make up about 10 percent of businesses in the region as a whole, but receive just 5 percent of smaller-value loans. J Detroit Metropolitan Airport advised travelers to arrive extra early for flights, as the campus in Romulus closed additional lanes and shifted traffic last week as part of its ongoing $16 million road and sign improvement project. J Detroit Institute of Arts Director Salvador Salort-Pons was scheduled to become a U.S. citizen in a public celebration and ceremony at Rivera Court last Friday. J The Startup Angels Workshop is scheduled for Oct. 4-5 in Detroit, hosted by Washington, D.C.-based Startup Angels Inc. and Techstars Mobility. It will offer lessons on best practices for investing in startups, portfolio diversification and more. J Eight design firms from places as far as Spain participated in public interviews last week in Detroit in a bid to win a design competition for West Riverfront Park.

CRAIN’S DETROIT BUSINESS

In his free time Garden Fresh Founder Jack Aronson can be found on the softball field.

Aronson keeps his love of softball in play

I

f he isn’t in the kitchen working on new recipes, mentoring a local food startup or working to strengthen literacy at local schools, chances are you’ll find Garden Fresh Founder Jack Aronson on the softball field. Aronson, who’s played ball his whole life, joined the Sterling Heightsbased Line Drive Sportz Senior Softball USA team several years ago. He was on the team when it beat the Jacksonville, Fla.-based Hollis

Appraisals. And when his team disbanded a few years back, the Florida team asked him to join its ranks. Earlier this month, Aronson was in North Carolina to play a tournament. In a few weeks he’ll head to Colorado for another and to Las Vegas in September to help his team hang onto the world championship they won last fall. “It’s 50-and-older, senior stuff,” Aronson said. “But they’re great.”



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