Crain's Detroit Business, Aug. 27, 2018 issue by Crain's Detroit Business

Duggan opens up new front in no-fault fight Page 3

AUGUST 27 - SEPTEMBER 2, 2018 | crainsdetroit.com WORKFORCE

Minimum-wage push could change way restaurants do business By Dustin Walsh dwalsh@crain.com

and Chad Livengood clivengood@crain.com

Michigan voters, or the Republican-led Legislature, could drastically change Southeast Michigan’s booming restaurant industry. Last week, the Michigan Court of Appeals ordered that an initiative to raise the state’s minimum wage to Need $12 be placed on the November ballot, reto know jecting the restaurant industry’s challenges  Lawmakers to petition signatures and how the measure is could adopt written. An appeal was pending with the minimum wage, state Supreme Court as of Friday. paid sick time Michigan’s current hourly minimum proposals after wage is $9.25 and, starting in 2019, Labor Day would increase annually with inflation unless the unemployment rate is high.  Legislature Under the proposal, the wage would rise to faces deadline to adopt proposals or $10 in 2019, $10.65 in 2020, $11.35 in 2021 and $12 in 2022, with yearly inflationary adlet voters decide justments afterward.  Restaurant The kicker for restaurants: The minimum owners say wage wage for tipped employees would gradually hike would hurt increase from the current $3.52 until reachtheir businesses ing the minimum wage for all other workers in 2024. While against the party’s palate, Michigan Republicans are mulling a plan to act on the proposal before the November election in an effort to keep some Democrat voters from turning out.

As the minimum wage debate is putting Democrats and Republicans in Lansing on the same side of the issue, albeit for very different reasons, Michigan workers are seeing wages rise. But rising costs on everything from rent to energy are cutting away at those gains, leaving some in the region worse off with a larger paycheck.

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Wage growth in larger Southeast Michigan — including Genesee, Lapeer, Washtenaw, Livingston, Monroe, St. Clair, Macomb, Oakland and Wayne counties — is outpacing the national average of 2.9 percent, according to recent data published by the U.S. Bureau of Labor Statistics. The region reported wage growth of 3.4 percent not seasonally adjusted between June 2017 and June 2018,

Vol. 34 No. 34 $5 a copy. $169 a year.

Olympia hiring binge may signal strategy shift kpinho@crain.com

to find the right talent to meet their business demands. But it’s not all tied to employer competition. The region’s particularly catastrophic decline during the Great Recession is resulting in a “rising from the bottom” phenomenon where wages were so low, the return to more normal wages seems like a win, according to economists.

The Ilitch family’s Olympia Development of Michigan is hiring, attempting to poach talent from other real estate companies in the region. This comes in the two months following the company quietly bringing into the fray a former Walt Disney Co. executive to oversee the family’s District Detroit project as its senior vice president of operations and development. Keith Bradford had been vice president of the reNeed branded and exto know p a n d e d Downtown Dis Former Disney ney, where his exec brought on LinkedIn profile board to oversee says he added District Detroit more than a dozproject en restaurants  Little Caesars and 70 retail loArena complete, cations as the enbut residential, tertainment and retail District theme park jugprojects struggle gernaut broadened the area to  Olympia has allow not only lost key development partners this Disney-related but also year third-party retail and restaurants. He comes to Detroit, 1,200 miles to the north, following what a source said was the departure of Baltimore-based Cordish Cos., the national developer and arena district specialist, from its work on The District Detroit earlier this year. Cordish had been working with Olympia since at least 2016 on the effort, although there had been tension between the two companies in recent months, another source said. An email seeking comment was sent to the Baltimore-based firm last week. Two sources said Bradford, who was not made available for an interview with Crain’s last week, started in June.

SEE WAGES, PAGE 22

SEE OLYMPIA, PAGE 24

Republicans who control the House and Senate could keep the minimum wage increase and guaranteed paid sick time off the ballot if they act on Sept. 5 or 6, when they are in session following a 12week summer recess. There’s a soft deadline of Sept. 7 for the Michigan Legislature to take action on the ballot measure before it goes to print for November’s election. Similar moves have happened in the past. In 2014, GOP lawmakers adopted a voter-initiated minimum wage increase in an effort to keep such a proposal off the ballot when Republican Gov. Rick Snyder was up for re-election. If lawmakers adopted the minimum wage proposal, they could then immediately amend the law with a simple majority and Snyder’s signature. SEE OWNERS, PAGE 22

Michigan workers’ wages rise, but so do costs dwalsh@crain.com

DEVELOPMENT

By Kirk Pinho

GETTY IMAGES/ITSTOCKPHOTO

By Dustin Walsh

Blue Cross makes deal with Express Scripts Page 4

better than metropolitan Chicago, Boston, Dallas, Houston, Los Angeles, Miami, Minneapolis, New York and Philadelphia. Only metro Phoenix, San Jose, Calif., Seattle and Washington, D.C., ranked higher in wage growth over the same time period. The labor market is finally tight enough and jobs are plentiful enough that companies are forced to pay more 2018 // A U G U S T 2 7 , OIT BUSINESS CRAIN’S DETR

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Ouch: The business of back surgery << Inside the operating room for spinal fusion with traveling surgeon. Page 10

monitors A row of four digital imaging of the surgery that gives live video views field during back surgery.

SURGERY BUSINESS OF BACK Health insurers look

JAY GREENE/CRAIN’S DETROIT

BUSINESS

en City Hospital, Neurosurgeon rounds at Gard n surgery fusio a firsthand look at spinal By Jay Greene jgreene@crain.com

JagannaNeurosurgeon Jayant rounds sevthan conducts morning patients at eral times a week on his with Amy TitGarden City Hospital r who tle, a surgical nurse practitione surgeries. assists with patients and He different. was time this But who had was with a Crain’s reporter of docpermission to take notes s and later tor-patient interaction spinal fusion that day witnessed a a school French, Angela on surgery with her librarian who traveled the Michigan husband, Dave, from painful back Thumb to have her

for ways to cut costs with back surgery By Jay Greene jgreene@crain.com

most overBack surgery is one of the as well as the used types of surgery that sends pamost common ailment rs and tients to doctors, chiropracto$90 bilthan physical therapists. More low-back pain lion a year is spent on alone. AmeriOn any given day, 31 million and it is pain, cans experience low-back worldthe leading cause of disability BurGlobal wide, according to the 2017 pain also is den of Disease study. Back reasons for one of the most common

known as back surgery failure rate, as high as 50 failed back syndrome, is experts say percent. But most spine have successone-third of patients will will have no ful outcomes, one-third be worse off. change and one-third will has cut Since 2007, Priority Health by requirdown on back surgery costs ency ing patients who have non-emerg n rehabilitatio surgery to consult with a treatment doctor, or physiatrist, about said John Fox, options before surgery, director. M.D., Priority’s medical spine proDuring the first year of the reducmillion $8 an had gram, Priority fell 24 pertion in costs. Surgery costs

Insurers try to rein in costs. Page 10

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MICHIGAN BRIEFS

INSIDE

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

Michigan health director faces manslaughter trial in Flint water case A judge on Monday ordered Michigan’s health director to stand trial for involuntary manslaughter in two deaths linked to Legionnaires’ disease in the Flint area, the highest-ranking official to face criminal charges as a result of the city’s tainted water scandal. Nick Lyon is accused of failing to issue a timely alert about the outbreak. District Judge David Goggins said deaths likely could have been prevented if the outbreak had been publicly known. He said keeping the public in the dark was “corrupt.” Goggins found probable cause for a trial in Genesee County court, a legal standard that isn’t as high as beyond a reasonable doubt. Lyon also faces a charge of misconduct in office. “It’s a long way from over,” Lyon told The Associated Press. Some experts have blamed Legionnaires’ on Flint’s water, which wasn’t properly treated when it was drawn from the Flint River in 2014 and 2015. Legionella bacteria can emerge through misting and cooling systems, triggering a severe form of pneumonia, especially in people with weak-

ened immune systems. At least 90 cases of Legionnaires' occurred in Genesee County, including 12 deaths. More than half of the people had a common thread: They spent time at McLaren Hospital, which was on the Flint water system.

Michigan State names president search panel

Michigan State University trustees have appointed 19 members to a committee seeking the school’s next president. The selections were announced Wednesday. The committee will have 10 men and nine women — including various representatives for students, faculty, the board of trustees and others. Linda Hubbard, president and CEO of Dearborn-based Carhartt Inc., is among the search committee members. A co-chairwoman of the presidential search committee, Trustee Dianne Byrum, said the panel is “inclusive, diverse and representative of the broader MSU stakeholders.” After Lou Anna Simon resigned in January amid fallout from the Larry Nassar sexual abuse scandal, Michigan State named former Gov. John Engler as interim president. The board of trustees plans to announce a new president no later than June 2019.

GRETCHEN WHITMER VIA TWITTER

Democratic gubernatorial candidate Gretchten Whitmer (right) introduces her running mate choice, Garlin Gilchrist II (left), on Monday in Lansing..

And on Thursday, Former Michigan State gymnastics coach Kathie Klages was charged with lying to police amid an investigation into the school’s handling of sexual abuse complaints against former sports doctor Larry Nassar. If convicted of the felony and misdemeanor counts, Klages could face up to four years in prison.

53 projects to compete in Knight Arts Challenge

Fifty-three projects will vie for a share of $3 million in the latest

round of the Detroit Knight Arts Challenge, the John S. and James L. Knight Foundation announced Thursday. The finalists propose a range of projects that tell unique Detroit stories, bring the city’s history and culture to the stage and use the power of the arts to bring people together. Project proposals include the Piet Oudolf Garden on Belle Isle, an artist residency program, a theatrical musical event and one focused on the impact of the construction of I-375. “Whether artists want to build on

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the city’s legacy in jazz and techno, or bring high-quality art to city parks, their creativity is spreading throughout the city in ways we could never have imagined,” Victoria Rogers, vice president for arts at Knight Foundation, said in a news release.

Whitmer picks Gilchrist to be running mate

Gretchen Whitmer on Monday introduced Garlin Gilchrist II as her running mate, turning to a fresh face in the Democratic Party to bolster her candidacy for governor and departing from the decades-old practice of the lieutenant governor position going to an elected official. Gilchrist, who narrowly lost a race for Detroit city clerk last year, is a 35-year-old Detroiter who returned to the city in 2014 to work for Mayor Mike Duggan’s administration as director of innovation and emerging technology.

Our network is as strong as this city We’re proud to give our members access to more doctors and facilities than ever before. With 97% of Michigan providers and nearly one million health care providers nationwide, we’ve got you covered.

priorityhealth.com/strongbusiness

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AUTO INSURANCE

SPORTS BUSINESS

Duggan opens new front in no-fault fight By Chad Livengood clivengood@crain.com

The Pistons Gaming Team during a game against Bucks Gaming during Day 3 of the NBA 2K — The Ticket tournament at the NBA 2K Studio in New York in July. MICHELLE FARSI/NBAE VIA GETTY IMAGES

ROOKIE-YEAR SUCCESS PistonsGT gaming team, after playoff berth, aims to measure ad impact By Bill Shea

Need to know

The Pistons Gaming Team — the professional esports video game squad sibling of the Detroit Pistons — accomplished in its inaugural season what its NBA counterpart has struggled to do: Make the playoffs. PistonsGT finished the NBA 2K League regular season with a 9-5 record, good for the third seed in the eight-team playoff tournament. Detroit lost 85-67 in the first round to one of the eventual finalist teams, the Miami Heat’s Heat Check Gaming, on Aug. 17. PistonsGT, which also saw a player

first season

bshea@crain.com

JJPistons Gaming Team makes playoffs in JJFinished the NBA 2K League regular

season with a 9-5 record

JJData helps set ad rates in offseason

get MVP consideration and its coach named NBA 2K League coach of the year, now joins the regular Pistons in spending the offseason on business matters — specifically, setting advertising rate cards. Both teams are using an audience analytics service from The Nielsen

Co. to determine prices for their digital advertising inventory in a bid to more efficiently generate revenue. For PistonsGT, that amounts to figuring out the value of ads inside the virtual basketball arena, such as logos on the pixelated hardwood court, on the bench seats, and anywhere else ad inventory is available. The ads are seen by audiences watching the team’s NBA 2K games on Twitch, the live streaming video platform that Amazon.com bought for $970 million in 2014. For the real-world Pistons, the software will help determine advertising prices for any inventory that

can be seen inside Little Caesars Arena online during games. The data also will reflect ads viewed on non-game digital content from both teams, such as social media posts and a behind-the-scenes online video series about player lives. Neither organization will disclose financial data, so it’s unclear how much additional revenue could be generated. The world of digital ads in video games, virtual and physical, also is a new space, and there’s much to be learned for both the teams and advertisers on what’s effective and what it’s worth.

Henry Ford Health System is planning at least two other new outpatient medical centers in Bloomfield Hills and Macomb County and two expanded medical centers in Royal Oak and Downriver to further build out its 28-center network in metro Detroit, health system officials say. Looking to provide care closer to patients in a less costly and more convenient way than hospitals can, six-hospital Henry Ford also wants to stay ahead of its competitors, which include health systems like Detroit Medical Center, Beaumont Health and Ascension Health in Southeast Michigan, but also a growing number of physician and corporate-owned

Need to know

JJHenry Ford Health to add two more

ambulatory care medical centers to network, signaling further growth in outpatient care

JJDetroit Medical Center, Beaumont Health and Ascension Michigan also moving more into care delivered to patients in more convenient, less expensive settings JJMedical technology and telemedicine allowing providers to care for patients closer to home

outpatient centers. As medical technology improves and payers reward doctors and hospitals for outpatient care, health sys-

tems and providers are spending millions of dollars on urgent care and larger multi-specialty ambulatory medical centers. A new study found that hospital emergency department visits were 30 percent lower in communities with access to walk-in, no-appointment medical services at urgent-care or ambulatory care centers compared with communities without those services. Also, the cost of care for the same conditions or illnesses in hospital ERs are about 10 times as much as in urgent care, according the Urgent Care Association of America. “We recently went through a refresh of strategic plan and reaffirmed that we have geographic gaps and capacity issues in ambulatory and clin-

J Mayor Mike Duggan’s no-fault lawsuit opens new front in auto insurance reform fight J Lawsuit blames medical costs for Michigan’s high auto insurance premiums J Trial attorneys contend he's ignoring the rate-setting practices of insurers

ical areas in multiple markets,” said Bob Riney, Henry Ford’s president and COO. “We have a multi-year plan to address this.” Henry Ford’s outpatient cenBob Riney: A multi-year plan to ter strategy includes 28 mediaddress gaps. cal centers in Southeast Michigan that offer a range of services provided by Henry Ford’s 1,200-physician employed medical group. It also offers more than 60 clinical office locations. SEE CLOSER, PAGE 21

SEE LAWSUIT, PAGE 25

SEE PISTONSGT, PAGE 24

Henry Ford, DMC aim to get closer to patients jgreene@crain.com

Need to know

For years, the Legislature has been in a constant impasse over reforming the auto no-fault system, as insurance companies have pushed for wholesale changes and hospitals, medical providers and personal injury attorneys with a vested interest in the multibillion-dollar industry have been fighting to preserve the system. “I no longer have any faith in Lansing to do the right thing,” Duggan said last week after he and eight metro Detroit motorists sued the state insurance commissioner in U.S. District Court. Duggan’s lawsuit seeks to test a 1978 Michigan Supreme Court ruling known as the Shavers decision that said compulsory auto insurance has to be available to motorists at “fair and equitable rates.” The lawsuit alleges auto insurance premiums in Detroit and many surrounding suburbs have “become unconstitutionally unaffordable.” “It is a very interesting play," said Vince Colella, a personal injury lawyer with the Southfield firm Moss & Colella PC. “I wouldn’t go as far as saying it’s a political ploy. But it does feel like a little bit of an act of desperation on the part of the mayor.” Four decades after the Shavers decision, Duggan is trying to upend an auto insurance law that now accounts for one-in-three lawsuits in Michigan’s circuit courts, where personal injury attorneys use lawsuits as a conduit to collect up to one-third of medical benefits for injured drivers shelled out by insurers.

HEALTH CARE

By Jay Greene

Detroit Mayor Mike Duggan’s lawsuit seeking to have Michigan’s no-fault auto insurance law declared unconstitutional opens up a new front in his quest to get substantial changes made to a law that has produced America’s highest auto insurance premiums. After hitting legislative resistance, Duggan is attempting to make an end run around the Capitol and get a federal judge to toss out the 45-year-old nofault law, which would revert Michigan to a tort state where injured drivers have to go to court to get their medical bills paid. And some on both sides of the debate think the lawsuit just might have a shot at succeeding.

MUST READS OF THE WEEK ‘Detroit Rising’: DEGC connects with small biz

McLouth cleanup hits milestone with deal

DTE’s new gas plant underway

$59 million Ilitch school open for business

Crain’s Chad Livengood discusses new neighborhood business liaisons. Page #

Moroun family’s Crown Enterprises agrees to tear down 45 structures in deal that would clear way for redevelopment. Page 6

Utility’s new billion-dollar power plant breaks ground. Page 15

School’s growing business programs will host first fall students starting this week. Page 19

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‘DE

Blue Cross Blue Shield of Michigan has approved a plan to contract with St. Louis-based Express Scripts Inc. for its retail commercial business in Michigan.

Blue Cross Michigan signs deal with Express Scripts

By Jay Greene jgreene@crain.com

“Highest Member Satisfaction among Commercial Health Plans in Michigan”

Blue Cross Blue Shield of Michigan has approved a plan to contract with St. Louis-based Express Scripts Inc. for its retail commercial business in Michigan. The contract is effective Jan. 1. The decision to shift network management of 2,400 pharmacies from about eight in-house employees to Express Scripts is intended to reduce administrative costs and pharmacy prices for the Detroit-based health insurer. It is also intended to increase choices and create flexibility for the Blues’ 2 million members who have pharmacy benefits in multiple product offerings. “We are doing a lot with pharmacy. We want to deliver value for customers and members because prescription drug costs continue to mount, skyrocket,” said Kevin Kevin Klobucar: Klobucar, Blue Want to deliver Cross’ executive pharmacy value. vice president for health care value. “Drugs are going up 200 percent to 500 percent in costs, in some instances, and we are trying to make it affordable.” Klobucar said Express Scripts already manages Blue Cross’ out-ofstate pharmacy network and the company’s Medicare Advantage business. “Customers won’t know the difference,” he said. “We have 99.9 percent of pharmacies in our network. The 30 pharmacies not in (Express Scripts’) network, we are reaching out to them” for contracts. The eight Blue Cross employees in the pharmacy benefit department will be able to apply for other jobs at the company, said Helen Stojic, Blue Cross’ director of corporate communications. She said the cost savings are not part of Blue Cross’ three-year program to reduce administrative costs at least $300 million by 2018. Andy Hetzel, vice president of corporate communications, said Blue Cross has been concerned the past

Need to know

Blue Cross Michigan signs contract with Express Scripts to manage retail pharmacy network of 2,400 pharmacies J

J Contract expected to save Blue Cross administrative costs, eliminate pharmacy management staff J Express Scripts will manage pharmacy network, credential pharmacies and offer narrow network to customers

several years with the large increases in prescription drug costs For example, pain and arthritis drug Fenoprofen Calcium capsules have increased 262 percent this year to $17.58, insomnia spray Zolpimist increased 843 percent to $102.70 per unit and diabetes inhaler Afrezza increased 101 percent to $7.94 per unit. “It affects employers, health benefits of employees. Those cost increases put pressure on deductibles and pocketbook costs,” Hetzel said. “We feel working with Express Scripts will make us more cost-competitive (and allow us) to better manage costs.” The Express Scripts contract will cover all commercial plans, including self-funded employers, small groups and the individual market. It also will require the pharmacies to sign contracts directly with Express Scripts, which will credential the pharmacies. Klobucar said Express Scripts will manage the pharmacy network more effectively and lower costs an unspecified amount because it is a larger company with more resources. Express Scripts is the nation’s largest pharmacy benefits manager. “The pharmacy business is very competitive,” he said. But Blue Cross will continue to oversee pharmacy fraud, waste and abuse programs to ensure costs remain as low as possible. “On opioids, we are putting in more and more limits to prevent overuse and that results in improved safety,” said Atheer Kaddis, vice president of pharmacy benefits. “On fraud, waste and abuse activities, we are trying to reduce bad behaviors out there, and that helps reduce costs.” Klobucar said the Express Scripts contract will also enable greater integration of medical and pharmacy

benefits in product design. For example, when an employer selects both medical and pharmacy benefits, members will also gain access to integrated management that gives providers data on prescriptions to address gaps in medical care, he said. Kaddis said another benefit with Express Scripts is that it will allow Blue Cross to offer customers a customized pharmacy network, or a narrow pharmacy retail network, for further price reductions. “We can offer in benefit plans a narrow network to get deeper discounts. We don’t have that now,” he said. Express Scripts also offers customers 90-day retail pharmacy dispensing plans to make it more convenient for certain customers to purchase prescriptions in three-month supplies. Under the longer-term prescription plans, patients fill their prescriptions in 90-day supplies either through home mail delivery or by visiting specified retail pharmacies.

Reducing pharmacy costs Over the past year, Blue Cross has taken several steps to reduce pharmacy costs, Klobucar said. In April, Blue Cross moved to reduce pharmacy costs by requirement members to seek prior authorization for infusion services requiring the administration of intravenous drugs conducted at hospitals or affiliated outpatient centers, where prices are higher. Blue Cross is seeking to direct patients to lower-priced outpatient providers or in-home services to reduce health care costs and hold down premiums. Employers and individuals have been demanding health insurers contain rising costs, especially pharmacy costs, and patients have begun to realize they pay much more out of pocket with high-deductible benefit plans if they go to higher-cost settings. “Another piece is formulary management, what tiers are covered, use of generics and our utilization management strategy,” Klobucar said. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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‘DETROIT RISING’

JEFF HUARD/SPOTLIGHT RADIO NETWORK

Mike Rafferty, vice president of small business services for the Detroit Economic Growth Corp., and Tenecia Johnson discuss the DEGC’s new business liaisons during an interview for the Crain’s “Detroit Rising” podcast at Louisiana Creole Gumbo, 13505 W Seven Mile Road. Johnson is the business liaison for City Council’s District 1 in northwest Detroit.

Connecting with small businesses on their turf

The Detroit Economic Growth Corp. is trying to decentralize its relationship with small businesses in the city by dispatching newly hired business liaisons to each of the city’s seven City Council districts. The DEGC’s district CHAD business liaisons serve as LIVENGOOD a conduit between neighborhood-level businesses and a municipal bureaucracy that has been hard to navigate in the past for some entrepreneurs. “This came out of a request from a community meeting where business owners voiced a need to have a direct contact who can assist them with accessing programs, resources and also navigating city services,” said Tenecia Johnson, the business liaison for Council District 1 on Detroit’s northwest side. Johnson and Mike Rafferty, the DEGC’s vice president of small business development, discussed the new approach to directly working with small and large companies in the city during an interview on the Crain’s “Detroit Rising” podcast. As the DEGC has ramped up small-business assistance programs such as Motor City Match and Motor City Re-Store, officials found a need for more direct connections to help entrepreneurs start up new businesses or invest in existing enterprises, Rafferty said. “Having just a few people who know where to go isn’t enough,” Rafferty said. “Having someone dedicated to council districts and understanding the geography was something that was really, really needed.” The district business liaisons are employed by the DEGC — Detroit’s quasi-governmental economic development agency — but work closely with city officials, including district managers whose primary responsibility is addressing residential issues in each council district. The new district business liaisons could be used to identify and assist new business investment in retail and restaurant businesses that are lacking along many of the city’s neighborhood commercial corridors.

Detroit business liaisons Earlier this year, the Detroit Economic Growth Corp. hired business liaisons for each of Detroit’s seven City Council districts. Here’s how business owners can contact them: District 1: Tenecia Johnson, (313) 460-0775, tjohnson@degc.org District 2: Ammie Woodruff, (313) 510-8261, awoodruff@degc.org District 3: Md-Abdul Muhit, (313) 452-7704, mmuhit@degc.org District 4: Martel Bivings, (313) 510-5288, mbivings@degc.org District 5: Dennis Perkins, (313) 452-1926, dperkins@degc.org District 6: Luz Meza, (313) 510-2488, lmeza@degc. org District 7: Brianna Walker, (313) 515-6979, bwalker@ degc.org

‘Detroit Rising’ podcast

When we say we'll take care of your employees, we mean it.

You can stream or download Chad Livengood’s ‘Detroit Rising’ podcasts at crainsdetroit.com, or find them on iTunes, Apple Podcasts or wherever you get podcasts.

A study recently commissioned by the DEGC found that Detroiters spend $2.6 billion annually in the suburbs on goods and services they can’t readily get within the city’s 137 square miles. The DEGC is working on strategies to attract more service businesses and retail stores to targeted areas of the city where there’s “a lot of demand” and not enough supply, Rafferty said. “It’s not that we’re trying to drain the suburbs, necessarily,” Rafferty said. “I mean, we love our region and our neighbors, but the thing is, it’s an equity issue. People who live in those (suburban) communities don’t have to travel quite as far to get their goods and services as folks do in Detroit.” Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

Discover more at bcbsm.com/employers

For J.D. Power 2018 award information, visit jdpower.com/awards. Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association.

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GET A HEALTHIER OUTLOOK ON CHILDHOOD Tune in to WJR 760 AM for Caring for Kids, a monthly radio program highlighting issues and efforts locally, regionally and nationally, that impact the health of the children in our area.

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Morouns, EPA finalize deal to clean up McLouth steel site By Chad Livengood

LISTEN TO WJR AM LIVE ON

LUANNE THOMAS EWALD, AMY WYCKOFF (right)

The Moroun familyâ&#x20AC;&#x2122;s Crown Enterprises Inc. paid $4 million for the former McLouth Steel site on West Jefferson Avenue in Trenton. The company has reached a deal with the U.S. Environmental Protection Agency to eventually make the polluted 183-acre site along the Detroit River an EPA Superfund site. The steel plant went out of business in 1995 and has been a blighted eyesore in Trenton for more than two decades.

The Moroun familyâ&#x20AC;&#x2122;s Crown Enterprises Inc. has reached deals with federal and state environmental agencies to clean up the heavily polluted McLouth steel plant site in Trenton and an adjacent site in Riverview that could eventually open up nearly 260 acres for redevelopment along the Detroit River. Crown Enterprises and an affiliated Moroun-owned company called MSC Land Co. LLC have signed an agreement with the U.S. Environmental Agency that will make the former McLouth Steel Products Corp. complex a Superfund site and eligible for federal funding. To meet the requirements of being placed on the EPAâ&#x20AC;&#x2122;s Superfund National Priorities List, the real estate development arm of billionaire Manuel â&#x20AC;&#x153;Mattyâ&#x20AC;? Morounâ&#x20AC;&#x2122;s companies will have to demolish 45 structures on the 183-acre site within two years and remove contaminated water and sludges from 23 pits, lagoons and basements on the property. Before demolition can begin, the Warren-based company also will be responsible for removing asbestos, waste and materials containing polychlorinated biphenyl, or PCBs, from the nearly 1 million square feet of buildings, according to the EPA agreement. Crown Enterprises also has reached a separate deal with the Michigan Department of Environmental Quality to clean up a separate 76-acre site to the north of McLouth that Moroun has owned since 2000 through another business, the Riverview-Trenton Railroad Co. That deal stipulates that the company will investigate and clean up five known waste-management units on the property, control dust

Need to know

Moroun company, EPA have deal on cleaning up McLouth steel plant site ď §

ď § 45 structures at long-abandoned steel mill to be demolished ď § 260 acres along Detroit River could be prime site for logistics hub

and eliminate stormwater flow to the Trenton Channel of the Detroit River. The McLouth steel plant operated from 1950 to 1996, when the steelmaker went bankrupt. Subsequent attempts by the Detroit Steel Co. LLC to restart the steel mill failed, resulting in a foreclosure for unpaid taxes dating back to 2006 and the property ending up in the hands of Wayne County taxpayers. Last September, Wayne County struck a deal with the Morouns to sell the property for $4 million to Crown Enterprises on condition that they invest at least $20 million within six years cleaning up and redeveloping the site. Under the deal, if Crown fails to meet that deadline, theyâ&#x20AC;&#x2122;ll be fined $1 million by the county. The EPAâ&#x20AC;&#x2122;s agreement with Crown also calls for the company to investigate five areas where PCBs may have been released into the ground and report options for stopping the uncontrolled flow of stormwater into the Detroit River. â&#x20AC;&#x153;The top priority must be to ensure that the site is properly cleaned up and is not a safety or environmental risk to the residents of Trenton or surrounding Downriver communities,â&#x20AC;? U.S. Rep. Debbie Dingell, D-Dearborn, said in a statement. â&#x20AC;&#x153;This agreement is a fundamental first step that allows us to turn to look towards future uses for the site.â&#x20AC;? The sprawling steel mill contains

blast furnaces, basic oxygen furnaces, electric arc furnaces, a hot strip rolling mill, soaking pits and pickle lines, according to a July 2016 DEQ inspection report. Itâ&#x20AC;&#x2122;s not known yet how much tax money the federal government will ultimately contribute to the cleanup. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s hard to really quantify,â&#x20AC;? said Brian Kelly, on-scene coordinator for the EPA. â&#x20AC;&#x153;The work that Crownâ&#x20AC;&#x2122;s going to do, and specified over a two-year period, that will mostly occur before the EPA gets going with the national priorities list work.â&#x20AC;? Itâ&#x20AC;&#x2122;s also unclear how long it will take to prepare the site for reuse â&#x20AC;&#x201D; a major redevelopment project that could depend on economic conditions and demand for large industrial sites. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve got a lot of work to get it to that point,â&#x20AC;? Crown Enterprises President Michael Samhat told Crainâ&#x20AC;&#x2122;s. â&#x20AC;&#x153;The goal of this process is to manage a contaminated site and get it into reuse.â&#x20AC;? Following the conclusion of a 30day public comment period that began Aug. 14, Crown is expected to take title to the property from the Wayne County Land Bank by Oct. 1, Samhat said. Khalil Rahal, the assistant county executive for Wayne County who inked the sale deal with Crown, said the propertyâ&#x20AC;&#x2122;s access to the river and railroads and close proximity to Interstate 75 and Detroit Metro Airport makes it ideal for a logistics and shipping hub one day. â&#x20AC;&#x153;Youâ&#x20AC;&#x2122;re not going to see development there tomorrow â&#x20AC;&#x201D; thereâ&#x20AC;&#x2122;s still a long way to go for this,â&#x20AC;? Rahal told Crainâ&#x20AC;&#x2122;s. â&#x20AC;&#x153;But for the first time in decades, it finally has direction â&#x20AC;&#x201D; and that is a big deal.â&#x20AC;? Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

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OPINION EDITORIAL

Raising minimum wage would cost jobs

allot drives for a $12 minimum wage and mandatory sick time appear to be headed for consideration in the Republican-controlled Legislature after Labor Day. The calculus that has Republicans considering a move that would normally be anathema to their free-market principles is a political one, not an economic one. The proposals likely would be a big lure for liberal-leaning voters to come out to the polls. That’s the situation Republicans are trying to avert in a year when many expect Democrats to make big gains, fueled by anti-Trump fervor. By passing the measures, the Legislature can keep the proposals off the November ballot. It’s a bad idea all around, and pre-emptively passing the measures is a terrible idea. Raising the minimum wage costs jobs, and the jobs that disappear are the kinds of low-skilled jobs that keep the working poor afloat and provide a stepping stone for young people to more lucrative employment. And when those jobs disappear, they often don’t come back. Fast-food restaurants like McDonald’s and others who customarily pay at or near minimum wage are already increasing automation in response to rising minimum wages. As we’ve seen in other industries, that virtually always means fewer jobs available. And when we inevitably hit a recession, it will definitely mean fewer jobs available. A free market for labor maximizes jobs. The minimum-wage proposal would also completely change the economics of the types of fine-dining restaurants that have helped fuel downtown Detroit’s turnaround. As Dustin Walsh and Chad Livengood report on Page 1, the $12 minimum would apply to tipped servers. If restaurants forced to pay that wage decide to eliminate tipping or go to a model where diners buy tickets, those servers may well be taking a massive pay cut. On sick time, business owners should be offering some level of paid sick time. In the long run, it means a healthier and more productive workforce. But business owners need to have the freedom to set their own policies. A mandated minimum will mean some employers on the edge won’t survive, which costs everybody they employ their jobs. Certainly, income inequality has become a problem in this country that is exacerbating political division, but there are other, better mechanisms like an expansion of the earned income tax credit that can help ease that problem. Instead of rolling over and passing laws they don’t agree with in a cold political calculation, legislators would be better-served by making their case against the proposals to the voters and winning in the market of ideas.

LETTERS

Time to reassess energy policies To the Editor: This fall, the election of a new governor and other state policymakers will hinge on several issues, like what energy and infrastructure policies they’ll support to strengthen Michigan’s economy. That means looking at abundant and increasing cleaner forms of traditional energy like oil and natural gas and alternative sources like solar and wind. That’s why the Legislature and the utility commission here, like in other states, are examining their energy policies’ impact on end-use consumers like families, businesses, manufacturers and farmers. Take, for example, the changes we’ve seen in the solar industry. Solar photovoltaic (PV) is one of America’s fastest-growing domestic energy resources. Per the U.S. Department of Energy, solar generation grew over 40 percent between 2016 and 2017. Solar was also the largest source of new

power generation to come online in the first quarter of 2018, representing 55 percent of all electric capacity generation added, according to a recent report from the Solar Energy Industries Association. Prices for solar installations have also declined, about 70 percent since 2011. An analysis by the National Renewable Energy Laboratory found that prices for utility-scale PV systems fell an additional 30 percent in early 2017 from the previous year. Technology and policies made by federal, state and local leaders, like incentives and net energy metering, have played a major role in the increased use of solar generation. These mechanisms have reduced homeowners’ out-of-pocket costs for installation and maintenance of PV systems. And in some states, the incentives exceed the cost of the system. In Michigan, for instance, an average homeowner-owned PV rooftop system reportedly receives $17,993 in taxpayer and net metering incentives, or 91 percent of the system’s

many teams are carrying the logos of local businesses, but I know it is a big number. It is simply good marketing, a smart way to advertise a local business. And when you add hockey, football and all the other local sports teams that are being sponsored by our local businesses, that number gets even bigger. If a local retail store wants to touch the local customer, then there cannot be a more effective

way than to sponsor a local team. Sure, the chances of winning it all are slim, but it seems to be a great way to make customers for life, not to mention the excitement and publicity the teams can generate. After all, those jackets with your businesses’ name on the back are normally worn with pride for quite a while. It is not often that a team might make it to the national or world finals, but it should be enough to hand

total cost. In contrast, an average third-party-owned rooftop solar system receives $21,701 in taxpayers and net-metering incentives, equal to 130 percent of the system’s cost. With the state projected to add over 800,000 more residents over the next three decades, plus new businesses with more employment opportunities, Michigan will need to maintain a modern and flexible, affordable electricity mix to ensure it can meet growing demand — which is why it’s paramount policymakers reassess policies and incentives that align with ever-changing market conditions. Chris Ventura Midwest director Consumer Energy Alliance Send your letters: Crain’s Detroit Business will consider for publication all signed letters to the editor that do not defame individuals or organizations. Letters may be edited for length and clarity. Email: malee@crain.com

We all have to be proud

ure we have been rooting for the Tigers, win or lose. Unfortunately, it has been mostly lose lately as we are told they are in the rebuilding phase. Meanwhile, all of us in Detroit still have something to be proud of on the ballfield: our Little League team from Grosse Pointe and the excitement they generated for all of us in Detroit. It’s worth noting how terrific it is that businesses all over Southeast Michigan are sponsors of Little

KEITH CRAIN Editor in chief

League teams. I have no idea how

out trophies to the kids at the end of the season. It is a good investment and one that our retailers have been doing for decades. A smart marketing buy.

More on WJR Hear Crain’s Group Publisher Mary Kramer and Managing Editor Michael Lee talk about the week’s stories every Monday morning on WJR 760 AM’s Paul W. Smith Show.

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 2 7 , 2 0 1 8

Big staffing decisions An open letter to the Ilitch family G lie ahead with marijuana legislation J

ust ahead of the November midterm election, Michigan legislators have sponsored bills they hope will propel the state forward. Many question, though, exactly how the legislative changes will affect everyday citizens, the local economy and the business community. In particular, how will passing a recreational marijuana law impact employers? On Nov. 6, Michigan voters will decide whether they want to legalize marijuana for recreational use. The legislation has massive implications, as it will directly affect our state’s workforce and shift the state’s economy. Yet many questions remain. How will the state initiatives hold up against federal law? How will the use of medical marijuana, especially as it relates to the Americans with Disabilities Act (ADA), affect companies’ drug policies? What responsibility do individual hiring agents hold for state and federal compliance? And what are the longterm health and public safety implications of these new statewide initiatives? The answers are, at best, murky. Where it was previously standard for companies to have zero tolerance drug policies, recent changes in marijuana legislation are forcing companies to adjust their human resources and drug testing policies to align with these new laws. This is also challenging for workers who could potentially be turned down for jobs because they may not understand the implications of state laws as opposed to federal law: By federal law, marijuana use of any kind is still illegal as it is a Schedule I substance under the federal Controlled Substance Act. For companies that operate on a federal level this is a major concern. Francesca Liquori, former National Attorneys General Training & Research Institute Program Counsel, explains, “Employers in states in which marijuana has been legalized must first determine whether their workplace is regulated by The Drug Free Workplace Act. The act requires that all federal grant recipients and federal contractors adopt a zero tolerance policy at their workplaces and certify to the federal government that their workplaces are drug free.” This is especially crucial in the case of transportation workers and first responders such as fire, police and medical officers. Such employers must comply with federal law and policy, including the Department of Transportation’s stringent requirements, but employees may not be aware of this need. Otherwise skilled — and necessary — employees could be lost before they can even be hired. Employers also must worry about marijuana use’s effects on employee performance: “If an employer is not required to comply with the act, such employer can still institute a zero tolerance policy for those workers in ‘safety-sensitive’ positions,” says Liquori. “A ‘safety-sensitive’ position, generally, is one in which an employee is responsible for the safety of

OTHER VOICES Cynthia Pasky

herself or others,” which can cover a broad array of employee positions. As we move to November, communication and education should be demanded by voters, employers and employees. For citizens to have what they perceive as a benefit and right could become a barrier to employment and one for the loss column. Also, employees need to understand that implementing changes for employers of all sizes and locations will not happen overnight. As with all change, we have two paths: one which is based on reaction and one which is based on preparation and education. Encourage all parties to educate, communicate and be proactive. Cynthia Pasky is CEO and president, Strategic Staffing Solutions.

reetings, Ilitch family: It’s me. Francis. You may know me from my writings and City Council appearances, where I question your plans for the neighborhood around the Little Caesars Arena. Also, you might recall that one time I sued you. So, it might seem like I’m against you. But honestly, I’m not. First off, I eat your pizza. Maybe not as much as Supino, but sometimes definitely as much. Or even more. Especially late night. I think whoever in your company came up with Hot-N-Ready should just be spending their whole day at the office getting high fives. Also, I love the Tigers. Maybe not as much this season. But I do love them. And I’ve come to enjoy games at Comerica. It’s so nice with a brat and beer and that downtown skyline on a summer night. The fireworks are also great. So, thanks for that. And I love the Red Wings. Maybe not as much this past season. But I love them, too. Their playoff and Stanley Cup streaks are awesome. And their new arena is actually pretty sweet. It’s fun to watch the Pistons there. It’s so good to have the NBA back downtown! I clearly love the Fox Theatre. Which makes sense, because you know how I feel about historic preservation. The work you did with the Fox is something to be very proud of. And I think I speak for the entire city when I say we’re grateful. Thanks. And I respect your family’s history of being entrepreneurs and building

OTHER VOICES Francis Grunow

Detroit has a history and a beauty worth preserving. a business from scratch. It’s inspiring. We need more of that in Michigan. Speaking of family business, I know the dynamics there can be tough. Every year I produce a community art parade with what seems like an extended family of creatives and carnies. Each has their own, sometimes truly insane idea of what to do and how to do it, and it doesn’t seem to add up. Sound familiar? Yes, it’s a wild ride, but sure enough, in the end, we make it work. Anyway, the point is, I get it. Really, I do. I just don’t want you to tear down any more old Detroit buildings. That’s all. I think you’ve torn down enough. Okay, I think you’ve torn down too many. Way too many. But that’s all in the past, right!?! Today’s a new day.

Seriously, like a lot of Detroit, I am rooting for you guys. I know you were here before Dan Gilbert. I know you made a choice to move into the city when so few did. I know that you have donated your time and resources to many important causes. All I’m asking is that you stop tearing down Detroit’s buildings. Nobody wants you to do it. Detroit has a history and a beauty worth preserving. There is a growing market for restored buildings in Detroit. Not just some of them. All of them. People love them. They don’t have to be big and epic like the train station or Guardian Building. Even ordinary buildings have character and integrity, like the Alden Apartments, that you say needs to come down, or the buildings in the Cass-Henry Historic District. They create a landscape imbued with texture and culture and stories of Detroiters that honestly can’t ever be replaced. Do you just not believe it? So, that’s it, really. Just stop tearing down buildings. You could also do something about that vast sea of surface parking. You know, maybe build something — oh, wait, sorry, look what I did there, getting greedy, asking too much! Fine, OK, the parking lots can wait for now. Today, just please don’t tear down any more buildings. Please. Stop. Thanks! Francis Francis Grunow is chair of the Arena District Neighborhood Advisory Committee.

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FOCUS HEALTH CARE

A row of four digital imaging monitors that gives live video views of the surgery field during back surgery. JAY GREENE/CRAIN’S DETROIT BUSINESS

BUSINESS OF BACK SURGERY Health insurers look for ways to cut costs with back surgery

Neurosurgeon rounds at Garden City Hospital, a firsthand look at spinal fusion surgery By Jay Greene jgreene@crain.com

Neurosurgeon Jayant Jagannathan conducts morning rounds several times a week on his patients at Garden City Hospital with Amy Tittle, a surgical nurse practitioner who assists with patients and surgeries. But this time was different. He was with a Crain’s reporter who had permission to take notes of doctor-patient interactions and later that day witnessed a spinal fusion surgery on Angela French, a school librarian who traveled with her husband, Dave, from the Michigan Thumb to have her painful back surgically repaired. Jagannathan is one of two neurosurgeons at Garden City, a for-profit hospital owned by Prime Healthcare of California. The other is Y.S. Mohan, who also is on staff at eight-hospital Beaumont Health. A third doctor, orthopedic surgeon Stanley Lee in West Bloomfield Township, also performs back surgeries at the hospital. “Last October, (Angela) began having severe pain. She had physical therapy and shots, but it wasn’t helping. She works at a school and is on her feet constantly. It got worse. There was too much pain, so she asked me to do surgery,” said Jagannathan, who has had an oncall contract at Garden City since 2015. SEE SURGERY, PAGE 14

By Jay Greene jgreene@crain.com

Angela French with her husband, Dave.

ANGELA FRENCH

Back surgery is one of the most overused types of surgery as well as the most common ailment that sends patients to doctors, chiropractors and physical therapists. More than $90 billion a year is spent on low-back pain alone. On any given day, 31 million Americans experience low-back pain, and it is the leading cause of disability worldwide, according to the 2017 Global Burden of Disease study. Back pain also is one of the most common reasons for missed work. Controlling costs is a major effort most health insurers are focusing on with patients who want back surgery. In Michigan, Blue Cross Blue Shield of Michigan, Blue Care Network, Priority Health and Health Alliance Plan have programs to ensure members have carefully weighed their options. Nationally, more than 1.2 million spinal surgeries are performed each year, including spinal fusion and decompression, or discectomy, surgery, according to the National Center for Health Statistics. The fastest-growing types the past decade have been lumbar spinal fusion surgeries that range from $60,000 to $110,000 per procedure. Some studies have shown that the

back surgery failure rate, known as failed back syndrome, is as high as 50 percent. But most spine experts say one-third of patients will have successful outcomes, one-third will have no change and one-third will be worse off. Since 2007, Priority Health has cut down on back surgery costs by requiring patients who have non-emergency surgery to consult with a rehabilitation doctor, or physiatrist, about treatment options before surgery, said John Fox, M.D., Priority’s medical director. During the first year of the spine program, Priority had an $8 million reduction in costs. Surgery costs fell 24 percent and imaging 18 percent. Over the past dozen years, health care costs have risen and the population Priority serves has nearly doubled, Fox said. “Our spine surgery rate was 4.1 per thousand in 2006 and today it’s 2.1 per thousand,” he said. “For the commercial population of just over 500,000, that translates into a cost savings of $36 million per year in avoided costs.” In 2019, Priority will adopt a new prior authorization criteria that encourages patients to have possible diabetes and hypertension under control, minimize the use of opioids and be either a nonsmoker or in a cessation program. SEE INSURERS, PAGE 15

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SPECIAL REPORT: HEALTH CARE

Jayant Jagannathan (right) with neurologist Ivan Landan in front of a King Air plane before leaving for the Upper Peninsula of Michigan in February. JAGANNATHAN NEUROSURGERY

Traveling ‘Dr. Jag’ jets to UP for patients By Jay Greene jgreene@crain.com

One week neurosurgeon Jayant Jagannathan, who patients and staff members call “Dr. Jag,” charters a plane at the Oakland Troy Airport to get to his patients in Michigan’s Upper Peninsula, and on another week he takes a two-hour car ride with a surgical nurse to northern Michigan. Specializing in minimally invasive head and spine surgery, traveling neurosurgeon Jagannathan performs dozens of office and hospital procedures to serve patients on their home turf and also to expand his small but growing practice that now has three other doctors and 19 employees. Jagannathan Neurosurgery’s main office is in Troy, where he serves Garden City Hospital and Michigan Surgical Hospital with two midlevel surgical practitioners, four nurses and support staff. He also has two clinics in central and northern Michigan in West Branch with five employees and in Sault Ste. Marie with one employee. He also performs surgeries at MidMichigan Medical Center in West Branch and Helen Joy Hospital in Newberry. “When I charter a flight I go to the UP (Sault St. Marie and Newberry). I leave at 8 a.m. and am back at 6 p.m.,” said Jagannathan, adding that he drives two hours to West Branch. “I split time. I am pretty busy. My main goal is to help patients and make it easy on them.” A native of India who grew up in the suburbs of Washington, D.C., and remains a major Washington Redskins football fan, Jagannathan arrived in Detroit in 2009 as chief resident at Detroit Medical Center. He practiced as an assistant professor of neurosurgery from 2010 to 2012 at hospitals on the DMC campus that included Detroit Receiving Hospital and Barbara Ann Karmanos

Need to know

Neurosurgeon travels to northern Michigan and the Upper Peninsula to serve patients and grow business J

J His practice has grown from one to 19 employees, including three other doctors, since 2013 J Hospitals include MidMichigan West Branch Hospital in north and Garden City Hospital in south

Cancer Hospital before starting his private practice in 2012. Jagannathan said he works much longer hours and days in a small private practice than when he was at DMC and in an academic practice with Wayne State University School of Medicine. He declined to disclose total revenue, but he said his practice has grown by 10 percent to 30 percent annually. He said income is solely based on how much work is done. “You have to be prepared to make less money in the beginning to grow your practice,” he said. “I made about $300 my first three months. “Usually in an academic or large group there is a cap, but in private practice the more you do, the more you” are paid, he said. But more patients also means “even when I am not formally on call I have to be available informally for problems and issues. I like it that my practice is growing, and it doesn’t feel like work.” Still, neurosurgery practices are relatively small compared with the dozens of doctors in multi-specialty groups. “I like being small because our practice is more centered around the patient experience than a major group,” he said. For example, Jagannathan said his practice’s business meetings are mostly about improving the patient experience and quality and not how to make more money. He added he

has been spending more time on physician and nurse recruitment to accommodate the practice’s growth. Jagannathan has two advanced practice surgical nurses — Amy Tittle and Heather Montie — in Detroit who assist him on rounds and procedures at hospitals. They also travel with him to northern Michigan to assist with surgeries. “They have pagers and take calls from patients,” he said. His clinic in Sault Ste. Marie has a full-time nurse and is looking for a mid-level practitioner. The larger West Branch office has eight staffers, including two full-time nurses who also assist with surgeries and other part-time staff and consultants, some of whom also travel to the UP to help see patients. “I built my office downstate, but the practice has grown so much in the past six years that it is hard for me to give up” serving northern Michigan, he said. As a result, Jagannathan has hired additional partners. They are Fadi Delly, M.D., a neurologist and pain medicine specialist, and Ivan Landan, M.D., a neurologist who is based in Grand Rapids and also serves the West Branch and Sault Ste. Marie offices. Last month, Jagannathan hired Melanie Novak, M.D., a pain specialist from Battle Creek, who will start in mid-September and will see patients in Troy and West Branch. “Dr. Delly does chronic pain management, which about 60 percent of our patients need,” Jagannathan. “Dr. Landan takes care of general neurology, stroke, neuromuscular disorders and MS patients.” Each month, the practice performs 70 to 100 procedures, not counting the dozens of minor ones, with about 30 to 40 major surgeries each month, Jagannathan said. When he started, he saw about 10 patients per month. Now he sees 50 to 60 patients per week, excluding regular

emergency consultations. “Our MidMichigan office has two rooms and I do four to five cases per day when I up there,” Jagannathan said. “We have enough volume for a second surgeon. I need to find the right one, someone who practices like me. I have a headhunter looking for a neurosurgeon. It isn’t easy.” For years there has been a nationwide shortage of doctors, especially specialists in rural areas, and Michigan is no exception, causing patients to travel long distances to get care. They may have to drive for hours or wait months to see a physician, Jagannathan said. “There is a huge need in the northern part of the state. There are not enough doctors, and it is not unusual for patients to travel two or three hours to see a doctor,” he said. “We focus on the neuroscience part, but my practice is mainly operative. If they don’t want surgery, we can provide other solutions.” But Jagannathan said there are no pain specialists north of Saginaw, and that creates huge waits for epidural procedures. He travels to MidMichigan West Branch the first and third week of the month, performing up to 40 minor procedures on Thursdays, surgeries and injections on Fridays and sometimes Saturdays. Donald Thorner, a nurse and manager of surgical services at MidMichigan West Branch, said the 88-bed primary care hospital took a big financial risk in 2012 when it added neuro back surgery. But Jagannathan and three other surgeons — Gerald Schell, Mark Adams and Kevin Lawson — built up the program from 21 surgeries the first year to 273 now per year. “We are a rural area with few services. It is a benefit to surgeons to come to a small hospital. We have OR time,” said Thorner, noting that surgery costs are lower at West Branch than at larger hospitals. “It also is a

benefit to patients. Win-win. Patients get to stay in their community.” Thorner said the West Branch hospital affiliated with MidMichigan Health in March and that will improve the access to services for local patients. “We have an eye (care) group who comes from Bay City. They work out of Midland and Saginaw and hold clinics. We used to have ENT and urology, but we lost those services,” he said. Going up to northern Michigan, Jagannathan says, fills a big need patients have for neurology, neurosurgery and pain management services. He said he hopes West Branch’s affiliation with MidMichigan will increase his surgery opportunities. “From my standpoint, my practice is designed to eliminate wait times. That is why I travel. If we can get patients in, evaluate them and get them treated, I will do it,” he said. “Some weeks I work six days. I would like to get a more balanced patient volume because I have a young family (children ages 4, 3 and 4 months). But my goal is to never have a patient waiting for a diagnostic test or surgery.” Asked about quality and outcomes, Jagannathan said more than 80 percent of patients can have relief from leg or arm pain, but back pain is trickier, and generally 50 to 60 percent experience relief. “Generally surgery is not recommended exclusively for back pain unless all other treatments fail and there is clear source of pain,” he said. “Of course other factors play a role — patient health, co-morbidities, weight, smoking status and the presence of prior surgery.” Each patient’s unique history plays a role in success of surgery and ability to recover. “This is why success is a hard term to quantify in medicine,” he said. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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■ Health care costs can vary within the same city, sometimes by double, triple or more. What accounts for this variation and how can employees make better decisions around quality and cost?

■ Why is it important to regularly solicit a range of quotes from health insurers at renewal?

There are significant price variations for health care services and procedures at hospitals and doctors’ offices, even though there is little or no corresponding improvement in health outcomes for services performed by higher priced care providers. Price variation between health systems are based on a number of factors including medical costs, utilization, plan design, taxes and fees, and mandated coverage required at the state or

Having a wide selection of quotes and health plans to choose from can help employers obtain the best possible coverage and rates. A range of quotes also helps employers find a health plan that fits their needs and budgets. For more information about UnitedHealthcare products and programs, visit uhc.com/MI. This content was sponsored by United Healthcare. For more about this report, contact Crain’s Detroit Business Director of Advertising Lisa Rudy at lrudy@crain.com. © 2018 United HealthCare Services, Inc. MT-1180114 8/18

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SPECIAL REPORT: HEALTH CARE SURGERY FROM PAGE 10

Jagannathan does a variety of minor procedures and major surgeries. One of the most common spine procedures in the U.S. is spinal fusion, which joins two or more vertebrae together to prevent movement to treat back pain and most often is done in the lumbar region of the lower back. More than 87 percent of spinal procedures are fusion-based, according to research firm GlobalData. “We always give options for pain management, but they have already seen their primary doctor and tried options. It is fusion versus no fusion. Another option is a laminectomy (decompression surgery) where we shave off (the back part of a vertebra)” to enlarge the spinal canal to relieve pressure on the spinal cord or nerves, Jagannathan said. In 2016, the global market for spinal fusion, which includes an array of medical devices, is projected to increase at an annual rate of 3.4 percent annually to $9 billion by 2023. Those devices and other advancements have changed the back-surgery game. Before minimally invasive surgery began in the mid-1990s, Jagannathan said surgeons had to make 5-inch slices along the spine, and the hospital stay was much longer than one or two days now. “The trend toward a minimally invasive approach will help this, as it usually results in a quicker recovery with less postoperative pain and shorter hospital stays,” Jagannathan said. “These types of technologies will see increased prominence in smaller hospitals particularly.” But before French’s surgery, which would start about noon, Jagannathan and Tittle had other work to do.

Rounding the hospital About 10 a.m. Jagannathan and Tittle began rounds of six patients, including three in intensive care. Up first was a middle-aged man who was recovering from cervical disk fusion surgery from the day before. He was having some difficulty and was placed in the ICU. “He has a clotting disorder that predisposed him to strokes and requires lifelong anticoagulation, but everything is normal today,” Jagannathan said. After a few days in the hospital, he was discharged and is doing well. Up next was an older woman who had a cardiac arrest at her home and was brought to the hospital by ambulance. She had strokes on both sides of the brain and was unconscious. Staff had placed a catheter in her brain to drain out the fluid. After a day the pressure was nearly normal because there was not much fluid left, but she was on a ventilator. The third patient, an overweight man in his 40s, was alert and talking. He had come in the night before with a head injury from a mysterious fall. “He has a vertebrae in his neck that is broken,” Jagannathan said. “He will need an MRI and probably more tests to see if there are other problems. We don’t want to discharge him and see him back with other problems.” The MRI showed significant ligamentous injury and narrowing around the spinal cord, which often causes people to lose their balance and fall. He was operated on for decompression and stabilization. Later, he was discharged to a rehabilitation

JAY GREENE/CRAIN’S DETROIT BUSINESS

Neurosurgeon Jay Jagannathan (left) performing spinal fusion surgery on Angela French assisted by nurse Amy Tittle (center).

facility to work on safe walking. Next was a male patient in his 30s with his wife and three children in the room. He was preparing to have spinal fusion surgery. As Jagannathan and Tittle entered, the man’s face lit up. “I have complete faith in you. You come highly recommended,” said the patient, who previously had an unsuccessful spine surgery in Colorado, where he use to live. Jagannathan smiled, explaining to the patient that he had several misplaced screws from the previous surgery that needed fixing and also a calcified disk pushing up on his thoracic spine. “I will move up the screws you have and put two new ones in,” he said. The patient said he had planned to get a thoracotomy to remove the disk at another large Detroit hospital, but canceled it because he said he didn’t feel comfortable with the surgeon. “I admit I am scared about this,” the patient said. His wife added: “He is afraid he won’t wake up.” Jagannathan told him not to worry and that they would take good care of him. After a successful surgery and a three-day stay, he was discharged. Several weeks after the surgery he was doing well, although it will take several months of limited lifting and bending before he can return to work. The fifth patient was a young, active man who previously had spinal fusion surgery at a large suburban hospital. The surgery apparently was successful, but the patient had reinjured himself because he did not properly rehab and use his back brace. “We removed and replaced the cage (that enlarges the space between vertebraes),” Jagannathan said. “He was discharged home that day and is doing better.” Last, an older woman who had fallen, hit her head and experienced a traumatic brain injury. She was admitted through the ER and was in the long-term care section of the hospital. She had a small head bleed that developed into a larger bleed that was causing pressure on her brain. She had been in the hospital for three weeks, and surgeons decided to do a 2 1/2-hour emergency decompressive operation. The surgery would relieve pressure on her brain by peeling back her skull cap. “The CT scan looks good. We will give her medicine and follow the protocol. It likely will take several months before the skull is replaced,” said Jagannathan, adding that the outcome is unknown.

Prepping for surgery The approximate 600-square-foot surgery room was filled with equipment and staff when French entered one of the eight ORs at Garden City. “They wheeled me in,” French said in an interview two weeks after her surgery. “It was the first time I saw a surgery room. I was kind of surprised how small the room was. I was face down. They were putting those little needles in my leg. They told me it was for testing on nerves. They put on the gas mask, and I don’t remember anything more until the recovery room.” Scrubbed in and wearing blue surgical gowns were Jagannathan, who also wore his signature Washington Redskins football skullcap; Tittle; anesthesiologist Keshav Joshi; a neuro-monitor technician; an X-ray technician and two other nurses. Two medical representatives were also present, John DeLeon with Globus Medical in Philadelphia and Dan Rosario with Aegis Spine of Colorado. They were there to answer any questions about the devices to be inserted during surgery. Rosario explained that the spacing between French’s vertebrae were too small, and Jagannathan planned to insert several expandable spinal “cages” to restore the height between vertebraes that were squeezing and placing pressure on the nerves, causing pain. “They go in small and crank up to larger height which allows us to open up the disk,” Jagannathan said. “Expandable is new technology. By going in at a small size there is less risk of injury to surrounding nerves, but they can still expand once in.” Once everyone appeared ready, one of the nurses began calling out information on the patient and the surgery plan for the operation on the left side, L5-S1, or the lumbar region’s fifth and lowest vertebrae. French’s L5-S1 had slipped over the first vertebrae of the sacrum. Everyone concurred with the plan. “You are seeing minimally invasive surgery from three different (measuring perspectives),” Jagannathan said. The first view is Jagannathan’s own as he is conducting the surgery. The second view is the intraoperative imaging that continuously displays the surgical instruments and implants on a high-resolution screen for the surgeon and team to monitor. This allows the surgeon to view live feedback and ensure the most precise implant placement. The third view is the neurology monitoring that tells the team how the nerves are responding in real time.

“This allows a system of checks and balances,” he said. “When you make moves around the brain and spine, all three parameters must correspond to be safe.” Because the surgery is minimally invasive, the surgeon can make much smaller incisions along the spine. This reduces post-surgical pain, scarring and blood loss, leading to fewer complications and a faster recovery, DeLeon said. “We use imaging to locate where (the spinal) screws enter. By doing this, we can make tiny incisions to implant the screws,” said Jagannathan, explaining the instrument has a guide wire that helps to locate and verify placement of the screws. After 45 minutes, the four spinal screws are inserted. Jagannathan now put on large magnifier glasses for better vision. He takes up a shaver instrument that sounds like a dental drill to remove the disk cartilage and bulge. French cannot hear it because she is out under anesthesia. The point is to decompress the vertebrae and make room for the expandable cages. “Now we are putting in the cages in L5-S1 to open up the space,” Jagannathan said. He then inserts the cage, places bone grafts into the cage to promote healing, and then places pins on each side to secure it. This takes another 30 minutes. He cranks open the cages to the maximum, locks them in, then places rods on each side of the cages, which are attached to the screws. DeLeon said the cages can be expanded between seven to 17 centimeters, depending on what the surgeon wants. Over time, the two vertebrae segments will heal, and then bone grows around it and fuses over eight to 12 months, Rosario said. Several times during the two-hour surgery, Jagannathan asks if everything looks clear on the neurology monitor. Probe sensors are placed on the skin that sends electrical signals if there are problems with pinching in the muscles. “They have real-time nerve readings which are interpreted by a neurologist who is off site,” Jagannathan said. “This is why I continuously ask for updates during critical parts of the case. Some nerves are sensitive, and even minor trauma can injure them. There have been cases where I have had to change our plan due to neuro monitoring.” Now, with everything good, Jagannathan and Tittle begin the closing procedure. “She had degeneration on the disks. We got the height of the disk back to normal. Everything went well. She should get up this afternoon and go home tomorrow,” he said.

Injury, recovery For 22 years, French, 47, has worked at Croswell Lexington Community Schools. Always an active woman, last fall French hurt her back trying to shoot an arrow. She pulled the bow back and felt a pain along her spine. “I woke up the next morning, and it didn’t feel good. It was manageable until the beginning of April,” she said. But she and husband, Dave, took a trip to Florida, driving 24 hours. “It became very painful.” French came home to Michigan and went to see a chiropractor that same day. “I did some traction where they stretched out my body by pull-

ing my legs. It caused me so much pain I couldn’t get out of bed. I went two weeks of three sessions a week, and the pain was even worse,” she said. She then went to see an orthopedic surgeon in Port Huron underwent an MRI and found she had a herniated disk that was pushing on the sciatic nerve. She was given oral steroids and then an epidural injection for the pain. “It got worse, not better. He wanted to do another epidural and then consult with their surgeon about a laminectomy (decompression surgery),” she said. As she talked with people about the surgery, her sister-in-law, Kari Stoutmeyer, told her how she had a spinal fusion surgery done by Jagannathan. Stoutmeyer already had a laminectomy but told French that was just a “Band-Aid” and the real fix for her was the spinal fusion performed by Jagannathan. “I called him, saw him in a week and had surgery a week later. I had a sharp pain down my left leg. I had drop foot. It was so numb, I was dragging it along with me and couldn’t walk straight,” she said. Asked if she was referred to physical therapy before surgery and she said she was past the point where that might help. “Anything I did caused more and more pain. My doctor said rest it, just stop moving and rest.” French said her Blue Cross Blue Shield of Michigan policy covered everything, including the previous chiropractic treatment and pain therapy. She had already met her deductible for the year because of her prior medical treatments. She also didn’t have any copayments for the hospital or physician services. “My insurance also covered my back brace and a nurse that came to my home after surgery,” French said. The total hospital and physician bill for surgery was $113,000, but Blue Cross only paid about $38,000 after provider discounts, French said. After her surgery, French said the first thing she remembers is Dave waiting for her to wake up by her bed. “I had to take two nights (Wednesday and Thursday at the hospital). Dr. Jag said I could go home the next day, but he suggested I stay another night because I was still very nauseous because of the anesthesia. I was bad. I couldn’t keep food down. I know I have problems with it. They gave me dopamine, and I came home Friday.” But after 12 days in recovery, French said she is outside walking and doesn’t have any pain in her back or leg when just a ride to the doctor’s office caused her to “cry the whole way there.” French said she took only a few Percocet in the hospital and regular Tylenol at home. “I had the staples from the surgery taken out” after two weeks. “They just popped them right out,” she said. Her rehabilitation over the first several weeks consisted of a visiting nurse coming to the house, and later physical and occupational therapy sessions. “It is summer. We don’t have school, so I am just resting,” she said. “In three months I will do physical therapy to strengthen my core. I just want to get back to my normal life. We have 10 acres of land I want to get back to mowing and gardening.” Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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INSURERS FROM PAGE 10

“The evidence demonstrates that risk factor modification reduces the likelihood of surgical complications, hospital readmission and repeat surgery,” Fox said. As a result over the past five years fusion surgery has not increased and surgery for herniated disks has decreased, Fox said. Depending on the payer, Medicaid, Medicare or private, provider discounts to health insurers can cut the actual cost to the insurer to up to 35 percent of billings. John Fox, M.D.: For example, a Trying to reduce $100,000 hospital readmissions. and doctor combined bill could be cut to a total payment of $35,000. The goal for surgeons in dealing with third-party payers is to continue to provide excellent quality care in the face of declining reimbursements, said Jayant Jagannathan, a Troy-based neurosurgeon. “Insurances are getting more and more difficult to deal with. The biggest obstacles are the variability in terms of criteria for coverage in spine. Significant differences in hospital reimbursement also make some hospitals not want to approve fusions for certain Medicaid programs.” But Jagannathan added: “Whatever the payment, our goal is to provide quality care and work with patients for the best outcomes.”

“We have noted increased interest in nontraditional methods of pain management such as acupuncture, massage therapy, behavioral therapy and more traditional chiropractic services.” Charles Bloom, D.O.

At HAP, treatment costs for chronic low-back problems have leveled off the past two years, partially due to use of alternative treatments and enhanced pain management, said Charles Bloom, D.O., HAP’s vice president of utilization management and provider relations. HAP requires authorization before surgery and expensive imaging tests. “As we see improvements in the appropriate utilization of spine surgery, we have seen increased utilization of pain management interventions (such as steroid injections) for which we also require authorization,” Bloom said. “We have noted increased interest in nontraditional methods of pain management such as acupuncture, massage therapy, behavioral therapy and more traditional chiropractic services.” Marc Kesheshian, M.D., Blue Care’s chief medical officer, said the Blues added prior authorization for spinal fusion surgery after 2012 as the number of back surgeries increased and costs rose. He said disk compression surgeries don’t require prior authorization. “(The member) calls in to inform us,

and we evaluate the clinical information they provide. If it meets our standards, we approve the surgery,” Kesheshian said. “If not, we speak to the doctor to justify and explain it.” Over the past several years, Blue Cross and Blue Care have seen an increase in back surgery claims, with the largest increase for spinal fusion and a slight increase for decompression surgeries. In 2017, Blue Cross paid for 5,500 spine and back surgeries in Michigan for the commercial population. Blue Cross declined to provide data on denials or trend information on back surgeries. “The denial rates are very low,” Kesheshian said. Jagannathan said about 95 percent of requests his office makes to health insurers are approved. “Only 5 percent get declined. Thirty percent of insurers initially will refuse or ask for additional justification, but most end up approving after we explain,” he said. Blue Cross, like most payers, encourages physical therapy or other nonsurgical options, including pain management, before surgery. “We don’t require second opinions. We make sure members get conservative therapy first,” said Kesheshian, adding that usually is physical therapy, but the Blues also pay for chiropractic care. “After physical therapy, if there is some reason why the surgery is necessary, we would approve it at that point.” Jagannathan said there is no consensus when fusion surgery is recommended and every health insurer has its own criteria. Generally, spinal fusion can be recommended for severe degenerative disk changes, lumbar herniated disks or lumbar spinal stenosis. Any surgery must include a determination that fusing two or more disks will lead to reduction of pain and increase in mobility.

Use of steroids and opioids Chronic back pain, which includes the neck, generally persists longer than three months. Most experts believe chronic pain should be treated more aggressively than acute pain, which most often is treated by rest, painkillers such as aspirin, ibuprofen, sometimes steroids and light exercise. Studies show that 90 percent of patients with acute back pain improve within six months with conservative care. But the opioid epidemic has led some health groups to reconsider whether to recommend opioids for low-back pain management. For example, the American College of Physicians in 2017 updated its low-back pain treatment guidelines to encourage other types of care before surgery and drugs. ACP guidelines now recommend the use of more heat therapy, massage, acupuncture and spinal manipulation, including chiropractic and osteopathic, as “conservative options.” Only when such treatments provide little or no relief should patients move on to prescription opioids, ACP said. Jagannathan said he always goes over pain-management options with patients, whether they are candidates for surgery or not. “Surgical pain is normal. Patients come in every week to get refills if they need it,” he said. “The (opioid) laws make it more difficult for patients, especially those who live far away” from their pain specialist. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

DTE ENERGY CO.

The new $1 billion Blue Water Energy Center gas plant planned for East China Township will replace three of DTE Energy Co.’s coal-fired plants.

DTE Energy moves forward on $1B natural gas plant in St. Clair County By Kurt Nagl knagl@crain.com

DTE Energy Co. moved forward Tuesday with plans for a new $1 billion natural gas plant in East China Township. Officials from the Detroit-based utility gathered at its Belle River Power Plant in St. Clair County for a symbolic groundbreaking and “significant step toward its goal of reducing carbon emissions by more than 80 percent,” the company said in a news release. The 1,100-megawatt Blue Water Energy Center will be built across 30 acres of DTE-owned land near the Belle River plant in St. Clair County, spokeswoman Renee McClelland said. It is expected to begin providing 24/7 low-emission electricity for 850,000 homes in 2022. The plant is being built to replace three coal plants at River Rouge, St. Clair and Trenton Channel between 2020 and 2023. DTE and Jackson-based Consumers Energy Co. have committed to a 25 percent renewable energy goal by 2030 and

promised to stop burning coal altogether by 2040. While both of Michigan’s main utilities plan to end coal burning, their paths in doing so are very different. DTE relies on coal to produce 65 percent of its power, while Consumers uses coal for 32 percent of its power. With this new plant, DTE has said it will double its renewable energy capacity to 2,000 megawatts by 2022. Its Pine River and Polaris wind parks are expected to begin operating within the next year with a combined capacity of 330 megawatts. The Blue Water plant will be “70 percent cleaner and 40 percent more efficient” than the coal plants it plans to retire, the company said. It was approved by the Michigan Public Service Commission earlier this year after a monthslong campaign against it by renewable-energy advocates who claim there are other ways to produce clean energy that are better for the environment and less costly for consumers. Site work is underway for the new plant and construction is expected to start next year, McClelland said.

“… As we continue to retire coalfired power plants — all of them by 2040 — we need to complement wind farms and solar arrays with high reliability assets,” said DTE CEO Gerry Anderson said in the release. “As we Michiganders know well, the wind doesn’t always blow, and the sun doesn’t always shine in our beautiful state. And that’s why we need natural gas-fueled plants like the Blue Water Energy Center.” Kiewit Engineering, a branch of Omaha-based Kiewit Corp., is constructing the Blue Water Plant and hiring more than 500 Michigan skilled laborers for the job starting next spring, according to the release. It will spend a minimum of $200 million on Michigan-based labor and materials. About 35 full-time employees are expected to staff the plant when it’s fully operational in 2022. GE Power, a branch of Atlanta-based General Electric, is providing the generating equipment. Kurt Nagl: (313) 446-0337 Twitter: @kurt_nagl

Toolmakers caught in tariff crossfire By Lindsay Chappell Automotive News

A profit pinch point is developing for automakers and suppliers working on new vehicle platforms: the cost of the tools to build them. Toolmakers are adding tariff costs to their prices, said Laurie Harbour, a consultant who works closely with the North American supplier and tool-and-die industries. Harbour warns that a wave of higher-than-expected bills from tool shops will soon hit the auto industry. Toolmakers are dealing with higher prices for steel as a result of a new 25 percent U.S. import tariff on the metal, as well as tariffs on specific Chinese-made automotive tooling. Imported automotive injection molds have been hit with a tariff, and that is spinning uncertainty through the tooling industry, said Harbour, CEO of Harbour Results Inc. in Southfield. A major shift in automotive tool manufacturing has occurred over the past two decades with China emerging as a key source for North American manufacturers. Further complicating the outlook is how the United States and Canada

Need to know

Toolmakers grapple with higher steel prices due to tariffs on China J

J China is a key source for North American manufacturers J NAFTA dispute complicates the equation

will resolve the North American Free Trade Agreement. Some 80 percent of the auto industry’s injection molds are traditionally produced in Canada — largely in Windsor. In some cases, Canadian tooling companies also now rely on tier two content from China. “Every tool out of Windsor will face an added tax,” Harbour said. “It will change the equation on every part and every vehicle that relies on that tool. “Adding 25 percent to the price of an item can have a huge impact on its profit margin,” Harbour said. “It’s not clear who’s going to absorb the added cost. If I’m a toolmaker, it might be all of the margin I had on the job.” Vehicle projects require large numbers of new tools. A single front fascia package might require the creation of 50 tools. A vehicle rede-

sign could involve $200 million worth of tool orders. Harbour said tool shops and suppliers are scrambling to understand how they will be affected by tariffs on molds, steel and aluminum. She said some of her clients have been asked by customers not to source the tools they now need for future vehicle programs from China. Some suppliers have even been asked to claw back tool orders they made with Chinese vendors, she said. The new border scrutiny is requiring Canadian tool suppliers to provide certificates of origin to account for the content of their products. Harbour is advising clients to assign dedicated managers to track trade issues. “On the positive side, this could be great news for U.S. tool producers,” Harbour said. “We’re already seeing some tool work leave China and come back to North America. I think you could see many customers deciding that it’s just too risky to rely on imported tools, and just opt to make what they need here. “But the trouble right now is the uncertainty,” she said. “These programs move on a tight schedule. There’s not much time for unknown factors.”

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Ford buys former brass factory for Corktown campus Need to know

By Kirk Pinho kpinho@crain.com

Ford Motor Co. has officially assembled a key piece of property it needs for its Corktown campus for autonomous and electric vehicle tech workers. The Alchemy building at 2051 Rosa Parks Blvd. has sold to an entity called 20th Street Properties LLC, according to a news release from Farmington Hills-based Friedman Real Estate LLC, which represented the seller, an entity called 2051 Rosa Parks LLC, owned by Angel Gambino. Mike Koenigbauer, the Friedman vice president of brokerage services on the deal for Gambino, declined to reveal the purchase price but said the deal closed last week. An email seeking comment was sent Wednesday morning to Ford Land

JJAlchemy building to be demolished later this year for 290,000-square-foot, four-story building JJNew building to include 247,500 square feet of office/lab space, 42,250 square feet of commercial space JJAutomaker plans $740 million campus anchored by the vacant Michigan Central Station

Development Co., the automaker’s real estate development arm The Alchemy property totals 3.84 acres and six different addresses: 2200 Rosa Parks, 2067 Rosa Parks, 2091 Rosa Parks, 1947 Dalzelle St., 1923 Dalzelle and 2066 Vermont St. The property is generally bounded by Rosa Parks, Dalzelle, Vermont and Marantette. Ford plans a $740 million cam-

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Squeeze more out of your dental plan. Brix wine bar to close, relocate to New Center By Annalise Frank afrank@crain.com

Brix Wine & Charcuterie Boutique is uprooting its wine bar in Detroit’s West Village neighborhood and moving to New Center. Owner Mikiah Westbrook plans to reopen in the neighborhood north of Midtown in early 2019, she announced last week in a Facebook post. She’ll close the 40-seat bar and lounge in the former bank building at 7968 Kercheval Ave. at the end of the month, after opening around a year ago. The post alludes to difficulties with its landlord, Banyan Investments LLC, also of the Stone Soap building redevelopment. Westbrook didn’t immediately respond to requests for comment. Another of Banyan’s tenants in the West Village bank building, Detroit Body Garage, is leaving next year. That decision was made to accommodate growth, said the gym operation’s owner, Terra Castro. With flower shop Goodness Gracious’ exit last year — also for growth reasons, according to Banyan CEO Aamir Farooqi — the building on a prominent corner in the Villages

Need to know

Banyan Investments LLC could see three new tenants move into its former bank building in West Village J

Brix alludes to difficulties with landlord

Expected to close at end of August, reopen in 2019 J

neighborhood could see three new tenants move in. The corner of Kercheval Avenue and Van Dyke Street is central to the city of Detroit’s commercial corridor plan for the area, and includes streetscaping and mixed-use development. A new 92-residential-unit development led by Detroit-based Roxbury Group and Invest Detroit is also expected to take shape nearby, according to the city. In the Brix Facebook post, Westbrook said she intended to stay in the West Village corridor, but wanted to move on to “a place where we are respected.” She didn't specify to where in New Center Brix would move. “We wish Brix well in their new home and will find an appropriate business to occupy that space which

Brix Wine & Charcuterie Boutique plans to close its West Village location and reopen in New Center.

is in line with the needs of the neighborhood,” Farooqi told Crain’s. He declined to comment further. “We have a huge tenant/landlord issue in this city and something must be done,” Westbrook said in the Facebook post, without men-

BRIX

tioning Brix’s landlord specifically. “I urge the City of Detroit and all of the programs that continue to lend support to NEGLIGENT COMMERCIAL property owners, to make them more accountable for their property ... We need help or we will

see an influx of businesses ... either leave this city or close for good.” Brix’s impending exit would leave Detroit Body Garage as the only publicly known tenant in the building. Another business is expected to move into Goodness Gracious’ old space, according to Farooqi, but he declined to disclose the name. Detroit Body Garage’s owner, Castro, said she expects to move her community exercise operation in summer 2019 to a space quadruple the size. “I’m at a point where I’ve capped myself, in terms of revenue,” Castro previously told Crain’s. She’ll be moving from 1,000 square feet to 4,000 square feet on two floors. The building is about five blocks east down Kercheval, in a redevelopment in the works at Fischer Street from local developers Reimer Priester and Alex DeCamp. Farooqi said he’s considering a restaurant for the Detroit Body Garage space, but it’s too far out to know yet. Two upstairs loft apartments are currently leased. Annalise Frank: (313) 446-0416 Twitter: @annalise_frank

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A rendering of what the former Alchemy brass factory site could look like. This view is looking down Dalzelle Street toward Rosa Parks Boulevard in Detroit’s Corktown neighborhood. FORD MOTOR CO.

pus anchored by the vacant Michigan Central Station on 15th Street off of Michigan Avenue. The train station will be the focal point of the campus, which is spread across multiple buildings and involves redevelopment and new construction on the site of the 89,000-squarefoot Alchemy property. The Ford campus is expected to take about four years to complete. The automaker is asking for about $250 million in local, state and federal tax incentives over 34 years. Gambino bought the Alchemy property in September 2011 for $270,000, according to Detroit land records. It is slated to be demolished later this year to make way for a 290,000-square-foot, four-story building, Richard Bardelli, program manager for Ford Land, said last week during a public meeting of the Neighborhood Advisory Committee on the Ford campus project. What will rise at the former brass factory is 247,500 square feet of office/lab space along with 42,250 square feet of commercial space. The train depot is expected to be turned into about 313,000 square feet of office space, about 42,000 square feet of residential space spread across 40 or so units, 43,000

KIRK PINHO/CRAIN’S DETROIT BUSINESS

The Alchemy property on Rosa Parks Boulevard in Detroit’s Corktown neighborhood. Ford Motor Co. plans to demolish it to make way for a 290,000-square-foot, four-story building with 247,500 square feet of office space and 42,250 square feet of commercial space.

square feet of commercial space and 60,000 square feet of event space. The book depository, designed by Albert Kahn, is expected to be transformed into 205,000 square feet of office space and 20,000

square feet of commercial space. Major construction work on the train station is expected to begin early next year, with a year being spent stabilizing the building and another two years spent restoring it. Major work on the book depository

is expected to begin early next year. The Southfield office of Los Angeles-based brokerage firm CBRE Inc. represented Ford in the deal. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

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CALENDAR WEDNESDAY, AUG. 29 The Cash Flow Factory Workshop Series. 8:30-10 a.m. Aug. 29. Michigan CFO Associates. A three-part educational workshop on techniques for business improvement. Part 1: Creating the Cash Flow Factory. Part 2: 10 Keys to a Healthy Business. Part 3: Four Key Systems Every Business Needs. Free. Automation Alley, Troy. Contact: Kellee Warren, phone: (586) 580-3285; email: kwarren@michigancfo.com; website: michigancfo.com/publications/event

THURSDAY, AUG. 30 Market Research Basics. 9-11:30 a.m. Aug. 30. Oakland County One Stop Shop Business Center. Workshop helps businesses find customers, identify competitors, perform competitive analysis, identify new site locations, target direct mail campaigns, reveal untapped markets and expand to new and appropriate markets. Oakland County Executive Office Building Conference Center, Waterford Township.

Free. Registration required. Phone: (248) 858-0783; email: smallbusiness@oakgov.com; website: eventbr ite.com/e/market-research-basics-august-30-registration-46439188864

UPCOMING EVENTS Michigan’s Competitive Advantage: The URC, Economy and Our Collective Future. 11:30 a.m.-1:30 p.m. Sept. 5. Detroit Economic Club. Presidents from Michigan’s University Research Corridor will release findings from its 2018 Economic Impact Report by Anderson Economic Group. Includes: Interim Michigan State University President John Engler, University of Michigan President Mark Schlissel and Wayne State University President M. Roy Wilson, M.D. $45 members, $55 guests of members, $75 nonmembers. Westin Book Cadillac. Phone: (313) 963-8547; email: info@econclub.org; website: econclub.org The ROI of ESG: How Environmental, Social and Governance

Practices Impact Corporate Value. 3-6 p.m. Sept. 6. Crain’s Detroit Business Custom Content Studio. Environmental, Social and Governance performance encompasses everything from diversity and inclusion, to consumer demands and transparency, to supplier engagement and corporate board behavior. Featured keynote: Jackie VanderBrug, managing director, Global Portfolio Solutions, Bank of America Merrill Lynch. Panelists include Frank Venegas Jr., chairman and founder, The Ideal Group Inc. Waterview Loft at Port Authority, Detroit. Free. Phone: (313) 446-0300; email: cdbevents@crain.com Connecting Cultures to Business Luncheon. 11 a.m.-1:30 p.m. Sept. 13. Schoolcraft College. How to successfully manage a multicultural, multigenerational workforce from a woman’s point of view. Panel will be led by Crain’s Detroit Business’ Kristin Bull and will feature: Sumaiya Ahmed Sheikh, Michigan Muslim Community Council; Caroline Vang-Polly, Thai Feast and Bangkok 96; Ronia Kruse,

OpTech, LLC; and Mary Engelman, Michigan Civil Rights Department. $30 member; $40 guest. Schoolcraft College VisTaTech Center. Contact: Laura Tahmouch, phone: (734) 427-2122; email: tahmouch@ livonia.org; website: livonia.org The Impact of Additive Manufacturing On Small Manufacturers. 8 a.m.-noon Sept. 18. Lawrence Technological University. Session will include case studies that share how companies are applying new generation tools to improve the delivery of durable goods. The event includes exhibits featuring regional additive manufacturing service firms, a live additive manufacturing casting demonstration as well as a tour of Lawrence Technological University’s Additive Manufacturing Lab. LTU Buell Building. Free with online registration. Email: mbrucki@ ltu.edu; website: ltucollaboratory. com/events/techtuesday-additive-manufacturing/ Entrepreneur and Small Business Conference: Small Busi-

ness Doing Big Business. 9 a.m.-4 p.m. Oct. 3. National Entrepreneurs Association. Event will focus on specific strategies entrepreneurs can implement to scale and generate larger profit margins. Topics include working with corporations, government contracting, joint ventures, funding large projects and digital marketing. Speakers include Joe Anderson, chairman and CEO, Tag Holdings LLC; Alina Morse, founder, Zollipops; Rochelle Riley, author and columnist, Detroit Free Press and Dawn Verbrigghe, digital marketer and founder, Jottful. $97. Lawrence Technological University. Contact: ZaLonya Allen, email: supportstaff@nationalentrepreneurs.org; website: nationalentrepreneurs.org To submit calendar items visit crainsdetroit.com and click “Events” near the top of the home page. Then, click “Submit Your Events” from the drop-down menu that will appear. Fill out the submission form, then click “Submit event” at the bottom of the page. More Calendar items can be found at crainsdetroit.com/events.

C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // A U G U S T 2 7 , 2 0 1 8

CRAIN'S LIST: LARGEST HEALTH CARE INSURERS/ MANAGED CARE PLANS Ranked by 2017 Michigan revenue Rank

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Company Address Phone; website

SE Mich. SE Mich. SE Mich. enrolled SE Mich. enrolled Michigan SE Mich. enrolled members in enrolled members revenue Mich. revenue members HMO/ members in ($000,000) percent ($000,000) year-end DHMO in PPO POS Other Top local executive(s) 2017/ 2016 change 2017/ 2016 2017/2016 plan plan plan members Types of health plans

Blue Cross Blue Shield of Michigan/ Blue Care Network

Daniel Loepp president and CEO

$26,900.0 3.9% $25,900.0 B

$26,900.0 4,623,292 C 1,065,483 3,381,666 $25,900.0 B 4,618,800 C

600 E. Lafayette Blvd., Detroit 48226 (313) 225-9000; www.bcbsm.com Rick Morrone Priority Health SVP, employer 27777 Franklin Road, Suite 1300, solutions Southfield 48034 (800) 942-0954; www.priorityhealth.com Teresa Kline Health Alliance Plan of Michigan D president and CEO 2850 W. Grand Blvd., Detroit 48202 (313) 872-8100; hap.org Meridian Health Plan of Michigan Inc. Sean Kendall president and COO 1 Campus Martius, Suite 700, Detroit 48226 (313) 324-3700; www.mhplan.com Laura Czelada F Delta Dental of Michigan president and CEO Farmington Hills and Okemos (800) 524-0149; www.deltadentalmi.com Christine Surdock Molina Healthcare of Michigan Inc. 100 W. Big Beaver Road, Suite 600, Troy president 48084 (248) 925-1700; www.molinahealthcare.com Nancy Jenkins McLaren Health Plan Inc. president & CEO G-3245 Beecher Road, Flint 48532 (888) 327-0671; www.McLarenHealthPlan.org Dustin Hinton, CEO, UnitedHealthcare UnitedHealthcare 26957 Northwestern Hwy., Suite 400, Michigan and Southfield 48034 Wisconsin (800) 842-3585; uhc.com

176,143 PPO, HMO, HSA-eligible products, Medigap, Medicare Advantage, Medicare Part D, commercial prescription drug plans, dental and vision benefits, Medicaid HMO

3,646.6 3,406.9

7.0

523.7 275.1

800,153 755,754

HMO/PSO, Medigap, PHIC, Medicare Advantage, Medicare PDP, Medicaid, Self-funded

2,389.7 2,480.7

-3.7

NA 1,897.3

628,929 662,846

296,134

77,986

13,280

2,201.8 2,420.8 E

-9.0

2,201.8 NA

517,338 504,832 E

1,983.1 1,813.4

9.4

939.6 937.6

2,605,679 2,633,565

1,949.3 E 2,104.8 E

-7.4

NA NA

398,239 E 391,148 E

969.6 NA

0.0 NA

255,465 NA

5,701

32,491

22,975

428.0 420.0

1.9

428.0 420.0

NA NA

241,529 HMO, POS, PPO, EPO, EPA, ASO, TPA

Medicaid, Medicare HMO

60,218 2,522,562 27,789 Delta Dental Premier, Delta Dental PPO

Medicaid, Medicare

194,298 Small Group; Rewards: Platinum, Gold, Silver; Standard: Platinum, Gold, Silver, Bronze; HSA: Platinum, Gold, Silver, Bronze ; HRA: Platinum, Gold - Large Group; POS; HMO; HSA; HDHP

Aetna Better Health 1333 Gratiot, Suite 400, Detroit 48207 (313) 465-1519; www.aetnabetterhealth.com/Michigan

Pamela Sue Sedmak president and CEO

349.5 E 340.2 E

2.7

NA NA

50,421 E 52,064 E

Upper Peninsula Health Plan LLC 228 W. Washington St., Marquette (906) 225-7500; NA

Melissa Holmquist G CEO

292.8 E 283.6 E

3.2

NA NA

48,579 E 47,852 E

Medicaid, Medicare

182.4 E 178.6 E

2.1

NA NA

34,779 E 36,158 E

150.0 136.4

10.0

150.0 136.4

34,348 40,800

31,696

2,652

139.0 H 138.6

0.3

NA NA

3,762,860 1,800,550

77.3 E 115.1 E

-32.9

NA NA

10,610 E 30,074 E

54.3 E 46.9

15.9

NA 46.9

2,478 E 4,125

Medicare, Medicaid, HMO

44.5 E 51.8 E

-14.0

NA 51.8

9,337 E 10,162 E

Medicaid, HMO

21.7 E 22.3 E

-2.3

NA NA

1,986 E 1,912 E

Medicare, Medicaid, commercial

Dennis Reese Physician Health Plan president 1400 E. Michigan Ave., Lansing 48912 (517) 364-8400; www.phpmichigan.com Randy Narowitz Total Health Care USA Inc. 3011 W. Grand Blvd., Suite 1600, Detroit CEO 48202 (313) 871-2000; www.thcmi.com M. Scott Mitchell, Vision Service Plan VSP 2000 Town Center, Suite 725, Southfield market director; Barbara Aikman, 48075 senior account (248) 350-2082; www.vsp.com executive Bruce Broussard Humana Medical Plan of Michigan 250 Monroe NW, Ste. 400, Grand Rapids president and CEO 49503 (502) 580-1000; www.humana.com Amy Williams Michigan Complete Health Inc. CEO (formerly Fidelis SecureCare of Michigan Inc.) I 800 Tower Drive, Suite 200, Troy 48098 (877) 373-8085; www.fidelissc.com Jesse Thomas Harbor Health Plan Inc. CEO 3663 Woodward Ave., Detroit 48201 (313) 578-2234; www.harborhealthplan.com John Randolph Paramount Care of Michigan president 106 Park Place, Dundee 48131 (734) 529-7800; www.paramounthealthcare.com

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

B Revenue includes premiums and premium equivalents of both fully insured and self-funded business. C Does not include members who are part of Michigan-based groups but reside outside of Michigan. D Merger of HealthPlus of Michigan in Flint and Health Alliance Plan in Detroit was approved in February 2016. E From Department of Insurance and Financial Services. F Plans to retire in December. The board named current COO Goran Jurkovic to replace her, effective Jan. 1. G Succeeded Dennis Smith in July. H Company estimate. I Effective April 1, 2017, Fidelis became Michigan Complete Health Inc. An expanded version of this list is available with a Crainâ&#x20AC;&#x2122;s membership at crainsdetroit.com/lists

C R A I N ’ S D E T R O I T B U S I N E S S // A U G U S T 2 7 , 2 0 1 8

$59 million Wayne State business school opens By Annalise Frank afrank@crain.com

When Wayne State University students start classes this week at the new Mike Ilitch School of Business, they’ll enjoy classrooms with views of downtown Detroit’s skyline and state-of-the-art facilities in a sleek 125,000-square-foot building on Woodward Avenue. The Ilitch family starred in a ribbon-cutting ceremony Tuesday for its patriarch’s namesake business school, 2 1/2 years after the largest donation in Wayne State University history jump-started its construction. The Mike Ilitch School of Business is the product of a $40 million gift from Marian and Mike Ilitch, who died Feb. 10, 2017, at 87. It sits just north of Little Caesars Arena as part of the 50-block District Detroit development by Ilitch Holdings Inc. and Olympia Development of Michigan. Need Mike Ilitch led to know the Little Cae 4,000-student sars pizza emMike Ilitch School pire and owned of Business set for the Detroit Tiits first semester in gers and Red new downtown Wings with his Detroit building wife Marian, known as the  Ilitch family's family’s financial impact featured mastermind. prominently in The Wayne ribbon-cutting State business  CEO Chris Ilitch school, estabpraises parents, lished in 1946, Detroit resurgence migrated from Wayne State’s Midtown campus in June. It is expected to enroll 4,000 this year as it debuts on Woodward Avenue. Classes start Aug. 29. Twenty MBA students are taking on a new concentration in sports and entertainment management that includes internships with local sports teams and venues, school of business Dean Robert Forsythe said during a media tour Monday ahead of the ribbon-cutting. Wayne State created the concentration, and an entrepreneurship and innovation program, as part of the donation agreement, Forsythe said. Joint venture Christman-Brinker led construction of the $59 million building with a two-story atrium, 260-seat Lear Auditorium and planned Avalon International Breads grab-and-go cafe.

Impact of ‘Mr. I’ The Ilitch stamp is evident not just in the curriculum, but also in the building’s aesthetic. A memorial wall on the first floor for Mike Ilitch is in the design stage, and a prominent stairway sign features the school’s “three I’s” after the Ilitches, Forsythe said: industry, intelligence and integrity. “We’re looking for ways to tell (Mike Ilitch’s) story to inspire our students,” he said. Son Chris Ilitch, president and CEO of Ilitch Holdings Inc., spoke Tuesday about the bright spot the business school marked in the family’s legacy. He acknowledged his mother, Marian, who received a standing ovation, and commended her as a “visionary and true champion for Detroit.” Ilitch also spoke about the new business school’s placement downtown as a boon for students and a

A two-story atrium sits at the center of Wayne State University’s new Mike Ilitch School of Business building in downtown Detroit, just north of Little Caesars Arena. The school and the Ilitch organization held a ribbon-cutting ceremony Tuesday ahead of the first semester in the new building. ANNALISE FRANK/ CRAIN’S DETROIT BUSINESS

ANNALISE FRANK/CRAIN’S DETROIT BUSINESS

Chris Ilitch, president and CEO of Ilitch Holdings Inc., speaks Tuesday about his parents’ legacy, in which their $40 million donation for the Mike Ilitch School of Business features prominently.

Enrollment soars Graduate MBA enrollment has increased by 65 percent and total enrollment at Wayne State University's business school has increased by 30 percent since the Ilitches' $40 million gift was announced in October 2015, the university said.

notch in the city’s nascent revitalization. “The timing couldn’t be more perfect,” he said. “With all the hard work that’s been done across our community by so many dedicated Detroiters, the momentum now going exceptionally strong and so much more to come from our organization and so many others. Detroit, I believe, is at a breakthrough point in its resurgence.” Mike Ilitch has a complex legacy that includes commended resto-

ration and controversial demolition, and the organization has drawn criticism for slow or no progress on transforming vacant lots. The Ilitch organization continues work on the Little Caesars Global Headquarters expansion downtown and nearby Columbia Street retail and restaurant corridor, Chris Ilitch said after the event. Most recently the Ilitch organization drew criticism for seeking approval to tear down the Alden Apartments at 145 Temple St., in the shadow of Little Caesars Arena. A DMC Sports Medicine Institute was announced in June next to the business school and work on redeveloping the Hotel Eddystone has missed a deadline. Annalise Frank: (313) 446-0416 Twitter: @annalise_frank

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 2 7 , 2 0 1 8

PEOPLE

DEALS & DETAILS ACQUISITIONS & MERGERS JJUniversal

Logistics Holdings Inc., Warren, a trucking company, has acquired Southern Counties Express Inc., Compton, Calif., a trucking company. Websites: universallogistics. com, scexpress.net JJPolk & Associates PLC, Bingham Farms, an accounting firm, has merged with Kirschner, Hutton, Perlin PC, Southfield, an accounting firm. Website: polkcpa.com

CONTRACTS JJMedNetOne

Health Solutions, Rochester, a health care management organization, has been selected by Solera Health Inc., Phoenix, a health benefit network, to implement diabetes prevention programs for Blue Cross and Blue Shield of Michigan and Blue Care Network Medicare Advantage plan participants. Websites: www3.mednetone.net, soleranetwork.com JJHuron Capital Partners, Detroit, a private equity firm, has partnered with KCM Capital Partners, Chicago, and Stonehenge Partners, Columbus, Ohio, in a joint investment in Atlantic Beverage Company Inc., Edison, N.J., a national food service provider. Website: huroncapital.com JJLiebler Group, Detroit, a public relations firm, has signed four new clients: Anderson, Eckstein and We-

strick Inc., Shelby Township, a civil engineering, design and architectural firm; SEG Automotive North America LLC, Novi, an automotive supplier; Westborn Markets, Dearborn, a supermarket chain; and the Center for Neurological Studies, Dearborn, a center for neurobehavioral disorders studies. Websites: lieblergroup.com, aewinc.com, seg-automotive.com, westbornmarket.com, neurologicstudies.com JJQualitech, Bingham Farms, a technology integrator and software re-seller, has upgraded the computer network at Dembs Development Inc., Farmington Hills, a development, construction and property management company, with a new Intel file server and upgraded the computer network at Miller & Tischler PC, Farmington Hills, attorneys, with a new SQL server and full integration with their existing network. Website: qualitech.net JJThe Robotic Industries Association, Ann Arbor, a trade organization, has formed a partnership with MassRobotics, Boston, Mass., a nonprofit organization and hub of robotics startups, to support and advance innovations and technologies from robotics organizations. Websites: robotics.org, massrobotics.org JJTrialAssure, Canton Township, developer of clinical trial transparency tools, has an agreement with Otsuka Pharmaceutical Development and Commercialization Inc., Princeton,

N.J., a pharmaceutical company, to implement its transparency management system for all compounds in Otsuka’s drug development pipeline. Websites: trialassure.com JJGolf Digest Planner, Bloomfield Hills, has a five-year contract extension with Golf Digest and J. Ryder Group, Bloomfield Hills, to provide the software to charities, schools, nonprofits and corporations nationwide for planning, organizing and hosting golf tournaments and golf outing fundraisers. Website: golfdigestplanner.com

EXPANSIONS JJMiller

Vein, Novi, a chain of vein treatment centers, has opened at 2251 North Squirrel Road, Auburn Hills. It is Miller Vein’s sixth location, and Michael Bischoff, M.D., will serve as medical director. Phone: (248) 2207375. Website: millervein.com JJRemedi SeniorCare, Towson, Md., a post-acute care pharmacy, has opened a pharmacy at 14700 Helm Court, Plymouth. Phone: (833) 7541260. Website: RemediRx.com

NEW SERVICES JJMoss & Colella P.C., Southfield, a law firm, has launched a new website mosscolella.com. The site was created by Greening Corporation United, West Bloomfield, a web design and SEO firm.

ACCOUNTING J Jeff Henaughen to partner, Cole, Newton & Duran CPAs, Livonia, from partner, Nicolas, Henaughen & Figurski LLC, Livonia.

ARCHITECTURE J Angela Wyrembelski to associate, Quinn Evans Architects Inc., Detroit, from designer. Also, Brandon Friske to senior designer from designer; Brian Moore to designer from staff designer and Derek Polk to designer from staff designer.

HEALTH CARE J Debra Griffith to vice president of development, Children’s Leukemia Foundation of Michigan, Farmington Hills, from Office of Development, Michigan Medicine, University of Michigan, Ann Arbor.

MANUFACTURING Tonit Calaway to executive vice president, chief legal officer and secretary, BorgWarner Inc., Auburn Hills, from executive vice president and chief human resources officer. J

To submit news of your new hires or promotions to People, go to crainsdetroit.com/peoplesubmit. Please limit submissions to management- or partner-level positions.

ADVERTISING SECTION To place your listing, please visit: www.crainsdetroit.com/onthemove or for more information, call Debora Stein at (917) 226-5470, email: dstein@crain.com

ENGINEERING & CONSULTING

ACCOUNTING Jason Miller Manager, Tax Services

RSM US LLP

Catherine M. DeDecker, PS

David MacDonald Marketing Manager

Business Development Manager

Spalding DeDecker Spalding DeDecker is proud to announce that vice-president and professional surveyor Catherine M. DeDecker, PS was promoted from Marketing Manager to Business Development Manager. Catherine will be responsible for creating business opportunities, building client relationships, and driving the growth of Spalding DeDecker. With more than 33 years of experience, Catherine began her career as a survey rodman and held many positions before becoming the Business Development Manager. Spalding DeDecker is pleased to announce that David MacDonald has joined the team as the new Marketing Manager. Mr. MacDonald will be responsible for designing and implementing marketing strategies to drive growth. In addition, he will increase brand development and messaging. Most recently, David spent 9 years as a Senior Consultant for DNV GL Energy Services where he provided marketing consulting to major utility companies in North America.

RSM US LLP, the leading provider of assurance, tax and consulting services focused on the middle market, has promoted Jason Miller to manager. Miller, a CPA with nearly 10 years of experience, provides a full spectrum of corporate and individual tax services, including advising and providing clients with tax planning, research and compliance. Miller’s experience includes serving clients in the automotive, manufacturing and distribution, and food service industries.

AUTOMOTIVE Laurent Borne Chief Technology Officer

Stoneridge, Inc. In this newly created position, Borne will support the company’s focus on developing future vehicle technologies, and help increase market demand for its advanced electrical and electronic mobility products. Borne most recently served as vice president of product development, global dishwasher platform, at Whirlpool Corporation. From 2010 to 2018, he held several roles of increasing responsibility at Whirlpool, McKinsey & Company and Delphi Powertrain Systems.

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

SPOTLIGHT Wayne County lead on jail effort leaves for Kresge Foundation

With the issues surrounding the failed Wayne County jail site in downtown Detroit settled, the county’s corporation counsel Zenna Elhasan is departing for the Kresge Foundation. She will serve as the Troybased foundation’s first lead attorney. Elhasan Elhasan will advise the foundation on legal matters, support the development and enforcement of foundation policies and practices and manage outside counsel relationships. She will officially join Kresge on Oct. 1.

Detroit PAL executive to leave for new role

Nonprofit veteran Russ Russell, who guided Detroit Police Athletic League in a $20 million fundraising campaign to redevelop the former Tiger Stadium site, is leaving for a new role. Russell is stepping down from his position as chief advancement offiRussell cer at the Detroit-based youth nonprofit for a role as chief development officer for Lathrup Village-based South Oakland Shelter, starting Aug. 27. Russell, 59, replaces Omari Taylor, who was hired to the chief development position in June 2017. Taylor is leaving the role to return to Gleaners Community Food Bank of Southeastern Michigan, where he worked as communications director until 2015. His new title is director of executive communications.

Former Key Safety CFO joins Busche Performance as CEO

Joseph Perkins, the executive who led Key Safety Systems’ push to acquire Takata Corp. in a $1.6 billion deal that closed in April, has left the supplier to become the CEO of Albion, Ind.-based Busch Performance Group. Perkins, 50, takes on the newly created role for founder Nick Busche, who will continue to serve as the company’s president and COO. Perkins will be based Busche’s technical center in Southfield.

Charity Dean to lead Detroit civil rights department

The city of Detroit has appointed a new director for its Department of Civil Rights, Inclusion and Opportunity. Charity Dean, 34, succeeds Portia Roberson starting Aug. 27, according to a news release from the city. Roberson is leaving city government to become CEO of Detroit-based nonprofit Focus: Hope. Dean comes from the city’s Bridging Neighborhoods Program, where she serves as director.

C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // A U G U S T 2 7 , 2 0 1 8

FACEBOOK.COM/CRAINSDETROIT

JOB FRONT

A rendering of the planned Henry Ford Medical Center at Village of Bloomfield in Bloomfield Township.

CLOSER FROM PAGE 3

Riney said Henry Ford has no plans to add urgent care centers. It currently operates four freestanding urgent care centers and four others connected either with hospitals or medical centers. Since the Affordable Care Act of 2010 expanded primary care, the number of urgent care centers has exploded in Michigan and nationally as patients seek to avoid a steep emergency room bill or visit more convenient health care settings. Data show there are more than 350 urgent care or walk-in clinics in Michigan, including more than 45 within 20 miles of Detroit, according to Urgent Care Locations LLC. Urgent care centers typically provide basic nonemergency services, wellness checks and occupational health services. Nonemergency services that include fevers, coughs, upper respiratory infections and sore throats, along with muscular and bone injuries can be treated in urgent care settings. Most health insurers in Southeast Michigan contract with urgent centers because of their lower cost compared with emergency rooms. DMC plans to open at least two more urgent care centers under the MedPost banner in 2019, locating most in Detroit but also in the suburbs, where it operates most of its nine MedPost Urgent Care centers, said Joel Keiper, DMCâ&#x20AC;&#x2122;s chief strategy for officer in Detroit and Chicago operations. MedPost is one of several outpatient brands owned by United Surgical Partners International Inc., a company partly owned by DMCâ&#x20AC;&#x2122;s parent, Tenet Healthcare Corp. of Dallas. â&#x20AC;&#x153;DMC had a long-standing culture of using its ERs as front doorâ&#x20AC;? to the hospitals, said Keiper, adding that a growing number of patients now prefer easier access, convenience and lower prices for nonemergency services. Over the past several years, visits to hospital emergency departments have declined as people have chosen urgent care centers more often. â&#x20AC;&#x153;There has been changing patient behavior and a shift in the market share data,â&#x20AC;? Keiper said. â&#x20AC;&#x153;Emergency medical services visits are down 2 percent (this year) in the market, down about 25,000 visits. The bulk has gone to urgent cares. We are up 50,000 visits in urgent care and down about 6,000 visits in the ED (of 350,000 annual visits).â&#x20AC;? Because of the shift from inpatient to outpatient care, ambulatory, out-

patient and physician office employment has skyrocketed the past decade to 7.5 million in July from 5.7 million in 2008, according to the U.S. Bureau of Labor Statistics. So far this year, the ambulatory sector has added 104,000 new jobs. In comparison, hospitals added 47,000 jobs this year to 4.7 million. Earlier this year, Ascension Health, the nationâ&#x20AC;&#x2122;s largest nonprofit health company with 15 hospitals in Michigan, announced it would devote more resources in the future to outpatient and telemedicine services than traditional hospital-based care because of changing consumer demand and insurance company reimbursement policies, according to CEO Anthony Tersigni. In Southeast Michigan, Ascension operates five hospitals, including its flagship hospital Ascension St. John Hospital in Detroit, and dozens of employed physician offices, clinics and outpatient diagnostic and clinical centers. Ascension spokesman Brian Taylor said the Catholic system is looking to expand outpatient services for patients in St. Clair County and considering building new ambulatory care sites in northern Macomb, northern and western Oakland counties. Taylor said new telemedicine initiatives, which include behavioral health and neurosciences, also are expected to be developed. Moreover, remote care monitoring will make it possible for clinicians to track and manage patients in their homes. Online patient scheduling will provide easier access to physicians and clinics, he said. DMCâ&#x20AC;&#x2122;s pediatric outpatient center strategy also is designed to be convenient for families and to allow for smoother care coordination, said Jacqlyn Smith, chief strategy officer with DMC Children's Hospital of Michigan. â&#x20AC;&#x153;We want to be in the familiesâ&#x20AC;&#x2122; communities and donâ&#x20AC;&#x2122;t want to force folks to drive or travel distances,â&#x20AC;? Smith said. â&#x20AC;&#x153;It is so much easier to follow through with appointments and to move from inpatient to outpatient.â&#x20AC;? DMC has six pediatric ambulatory centers, including a major facility in Troy and in Detroit across from Childrenâ&#x20AC;&#x2122;s Hospital. The other clinics are located in Clinton Township, Southfield, Dearborn and Canton. DMC also operates several ambulatory surgery centers and 36 rehabilitation outpatient clinics.

HENRY FORD HEALTH SYSTEM

Henry Ford expansion

of 2019 a $38 million outpatient medical center at the Village of Bloomfield, an 87-acre mixed-use development in Bloomfield Township in Oakland County. The Village of Bloomfield is being developed by Southfield-based Redico LLC, which will also develop Henry Fordâ&#x20AC;&#x2122;s medical center. Henry Fordâ&#x20AC;&#x2122;s 29th full-service medical center at the Village will be a two-story, 83,000-square-foot facility. It will initially offer primary care and womenâ&#x20AC;&#x2122;s health, a walk-in clinic, pharmacy, OptimEyes clinic and retail services. Riney told Crainâ&#x20AC;&#x2122;s that two more outpatient medical centers are being considered. He said a newly located and expanded Henry Ford Medical Center in Royal Oak will be built in the 10 Mile Road area sometime in 2020. However, an exact location has not been picked. The current location of the medical center is 26300 Woodward Ave., four miles south of Beaumont Hospital in Royal Oak. Another new site will be somewhere in Macomb County, Riney said. Another medical center expansion will likely happen Downriver in Brownstown Township, where Henry Ford operates a smaller clinic, he said. â&#x20AC;&#x153;Our goal continues to be population health strategy. We want a holistic way to treat patients,â&#x20AC;? Riney said. â&#x20AC;&#x153;We see our hospitals as an important and critical part of our portfolio. We see ambulatory as a convenience level for the community. People donâ&#x20AC;&#x2122;t want to travel far for care.â&#x20AC;? Riney said payer reimbursement also is shrinking, and patients want lower-cost settings for care. â&#x20AC;&#x153;Patients definitely want outpatient if they can get it. There are more surgical procedures done outpatient than ever before because of technology.â&#x20AC;? But Riney confirmed that one strategy Henry Ford pursued the past five years with CVS Pharmacy would be ending. Henry Ford Medical Groups, the systemâ&#x20AC;&#x2122;s 1,200-member employed group, has contracted with CVS to provide medical directors for several of CVSâ&#x20AC;&#x2122; Minute Clinics in Southeast Michigan. â&#x20AC;&#x153;CVS is moving away from managed care models in markets,â&#x20AC;? said Riney. â&#x20AC;&#x153;They want to get away from a single or exclusive arrangement with a single provider. As they are moving away from that model, we are seeing more and more done on an ambulatory basis and are looking at how that gets organized.â&#x20AC;?

Earlier this year, Henry Ford announced it plans to open in the fall

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

POSITIONS AVAILABLE

Engineering Intel Americas, Inc. has opening(s) in Novi, MI. Combination ed/exp accepted in some positions in lieu of degree. To apply, email resume to Novi_Jobs@intel.com and reference the job # below. Apply to each job # of interest. Applications will be accepted through 10/18/18. EOE

The Marvin L. Winans Academy District is seeking certified, motivated K-8 Teachers (All Subjects) and Perorming Arts Teachers (Vocal, Band, Drama and Dance) for the 2018 - 2019 school year. Must have Teacher Certification. The school offers competitive wages, employer match 401(k) program, great benefits and a clean, safe environment. Applicants can forward resumes to HR@solidrock-management.com

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MARKET PLACE REQUEST FOR PROPOSALS

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C R A I N ’ S D E T R O I T B U S I N E S S // A U G U S T 2 7 , 2 0 1 8

WAGES FROM PAGE 1

“I do think that the labor market is tightening. That’s happening all over the country, but it may be happening to a greater extent in the Detroit area than in some other areas,” said Charles Ballard, economist at Michigan State University. “I would say that rising from the bottom is a significant part of the story of the Michigan economy over the last eight years. The Great Recession did more damage to Michigan than to most other parts of the country, which left our economy with more slack than most. In terms of per-capita personal income, Michigan has had faster growth than the national average for most of the last eight years. Gov. (Rick) Snyder and Lt. Gov. (Brian) Calley would like to portray that as a result of their brilliant economic policies, but I think it’s more the result of a process of rebounding from the recession.” But the actual dollars in the pockets of local workers remains meager compared to many other regions and are largely stymied by cost of living increases — up 2.9 percent not seasonally adjusted from July 2017 to July 2018, the U.S. Labor Department reported earlier this month. This totally wiped out the wage gains for the national average at 2.7 percent. Many Americans are, in fact, poorer now than they were a year ago. For instance, wages in Wayne and Macomb counties rose only 2 percent and 2.1 percent between June 2017 and June 2018 — meaning the rising wages didn’t exceed the national average rise in the cost of living. The cost of living index was up 3.6 percent in the Detroit MSA over the same time period. So while residents in Wayne County saw $24 more dollars on average in their weekly paycheck, those gains were wiped out by the rising costs of goods, such as medical care, energy costs and mortgage and rent. And wage growth isn’t equitable either. The region’s wage growth, though muted by increases, is largely

OWNERS FROM PAGE 1

The ballot initiative pits progressives against fine-dining restaurateurs who say raising the minimum wage for their servers will reduce others’ wages or force restaurant owners to change the business model to remain solvent. “This is going to push wages down for many employees and will result in taxing the customers up front,” said James Rigato, executive chef and owner of Mabel Gray and majority owner of Doug’s Delight, both in Hazel Park. “I appreciate the sentiment, but as this stands now, it’s very damaging to the structure of the food scene.” Rigato said he may be forced to change Mabel Gray’s service model from a traditional reservation- and drop-in-based restaurant to an event-like system, where tickets for a set tasting menu are sold ahead of time. The theory here is that Rigato could dictate what a set number of guests will eat and what that will cost the restaurant, allowing him to predict the balance sheet every evening.

LISA SAWYER/CRAIN’S DETROIT BUSINESS

“I do think that the labor market is tightening. That’s happening all over the country, but it may be happening to a greater extent in the Detroit area than in some other areas.” Charles Ballard

LISA SAWYER/CRAIN’S DETROIT BUSINESS

buoyed by Oakland and Livingston counties. Oakland County residents saw their wages increase 4.2 percent over the year, resulting in an average

of $51 extra in their weekly paychecks. Livingston, on the other hand, saw an incredible rise in wages,

“This is a victory both for voting rights and for workers in need of one fair wage to take care of their families.”

ordering portals that put placing an order into the hands of customers, freeing up servers’ time to take on more table coverage. The result, of course, would be fewer servers employed by the restaurant. “I’m not in a position now to tell you how we’ll change, but we know three things: We don’t want to take value away from our guests, money out of the pockets of our employees and we don’t want to not grow our business,” Sasson said. “Every business will have its own solution to adapt, if that can do so quick enough, but some will probably realize the blood, sweat and tears are no longer worth it.” Michigan won’t be alone in implementing new higher minimum wages, joining 18 states since Jan. 1 this year alone. Restaurateurs in those states have adjusted in many of the ways Rigato and Sasson suggest. Cajun-inspired Oakland, Calif. seafood restaurant AlaMar switched from a traditional full-service model to a counter-service model, where customers order and pick up food at the counter, much like a fast-food restaurant, Eater reported earlier this year. In Oakland, voters passed a ballot initiative in 2014 tying annu-

Darci McConnell

Jeremy Sasson, founder and CEO of Heirloom Hospitality and board member of the Michigan Restaurant Association, said restaurateurs should be planning now for changes as the costs of operation will increase if the law passes. Heirloom operates American restaurants Townhouse in Birmingham and near Campus Martius in Detroit; steakhouse Prime + Proper, also near campus Martius; and seasonal Latin-inspired restaurant Clementina in Capitol Park in Detroit. Sasson said most restaurants will have to increase prices for certain menu items, while others will install a service charge that covers increased costs and lost tips for workers. Another option is to implement expensive technology, such as tablet

growing 17.4 percent between June 2017 and June 2018 adding an additional $151, on average, to weekly wages. But the Livingston County data could actually reveal that wage growth in the region is, in fact, lower than reported. BLS calculates wage growth by sampling employers and a large, high-wage employer could skew the data set for the entire county, Alex West, director of research for Ann Arbor Spark, which handles economic development for Livingston County, said in an email to

“This is going to push wages down for many employees and will result in taxing the customers up front.” James Rigato

al minimum wage increases to percentage changes in the Consumer Price Index, a metric that measures changes in price of common products and services. Minimum wage is currently $13.23 an hour in Oakland. AlaMar turned the wage hike into success, increasing sales by 17 percent and slashing menu prices by 30 percent to 50 percent, albeit by cutting staff, Eater reported. That’s the fear among those in the restaurant industry, that minimum wage increases will decimate the food industry’s labor ranks. But early studies measuring wage increases in places like Seattle, which began gradually raising the minimum wage in 2015 until it reaches $15 per hour by 2021, aren’t showing that decline. Seattle’s minimum-wage law has led to increased pay for restaurant workers without impacting the over-

Crain’s. West could not point to any new development or hiring effort that would account for that leap in wages for the county. While the BLS dataset is accurate, it’s in contrast to what they are hearing from employers in the region. West said. “Employers are telling us that the competitive market for talent is compelling them to stand out not by adjusting wages, but by offering training programs, workplace ‘culture’ perks, flexible schedules, etc,” she wrote. Basically, the Livingston County data as an outlier could be artificially raising the wage growth for the entire region, meaning it’s not doing as well as the data suggests. Only time will tell whether it’s a longterm trend or a blip in the data. And while the wage growth for the region rings of positive momentum for workers, the reliance on manufacturing poses a threat that those wages could retreat soon, said Michael Belzer, economist and associate professor at Wayne State University. “I want to emphasize the normality of this; we’re at a late stage in the economic expansion cycle,” Belzer said. “We’re nearly ten years into the recovery, which is unheard of, and we’re operating a much more normal basis now. What we have here is a temporary bump in manufacturing employment bumping up wages.” Experts predict U.S. car sales to reach 17.2 million units this year, but expect sales to slump in 2019 as a recession could be looming. Economists polled by the Wall Street Journal in July expect a recession to hit the U.S. in 2020. That will likely lead to layoffs and production shifts in Southeast Michigan, causing wages to once again fall. “While it’s really good news that manufacturing is recovered and strong again, it’s important to note that it won’t be this good forever,” Belzer said. “As soon as the economy turns, and it will, those wages will go down quickly again.” Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh all jobs in the industry, according to a 2017 study from the University of California, Berkeley. Though those wage increases were muted in the full-service restaurants similar to Rigato’s Mabel Gray and Sasson’s Prime + Proper, they benefited the workers at franchised fast-food restaurants like McDonald’s and Taco Bell. Proponents of raising the minimum wage in Michigan see that as a victory as its focus is more squarely on improving the lives of workers who rely on minimum-wage careers. “This is a victory both for voting rights and for workers in need of one fair wage to take care of their families,” the Michigan ballot drive’s campaign manager, Darci McConnell, told the Associated Press. Rigato agrees that minimum wage workers should make more money, but said the law has consequences that impact his small restaurant far more than large franchises. “Look, a mother of three making $9.50 an hour at McDonald’s is criminal, but there has to be a smarter solution,” he said. “Find me an algorithm that works, and I’m all for raising minimum wage, but that’s not what it’s going to do at my restaurant, for my workers.”

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 2 7 , 2 0 1 8

OLYMPIA

Open Olympia Development positions

A graduate of the University of Mississippi, Bradford will “be a good salesman for Detroit,” said Robert Gibbs, an urban planner who is principal of Birmingham-based Gibbs Planning Group. He worked with Bradford seven or eight years ago providing market research on the Disney Springs project, he said. “He’s good with commercial (properties) and most aspects of the development, and he’s a great visionary,” Gibbs said. “It says a lot that they are bringing in somebody of that standard. “He really brings a worldwide understanding. He understands more than just the national trends, but internationally understands the trends in real estate development, from the types of businesses that go in and how they interrelate to one another.” Sources said the Detroit-based Olympia has been targeting development professionals from other companies and attempting to lure them to work on its District Detroit project with pay 30 percent or greater than what they were making at previous positions. Some were offered pay increases of 50 to 100 percent, and others were also offered things like car allowances and other perks. One longtime real estate professional who spoke with Crain’s was interviewed in June for a director of development position that had a $200,000 salary ceiling, but no other pay bonuses so he didn’t pursue the job. Another person Crain’s spoke with who was interviewed for a vice president position was offered substantially higher pay than their current rate, but ultimately turned down the job because of stability and work-life balance concerns. “They are way above market price, which is a little scary because it’s almost a little too good to be true,” that person said. While Olympia has not wooed some of the people it has targeted, it successfully lured Angela Fortino away from the Royal Oak office of JLL. There, she

(as of Aug. 23)

FROM PAGE 1

PISTONSGT FROM PAGE 3

Mike Donnay, who oversees PistonsGT as the vice president of brand networks for corporate parent Palace Sports & Entertainment, said they won’t have the “Nielsen Sports Social 24” digital audience analytics tool data until the end of September. That will be used to set ad rates for the video game team’s matches when the 2019 season begins next spring. “We didn’t have a lot of hard data to present to partners,” Donnay said. Companies took a big of a leap of faith in signing deals with PistonsGT, he said. Getting numbers will validate the risk. “We’ll have a year’s worth of data and media valuation to set rate card for assets instead of projections and forecasts,” he said. “We can make sure deals are right-sized with third-party validation.”

The advertisers The PistonsGT corporate sponsor roster this season included FindAMortgageBroker.com (owned by Pontiac-based United Shore Financial Services LLC), real estate agents Noah Cohen and Melanie Bishop of Max Broock Realtors, MotorCity Casino Hotel, Szott M59 Chrysler Jeep, Meretz Fitness Gaming, Microsoft Store at

The $862.9 million Little Caesars Arena opened a year ago to much fanfare and acclaim.

JJProject manager, development

LARRY PEPLIN FOR CRAIN’S

JJVice president, construction JJFinancial analyst JJAccounting manager JJDirector of finance JJParking manager JJSales and marketing manager, parking operations JJDirector of finance, parking operations JJOperations supervisor, parking JJDirector of finance, parking operations

had been project and development services manager; she started at Olympia this month as project manager, according to her LinkedIn profile. The hiring effort comes after ODM lost other key partners in addition to Cordish since the beginning of the year: George Jackson’s Detroit-based Ventra LLC real estate consulting company, which had been advising Olympia on multifamily development projects; and Detroit-based American Community Developers, which had been developing housing in the 45- to 50-block area surrounding Little Caesars Arena. CBRE Inc., a Los Angeles-based real estate brokerage with an office in Southfield, has been handling retail leasing for the district since 2014. Southfield-based Plante Moran CRESA has been providing office and retail space advising, as well. White Plains, N.Y.-based Street-Works is the planning consultant on the District Detroit project.

Arena complete; other projects flounder The leadership change comes at a critical moment for the District Detroit. It’s been more than four years since Somerset Collection, Alienware Corp., Varidesk, DxRacer and Razer. Each had deals for their branding to appear during games, and some had their logos displayed on social media, within digital content, and during live team events. FindAMortgageBroker. com had its logo on the team’s jerseys, and MotorCity’s name was on the digital basketball court — the two most expensive pieces of advertising inventory, according to Donnay. Terms weren’t disclosed, but it’s known that some deals were for one season and others had options for multiple years. Advertisers often are interested in esports deals to reach a younger demographic. That’s been especially true for Shore, Sarah DeCiantis: United which launched a Expand awareconsumer-facing ness of website. campaign to bolster its wholesale mortgage broker business. It’s using the PistonsGT deal for brand awareness. “It has allowed us to effectively expand awareness of the new FindAMortgageBroker.com website, and really give people an understanding of why mortgage brokers are the better option over big banks and mega retail lenders,” said Sarah DeCiantis, United Shore’s

the Ilitch family first publicly revealed its plans to create a sprawling sports and entertainment district across 45 to 50 blocks of substantially vacant Detroit real estate, largely owned by the Ilitches for years. With Little Caesars Arena as its anchor, it would be laden with office, retail, residential, entertainment and restaurant space, the Ilitches and top lieutenants said at the time. While the $862.9 million arena opened a year ago to much fanfare and acclaim like the Sports Facility of the Year Award, plans for residential space and big-ticket retail names have gone unrealized to date. However, the district’s first major office tenant, a Google sales office, is nearly open in 29,000 square feet in a building attached to the 20,000-seat arena, ground on which was broken four years ago next month. A ribbon-cutting ceremony was held last week for the Wayne State University Mike Ilitch School of Business, named after the family patriarch, who died in February 2017 after donating $40 million to the business school along with his wife, Marian. (See story, Page 19.) Sandwiched between the arena to the

south and the business school to the north, a Detroit Medical Center sports medicine institute is planned for the Ilitch-owned Red Wings and Detroit Tigers, but also, college, semi-professional, high school and other athletes. And construction on a $150 million new headquarters for Little Caesars, the source of the billionaire family’s wealth, continues with completion expected in the coming months. But plans for residential space in the district, which is north of where fellow billionaire business mogul Dan Gilbert has largely concentrated his real estate activities, have floundered. Not one apartment or condominium has opened. The half-dozen multifamily projects totaling nearly 700 units announced a year ago are in a state of flux as a developer struggles to secure financing to redevelop the United Artists Building at 150 Bagley St., and American Community Developers is no longer working on three redevelopments and two new construction projects that were to comprise approximately 80 percent of the total unit count. One of those three redevelopments,

chief marketing officer, via email. The NBA 2K esports teams cannot sell advertising in five categories that the NBA limits for itself for national deals: Salty snacks, apparel, energy drinks, insurance and basketballs.

peak of 700,529 peak concurrent viewers for a match in July. Those numbers don’t reflect millions of other viewers on the Twitch feeds of individual pro gamers. The NBA 2K League’s Twitch stream has 66,700 followers. Fortnite has 1 million. Donnay said the initial audience numbers give reason for optimism. “If we can sustain that level and continue to grow, we’ll be successful,” he said. About 300 million people watched live video game competitions online globally last year, mostly streaming on Twitch and YouTube, according to New York City-based gaming industry analyst firm SuperData Research. SuperData estimated that e-sports generated $1.5 billion in revenue last year, half of which came from investments and 35 percent from sponsorships and advertising. E-sports revenue is predicted by SuperData to hit $2.3 billion by 2020, and its viewership to grow 12 percent annually. Big, hard-to-reach audiences of young people are sought by advertisers, and that interests sports leagues and team owners. “It’s certainly something that has caught our ownership’s attention,” Donnay said. PistonsGT is a separate entity from the basketball team, but has the same ownership. NBA team owners — private equity billionaire Tom Gores in the case of the

The numbers The Nielsen data will help PistonsGT understand if it’s selling ad inventory for max value, and part of that rate-setting equation will include audience consumption. Publicly available data shows that the NBA 2K League’s Twitch streaming channel is the 27th most popular by viewers, according to TwitchTracker. com. Data shows that the league has streamed 296 hours of content and racked up 23.7 million unique views and 2 million combined hours watched. The league’s channel averaged 10,764 unique concurrent viewers over the past month, peaking at 28,850 viewers. The data wasn’t broken down by specific team matches. The league had 17 teams, all owned by NBA team owners and closely linked in colors and name to their real-world basketball counterparts, this season. “The numbers that Twitch is reporting started slow, but we saw significant growth,” Donnay said. By contrast, the ultra-hot first-person-shooter game Fortnite’s official Twitch channel ranks 1st with 92,832 concurrent viewers on average, and a

the Hotel Eddystone at 100 Sproat St., faces a looming Sept. 12 deadline that will be missed to redevelop the windowless tower. Olympia says it plans to install windows next month. The fate of the other two — the Hotel Fort Wayne at 408 Temple St. and the Alhambra Apartments at 100 Temple St. — is not known now that ACD is no longer involved. Late last week, boards were placed over window openings at the Hotel Fort Wayne. Earlier this year, Olympia revealed it would not be using the two construction projects for apartments, but instead for new office and first-floor retail space. Olympia also plans to turn three early 20th century buildings into office and first-floor retail space: The Detroit Creamery Co. building at 1922 Cass Ave.; the Detroit Life Building at 2210 Park Ave. and the Women’s City Club building at 2110 Park Ave. Total, those projects are expected to bring 145,000 square feet and 24,000 square feet of retail, Olympia says. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

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Pistons and PistonsGT — each reportedly paid $750,000 for their NBA 2K teams under three-year contracts, according to ESPN. That’s a relatively cheap price to get at those young eyeballs because other pro gaming leagues cost as much as $20 million to join. The NBA 2K League is a three-year partnership between the NBA and the game’s owner, Novato, Calif.-based game publisher 2K Games Inc. The league is being run by former Palace Sports & Entertainment sales executive

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C R A I N ’ S D E T R O I T B U S I N E S S // A U G U S T 2 7 , 2 0 1 8

LAWSUIT

Negotiating tactic?

FROM PAGE 3

“The craziest thing in the world is in the 1970s, the trial lawyers fought to have (no-fault) declared unconstitutional because they thought they were going to lose money by not having lawsuits,” Duggan said. “Today, the trial lawyers are fighting to keep no-fault in place because they’re making millions off of the system, which tells you everything you need to know.” In 1978, the state Supreme Court gave then-Gov. William Milliken and the Legislature 18 months to make changes to the no-fault law, which personal injury attorneys had challenged because the new insurance scheme was seen as a detriment to their ability to represent injured drivers in lawsuits. The high court’s order resulted in the Essential Insurance Act, which gave rise to the file-and-use system insurers have used since then to set rates. The chief criticism of this law is it left insurers empowered to impose premiums with little to no scrutiny from the state’s insurance commissioner. Insurance companies impose different prices for motorists based on ZIP codes, marital status, education level, credit score and job title. “Duggan overlooks conveniently what’s happening in his city — the blatant redlining by insurance companies,” said Oakland County Executive L. Brooks Patterson, a fervent supporter of the no-fault system. “You got to say to the insurance company, ‘God damn it, quit the redlining.’”

‘Smart lawsuit’ Duggan’s lawsuit marks the first time anyone has challenged an untested aspect of the Shavers decision, according to personal injury attorneys. “It’s a smart lawsuit. It really exploits this opportunity to push change that’s been there ever since Shavers came down,” said Steven Gursten, owner of Michigan Auto Law, a Farmington Hills-based personal injury law firm. “I’ve known for years — and other law-

CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

Detroit Mayor Mike Duggan has filed a lawsuit challenging Michigan’s no-fault auto insurance system.

yers have known — that our no-fault law has been very vulnerable to this kind of legal challenge.” But Duggan’s adversaries in the personal injury attorney bar take issue with his lawsuit placing blame for unfair and inequitable rates on the shoulders of the medical providers and lawyers who treat and represent injured motorists. “He blames the doctors. He blames the lawyers. He blames the patients. He blames the patients’ families. He blames everybody but the insurers,” said George Sinas, managing partner of the Sinas Dramis Law Firm in Lansing. “Why? Is he afraid to take on the big boys? … Or is he in bed with them?” Duggan has repeatedly said the unlimited medical benefits and lack of cost containment are what drives up the cost of auto insurance. He has rebuffed fellow Detroit Democrats who want to prohibit insurers from using non-driving factors such as credit score and ZIP code for setting rates, arguing that won’t reduce medical costs baked into the premiums all drivers shoulder. “The real constitutional issue in this lawsuit is whether or not rates are fair

and equitable. And the way to determine if they are is to examine the rate-making rules,” said Sinas, general counsel for the Coalition Protecting Auto No-Fault, a powerful group of medical providers and attorneys working to preserve the no-fault system. In the Shavers case, the state Supreme Court did not define what constitutes “fair and equitable” rates for mandatory insurance rates to be constitutional. The high court’s ruling centered on the role of auto insurance carriers, not medical providers and personal injury attorneys. “The entire rate structure is suspect,” the justices wrote in the 1978 decision. The high court said insurance rate-making, unlike the regulated rates of electric and gas companies, “inherently involves discrimination among individuals.” Duggan’s lawsuit doesn’t take on the “Willy Wonka shroud of secrecy that insurance companies enjoy,” Colella said. “He ignores really what Shavers was saying — that we’re suspect of insurance companies and their rate structure,” Colella said.

ished 8-5 and got to the second round of the playoffs before losing to the New York Knicks’ esports team.

ports team at the Pistons’ new headquarters facility that’s scheduled to open downtown in later 2019. Players will live closer to Auburn Hills in 2019 and downtown in Season 3.

The costs

Lets Get It Ramo high-fives JosephTheTruth of the Pistons Gaming Team during the game against Knicks Gaming in July at the NBA 2K Studio in New York. MICHELLE FARSI/NBAE VIA GETTY IMAGES

Brendan Donohue, who’s now an NBA executive. “The competition and player engagement have exceeded our expectations, viewership and engagement with our content on social media continue to grow, and the 17 teams are engaging with and being embraced by their local communities,” Donohue said via email. Detroit real estate tycoon Dan Gilbert’s Cleveland Cavaliers also have an NBA 2K team, Cavs Legion, which fin-

Money from corporate ad sales helped defer PistonsGT’s costs, which mainly were player and management salaries and living expenses. First-round draft pick Ramo “Lets Get It Ramo” Radoncic got a six-month, $35,000 contract plus housing in West Bloomfield Township and his local transportation covered. The picks in the second through six rounds — four other starters and a sixth man — got six-month, $32,000 deals. All the players get money to relocate to their new cities, medical insurance, a retirement plan and will compete for $1 million in prize money. They’re NBA employees. The $195,000 in total player salaries (and their housing) was covered by the Pistons organization. The NBA paid to fly the players to New York for weekly league play. The six-man team earned additional pay from tournament play. For example, making it to the first-round of the playoffs earned the PistonsGT squad $25,000 to share. The eventual league winner would share a $300,000 prize. The finals are scheduled for Saturday. The PistonsGT players practice in a custom facility inside The Palace of Auburn Hills, and Donnay said they will relocate to a space designed for the es-

The honors While the business operations prepare for 2019, the gaming half of PistonsGT has laurels upon which to build toward its sophomore season. In addition to the winning record and playoff berth, PistonsGT saw top draft pick Ramo “Lets Get It Ramo” Radoncic named a finalist for league MVP. Another highlight was PistonGT’s Duane Burton win ning the league’s coach of the year award on Aug. 11. Burton, 32, has worked for the Pistons for a decade, including the past five as game operations manager. He took on coaching PistonsGT after the NBA season ended, and picks back up with Pistons game work when the NBA season starts in October. “I don’t really have an offseason,” he said. With PistonsGT, he’s responsible for coaching players on their in-game performance, game plans, film, scouting, analytics, scrimmages and practices. During formal matches in New York, he coaches them via headphone during timeouts and halftime. For 2019, his primary talent management goal is to have a more formal workday schedule for the team.

Duggan has asked the judge to force the Legislature to “repair” the auto insurance law within six months — with the threat of reverting Michigan to a tort state if legislators don’t act. “If we win the court case, it will cause very quick change,” Duggan said. For the first time, Duggan voiced support last week for scrapping the no-fault system altogether after spending much of the past four years trying unsuccessfully to get the Legislature to reform it. “I’d love to go back to torts today, but I could live with driver’s choice and cut the rates 20 to 30 percent right now,” said Duggan, referring to his plan to let drivers opt out of unlimited medical coverage. “I think going back to tort would cut the rates 50 percent — and I’m good with either outcome.” Having filed the lawsuit in late August, there’s just four months left in Gov. Rick Snyder’s term as well as those of the majority of legislators in the House and Senate. Auto insurance reform is seen as an issue the Legislature could possibly take up after the November election in its lame duck session. Duggan’s lawsuit is a “reflection of the frustration” reformers have felt for years and could spur action before year’s end, said Pete Kuhnmuench, executive director of the Insurance Institute of Michigan. “He’s been immersed in this issue for a number of years and probably sees this as part of his tactics to get the Legislature to act,” said Kuhnmuench, whose group represents auto insurance companies. But Duggan said the lawsuit is not designed to be a negotiating tactic with the Legislature. “I never do lawsuits to do anything except win — and we think we have a winner of a case,” he said. Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood “I need to implement more structure. A lot of the guys are not used to being on a team, used to being coached,” he said. Burton was a late addition to the organization, coming in just after the draft. Hiring him to coach allowed PistonsGT esports manager Adam Rubin to instead focus on corporate advertising sales and other non-game duties. “It freed up Adam to concentrate on business side,” Donnay said.

Season 2 Burton, Rubin and Donnay for now are waiting for answers to structural questions about Season 2. The NBA 2K League has added four teams for 2019 — Atlanta Hawks, Brooklyn Nets, Los Angeles Lakers and Minnesota Timberwolves — and their rosters will be filled by an expansion draft next month. Donnay said they don’t yet know how many current players they’ll be allowed to shield from that draft. Once teams know how many players they can shield and keep for 2019, the process of a new player skills combine and regular-season draft begins to repopulate the rest of the roster. That will involve scouting hundreds of potential new players, just as the regular Pistons’ coaches and front office does. Bill Shea: 313 (446-1626) Twitter: @Bill_Shea19

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C R A I N ’ S D E T R O I T B U S I N E S S // A U G U S T 2 7 , 2 0 1 8

THE WEEK ON THE WEB

RUMBLINGS

Kuzzo’s to open second restaurant in Detroit

Duggan wants dedicated QLine lane on Woodward

AUGUST 17-23 | For more, visit crainsdetroit.com

etroit’s popular Kuzzo’s Chicken & Waffles restaurant will get a second, larger location in the greater downtown area in early 2020, the owner told Crain’s this week. Ronald Bartell said he’s signed a five-year lease for a 4,000-square-foot location in a to-be-built mixed-use development called The Woodward @ Midtown, which has long been planned by Detroit-based developer Queen Lillian II LLC. The site is at Woodward Avenue at Stimson Street just south of Mack Avenue across from The Bonstelle Theatre. Construction of the building, which will include ground-floor retail and several stories of residential units along Woodward Avenue, is expected to take 18 months after work begins this fall, Bartell said, and then his own restaurant build-out will take 60 days. That means an opening in early 2020, he said. He’s not yet hired a restaurant designer, but said he plans to have a larger kitchen. That’s a lesson from the first Kuzzo’s, whose kitchen isn’t large enough to handle food demand at times, Bartell said. “The biggest lesson I learned is always overbuild your kitchen,” he said. He also said he plans to seek a liquor license for full bar service at the second Kuzzo’s to capture pre- and post-game and event attendance from the nearby sports and entertainment venues on Woodward. Bartell doesn’t plan any food changes because Kuzzo’s has proven to be a winning recipe. “The menu is going to be the same,” he said. A few less-popular items could be dropped, he added. The new Kuzzo’s is expected to seat up to 125. The current restaurant is 2,800 square feet and seats 80, he said. Over the next several months, Bartell will work to finalize store design, identify management and staff hires, and begin the liquor license paperwork. The Woodward @ Midtown has been in the works for years, long beset by use and financing snags. However, the Queen Lillian development group, run by Chris Jackson and Jim Jenkins, has entered advanced negotiations with Detroit-based The Platform LLC, run by Peter Cummings and Dietrich Knoer, to become an equity partner on the project. The Platform is involved in several developments and redevelopments along Grand Boulevard and in other Detroit neighborhoods. Queen Lillian consists of Jackson, who is minority owner and a former staffer to Detroit City Council President Gil Hill and former part owner of Greektown Casino-Hotel; and Jenkins, who is majority owner of the company and is president and CEO of Detroit-based Jenkins Construction Inc., which will be the construction manager on The Woodward @ Midtown.

BUSINESS NEWS J Fiat Chrysler Automobiles sought to “corrupt and warp” its relationship with the UAW to obtain advantages in contract agreements “in an effort to buy labor peace,” federal officials say.

Kuzzo’s owner Ronald Bartell said he’s signed a five-year lease for a 4,000-squarefoot location of the popular Detroit restaurant in a to-be-built mixed-use development called The Woodward @ Midtown.

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

304

Number of apartments planned by The Platform in a proposed 28,000-square-foot development near Detroit’s Fisher Building.

Number of Kmart and Sears stores to close in the troubled company’s latest culling. That includes a Sears in Jackson.

Number of people on the search committee that will select a permanent president for Michigan State University.

The latest allegations in the ongoing federal corruption case involving FCA and UAW officials were reported Monday by the Detroit Free Press and The Detroit News. A 14-page memorandum of sentencing for Alphons Iacobelli, FCA’s former labor relations chief, stated: “FCA sought to obtain benefits, concessions and advantages in the negotiation and administration of collective bargaining agreements with the UAW in an effort to buy labor peace. High-level officials of the UAW sought to enrich themselves and live lavish lifestyles rather than zealously work on behalf of the best interests of tens of thousands of rank and file members of their union.” J Dave Mancini of Supino Pizzeria in Detroit’s Eastern Market bought a building in the city’s New Center neighborhood and is planning a restaurant. Mancini bought the building at 6519 Woodward Ave., Sue Mosey, executive director of area nonprofit and developer Midtown Detroit Inc., confirmed to Crain’s. Mosey did not respond to questions on timeline and purchase price. J LJPR Financial Advisors will rebrand at the end of the year when the

investment firm in Troy merges with an Ohio-based company. LJPR LLC plans to dissolve under Sequoia Financial Group LLC, an investment firm based in Akron, Ohio, in the deal that includes 25 employees and $771 million in managed assets. The stockfor-stock merger, which included an undisclosed sum of cash, brings Sequoia’s portfolio to $4.9 billion and staff to 91 people. J Planterra Conservatory is planning a $1 million expansion in West Bloomfield Township that will aim to provide the “authentic experience” craved by millennials and hip corporate party planners. The 22,000-square-foot conservatory at 7315 Drake Road was built 10 years ago to support Planterra’s interior plant supply business, said Shane Pliska, company president. Its business model, however, has changed since then, with weddings and events taking off after the Great Recession. J WeWork is continuing its expansion in Detroit by adding another floor of 1001 Woodward to its footprint. The New York City-based shared workspace provider signed on to lease the entire fourth floor, which spans 11,000 square feet, of the downtown office building from Bedrock.

OTHER NEWS Metro Detroit’s major bus systems are eliminating transfer fares, adding a mobile payment app and cutting pass options in hopes of simplifying the transit systems. The Detroit Department of Transportation and Suburban Mobility Authority for Regional Transportation are proposing the changes, which they say will lower costs for customers and smooth over confusion about passes and transfers. J The Michigan Taxpayers Alliance says it paid for a recount of the SMART public transportation tax proposal that voters approved Aug. 7 by a razor-thin margin in Macomb County. J The Securities and Exchange Commission is barring and fining Roger Denha, an investment adviser with Southfield-based BKS Advisors LLC, for allegedly engaging in “cherry-picking.” J

etroit Mayor Mike Duggan is second-guessing the placement of tracks for the QLine, contending the street car service should have a dedicated lane on Woodward Avenue to cut down on delays caused by motor vehicles. “If I had been mayor about a year earlier, it would have been a dedicated lane down the middle the street,” Duggan said Thursday at a news conference announcing streamlined fares and passes for the DDOT and SMART buses. Duggan took office in 2014, about six months after M-1 Rail had hired construction firms and began finalizing a design for the streetcar to go down the center of Woodward on the north end in New Center and then shift to the far-right lanes in Midtown. The streetcar project was designed to spur development along the 3.3mile stretch from downtown to New Center, with streetside retail stores, restaurants and entertainment venues benefiting from riders being able to easily jump on and off the cars. But the QLine’s service has been

plagued at times by vehicles blocking the tracks in Midtown. Duggan suggested last week that at some point, the tracks may need to be moved. “I would not do this weaving, in and out of traffic,” he said. “We’re going to have to get that kind of cleaned up.” If funding were available to extend the QLine north from New Center toward Ferndale, Duggan said he'’d push for running the streetcar in a dedicated lane in the center of Woodward. “And then maybe we’d start to make some modifications at a later point,” Duggan said of the existing track. Duggan envisions having a second streetcar running east from downtown along Jefferson Avenue — a project that would likely require tens of millions of dollars. The QLine cost $187 million to construct and was mostly funded by corporate and philanthropic donors. “Someday I’d like to see us build one down the center of Jefferson,” Duggan said. “Those are all things that we’re working on.”

ROSSETTI INC.

The $500 million Louis Armstrong Stadium, designed by Detroit architects Rossetti Inc., opened Wednesday at the USTA National Tennis Center in Flushing Meadows, New York. It will be the No. 2 court for the U.S. Open later this month.

Rossetti’s latest design at U.S. Open home showcased T

he United States Tennis Association last week unveiled the new $500 million Louis Armstrong Stadium, designed by venerable Detroit architectural firm Rossetti Inc. The 14,069-seat tennis stadium — it boasts of natural ventilation and a retractable roof — replaces a venue of the same name that opened in 1997 at the USTA Billie Jean King National Tennis Center in New York City’s Flushing Meadows-Corona Park in Queens. Louis Armstrong Stadium is one of the U.S. Open sites and the No. 2 tennis “show” court at the tennis center, behind 22,547-seat Arthur Ashe Stadium, whose retractable roof was designed by Rossetti, and the third court, the replacement 8,125-seat Grandstand Stadium that opened as a Rossetti design in 2016. Rossetti said it has provided archi-

tectural design and master planning services to the USTA for 25 years, and the Louis Armstrong Stadium project culminates a 10-year effort to modernize the USTA’s campus. In a statement, Rossetti said the Louis Armstrong Stadium design “allows for maximum airflow into the stadium from all sides and into the spectator areas. It also includes a perforated lower seating bowl that allows air to pass through underground air pathways and to the seats closest to the court.” Design work began in October 2014. Rossetti, founded in 1969 by current firm President Matt Rossetti’s father Gino, specializes in sports and entertainment projects globally. Rossetti previously said he expected the firm to hit about $25 million revenue in 2017.

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