Published: 07 March 2000
Analyst(s): Patrick J. C. Powers
Management Summary During the last year, employers, healthcare providers and payers in the Grand Rapids and Holland area have led the transformation of western Michigan from a market of separate cities with locally based integrated delivery systems (IDSs) into a consolidated regional healthcare market. Several important events have converged to create this regional market. A newly formed, large employer coalition has signed a managed care contract with a six-member hospital network that will cover 120,000 employees and their dependents. An important independent hospital in Grand Rapids is establishing a joint-management agreement with Kalamazoo's leading healthcare system. The merger of the area's leading two-facility hospital system with the second-largest local hospital established a giant IDS that controls more than 65 percent of the area's inpatient bed capacity. Western Michigan's dominant HMO has acquired a profitable northern-Michigan-based HMO to reduce its financial liability by expanding its patient base. Most important in its affect on managed care in western Michigan may be the contract signed in summer 1999 between the 100-business-member Regional Employer Alliance (REAL) Health Coalition, the six-hospital-member West Michigan Regional Delivery Network and MultiPlan/Wisconsin Preferred Provider Network (WPPN), a national preferred provider organization (PPO). This PPO agreement is a significant departure from capitated HMO contracting by the area's major self-insured employers, which are looking to eliminate the costs of paying for the managed care organization (MCO) middleman. Three employer health groups in Grand Rapids, Holland and Muskegon formed REAL Health Coalition a year ago to institute a communitywide healthcare quality measurement system and to do direct group purchasing of healthcare coverage for self-insured employers. West Michigan Regional Delivery Network also formed in fall 1998 as a managed care alliance of six nonaligned...
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