JUNE 19 - 25, 2017
Clark
looks to
next act at
Hudson-
Webber.
Page 3
Workforce
Union rules on
teacher pay
contribute
to shortages
By Mike Wilkinson
Bridge Magazine
In Detroit, as many as 260 class-
room teacher positions are unfilled in
the state’s largest district, prompting a
shortage so severe that substitutes last
year were the full-time solution in
more than 100 classrooms.
And with fewer new teachers
graduating from college every year,
pressure is mounting to find quali-
fied teachers. The situation has left
teachers working harder in over-
crowded classrooms for under-
whelming pay — they’ve seen their
pay frozen and cut repeatedly in a
district that’s beset with problems
both financial and academic.
Yet in the face of a supply and de-
mand problem, the Detroit teach-
ers, like their peers in numerous
Michigan school districts, have bar-
gained for contracts that severely
restrict the pay of the folks who
could help alleviate the shortage.
In Detroit, Dearborn and Rose-
ville, new teachers can only get cred-
it for two years’ experience they ac-
crued working in other school
districts. In Grand Rapids it’s five
years, in Lansing it’s eight.
It’s difficult to gauge whether the
restrictions affect teacher recruitment
because they may scare away poten-
tial applicants. But for those consider-
ing a move, the impact is huge.
Say you’re a teacher with 10 years’
experience at Utica schools, which had
layoffs last year. To work in Detroit,
you’d have to accept nearly $36,000
less, going from more than $78,500 to
just under $43,000 because eight years
of experience wouldn’t count.
Detroit already pays less, with
teachers topping out at $65,265 after 10
years, compared with well over $78,000
in most districts. But the restriction put
in place by the teachers — and agreed
upon by the administration — makes
that cut even more steep.
SEE TEACHERS, PAGE 19
© Entire contents copyright 2017
by Crain Communications Inc. All rights reserved
crainsdetroit.com Vol. 33 No 25
NEWSPAPER
Alibaba sees
Detroit as
ideal place
for Gateway
President on new
small-biz push. Page 3
Health Care
SPECIAL REPORT
DETROIT 1917 / 1967 / 2017
Individual
Prelude to ’67 rates jump;
employers
insulated
By Jay Greene
jgreene@crain.com
Uncertainty over the future of
Obamacare, along with high use of
health care services and sky-high
drugs prices, led last week to re-
quests for huge rate increases for in-
dividual health insurance in Michi-
gan — but the volatility is unlikely to
extend to the group coverage most
employers offer.
Michigan’s nine insurers submit-
ted two sets of individual market
rates last week to the state Depart-
ment of Insurance and Financial
Services that showed some eye-pop-
ping price hikes. One set — includ-
ing the controversial federal subsidy
designed to hold down premiums
— requests rate increases from in-
surers that range from 8 percent to
27 percent. The second set, without
the subsidies, range from 19 percent
to 60 percent.
Individual policies account for
about 6 percent of those with health
insurance in Michigan, about
560,000 people. Among those are
WILLIAM VANDIVERT, THE LIFE PICTURE COLLECTION VIA GETTY IMAGES small business owners who don’t
Paradise Valley, 1942. Once a Detroit neighborhood where African-American businesses thrived, Paradise Valley was destroyed in carry group coverage and many of
the name of urban renewal in the early 1960s. their employees. For the majority of
employers that carry group insur-
The economic roots that contributed ance, the increases are expected to
be much smaller.
to Detroit’s worst summer Congressional Republicans’
moves to repeal key provisions of the
First in a series: To recognize the 50-year anniversary of the 1967
Affordable Care Act and uncertainty
over whether the Trump administra-
uprising, Crain’s looks back 50 years before that summer and the 50 years tion will pay “cost sharing” subsidies
are the reason for the spread for
since to explore its impact on Detroit’s business community. Michigan’s nine insurers participat-
ing on the health care exchanges.
Part 1, pages 14-17 Opinion Part 2, June 26 The spread between the two sets of
How urban renewal projects J Ron Fournier: The business impacts of a riot that rate requests amounts to 10 percent
uprooted a thriving African- Language is a tore through many of Detroit’s to 50 percent above what the normal
American business district. matter of commercial districts, and how increase would be based on project-
Read and comment: viewpoint. that damage hobbled the city ed rising drug prices and medical
crainsdetroit/Detroit1967 Page 6 through decades of decline. service use.
SEE INSURE, PAGE 22
$2 a copy. $59 a year.
EACH WEEK DON’T MISS
17
S I N E S S // J U N E 1 9 , 2 0
CRAIN’S DETROIT BU
8
CARE
SPECIAL REPORT: HEALTH
OUT ON CRAIN’S Medical mergers and Botsford was one of the
biggest in Southeast
SPECIAL REPORT!
Health System, Oakwood Healthcare hospital merger mistakes?
The 2013 merger between Beaumont remains is the new Beaumont
able to overcome traditional Henry Ford Health
Michigan in years. The key question has created a broader and deeper
Health and HealthPlus of Michigan
Meanwhile, the addition of Allegiancefar?
gone so
System. How has the merger
Henry Ford
expands with
HEALTH CARE – Medical mergers, Page 8 Jackson, Flint
acquisitions
By Jay Greene
jgreene@crain.com
BROUGHT TO YOU BY:
year in
Henry Ford Health System had a big
Allegiance
2016 when it added Jackson-based
of
Health in April and Flint-based HealthPlus
acquisi-
Michigan earlier in February. The two
reve-
tions added about $800 million in annual
expand-
nue to the now $5.7 billion system and
to the west
ed its geographic reach by 75 miles
from five
and 70 miles to the northwest and
counties to eight.
history
So, how has Henry Ford, with its rich
with a
as a Detroit-based integrated system
group and
1,200-physician employed medical
company,
a 662,000-member health insurance
fared since then?
Ford
By all accounts, if you talk with Henry
the implementation of
officials and physicians,
says it
the merger has gone well. But experts
of fail-
takes years before determining success
or merg-
ure with a major business acquisition
er.
man-
Robert Burns, chair of the health care BEAUMONT HEALTH
School at
agement department at the Wharton was part of a merger in 2014.
Hills, the former Botsford Hospital that
the University of Pennsylvania, said
research tower at Beaumont Hospital, Farmington
Construction is underway on a new patient
hi d f all corporate mergers,
l
2 C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 9 , 2 0 1 7

MICHIGAN BRIEFS INSIDE

Officials charged in death
during Flint water crisis
Attorney General Bill Schuette filed
an involuntary manslaughter felony
charge against state health director
Nick Lyon and four other state and
Flint officials over the death of a man
who contracted Legionnaires’ disease
during Flint’s water crisis.
Genesee County District Court
Judge G. David Guinn allowed the
charges to be filed Wednesday morn-
ing, making Lyon the highest ranking
state official in Gov. Rick Snyder’s ad-
ministration to be charged criminally
over Flint’s tainted water.
Schuette’s involuntary manslaugh-
ter charge against Lyon and the four
others blames them for indirectly
causing the Dec. 13, 2015, death of
85-year-old Robert Skidmore of
Mount Morris.
“Defendant Lyon’s acts and failure
to act resulted in the death of at least
one person, Robert Skidmore,” Special
Agent Jeff Seipenko said in Genesee
County court.
Schuette also said he’s filing invol-
untary manslaughter charges against
former Flint emergency manager Dar-
nell Earley, former Flint public work-
ers director Howard Croft and Stephen
Busch and Liane Shekter Smith, two
top water regulators at the Michigan
Department of Environmental Quality
Special Prosecutor Todd Flood (left), Attorney General Bill Schuette, Genesee
County Prosecutor David Leyton and Andy Arena, chief investigator for Schuette’s
Flint water crisis investigation.
during Flint’s water crisis.
Earley, Croft, Busch and Shekter
Smith were previously charged by
Schuette for a variety of criminal alle-
gations of misconduct for their han-
dling of Flint’s tainted water problems.
Schuette’s office also filed criminal
charges of obstruction of justice and
lying to a police officer against Dr.
Eden Wells, the state’s chief medical
executive.
The Attorney General’s office al-
leges Wells obstructed Wayne State
University researchers who have been
trying to find a link between the corro-
sive Flint River water and the Legion-
naires’ outbreak.
Snyder, legislators
strike budget deal
Gov. Rick Snyder and Republican
CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS
legislative leaders reached a budget
deal that would automatically enroll
newly hired school employees in a
401(k)-only retirement plan unless
they opt into a costlier pension benefit
within 75 days, The Associated Press
reported.
The change would apply to teach-
ers and other school workers hired
next Feb. 1 or later and may cost the
state much less than an earlier version
of legislation introduced last month,
according to a summary of the agree-
ment circulated to GOP senators at a
caucus meeting and obtained by The
Associated Press.
New hires now qualify for a pension
and a small 401(k).
Under bills that could begin ad-
vancing Wednesday, they would de-
fault into a better 401(k)-only plan like
what state employees receive — a 4
CALENDAR 18
CLASSIFIED ADS 19
percent employer contribution plus KEITH CRAIN 6
another 3 percent if they kick in at least
OPINION 6
3 percent of their pay. They could still
pick a pension, but it would cost them OTHER VOICES 7
an unspecified amount more than PEOPLE 18
what teachers now pay: 6.4 percent of
their salary. RON FOURNIER 6
In the new hybrid plan, workers RUMBLINGS 23
would be responsible for half of the
WEEK ON THE WEB 23
cost-sharing, including any new un-
funded liabilities. If the funding falls COMPANY INDEX:
below 85 percent for two straight years, SEE PAGE 22
the plan would be closed to new en-
trants.
It was not immediately clear just
how unappetizing the pension option publican you know or see or heard of
would be for new teachers, but Repub- kids and others who have faced this
licans expect opposition from labor and have real struggles and have died
unions. as a result,” Lansing Democratic state
Rep. Andy Schor said on the House
House OKs bills to combat floor before last Tuesday’s vote on
opioid addiction his bill dealing with Medicaid pay-
ments.
The Michigan House approved leg-
islation that would create an opioid Correction
prescription abuse program for school
districts and to let Medicaid pay for An article published in the
patient detoxification and rehabilita- March 23, 2015, edition of Crain’s
tion services for people with addic- under the headline “Sun Com-
tions, The Associated Press reported. munities buys Green Courte
The bills also would prevent doc- Partners” should have stated that
tors from giving prescriptions without Southfield-based Sun Communi-
written parental consent and let phar- ties Inc. purchased Green Courte
macists refuse filling prescriptions Partners’ subsidiary American
suspected of being fake. Land Lease Inc.
“Whether you’re Democrat or Re-

THANK
YOU
for helping us find 8,000 Detroit youth
a rewarding summer job! www.gdyt.org

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Quicken Loans City Connect Detroit Building Authority John Talmer & Associates Rippling Hope Wayne State University
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 C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 9 , 2 0 1 7 3

Sports Business
Little Caesars Arena to
CRUNCH TIME open in three months
Three months to the day from
when Kid Rock will christen Little
Caesars Arena with the first of four
shows, Olympia Entertainment’s
Tom Wilson took local journalists
on a walking tour of the sprawling
building Monday afternoon.
He showed off the 20,000-seat fu-
ture home of the Detroit Pistons and
Red Wings by highlighting its mas-
sive scoreboard beginning to take
shape, the unique gondola seating
that looks nearly directly down over
the floor, and the Via concourse that
has a wide transparent roof encir-
Little cling much of the bowl.
Caesars More than 1,000 workers are on
Arena’s site daily to get the 20,000-seat ven-
20,000 ue and surrounding 12-acre site fin-
seats are ished on time. Much of the seating
still being is installed, and crews are working
installed. to wrap up the interior fixtures and
infrastructure.
The arena project including
nearby developments is now tabbed
PHOTOS BY BILL SHEA/CRAIN’S DETROIT BUSINESS at $862.9 million, including an adja-
Olympia Entertainment President Tom cent parking garage and commer-
Wilson explains Little Caesars Arena’s cial buildings flanking the venue
progress to reporters during a media tour along Woodward Avenue and Hen-
last week. ry Street.

Q&A Nonprofits

Gateway ’17 looks to About Gateway ’17

in Detroit
“I’d like to see us lean into
investments that support
connect MI biz to China What: Gateway ’17 is the inaugural
the policy work that can
move the needle.”
By Dustin Walsh The answer starts with Alibaba’s national event put on by the Melanca Clark,
dwalsh@crain.com
business strategy in the United Chinese e-commerce company to Hudson-Webber Foundation
Alibaba is States, which is focused on helping find new U.S. vendors who are
coming to De- the U.S. businesses sell to the China interested in

Clark brings political,

troit this week. market. exporting to
The Chinese On a practical level, there are China.
e-commerce gi- two main focuses of Gateway ’17:

social background
Who:
ant is hosting its first is educating U.S. brands, small Featured
inaugural Gate- businesses and agricultural provid- speakers

way event, in-
tended as a way
for businesses
J. Michael Evans: to learn about
Alibaba president exporting to
says Detroit China and, in
offers access turn, help Aliba-
ba find products to sell.
Alibaba, though it sells little in the
U.S., is growing quickly. It has fore-
cast revenue next year of up to near-
ly $35 billion, an increase of 45 per-
cent to 49 percent over 2017.
Crain's Dustin Walsh talked with J.
Michael Evans, Alibaba Group’s pres-
ident and director, about why the
company picked Detroit, and what
Alibaba might do for local businesses.
Agriculture seems to be the focus,
though not the entirety, of the first
Gateway event. Why is ag
important to Alibaba and China?
ers (including farmers and cooper-
atives) about the opportunity to sell
to the more than 500 million Chi-
nese consumers on our platforms.
And second is equipping those
brands, small businesses and agri-
cultural providers with the tools
and understanding they need to
begin the process of getting on our
platforms and selling to Chinese
consumers who have a high de-
mand for products from the United
States.
Agriculture is important because
our consumers in China are looking
for safe, high-quality fresh produce
and agriculture products. The U.S. is
a net exporter of a wide range of
these products and so we can help
this supply connect with strong and
Others include fashion and appar-
el, mother and baby products,
SEE GATEWAY, PAGE 21
to Hudson-Webber
include
Alibaba CEO
Jack Ma,
Martha
Jack Ma By Sherri Welch ground to bear in developing a new
Stewart
swelch@crain.com
strategic plan for the funder, one that
Living
When Melanca Clark first ex- could see it taking a new advocacy
Omnimedia
founder pressed interest in leading the Hud- role on policy issues that impact the
Martha son-Webber Foundation, there was quality of life in Detroit and funding,
Stewart, UPS some question of whether she’d be among other things, new approaches
CEO David able to get an interview, given her to crime intervention in the city.
Abney and TV non-traditional background. The strategic plan is expected to be
anchor Unlike the heads of most private done later this summer.
Charlie Rose. foundations, Clark hadn’t come up “Given our scale and scope ... we’re
through nonprofit channels. not going to program our way out of
When:
Martha Stewart Instead, she’d turned her Har- some of these issues that we’re trying
Tuesday-
vard Law School degree to social to take on,” Clark said.
Wednesday.
justice and political work, a path The foundation grants $6 mil-
Where: Cobo Center, Detroit. that took her all the way to the lion-$7 million annually to efforts
Tickets: Sold out. White House. supporting physical revitalization, the
Now, just under a year after joining arts, economic development and safe
More: Gateway17.com Hudson-Webber, she’s bringing her communities in the city.
political and social justice back- SEE CLARK, PAGE 20

MUST READS OF THE WEEK Office space

Hayman buys Troy
Many dollars, not so many wins Officentre for $55
million, plans $10 million
The Tigers’ return on their payroll investment puts them in renovations. Page 5
near the bottom of Major League Baseball, Page 4
4 C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 9 , 2 0 1 7
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The average MLB roster spending this season is $139.3 million. The Tigers are spending $201.1 million.
Tigers remain one of Major League
"My children
Baseball’s inefficient spenders
and I deserve By Bill Shea
“I can’t afford genuine love.” bshea@crain.com
to leave.”
It’s June, so summer is basically
“ Nobody else I AM A
Survivor!
here, the weather is nice, and the
will love me.” kids are getting out of school. And
that other annual midyear phenom-
enon is in full swing: Detroit Tigers
”we have no where to go.” “There is HOPE for
a better future!” fans are complaining.
Are the beefs legit? Has the team
"my children and been effective or inept with its talent
“I have to keep my family together.” i are worthy of so far this season?
support and The Tigers, going into Wednesday,
encouragement!” were 30-33. After 63 games a year
ago, they were 32-31, and would go
on to chase a playoff spot until the
Create opportunities to succeed and join us in final weekend of the season. In 2012,
our commitment to serving families affected by when the Tigers last reached the
World Series, they were 30-33 after
domestic violence. 63 games.
Across Major League Baseball
Visit www.cotsdetroit.org right now, the average team sits at
HOPE HELP HOUSING
for more information. 26 Peterboro | Detroit, MI 32-32. What separates the Tigers
313-831-3777 from the rest of the middle of the
pack is payroll.
Average MLB roster spending this
season is $139.3 million. The Tigers
are spending $201.1 million.
More than a third of the season is
in the books, and if the Tigers main-
tain their .476 winning percentage
STAY IN THE
pace, they’ll finish 77-85. Cocktail
napkin math suggests they’ll have
spent $2.61 million for each victory.
KNOW
A 77-85 team spending the league
average on players will have doled
out $1.8 million per victory this sea-
son.
Last season, it cost the Tigers an
with Crain’s average of $2.39 million for each of
the team’s 86 victories. At their 2017
Email pace, they’ll win nine fewer games
and spend more to do it.
Newsletters
The flaw in such math is that it’s
much harder to be efficient when a
team spends more. Big payrolls
don’t automatically equal winning
or a World Series, but being cheap
doesn’t win many games, either. The
elusive grail for front offices is to find
Subscribe for FREE by visiting the right collection of players for the
crainsdetroit.com/crainsemails right price. The only teams to win a
championship while having the
most expensive roster were the New
York Yankees in 2000 and 2009. That
said, higher spenders got to the
World Series more often that cheap-
er teams.
The best team in baseball right
now is the Houston Astros with a 44-
22 record. Their payroll is $125.3 mil-
lion, which is $14 million below the
league average. Detroit spending 44
percent more than the league aver-
age hasn’t resulted in much beyond
a .500 club that’s in third place with-
in American League Central Divi-
sion.
The Philadelphia Phillies are the
worst MLB club at 21-42. If they keep
up with .333 winning percentage
and win just 54 games, their $113.2
million roster translates into $2 mil-
lion spent per victory.
At the other end of the spectrum,
the L.A. Dodgers have MLB’s largest
payroll at $246.3 million, and their
.615 wining percentage projects out
to 100 wins. The math suggests $2.46
million for every Dodgers victory.
Or, in other words, they’ll spend less
per game for each victory than De-
troit.
Spending efficiency, of course, is
meaningless to fans and billionaire
owners if their team wins the World
Series. For the Tigers, the math so far
paints a muddied picture with a lot
of baseball left to be played.
Detroit, which was 3.0 games out
of the division lead on Wednesday,
was 13th among MLB’s 30 clubs
when it comes to team batting aver-
age (.255) and home runs (79) but
it’s in the upper tier for on-base per-
centage (.333, 7th), slugging per-
centage (.431, 10th), on-base plus
slugging (.764, 8th), and the Tigers
were sixth in baseball with 235 walks.
They had the 12th-most strikeouts
with 534, so the team is a confound-
ing mix of patient at the plate, hitting
for extra bases, but still striking out
more than most teams.
Pitching has been the team’s bug-
aboo. The staff has a combined 4.78
ERA, which ranks 24th in MLB, and
opposing teams were hitting .273
against Detroit, which ranks 28th.
The pitching staff’s WHIP — a mea-
surement of baserunners allowed
CRAIN’S DETROIT BUSINESS
per innings pitched — also was 28th
at 1.47.
Oh, and that bullpen, ever a
source of angst. So far this season,
the Tigers’ bullpen had blown 12 of
26 save opportunities, third worst in
baseball, and the group’s 5.01 ERA
was 27th in MLB.
A more technical measure of the
team’s performance so far is an ad-
vanced analytical metric that’s be-
come popular over the past decade:
wins above replacement, or WAR.
The measurement is for individual
players, and gives an idea of how
many victories a player is worth to
his team compared to a replace-
ment-level player. The higher the
WAR, the better the player.
Through Wednesday, ESPN’s ver-
sion of WAR showed just four Tigers
players in the top 100: Outfielder Jus-
tin Upton with a 2.1 WAR came in at
No. 52, pitcher Michael Fulmer tied
for No. 73 with a 1.89 WAR, and back-
up catcher Alex Avila’s 1.74 WAR was
tied for 85th. Avila was starting while
everyday catcher James McCann was
out with an injury.
Last year, the Tigers had several
players in the top 50 WAR rankings:
pitcher Justin Verlander finished
ninth in baseball with a 6.61 WAR.
Second baseman Ian Kinsler was
17th with a 6.13 WAR and Miguel
Cabrera was 45th with a 4.9 WAR.
Fulmer with 46th at 4.87 WAR.
A WAR rating increases with
games played.
Baseball salary tracking site Spo-
trac.com has a metric called True
Value Statistic (TVS) used to value
teams by payroll, victories, and ac-
cumulated player production. De-
troit’s 19.47 TVS ranked 25th in
baseball, with the Astros as the best
at 98.14 and San Francisco Giants
worst at 1.74. The average TVS was
48.3 as of Wednesday.
Note: The statistics, rankings, and
salary information in this story come
from MLB, ESPN.com, Fangraphs.
com, and Spotrac.com.
Bill Shea: 313 (446-1626)
Twitter: @Bill_Shea19

About $10 million in capital improvements are expected at the five-building Troy
Officentre complex along East Big Beaver following a sale to Southfield-based
Hayman Co.
Hayman buys Troy
Officentre for $55M
By Kirk Pinho
kpinho@crain.com
Hayman Co. has paid $55 million
for the Troy Officentre complex.
The deal that closed earlier this
month for the 732,000-square-foot
property along East Big Beaver Road
just north of I-75 amounts to $75.14
per square foot.
Andrew Hayman, president of
Southfield-based Hayman Co., said
about $10 million will be spent up-
dating and renovating the five-build-
ing property.
Improvements include new ele-
vators, some roof replacements,
parking lot and parking deck repairs,
and landscaping and signage up-
grades. Common areas are also ex-
pected to be improved, Hayman
said. According to CoStar Group
Inc., the average asking rent is $17.95
per square foot per year, and Hay-
man said he and New York City-
based Torchlight Investments, an
investment partner in the deal, hope
to increase rents over approximately
a five-year ownership period to
more than $20 per square foot.
“We see a tremendous value op-
portunity, but at what we feel is a re-
Mobility center awards $24M
contract for proving grounds
By Kurt Nagl
knagl@crain.com
The American Center for Mobility
has awarded Warren-based Angelo
Iafrate Construction a $24 million
contract to begin phase one of the au-
tomated vehicle proving ground at
Willow Run.
Phase one includes construction of
a 2.5-mile highway loop with on and
off ramps, a 700-degree curved tun-
nel, customer garage and operations
center, the mobility center announced
in a news release.
Completion of the project’s first
phase is expected by December, when
the grounds will open for testing, the
news release said.
“The American Center for Mobility
is attracting worldwide interest from
private and public entities that have a
need for developing and testing ad-
vanced connected and driverless ve-
hicle technologies,” John Maddox,
president and CEO of the mobility
center, said in a written statement.
C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 9 , 2 0 1 7 5
Visit us at SHRM17,
Booth 3352.
COSTAR GROUP INC.
Reap the
s
a r d
e w
ultig
r
 enerational
m
of a workforce
ally good price per square foot,” Hay-
man said.
The complex, most of which was
built in the mid-1980s, is about 83
percent occupied, with large tenants
including J.D. Power & Associates
(43,000 square feet), St. John Provi-
dence (30,000 square feet), Urban
Maturity. Judgment. Work ethic. This is the value
Fulfillment Services (30,000 square experienced workers can bring to your workforce.
feet), General Physics Corp. (60,000 When younger and older employees work together,
square feet) and Dialog Direct
(60,000 square feet), Hayman said.
everyone is more productive.
Hayman Co. will manage and Learn more at AARP.org/employers
lease the building to tenants, and
serve as construction manager on
the renovations.
The previous owner was a subsid-
iary of Osprey S.A. Ltd.
Anne Galbraith Kohn, senior vice
president in the Capital Markets
Group in the Southfield office of Los
Angeles-based CBRE Inc., brokered
the deal.
Hayman Co. has an office portfo-
lio of about 4 million square feet un-
der ownership and management,
plus more than 10,000 apartment
units spread across about 40 proper-
ties, Hayman said.
Kirk Pinho: (313) 446-0412
Twitter: @kirkpinhoCDB
DOING
In January, the American Center
for Mobility, a nonprofit self-driving
vehicle test bed at the Ypsilanti air-
THE UNDOABLE
IS IN OUR
port, was named by the U.S. Depart-
ment of Transportation an official
proving ground for the development
of driverless cars.
DNA.
Construction of the proving
grounds — at the site of a former Gen-
eral Motors plant that closed in 1992
— is expected to cost $110 million.
The mobility center has secured about
half those funds with more private in-
vestment on the way, according to
GM Authority, a forum for news relat-
ed to the automaker.
The Michigan Department of Grand Rapids We believe our attorneys have the passion,
Transportation has also started work Southfield
on a 1.5-mile section of US-12 be- talent and tenacity to do the undoable. Named
Macomb
tween Ecorse Road and Airport In- one of the nation’s best law firms by U.S. News
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6 C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 9 , 2 0 1 7
What do you call
the summer of ’67?
I
call what happened in Detroit in
1967 a riot because my father
called it a riot, and my father
called it a riot because he was a De-
troit riot cop.
It’s a matter of perspective.
It’s trite to open a column with a dic-
tionary definition, but words matter, so
we have to start with Merriam-Web-
ster: A riot is “a tumultuous distur-
bance of the public peace by three or
more persons assembled together and
acting with common intent.”
The word vaguely applies to what
happened here 50 years ago this sum-
mer: 43 dead (33 blacks and 10 whites),
1,189 injured, more than 7,200 arrests,
and 2,509 businesses burned, looted or
otherwise destroyed.
But “riot” also lacks context. It as-
sumes “common intent” when the
violence of 1967 had many inten-
tions, many reasons and justifica-
tions, and not all of them pure.
Much of it was fueled by anger.
Anger over policy brutality. Anger
over red-lined neighborhoods. An-
ger over systemic racism that, among
other things, led to the destruction of
a vibrant black business community
called Paradise Valley (See Kirk Pin-
ho’s story on Page 14).
For many black Detroiters, anger
defined the words their parents used.
Rebellion: “opposition to one in
authority or dominance.”
Revolt: “to renounce allegiance or
subjection (as to a government).”
Uprising: “a usually localized act
of popular violence in defiance usu-
ally of established government.”
Insurrection: “an act of instance of
revolting against a civil authority or
an established government.”
I’ve heard people use the word
“unrest” rather than riot or rebellion. I
looked it up: Unrest means “a dis-
turbed or uneasy state,” which might
make it more of a euphemism than a
synonym. Same for “civil disturbance.”
Frank Joyce, a prominent New
Left activist in Detroit in the 1960s,
read a lot into word choices. “The in-
vestment that a lot of white people
have in calling this a riot is precisely
because they don’t want to concede
that black people had anything to
rebel about …,” he said in 2016.
Among those who fiercely dis-
agreed was Roman Gribbs, who
served as Detroit mayor from 1970 to
1974. “How can you say a rebellion
when you have 43 murders, $50 mil-
lion (of) damages — blocks and
blocks of fires,” he said in 2015.
“That’s not a rebellion, that’s a riot.”
(Gribbs died in 2016.)
Both Joyce and Gribbs were inter-
viewed by the Detroit Historical Soci-
ety for its 1967 oral history project.
The DHS collected hundreds of inter-
views and built a Midtown exhibit,
“Detroit 67: Perspectives,” to encour-
age metro Detroiters to move beyond
OPINION
RON FOURNIER
Publisher and Editor
Ron Fournier is publisher and editor of
Crain’s Detroit Business. Catch his
take on business news at 6:10 a.m.
Mondays on the Paul W. Smith show
on WJR AM 760.
the linguistics of 1967 and attack the
root causes of whatever we call it.
For this issue’s coverage of the 50th
anniversary, Crain’s staff didn’t settle
on one word to describe what hap-
pened, because no single set of letters
conveys the full breadth of that bloody
summer, and each word reflects a dif-
ferent perspective. We recognize that
our readers come from all walks of life.
We chose to write about the sum-
mer of ’67 because Crain’s is a busi-
ness publication, and what hap-
pened that summer was an
economic cataclysm. The financial
pain lingers today. Detroit’s future
depends upon how well the business
community and other civic leaders
learn from the lessons of the past.
“If we fail again,” Mayor Mike Dug-
gan warned at the Mackinac Policy
Conference, “I don't know if the city
can come back.”
La June Montgomery Tabron,
president of the W.K. Kellogg Foun-
dation, was traveling to Mackinac Is-
land when Duggan was tracing the
history of institutionalized racism in
Detroit. But by the next morning,
when she joined me for breakfast at
the Grand Hotel, everyone was
talking about the mayor’s speech.
“Good for him,” she murmured.
Then we compared notes: We’re
roughly the same age. We grew up on
the city’s east side. Her neighborhood
was diverse, mine was not. She is black.
I am white. My father wore riot gear. Her
father wore a grim look of resolve when
neighbors and friends filled his base-
ment, taking shelter from violence.
“Suddenly, a guy showed up car-
rying a TV under his arm. My father
stood in the door to our house and
said, ‘Oh, no you don’t! Get that TV
out of here!’”
She took a bite of breakfast and
continued: “What I remember is lead-
ership — somebody, my father, giving
shelter to people who needed it and
helping us process right from wrong.”
I didn’t ask her what she calls the
events of 1967. I suspect it matters
much less to her than what Kellogg is
doing for Detroit’s neighborhoods
under her leadership.
The QLine runs up and down Woodward in downtown Detroit.
Let’s keep it within reason
I happen to think that the new
streetcars are great. My only sug-
gestion, as given to me by a friend,
is that they need to put more cars
on the system. A 10- or 15-minute
wait is about the tolerable maxi-
mum, and now it’s about double.
There is no doubt that the proj-
ect has been a hit, and if they can
find the money to keep it running,
then we have a home run.
The problem has always been,
everywhere, if there is a deficit,
they raise the price, fewer people
ride, and it becomes a spiral down-
ward. Just about every mass transit
system needs a government subsi-
dy, so don’t be surprised when tax-
payers are asked for one.
Meanwhile, we are hearing a lot
of crying for more trolleys going
out to the suburbs. It would be
hard not to want an expansion of
our system after seeing it in opera-
tion. Like the People Mover, it does
not do as much good as possible
without being expanded.
In a perfect world with lots of
Re: UM to offer free
tuition for students
with family incomes
under $65,000
Another reason not to send my
kids to U of M. Now they have to sub-
sidize these free students through
their own student loans. The in-
crease U of M is proposing may not
sound a lot as a percentage but when
KEITH CRAIN
Editor-in-chief
revenue, we would all like to see
an expanded system serving all of
Southeast Michigan. But the cost
would simply be prohibitive.
And let’s be equally careful that
we don’t fall too in love with a
fixed rail system. I always remem-
bered watching the system in Chi-
cago, called the “Loop,” become
obsolete when, over a few decades,
the downtown moved, leaving the
system today in the wrong place.
Buses, whether they are pow-
ered by fuel, electricity or even hy-
drogen, have the simple ability to
move as population shifts, a real
advantage. Trolleys or streetcars
TALK ON THE WEB
you consider the average debt, that
could add years to the loan repay-
ment. Nice thought, poor imple-
mentation.
How about cutting the salaries of
the professors and charging a fee to
the board of regents to subsidize all
the students! They certainly make
more than $65k and should be hap-
py to take a 3 percent cut.
MarkYTH
CRAIN’S DETROIT BUSINESS
are cool but very expensive and
don’t have the flexibility to move
as population moves.
Unless you are certain that pop-
ulation will stay put for decades,
buses seem to be a better choice.
Right now we have isolated transit
systems that don’t seem to be con-
nected. Our trolley up and down
Woodward is going to be a business
bonanza. I hope everyone watches
as businesses sprout up all along
the system, whether they are
restaurants, apartments or offices. I
am sure we will see lots of new eco-
nomic growth along the route.
Even in the Motor City, mass
transit will build business, some-
thing long overdue. But to be really
powerful we have to watch it ex-
pand all over our region.
The People Mover was a begin-
ning, followed now by the street-
cars. Over a period of time, when
we have the tax revenues, we must
see an expansion of our system. It
will add substantially to our eco-
nomic prosperity.
Since this is funded by out-of-
state tuition and university cost con-
tainment won't it simply raise the
tuition for those who are paying? I
don't see this as the long-term solu-
tion for the ever-rising costs of col-
lege education. Additionally, if UM is
the trendsetter here it could poten-
tially dissuade students from elect-
ing to attend the school.
BFureigh
 C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 9 , 2 0 1 7 7

Retiring educator said yes to career-minded young people

As debates continue within the
business community about how to
Too often, the
support education, there is a lesson word we hear the
we can learn from an educator who most in business
is worthy of celebration.
Pete Bowers is retiring after 41 is negative — “no.”
years as a teacher and, as he is well-
known in local broadcasting circles, tional media figures on a talk show,
the station manager of WBFH-FM OTHER VOICES he said “yes.” Two of many exam-
in Bloomfield Hills, a community Matt Friedman ples of experiences then that built
radio station staffed primarily by skills used now.
Friedman is co-founder of Tanner
the students he has mentored since Pete Bowers saw his role not just
the “The Biff” first signed on the air Friedman Strategic Communications in to manage, not just to teach, but
in 1976. “Bitten by the broadcasting Farmington Hills and an alumnus of also to empower. If we can all figure
bug” as a college student, Bowers WBFH-FM. out ways to say “yes” to ca-
channeled that passion into a ca- reer-minded young people, his leg- Pete Bowers is retiring after 41 years as a teacher and as the station manager of
reer, in his hometown, filled with acy will long outlast his retirement. WBFH-FM in Bloomfield Hills.
indelible influence.
One of the unusual aspects of the
communications business is the
lack of barriers to entry. There is no
state certification, no licensing ex-
ams. Would-be entrants just need
someone to open the door to a ca-
reer. For me, that was Bowers.
When I was just 11 years old, as a
sixth-grader fascinated by media,
he gave me a radio show he named
“Middle School Spotlight.” As a se-
nior in high school, he named me
the station’s operations manager,
overseeing a staff of 30. In between,
I learned how to DJ, anchor news,
report sports and call play-by-play.
In more than four decades, he FALL REGISTRATION NOW OPEN
gave similar career head starts to
WXYZ-TV’s Heather Catallo and Jo-

READY. SET.
Anne Purtan, WXYT-FM’s Scott
“The Gator” Anderson and WDET-
FM’s Jake Neher, among dozens of
others. Sure, we all grew up in and
around Bloomfield Hills, which
provided us with multiple advan-
tages. But it was Bowers who creat-
ed an environment that encouraged

GR W.
teamwork and fresh thinking, in-
valuable lessons for communica-
tors and others who have enjoyed
success in a wide range of profes-
sions.
At a retirement luncheon June 3,
administrators, colleagues and
alumni thanked Bowers for all he
has sent into the lives of his stu-
dents. In a mix of laughter and tears,
we spoke on how experiences as a
teenager have shaped our lives as
adults. All of the comments had
something in common — we talked LAUNCH YOUR CAREER TO THE NEXT LEVEL
of intangibles, not anything that can
be measured by standardized tests.
One former student, now an FBI
agent, drove 500 miles from Virginia
Crain’s Leadership Academy is a unique
“An unparalleled opportunity to learn
to be there. Another, an internet en- multisession development experience,
trepreneur, flew in from Atlanta. A deeply about yourself as a leader while
third, a teacher and debate coach in designed for the next generation of leaders.
Florida, flew in to say, “The three
expanding your professional network
This 3-month program guides participants on a
biggest positive influences in my
life have been my mother, my father journey of personal discovery and cross-sector
with other like-minded leaders from a
and Pete Bowers.”
perspectives, through interactive activities wide variety of industries”
Too often, the word we hear the
most in business is negative — “no.” and thought-provoking discussions. – C1: Spring 2017 Crain's Leadership Academy Graduate
Forget about creativity. Just hit your
numbers. Make the boss happy.
Keep your head down. Don’t cause
trouble.
But with Pete Bowers, the answer EARLY BIRD NOMINATIONS START NOW.
to students was always “yes.” When – END SEPTEMBER 1 –
I, at 14, wanted to be the first broad-
caster, perhaps nationally, to call a
middle school basketball game on For more information and to nominate, visit crainsdetroit.com/leadershipacademy
the radio, he said “yes.” Three years
later, when I wanted to rack up long
distance charges interviewing na-
8 C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 9 , 2 0 1 7

SPECIAL REPORT: HEALTH CARE SP

Medical mergers
H
FRO

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

Henry Ford ers

duc

expands with
“
den
grat

Jackson, Flint hos

cal
Nat

acquisitions anc
inte
tion
By Jay Greene not
jgreene@crain.com
effic
Henry Ford Health System had a big year in fina
2016 when it added Jackson-based Allegiance per
Health in April and Flint-based HealthPlus of Th
Michigan earlier in February. The two acquisi- Hen
tions added about $800 million in annual reve- Hea
nue to the now $5.7 billion system and expand- vers
ed its geographic reach by 75 miles to the west thre
and 70 miles to the northwest and from five nize
counties to eight. B
So, how has Henry Ford, with its rich history sho
as a Detroit-based integrated system with a tion
1,200-physician employed medical group and such
a 662,000-member health insurance company, orga
fared since then? the
By all accounts, if you talk with Henry Ford veys
officials and physicians, the implementation of liev
the merger has gone well. But experts says it but
takes years before determining success of fail-
ure with a major business acquisition or merg-
er.
Robert Burns, chair of the health care man-
agement department at the Wharton School at
the University of Pennsylvania, said research BEAUMONT HEALTH
shows two-thirds of all corporate mergers, Construction is underway on a new patient tower at Beaumont Hospital, Farmington Hills, the former Botsford Hospital that was part of a merger in 2014.
which includes hospitals and insurers, fail to
achieve success as defined by the public: pro-
viding better coordinated care that leads to im- Beaumont’s financials, patient volume Bob

stats up three years into union of hospitals

proved quality, lower costs and enhanced cus-
tomer service. App
“A successful merger is defined by what the mer
hospital says it is, not what society is looking
for,” said Burns, a national expert who has By Jay Greene definition, our slice of the pie is getting bigger.” They include combining administrative staffs sion
jgreene@crain.com
studied hospital and physician mergers for It’s paying off. and back-office support services; issuing a was
more than 30 years. Hospital mergers like the one that formed For fiscal 2016 that ended Dec. 31, Beau- consolidated bond for $398.4 million that one
“Reduced costs are what the public wants in a eight-hospital Beaumont Health in September mont Health enjoyed an saved the new system $23.5 million; consoli- syst
merger,” he said. “Systems seek market power, 2014 often take five years or more to ultimately operating income increase dating electronic medical record systems with adv
market share, to weed out competitors” and to be judged a success or failure. of 43 percent to $200.6 mil- Epic Corp.’s electronic medical record; forming gati
protect their pricing scheme against insurers, But three years into the merger that brought lion for a 4.6 percent mar- 900-physician Beaumont Medical Group and plag
managed care organizations and employers. together four-hospital Oakwood Healthcare, gin, compared with $140.7 launching Beaumont Care Partners to negoti- cou
Burns says hospital executives will never pub- Botsford Hospital and Beaumont Health Sys- million the prior year. Net ate managed care contracts. W
licly acknowledge these goals, but the former tem, progress toward that end has been un- revenue grew 6.7 percent Cost savings last year from the merger, esti- med
SEE HENRY FORD, PAGE 9 mistakable, according to top executives and to $4.4 billion. Beaumont mated at $77 million, allowed Beaumont to istra
physicians interviewed by Crain’s. Beaumont’s has projected net savings reward employees with pay raises, company iden
A 59,000 square-foot inpatient tower board chair, John Lewis, declined interview re- from the merger over three 403(b) retirement plan matches and new edu- syst
at Henry Ford Allegiance Health in quests. John Fox: years to be more than $134 cational assistance and benefit plans. Beau- solid
Jackson will create 66 private rooms. “From an operating standpoint, we have got Beaumont is million. mont employs 35,000 workers and has nearly effic
a beat and rhythm and are doing well,” CEO exceeding targets. Beaumont is metro De- 5,000 physicians on its medical staffs. said
John Fox said of the merger. “We are exceeding troit’s second-largest sys- Many smaller improvement projects are fly- 75 p
our targets, getting higher volumes, our hospi- tem by revenue at $4.4 billion, somewhat be- ing under the public radar. But prominent prod
tals are growing with better asset utilization. hind $5.7 billion Henry Ford Health System, changes included the January launching of a ning
Part of that reason is that people understand a which includes $2.4 billion in health premium new Beaumont branding campaign during the A
HENRY FORD HEALTH SYSTEM

lot better than a couple years ago what Beau-
mont Health is.”
“Patients and doctors are trying us who have
not done so before. All boats are rising. With
that, our market share is growing. We see it in
all the math. The (Southeast Michigan) market
has grown by X, but we are growing by 2X. By
revenue. Comparing just net patient revenue, Super Bowl. Its “No Quit in Us, No Quit in You” the
Beaumont is ahead of six-hospital Henry Ford, print, radio, TV and billboard campaign so far mer
$4.1 billion to $3 billion. is getting good reviews, Fox said. This summer, Hea
Over the two years Fox has been CEO, Beau- executives will analyze data to determine if pa- now
mont has moved the needle on integrating the tients responded to the campaign by visiting a of 6
eight hospitals with 3,337 beds and 168 outpa- Beaumont hospital or doctor. mer
tient sites into one entity in a number of ways. SEE BEAUMONT, PAGE 12 PPO

SPECIAL REPORT: HEALTH CARE
HENRY FORD
FROM PAGE 8
hospital executive said private moti-
vations never change.
In a 2015 study, Burns and fellow
researcher Jeff Goldsmith looked at
the performance of 15 “integrated
delivery networks” in the U.S. as
they added hospitals, physician or-
ganizations and managed care con-
tracts where they assumed some fi-
nancial risk. The research concluded
there is little evidence that the merg-
ers help to promote quality or re-
duce costs.
“Indeed, there is growing evi-
dence that hospital-physician inte-
gration has raised physician costs,
hospital prices and per capita medi-
cal care spending,” the paper in the
National Academy of Social Insur-
ance concluded. “Similarly, hospital
integration into health plan opera-
tions and capitated contracting was
not associated either with clinical
efficiency (shorter lengths of stay) or
financial efficiency (lower charges
per admission).”
The 15 systems studied included
Henry Ford Health System, Advocate
Health Care in Chicago and the Uni-
versity of Pittsburgh Medical Center,
three health systems widely recog-
nized as successful systems.
But Burns added that studies also
show there is a great deal of varia-
tion in outcomes, depending on
such factors as the leadership of the
organizations, the market and how
the mergers are implemented. Sur-
veys also show employers don’t be-
lieve hospital mergers reduce costs,
but do lead to better care coordina-
tion and quality.
Bob Riney,
Henry Ford’s
COO, said the
health system
ALTH approached the
merger with Al-
legiance very dif-
ferently than
hospital combi-
Bob Riney:
s
nations of the
Approached past.
merger differently. “When we
made the deci-
taffs sion to partner with Allegiance, it
g a was a mutual decision to become
that one,” Riney said. “We set out as a
soli- system determined to try and get
with advantages with mergers and miti-
ming gating the challenges that have
and plagued so many mergers across the
goti- country.”
With the HealthPlus purchase, im-
esti- mediate goals were to reduce admin-
t to istrative costs, create a mutual brand
any identity and connect information
du- systems with HAP, Riney said. “Con-
eau- solidation went pretty quickly and
arly efficiently without much fallout,” he
said, adding that the merger is about
fly- 75 percent complete, although new
nent product development is just begin-
of a ning.
the After adding 300 employees from
You” the old HealthPlus and 73,000 com-
o far mercial members, Henry Ford’s
mer, Health Alliance Plan of Michigan
pa- now has 1,300 employees and a total
ng a of 662,000 insured lives in its com-
mercial, Medicaid, Medicare and
E 12 PPO business lines.
C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 9 , 2 0 1 7
A renovated Henry Ford Allegiance Health Center on Spring Arbor Road in Jackson will consolidate services under one roof,
including dermatology, plastic surgery, and obstetrics and gynecology. Construction is scheduled for completion in August.
Mergers with Obamacare
Over the past several years, Henry
Ford and Allegiance explored mergers
with various health systems. Nation-
ally, many health systems and insur-
ance companies did the same be-
cause of the need to reduce costs and
improve quality to take advantage of
incentives and payment cuts con-
tained in Obamacare, or the Patient
Protection and Affordable Care Act of
2010.
Four years ago, Henry Ford at-
tempted to merge with Beaumont
Health System in Royal Oak. Cultural
and management incompatibilities
ended that deal. Beaumont then
merged with Oakwood Healthcare
and Botsford Hospital to become
eight-hospital Beaumont Health, the
largest health system in Southeast
Michigan in market share.
Allegiance also discussed various
deals with the University of Michigan
Health System in Ann Arbor and Pro-
Medica in Toledo.
But one of the advantages Henry
Ford had over UM and ProMedica is
that Henry Ford offered to invest more
than $300 million in capital improve-
ments over five years in the Jackson
market. Henry Ford also pledged to
enhance clinical services in Jackson.
Capital projects underway at Alle-
giance include adding a much-await-
ed $45 million, 66-bed patient tower,
enhancing cardiovascular services,
adding a $70 million Epic Corp. elec-
tronic medical record and a $10 mil-
lion, two-story health innovation and
education center.
Georgia Fojtasek, president of
Henry Ford Allegiance Health who
was president of the old Allegiance
system, said the early positive im-
pact from the merger has been that
Henry Ford has kept its promises on
capital projects and how it has treated
Allegiance physicians and employees.
“Being aligned on values has really
helped us manage the challenging
parts of bringing two organizations to-
gether,” said Fojtasek, a nurse who has
been Allegiance’s CEO for 23 years. “It
is still early, and we have a lot to do, but
(the merger) has worked out very
well.”
Fojtasek said Henry Ford has al-
ready integrated Allegiance with its
billing and collections revenue-cycle
processes, combining group purchas-
ing, human resources, legal, finance
and marketing. The system is working
on merging employee benefit pro-
grams and its new Epic records sys-
tem.
“We have been so focused on (in-
stalling) Epic that has meant that our
other integration efforts have been de-
layed some,” she said.
But Fojtasek said Allegiance has
continued to bring in more patients by
opening a level-two trauma center, re-
cruiting physicians and getting a Hen-
ry Ford name-recognition bounce in
the market.
“It is impressive to me what the
Henry Ford brand has meant to staff,
physicians and employees,” she said.
“Henry Ford talks about commitment
to excellence and how they treat peo-
ple, and that is true.”
Since last year, Henry Ford Alle-
giance’s market share has increased by
1.5 percentage points to 33 percent of
inpatient discharges, a number similar
to Henry Ford’s market share in South-
east Michigan. Allegiance’s total dis-
charges for 2016 were 19,996, a 3.6 per-
cent increase from 2015.
Fojtasek said Allegiance was able to
attract a Henry Ford rheumatologist
part-time to see patients in Jackson
and recruited a radiation oncologist
and neurosurgeon, both of whom re-
cently completed residency training at
Henry Ford.
“There has been a small shift of
people going to
Henry Ford in
Detroit from Ann
Arbor,” she said.
“Obviously, some
of our patients
still go to the Uni-
versity of Michi-
gan and St. Jo-
seph’s. Some go
Georgia Fojtasek: to Beaumont and
Henry Ford has also to (hospitals
kept promises. in) Lansing and
Kalamazoo. We
are keeping more patients than we
used to do.”
Riney said Henry Ford also is build-
ing out Allegiance’s network of 40
medical facilities by adding a new am-
bulatory care center in Brooklyn. He
said plans call for adding other centers
in the coming years.
“We have had tremendous growth.
We had 300 more patients, and 70 per-
cent of those patients were new to
Henry Ford,” Riney said.
On the other hand, Allegiance be-
gan a community paramedic program
with Jackson Community Ambulance
to reduce unnecessary emergency de-
partment visits and lower costs. Addi-
tional hours were also added to eve-
ning clinics for primary care. Both
programs helped reduce ER visits by
1.6 percent in 2016 to 84,663 from
HENRY FORD HEALTH SYSTEM
86,041 the prior year.
As a result, Henry Ford Allegiance’s
revenue increased 7 percent to $501
million for the first nine months of the
merger ending Dec. 31, 2016. Howev-
er, net operating margin declined 2.3
percent for the same period to a loss of
$2.5 million, primarily because of
merger costs and the Epic EMR instal-
lation, Fojtasek said.
Overall, by adding Allegiance, Hen-
ry Ford added assets of about $524.8
million in net fair value and net reve-
nue of $414 million from April to De-
cember 2016, according to Henry
Ford’s 2016 audited financial state-
ment. HealthPlus added $18.9 million
in fair market value to Henry Ford with
premium revenue of $331.7 million
from February through December, the
report said.
Besides adding size and revenue,
health care mergers and acquisitions
also traditionally save some money for
the combining hospitals by taking ad-
vantage of economies of scale, central-
ized business services, but also
through employee and top manage-
ment layoffs, Burns said.
But other than normal attrition at
Allegiance, Riney said there haven’t
been any staff reductions. “Our job is
to grow the business and also be sensi-
tive to the jobs in all the communities
we serve,” he said.
Jackson market
Competition for patients will in-
crease in the Jackson market with a
stronger Henry Ford Allegiance Health
hospital and the University of Michi-
gan Health System creeping closer to
Jackson.
In March, UM announced it plans
to purchase a 49 percent interest in St.
Joseph Mercy Chelsea Hospital, which
is between Ann Arbor and Jackson.
Officials for St. Joseph Mercy Health
System, which owns the Chelsea hos-
pital, said the two are expected to in-
vest at least $20 million in improve-
ments. The community hospital
would increase operating rooms to
eight from six, boost operating beds
from about 100 now to the licensed ca-
pacity of 133 beds and add minimally
invasive robotic surgery.
Fojtasek said the move to Chelsea
makes sense for the University of
Michigan. “We are competitors, and
that probably will increase competi-
tion and makes sense for them,” she
said.
But David Spahlinger, M.D., presi-
dent of the University of Michigan
Health System, said UM’s decision on
9
Chelsea had nothing to do with blunt-
ing Henry Ford’s move into Jackson.
He said UMHS simply needs addition-
al beds to serve its patients and is strik-
ing deals with health care organiza-
tions like St. Joseph’s across the state.
Spahlinger confirmed that HAP
plans to roll out a tiered provider net-
work insurance product in the Jackson
market sometime this year. He said he
was informed by Henry Ford that UM
will become a “tier 2” provider that will
charge patients using UM higher out
of pocket costs under the new product
plan.
In a statement, Mary Ann Tournoux,
HAP’s senior vice president and chief
marketing officer, said that HAP is con-
sidering a tiered provider network in
Jackson market that could place some
providers in higher cost-sharing tiers.
“As with all health plans in Michi-
gan, HAP is evaluating the use of tiered
networks in all of our markets that
would give an incentive to those mem-
bers who choose to get their health
care from high-quality providers that
deliver the best value,” Tournoux said.
Under the tiered network approach,
health insurers charge patients higher
copays for tier 2 or tier 3 to discourage
the use of certain providers or to en-
courage use of lower-cost and high-
er-quality providers. Tier 1 is consid-
ered the preferred network providers
and have the lowest copayments.
In the Jackson and Ann Arbor mar-
kets, sources tell Crain’s, the end result
is expected to reduce the number of
HAP members using UM and direct
more to Allegiance or possibly coming
to Henry Ford Hospital in Detroit for
higher-cost specialty services.
“HAP has (placed UM in tier 2 for
the proposed narrow network insur-
ance product), but these actions oc-
curred after our announcement (with
St. Joe’s Chelsea hospital),” said Spah-
linger.
HealthPlus helps
HAP expand
Looking to the future, Henry
Ford’s ultimate goal is to have a
statewide health insurance network
for HAP. Expanded geographic mar-
ket to Genesee, Washtenaw and
Jackson counties will help toward
that goal, Riney said. Henry Ford
joining the Affirmant Health Net-
work, a statewide clinically integrat-
ed network with seven health sys-
tems and 33 hospitals, will also
enable HAP to enter other markets.
“HAP is in a unique position (to of-
fer) value-based narrow network
products” in Jackson and elsewhere,
Riney said. “We will be offering prod-
ucts that are high value with preven-
tive medicine and wellness that hope-
fully is unique in the marketplace.”
HAP’s entry into Jackson will help
provide competition and diversity of
payers in the state, Fojtasek said. In
January, Allegiance put its 5,000 em-
ployees and dependents on the HAP
plan with UM as a tier 2 provider.
“It takes time for a new insurer to
take hold in market, and we are talking
with them about how our clinically in-
tegrated network of physicians can
manage care together in the commu-
nity,” she said.
SEE HENRY FORD, PAGE 10
10
SPECIAL REPORT: HEALTH CARE
HENRY FORD
FROM PAGE 8
Bridging the physician
divide
At Allegiance, Henry Ford execu-
tives took the position that Allegiance’s
management and physicians had just
as many best practices to share with
Henry Ford as Henry Ford has to share
with Allegiance.
“We did not pre-suppose that there
is an automatic Henry Ford way that is
best,” Riney said. “We wanted to share
approaches together and develop syn-
ergies and sustainable values.”
Riney said Henry Ford wanted to
first show the community and physi-
cians that they were there to improve
clinical services and quality.
“We wanted to gain the respect of
the community and show we could
add value to them,” he said. “We didn’t
want to just say, we can save you $4
million in supplies with a broader base.
That doesn’t resonate in a community
as much as bringing value, and we
wanted to do that for the people of
Jackson.”
Riney said Henry Ford wanted to al-
leviate anxieties of the community and
Allegiance physicians that the goal was
to expand services in the local market.
“There are some serious complex
care needs that can be done at Henry
Ford Hospital and we have seen an in-
C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 9 , 2 0 1 7
Henry Ford Allegiance Health’s family medicine location in Brooklyn, which opened
in 2016, offers imaging and laboratory services.
crease in quaternary (high complexity)
cases,” said Riney, noting that a hand-
ful of patients have been transported
by helicopter to Detroit.
For Allegiance, clinical areas target-
ed for improvement first include radia-
tion oncology, cardiovascular and
neurosurgery. Riney said telemedicine
has allowed Henry Ford specialty doc-
tors in Detroit to conduct virtual visits
with patients and local Allegiance doc-
tors.
“There is a way to align physician
organizations in a non-threatening
way,” he said. “We don’t want to have
(local) doctors feel threatened for their
existence.”
In fact, Riney said one of the more
satisfying aspects of the merger for him
has been how well the employed doc-
tors at Henry Ford Medical Group have
accepted and worked closely with Alle-
giance doctors in Jackson.
“The clinical chairs regularly meet
HENRY FORD HEALTH SYSTEM
with their clinical partners at Alle-
giance,” Riney said. “They are on the
same page on value-based care that
can be one of the biggest challenges.”
Jackson also has a group of 50 or 60
independent doctors, some of whom
have been critical of Allegiance’s
management over the years. Sources
told Crain's that a good percentage of
the independent doctors initially
wanted Allegiance to join UM.
Two independent doctors told
Crain’s that Henry Ford executives, in-
cluding Riney and John Popovich Jr.,
M.D., president of 805-bed Henry
Ford Hospital and the system’s senior
vice president for clinical affairs, have
reached out to them to explain Henry
Ford’s plans.
They said independent doctors
have become more comfortable with
Henry Ford as the new owner, al-
though some are still not sold on the
change.
“You will always have divergent
views on every topic,” Riney said. “I
am not going to suggest if there were
doctors negative in past there has
been a dramatic change now. But a
vast majority of Jackson doctors are
excited to partner with Henry Ford
Medical Group. They don’t feel threat-
ened.”
Riney said he has spoken with sev-
eral physician leaders of the indepen-
dent group and believes they under-
stand Henry Ford is not the enemy.
“We are hoping to change minds,” he
said.
Installing Epic EMR
In early August, Henry Ford Alle-
giance is expected to go live with the
installation of its Epic EMR system.
Henry Ford installed Epic for its
Southeast Michigan doctors, hospi-
tals and clinics in 2013.
“It is a big, complex enterprise and
we have significant numbers of teams
working on the construct and adop-
tion of the Epic system, with appropri-
ate modifications for Allegiance,”
Riney said.
Once Epic is installed, communi-
cation between doctors on medical
cases will be improved dramatically
as patient hospital and physician data
can be shared instantly to avoid dupli-
cation of tests or medication errors.
“The continuity of care will become
incredibly easy once we get on the
same platform,” Riney said.
Fojtasek said Allegiance and its
physicians had already chosen to pur-
chase Epic before Henry Ford ac-
quired it at a cost of about $30,000 per
physician. One challenge Allegiance
doctors and administrators have is
adapting the EMR to Henry Ford poli-
cies.
“It becomes more complex be-
cause since 2008 we have all been on
the Jackson Community Medical Re-
cord system, a NextGen (EMR) plat-
form,” said Fojtasek. The JCMR,
owned by Henry Ford Allegiance, in-
cludes Allegiance, about 250 of the
medical staff's 400 doctors, the Jack-
son County Health Department, area
clinics and other health providers, she
said.
Riney said he couldn’t predict how
long it might take to integrate opera-
tions and cultures of Allegiance and
HealthPlus. He said the public, the
business community, employees and
physicians already are seeing im-
provements. But clinical service inte-
gration with complex specialties
could take years.
“Cultures are like living things.
They are constantly evolving within
the community,” Riney said. “We have
made incredible strides. The capital
investments they are seeing. (These
are) examples of promises made,
promises kept.”
Jay Greene: (313) 446-0325
Twitter: @jaybgreene
 C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 9 , 2 0 1 7 11

CRAIN'S LIST: LARGEST HEALTH CARE INSURERS/

MANAGED CARE PLANS
Ranked by 2016 Michigan revenue
SE Mich. SE Mich.
SE Mich. enrolled SE Mich. enrolled
Michigan SE Mich. enrolled members in enrolled members
Company revenue Mich. revenue members HMO/ members in
Address ($000,000) percent ($000,000) year-end DHMO in PPO POS Other
Rank Phone; website Top local executive(s) 2016/ 2015 change 2016/ 2015 2016/2015 plan plan plan members Types of health plans
Blue Cross Blue Shield of Michigan/ Daniel Loepp $25,900.0 B 6.9% $25,900.0 B 4,618,800 C 1,000,530 D 3,413,045 205,225 NA PPO, HMO, HSA-eligible products; Medicare
Blue Care Network president and CEO $24,222.0 $24,222.0 4,533,379 C Advantage, Medigap, Medicare Part D prescription
1 600 E. Lafayette Blvd., Detroit 48226 drug plans; and PPO, HMO and HSA-eligible
products for individuals. BCBSM and BCN also offer
(313) 225-9000; www.bcbsm.com
prescription drug, dental and vision benefits.
Priority Health Joan Budden 3,406.9 21.7 275.1 755,754 291,145 124,043 91,902 248,664 PPO, POS, HMO/EPO, HSA, HRA, Medicare,
27777 Franklin Road, Suite 1300, president and CEO 2,800.0 341.4 NA Medicaid
2 Southfield 48034
(800) 942-0954; www.priorityhealth.com
Health Alliance Plan of Michigan E Teresa Kline 2,480.7 0.8 NA 662,846 277,410 72,221 10,550 302,665 HMO/POS/PPO/EPO/EPA/ASO/TPA
3 2850 W. Grand Blvd., Detroit 48202
(313) 872-8100; hap.org
president and CEO 2,460.7 F NA F 689,020

Meridian Health Plan of Michigan Inc. Jon Cotton 2,420.8 G 14.6 NA 504,832 NA NA NA NA Medicaid, Medicare HMO
777 Woodward Ave., Suite 600, Detroit president and COO 2,113.2 G NA 455,299
4 48226
(313) 324-3700; www.mhplan.com
Molina Healthcare of Michigan Inc. Christine Surdock 2,104.8 G 43.4 NA 391,148 NA NA NA NA Medicaid, Medicare
100 W. Big Beaver Road, Suite 600, Troy president 1,467.9 G NA 327,904
5 48084
(248) 925-1700;
www.molinahealthcare.com
Delta Dental of Michigan Inc. Laura Czelada 1,813.4 4.8 937.6 2,596,931 0 61,454 2,425,552 109,925 Delta Dental Premier, PPO
6 Farmington Hills and Okemos
(517) 349-6000; www.deltadentalmi.com
president and CEO 1,729.9 941.4 2,633,565

McLaren Health Plan Inc. Kathy Kendall 929.6 G 3.0 NA 186,387 NA NA NA NA HMO, POS, Medicaid, Medicare Advantage
G-3245 Beecher Road, Suite 200, Flint president and CEO 902.6 G NA 203,942
7 48532
(888) 327-0671;
www.mclarenhealthplan.org
UnitedHealthcare Dustin Hinton, CEO, 420.0 NA 420.0 NA NA NA NA NA NA
26957 Northwestern Hwy., Suite 400, UnitedHealthcare NA 302.9 H NA
Southfield 48034 Michigan and
8 (800) 842-3585; uhc.com Wisconsin; Tim
Dimartino, VP sales
and account
management
Aetna Better Health Pamela Sue Sedmak 340.2 G 20.6 NA 52,064 NA NA NA NA NA
1333 Gratiot, Suite 400, Detroit 48207 president and CEO 282.1 G NA 48,094
9 (313) 465-1519;
www.aetnabetterhealth.com/Michigan
Upper Peninsula Health Plan LLC Dennis Smith 283.6 G 14.3 NA 47,852 NA NA NA NA Medicaid, Medicare
10 228 W. Washington St., Marquette
(906) 225-7500; NA
president 248.1 G NA 47,112

Physician Health Plan Dennis Reese 177.4 G 8.9 NA 36,158 NA NA NA NA NA

11 1400 East Michigan Ave., Lansing 48912 president
(517) 364-8400; www.phpmichigan.com
162.9 G NA 33,972

Vision Service Plan VSP M. Scott Mitchell, 138.6 NA NA 3,762,860 NA NA NA NA NA

2000 Town Center, Suite 725, Southfield market director; NA 133.5 1,800,550
12 48075
(248) 350-2082; www.vsp.com
Barbara Aikman,
senior account
executive
Total Health Care USA Inc. Randy Narowitz 136.4 -15.8 136.4 32,787 31,590 NA 1,197 NA HMO
3011 W. Grand Blvd., Suite 1600, Detroit CEO 162.1 162.1 40,800
13 48202
(313) 871-2000; www.thcmi.com
Humana Medical Plan of Michigan Bruce Broussard 115.1 G 43.7 NA 30,074 NA NA NA NA NA
250 Monroe NW, Ste. 400, Grand Rapids president and CEO 80.1 G NA 17,011
14 49503
(502) 580-1000; www.humana.com
Harbor Health Plan Inc. Jesse Thomas 51.8 G 41.5 51.8 10,162 NA NA NA NA Medicaid, HMO
3663 Woodward Ave, Detroit 48201 CEO 36.6 G 36.6 6,638
15 (313) 578-2234;
www.harborhealthplan.com
Michigan Complete Health Inc. Amy Williams 46.9 -22.6 46.9 4,125 NA NA NA NA Medicare, Medicaid, HMO
(formerly Fidelis SecureCare of CEO 60.5 60.5 7,540
16 Michigan Inc.) I
800 Tower Drive, Suite 200, Troy 48098
(877) 373-8085; www.fidelissc.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 that are part of Michigan-based groups but reside outside of Michigan.
D Includes Blue Care Network members.
E Merger of HealthPlus of Michigan in Flint and Health Alliance Plan in Detroit was approved in February 2016.
F Figures include Health Alliance Plan (HMO), Alliance Health & Life Insurance Co. PPO and EPO; Medicare HMO and PPO; HAP Midwest Health Plan (Medicaid HMO), HAP Preferred Inc Ð Network
Leasing, ASR (TPA)
G From Department of Insurance and Financial Services.
H Crain's estimate.
I Effective April 1, 2017, Fidelis became Michigan Complete Health Inc.
An expanded version of this list is available with a Crain’s data membership at crainsdetroit.com/lists
12
SPECIAL REPORT: HEALTH CARE
BEAUMONT
FROM PAGE 8
This year, Beaumont plans to open
a new ER center and proton beam
cancer center in Royal Oak and a new
patient tower at Botsford Hospital in
Farmington Hills. It also will break
ground on a new shopping village with
a hotel, shops and food services adja-
cent to its 1,100-bed hospital complex
on Woodward Avenue and 13 Mile
Road.
While individual merger cases may
vary, Robert Burns, chair of the health
care management department in the
Wharton School at the University of
Pennsylvania, said research on hospi-
tal mergers shows long-term results
show little improvement in cost reduc-
tion and quality compared with non-
merged competitors in markets they
share.
"Hospitals that merge to become
one reduce costs a little bit (estimated
2.5 to 5 percent) but don’t improve
quality" compared with competitors,
Burns said. “The systems that coalesce
under one roof, they don’t reduce
costs or quality. Most studies show
that.”
Burns said merged hospitals, espe-
cially those who form larger systems
like Beaumont, first tackle administra-
tive and staffing costs.
“Centralizing financial, human re-
source, back office, that is the easy
stuff, the chump change, the
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low-hanging fruit, because it doesn’t
require buy-in from doctors,” Burns
said. “The administrative side is a
small portion of total costs. They get
some savings there, but it will not take
you very far. Merger costs tend to slow
and stop in the intermediate term (five
years).”
Staff buy-in critical
After the failed merger deal with
Detroit-based Henry Ford Health Sys-
tem in 2013, which primarily was ter-
minated because physician and exec-
utive cultures didn’t mesh, the
Beaumont board and executives real-
ized they needed more like-minded
partners, especially on the physician
side.
The culture of Henry Ford’s em-
ployed physicians and Beaumont’s
mostly independent medical staff
were never going to mesh, sources
have told Crain’s. Administrators also
differed on a variety of other policy is-
sues, including location of corporate
headquarters and the fate of the his-
toric Henry Ford Hospital in Detroit.
While supportive of the Beaumont
Health merger, five veteran physi-
cians at Beaumont’s three legacy hos-
pitals told Crain’s they are becoming
disenchanted with some of the chang-
es underway. They increasingly view
the merger as a business deal and ha-
ven’t yet seen much of an effort by
management to integrate the three
TECHNOLOGY IN MOTION
COBO CENTER // SEPTEMBER 6-8, 2017
TIMDETROIT.COM
EXHIBITORS & SPONSORS
SP
legacy partner cultures.
Fox understands physician frustra-
adm
stru
tions at the pace of change. He often phy
listens to physician concerns and out
meets monthly with all eight hospital F
medical staffs, physician leaders, di- said
rectors and managers. cian
“We are very open with physicians. port
I meet one-on-one with clinical lead- thou
ers and hear their concerns (that) de- surp
pend on their area of specialty,” Fox “
said. “Whether you are employed or tion
in private practice, it is hard to be a chan
doctor in American health care. It run,
pulls on you in ways not there 10 or 20 with
years ago.” wee
To ease external medical practice they
pain, Fox said Beaumont is trying to phy
help physicians adjust to coming val- BEAUMONT HEALTH W
ue-based payment reimbursement The newly renovated Neonatal Intensive Care Unit pod at Beaumont Hospital, an
changes, which tie payment increases Dearborn, formerly Oakwood Hospital. cou
to quality improvement, coming in poin
2019. “We have presentations going the more disturbing changes at Beau- mont hospitals only had this report- mon
on with private practice doctors and mont occurred earlier this year when ing relationship. Most hospitals in B
office staffs. We want them to know each local hospital chief medical offi- health care systems, including those cern
how to manage that and do well in the cer was asked to report directly to the in the old Oakwood system, do have ical
environment of health care.” local hospital president. Before, local medical directors report to the hospi- mer
But one recurring complaint he CMOs reported directly to the sys- tal president. is d
hears is that physicians don’t think tem’s chief medical officer, David “It was very unusual. We tried to den
Beaumont has enough support staff. Wood, M.D. provide clarity around that,” Fox said. Th
“They want more experienced people. “Beaumont operated under the “Hospital CMOs still talk with Dr. told
It is a two-way street,” Fox said. “We theory that two people were jointly re- Wood. ... The hospital president and mon
have to be competitive with salaries sponsible for the hospital, the CMO CMO have to be on the same page. deci
and be attractive for nurses, physical and the president,” Fox said. “That can When they are not, we have a real and
therapists” and other clinicians. be a difficult situation and very con- problem.” mat
For the five Beaumont physicians, fusing in a crisis, having two people But Beaumont doctors told Crain’s W
who asked for anonymity because of decide.” that the reporting change from Beau- staff
their positions, they agreed that one of Fox said the three legacy Beau- mont’s once-independent medical der
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SPECIAL REPORT: HEALTH CARE

administration has led to a more rigid
structure that is less appreciated by
physicians because they often feel left
out of decisions.
From his perspective, CMO Wood
said he believes the impact to physi-
cians and the hospitals from the re-
porting change has been minimal, al-
though at first some doctors expressed
surprise and concern.
“We have excellent working rela-
tionships. The change didn’t really
change practically how things are
run,” said Wood, who added he meets
with all eight local CMOs every two
weeks. “The hospital presidents, if
they are to be effective, have to have
physicians behind them.”
ALTH Wood said Beaumont has formed
an 18-member clinical leadership
council composed of elected and ap-
pointed physicians to work on com-
port- mon issues, problems and projects.
s in Beaumont physicians are con-
hose cerned about the possibility that med-
have ical staffs of the hospitals will be
spi- merged into one and that the system
is developing a single physician cre-
d to dentialing process.
aid. The Beaumont Royal Oak specialist
Dr. told Crain’s he and other legacy Beau-
and mont doctors would oppose any such
age. decision. “We don’t want Oakwood
real and Botsford doctors getting auto-
matic system privileges,” he said.
ain’s Wood said a systemwide medical
eau- staff credentialing proposal is not un-
dical der discussion by the clinical leader-
ship council, but he added that there
would be some minimum criteria and
some shared bylaws across the sys-
tem.
“By regulation, each hospital has a
separate medical staff. With all the
mergers (going on nationally), that
system is somewhat archaic,” he said.
“We are merging
the back offices
of credentialing
to be more effi-
cient. We will
have one creden-
tialing system,
but the (privileg-
es) criteria will be
a local decision.”
David Wood: But Wood said
Excellent working decisions of who
relationships. will be on each
hospital medical
staffs “will be a hospital decision” be-
cause the needs of each hospital are
different.
Despite hearing some grumbling,
Wood said he believes overall physi-
cians are doing well with the merger.
“Health care is at very turbulent
times for hospitals and physicians. I
think considering all the turbulence,
they are doing well. They are seeing
the value of the new size, scope and
geography and feeling positive about
it.”
However, Wood acknowledged
physicians can have positive and neg-
ative feelings depending on their spe-
cialty, location and time spent in the
system.
“Many of the legacy Oakwood phy-
sicians enjoy (being part of) the Beau-
mont brand and feel very positive
about that. Many of the legacy Bots-
ford doctors feel a lot of stability be-
cause they are in a larger system,”
Wood said. “The legacy Beaumont
physicians, they are enjoying size and
stability. Then went through a period
of time where there was quite a bit of
merger talks and uncertainty.”
Priority list
Over the past two years, Beaumont
has taken steps to improve clinical
care programs — primarily quality,
patient safety and outcomes — across
the system, Fox said. Wood said the
goal is to ensure quality and customer
experience is consistent.
Depending on the service line, pro-
grams at smaller hospitals will be en-
hanced, Fox said.
“Orthopedics is constrained in
Royal Oak (Beaumont’s 1,100-bed
flagship hospital). We are looking at
(Beaumont Hospital) Taylor to be a
platform. Taylor has four to five ORs
that can open quickly. We will hire
more spine surgeons for orthopedics,”
Fox said. “It is a way to vector out more
to the west. ... We need to offer more
programs to more markets.”
Wood said the Taylor hospital is
known for its excellent physical medi-
cine program and Beaumont recently
added more residents to support the
hospital and orthopedics.
“Our market share in orthopedics
has increased. I can’t say it is entirely
due” to clinical care improvements,
but Wood said there has been growth.
One project that began last year
will clinically integrate three Beau-
mont departments — mothers and
children, oncology and orthopedics
and spine — across all eight hospitals.
“What we are trying to do is get an
identity for each clinical program”
that reflects Beaumont health instead
of individual Beaumont, Oakwood
and Botsford hospitals, said Fox.
“We will have the services (in
place) to support them: emergency,
pain management, imaging, pharma-
cy, infection control, palliative care
and laboratory,” he said. “The real
message is we need these clinical pro-
grams talking with each other.”
Other changes
In March 2015, Fox began CEO du-
ties at Beaumont. But he didn’t report
for work at the Beaumont Royal Oak
campus, as had the five previous CEOs
in the hospital’s 62-year-old history.
“I have never worked in this kind of
building. It was done before I got off
the plane,” said Fox, adding he misses
rubbing elbows with doctors, nurses
and patients. “You can’t do this job
unless you listen to people from the
ground up.”
So, Fox said he also is looking for a
new corporate headquarters location,
one that he called “a shared services
building.” He declined to specify an
area, but said it could be multiple lo-
cations. “I don’t want to increase real
estate speculation” and drive up costs,
he said.
But it is clear Fox wants the new
corporate HQ to be located closer to
one of Beaumont's hospitals.
This year, Fox said Beaumont also
plans to expand the number of patient
and family advisory councils. “We will
have hundreds of advisers,” he said.
“Patients use the ER a lot. They have a
feel for it. They have been involved in
our ER redesign. They will see things
that you don’t.”
Patients and families also helped
design the waiting room area in Beau-
mont’s new proton beam center,
which will become operational this
month. “They are in your facilities ev-
ery day. Whatever we are doing, we
want to get their perspective on this,”
Fox said.
Fox said Beaumont will invest in
other therapies that include transaor-
tic valve replacement, deep brain
stimulation and urological advances.
“There are new disruptive technol-
ogies that will truly add value and ad-
vance patient health better than any-
thing in the portfolio,” he said.
Jay Greene: (313) 446-0325
Twitter: @jaybgreene

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14 C R A I N ’ S D E T R O I T B U S I N E S S // J u n e 1 9 , 2 0 1 7 C R A I N ’ S D E T R O I T B U S I N E S S // J u n e 1 9 , 2 0 1 7 15

DETROIT 1917 / 1967 / 2017

PART 1: PRELUDE TO ’67

It’s difficult to draw a straight line connecting

the demolition of Paradise Valley and Black Bottom
to the violent summer of 1967.
But some of the businesses that relocated to
12th Street from the bustling commercial heart
of black Detroit were destroyed — twice.

DETROIT HISTORICAL SOCIETY

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

Seebaldt Street near Grand River

and Tireman.)
A pair of small black-owned ho-
tels, the Norwood and the Biltmore,
each with about 30 to 40 rooms, were
in Paradise Valley. Ed Davis, who in
1963 became the first African Ameri-
can to get a Big Three auto dealer-
ship from Chrysler-Plymouth, had a
Studebaker Corp. dealership at Ver-
nor and Brush.
There were also doctors, lawyers,
real estate brokers, drug stores,
restaurants, numbers-running oper-

Hastings
ations and even a candy shop.
During the Prohibition Era, Paradise
Valley also had speakeasies, becom-
ing “a place where you can go into a
saloon and drink whiskey out of a
COURTESY MARSHA MUSIC Dixie cup,” Coleman said.
Joe Von Battle’s record shop on Hastings Street once had an inventory of 35,000 Some, like John Roxborough,

Street
albums and almost $2.5 million in revenue.
the city in the two decades prior to
1967.
Seven decades ago, a very similar
word, “renewal” — more precisely,
urban renewal — nebulously re-
Brush Street to the west.
Exactly where the neighborhoods
started and ended is up for debate,
Coleman said.
“It’s not like these communities
Louis’ co-manager and a num-
bers-runner, began to accumulate
substantial wealth.
“He was certainly thought to be a
millionaire,” Coleman said.
Others saw success in Paradise
Valley, too.

Blues
ferred to what would become the
government-sponsored forced exo-
dus of tens of thousands of people
from densely-packed Black Bottom
and later, the destruction of hun-
dreds of businesses in lively Paradise
Valley.
Vibrant business district
Paradise Valley, the commercial
district, covered the area approxi-
were codified in boundaries at City
Hall. They were loose in general.”
Still, what’s clear is that the two
areas were vibrant, bustling with ac-
tivity.
Joe Louis co-owned a restaurant,
the Brown Bomber’s Chicken Shack,
with Sunnie Wilson on East Vernor
(it reportedly lost the legendary box-
er $40,000, according to LIFE maga-
zine).
Charles Diggs, later the state’s
“For the first time, African Ameri-
cans became either managers or
owners of some of these places.”
More than 300 businesses in Para-
dise Valley in all, and well over
100,000 residents in Black Bottom,
living in increasingly cramped quar-
ters as racially-based housing re-
strictions kept them in the neighbor-
hood.
“Because of restricted covenant
deeds, it (Black Bottom) was very,

Editor’s note: This story is first in our
two-part series about the 1967 upris-
ing ­— an exploration of economics
and business in Detroit in the 50
years before the summer of ’67 and
the 50 years since. In next week’s is-
sue, we’ll explore the impact of the ri-
ots on three generations of entrepre-
neurs. For more on the language we
use to describe what happened in
1967, see Ron Fournier’s column on
page 6.
A
By Kirk Pinho | kpinho@crain.com That’s a question Marsha Battle
Philpot, Joe’s daughter who goes by the
t one point, Joe Von Battle’s record store in Detroit had an inventory of 35,000 albums and the name Marsha Music, likely wrestles
equivalent of almost $2.5 million in revenue. ¶ That was in the late 1940s, when Joe’s Record Shop with. But it’s not just Von Battle’s store
on Hastings Street was just one of the mainstay businesses for African Americans who made their that suffered at the hands of what was
homes in the now demolished Black Bottom and Paradise Valley neighborhoods. ¶ It’s difficult to then called “urban renewal,” a steril-
draw a straight line connecting the years-long demolition of the commercial Paradise Valley en- ized term to describe what in reality
was the forced relocation of black resi-
clave, and also Black Bottom adjacent to the southeast, to the riots of July 23-28, 1967. ¶ Not only did the violence
dents and businesses from the neigh-
those six days claim 43 lives — it also claimed Von Battle’s store, which was founded in 1945. ¶ Would Joe’s Record borhoods they called home.
Shop still be around had it not been forced to move in the early 1960s to the 12th Street area from Hastings, the “In a rout like that, some business-
main north-south artery running through Paradise Valley and Black Bottom? es weren’t able to survive,” she said.
An exodus
The prefix “re-” generally means
to occur again, that something is
happening anew.
Detroiters have been hearing
those two letters a lot lately. Revital-
ization. Rebirth. Resurgence. Re-
naissance.
Today, these terms are liberally
and practically interchangeably
used by city and business leaders to
describe both incremental and
marked progress made in Detroit
this decade — asterisked though it
may by the nation’s largest-ever
Chapter 9 municipal bankruptcy
case until Puerto Rico just a few
weeks ago and convictions in one of
the most scintillating public-corrup-
tion cases in recent memory.
But those words hold a different
meaning for some long-time Detroit
residents, particularly if they were in
mately where Comerica Park and
Ford Field are today downtown, said
Detroit historian Ken Coleman. His
book, Million Dollars Worth of
Nerve, profiles the power-players of
Paradise Valley and Black Bottom, a
residential neighborhood that exist-
ed generally where Lafayette Park is
now, bounded by Gratiot Avenue to
the north, Congress to the south, the
Grand Trunk Railroad (the present
day Dequindre Cut) to the east and
first black state senator, was a lead-
ing funeral home owner there, as
was James Cole, whose funeral
home business survives to this day.
(Two months ago, the funeral home
provided services for Orsel Mc-
Ghee, who along with his wife,
Minnie, were part of a landmark
court case in 1948 that helped ban
restrictive covenant deeds nation-
wide following an attempt to re-
move them from their house on
very dense,” Coleman said.
“Some of those second-floor resi-
dential living quarters, on top of bars
and restaurants and bakeries, where
an owner might put a wall partion up
in a bedroom and make it two bed-
rooms, or take the living room and
slice that in half, until you get a cou-
ple different families living in the
same 400 or 500 square feet, or prob-
ably even less.”
CONTINUES ON PAGE 16
16
DETROIT 1917 / 1967 / 2017
PART 1: PRELUDE TO ’67
FROM PAGE 15
“Slum removal”
The beginning of the end for Black
Bottom came during the administra-
tion of then-mayor Edward Jeffries,
who ran the city from 1940-48, Cole-
man said.
During the previous decade, fed-
eral financing through Franklin D.
Roosevelt’s New Deal was made
available for so-called “urban re-
newal.” Several years later, in 1944, a
New York City developer, Eugene
Greenhut, proposed what became
known as the Detroit Plan, which in-
volved the razing of Black Bottom
and a mostly white neighborhood
west of Woodward in the name of
“slum removal.”
“It was intriguing to Jeffries, and
he begins to float the idea,” Coleman
said. “White folks in the community
go ballistic. The black folks, you hear
a little bit of noise, but not so much
because they don’t have the political
power that the whites do.”
At $50 million ($695 million to-
day), the plan proposed clearing two
sprawling areas: One, bounded by
Myrtle, Trumbull, Henry and Four-
teenth streets; the other, Black Bot-
tom, bounded by Hastings, Macomb,
Dequindre and Larned, according to
a 1944 Detroit Free Press article out-
lining the plan.
As proposed, Greenhut would pay
$8 million (about $111 million) for
98 acres of east side land and 120
acres of west side land for the proj-
ect, which would have brought al-
most 31,000 “rooms” to the market
for an average rent of $10.50 (about
$146 today) per month, the article
says.
Eventually, the western portion of
the development plan was aban-
doned.
The plan sat until the fall 1946,
when the council approved it. Dem-
olition didn’t begin until 1950 under
then-mayor Albert Cobo. But he did
not want to take federal funding, so
he put the land that was cleared
through the condemnation process
out to the private sector in a request
for proposals, Coleman said. It’s not
known exactly how much was paid
to property owners for the land, but
Coleman said some were satisfied
while others felt it was not enough.
Still, the land sat for years, for the
duration of the Korean War and be-
Detroit 1967 timeline: 1917 to 1967
1917: In May and again in July, simmering racial tensions between white and black laborers
boiled over in East St. Louis, Ill. in two deadly race riots. Though the death toll remains unclear,
as many as 200 people, most of them black, may have been killed. In the aftermath of the
violence, the Burlington Free Press pointed to Detroit as an example of a city that had figured
out how to peacefully integrate an influx of black workers, pointing to the Detroit Urban
League’s efforts to help black migrants find gainful employment and to collaborate with the
Detroit Board of Commerce to form a commission on worker housing.
Between 1910 and 1920:
Detroit population
Detroit’s population more than
doubled, growing from 465,766
people in 1910 to 993,678 people
by 1920. In that time, the black
population of Detroit grew from
a little over 5,000 in 1910 to over
40,000 in 1920, jumping from
just over 1 percent of Detroit’s
population to over 4 percent.
C R A I N ’ S D E T R O I T B U S I N E S S // J u n e 1 9 , 2 0 1 7
Above, Marsha Music, outside her Lafayette Park home. Below, Marsha as a young girl in front of her father’s record store.
COURTESY MARSHA MUSIC
1925-1926: Dr. Ossian Sweet, along with
his family and some friends, were acquitted
in a series of trials after they defended
themselves when a mob tried to force the
Sweet family from the home they had
bought in an all-white Detroit neighborhood.
1940-41: An influx of about 400,000
1910 Total population
migrants — largely Southern blacks and
1920 Black population
Europeans — move into the city seeking
1930
wartime production work, a wave that
1940
inflames social and housing tensions.
1950 TOTAL POP. HIGH: 1,849,568
Integrated federal housing projects built in
1960
the city for defense workers fueled
1970
backlash, especially from white Polish
1980
1990 BLACK POP. HIGH: 777,916 residents. White supremacist groups such
2000 as the Ku Klux Klan also had support in the
2010 city at the time.
yond due to little interest from devel-
opers, Coleman said.
“They begin to call it ‘Cobo’s Rag-
weeds.”
That is, until October 1956, when
ground broke on the area’s first de-
velopment, The Pavillion.
Lafayette Park, the residential
area that now stands, was born, and
Black Bottom was dead.
Links to 1967
Housing availability and condi-
tions were among the concerns
during the unrest in 1967, said Jef-
frey Horner, a senior lecturer and di-
rector of the Urban Studies Program
at Wayne State University.
“There were some people who
were still very upset about the loss of
their old neighborhood, as any per-
son would be. It’s very difficult to
disentangle what the exact motiva-
>> June 20-22, 1943: A brawl among
teens on Belle Isle spills over into citywide
racial violence, as false rumors spread of
attacks by both whites and blacks. Both
white and black mobs attack residents and
businesses. The violence is suppressed by
6,000 federal soldiers. Most of the 34
people killed are black, and most are killed
by police or soldiers. Most of the 433
injured are black. Property damage is
valued at $2 million, much of it sustained in
the city’s black business corridor, Paradise
Valley.
1950: Detroit’s population peaks at
1,849,568, of which 84 percent is white.
April 8, 1956: Streetcar service ends in
Detroit in favor of buses.
JACOB LEWKOW FOR CRAIN’S
tions were for the 1967 riot, but po-
lice brutality seems to be the plurali-
ty reason, if there is such a thing.”
“But a lot of it is being moved
around, people literally being kicked
out of their homes and having to find
somewhere else to live,” Horner con-
tinued. “There is a lot of evidence that
a lot of people who were in the Black
Bottom area moved to the 12th Street
area, so there is some linkage there.”
As people and businesses were
scattered throughout Detroit from
Black Bottom and Paradise Valley,
which began to be demolished in
1959 to make way for the Chrysler
Freeway, they also ended up in the
12th Street and Clairmount Avenue
area, among others.
The Michigan Chronicle moved to
Eliot Street from East Vernor in 1948
and survives to this day, publishing a
weekly newspaper. The Diggs and
Cole funeral homes moved before
GETTY IMAGES
C R A I N ’ S D E T R O I T B U S I N E S S // J u n e 1 9 , 2 0 1 7 17
MILWAUKEE the Black Bottom razing, with Diggs
JUNCTION moving to 689 Mack in the 1940s and
Cole to 446 E. Warren Ave. in the
1930s, Coleman said.
NEW CENTER
Sunnie Wilson, who co-owned
Blv
d. the chicken restaurant with Joe Lou-
nd
Gra is, had hotels on Garfield Street and
POLETOWN EAST
e.
Grand River Avenue, and in the
n Av
rre 1980s had a nightclub downtown.
Wa
ART CENTER
He died in 1999 at age 90.
94 Ed Davis’s Studebaker dealership
Paradise in Paradise Valley went out of busi-
WAYNE STATE Valley ness in 1956. His Chrysler-Plymouth
FOREST PARK dealership on the west side was a suc-
ve. cess in the ‘60s, and sold more than
75 ckA
Ma
1,000 new cars per year, according to
the Detroit Historical Society — and
1 twice that in used vehicles. But the
3
e.
MIDTOWN
Av
neighborhood declined after 1967
ot
CASS CORRIDOR
and Davis closed up shop in 1971.
ati
BRUSH PARK
Gr
Wo
10 2 Coleman said after Hastings
od
Street, the main business artery, was
wa
Gr 4 375
rd
an demolished, much of the illegal ac- AUTOMOTIVE NEWS
Av
dR LAFAYETTE PARK
ive
6 Edward Davis (left) receives a Small Businessman of the Year award from the Small
e.
rA
ve Black t.
tivity — drug dealing and prostitu-
NORTH CORKTOWN
.
5 7 Bottom yett
eS
tion, for example — moved to the Business Administration of Michigan. Davis opened his west side Chrysler-Plymouth
FOXTOWN fa
La 12th Street area. dealership after his Studebaker dealership in Paradise Valley, went out of business.
E.
GREEKTOWN
“A lot of people will tell you that
DOWNTOWN BRICKTOWN 12th Street became the new Hast- said she didn’t think much of her fa- business owners out.
75 Michigan Ave.
ings,” he said. “With vice and drugs ther leaving the house with a weap- “He never shook the feeling that
CORKTOWN and illicit behavior comes a lot of po- on. So she and her family started by halting his efforts to protect his
Detroit River lice presence, and that ended up watching television and, eventually, store, they had guaranteed its de-
building tension between the police succumbed to sleep. struction,” she wrote in an essay,
CRAIN’S MAP and the neighborhood.” They woke up to something they “Joe’s Record Shop,” in Detroit ‘67:
1. Joe’s Record Shop At one point in the late 1940s, Joe’s Record Shop, owned by Joe Von couldn’t have foreseen. Origins, Impacts, Legacies.
3530 Hastings St. Battle, had an inventory of 35,000 records and $100,000 per year in “Gone forever” “We can look over the horizon to She says on her website that he re-
sales (almost $2.5 million today). The business moved to 12th Street the west side, from Highland Park, turned after the unrest to find
after Black Bottom was razed and was destroyed in the uprising in Joe Von Battle, Marsha Music’s fa- and see these clouds of black smoke.” “mounds of charred and melted re-
1967. ther, picked up his gun. Not long after that, Battle’s record cords and fire hose-soaked reel-to-
2. Brown Bomber’s Legendary boxer Joe Louis co-owned this restaurant with Sunnie It was the middle of the night in shop, whose original location had reel tapes, unwound and slithering
Chicken Shack Wilson on East Vernor. It reportedly lost him $40,000, according to July 1967. The U.S. was mired in the been forced to close and demolished like water snakes; thousands of
424 E. Vernor LIFE magazine article at the time. Vietnam War. And 12th Street, where less than 10 years earlier, was de- songs, sounds and voices of an era,
3. James H. Cole James Cole Sr. founded his funeral home in the Black Bottom he relocated the record shop from stroyed for the second time. most never pressed onto records —
Home for Funerals neighborhood in 1919. After Black Bottom was cleared, the funeral Hastings Street, was broiling, brim- Her father tried to protect his gone forever.”
3515 St. Antoine, home moved to E. Warren and then to the 2600 block of W. Grand ming with tension. shop, Marsha said, but after the first Kirk Pinho: (313) 446-0412
Detroit MI Boulevard, where it still operates today. The funeral home is owned by In an interview last month, she day of violence, the police cleared Twitter: @kirkpinhoCDB
Karla Green, James Cole Sr.’s granddaugher.
4. Davis Motor Sales Ed Davis opened a used car dealership at Vernor and Brush in 1939.
Intersection of Vernor
and Brush
Studebaker offered Davis a franchise in 1940. After Black Bottom, in
the 1960s, Davis became the first African-American to get a Big Three
auto dealership when Chrysler-Plymouth offered him a new car
franchise. It sold more than 1,000 new cars per year, according to the
Housing discrimination stokes tension
Detroit Historical Society, but he closed the business in 1971 as the By Tyler Clifford met by white mobs. In turn, most From 1930 to 1950, Detroit’s black
neighborhood around him deteriorated.
tclifford@crain.com were relegated to substandard neigh- population more than doubled during
As millions of African Americans borhoods, most notably in Black Bot- the second wave of the Great Migra-
5. Norwood Hotel A small black-owned hotel in Paradise Valley between Beaubien and
550 E. Adams St. Antoine with 30-40 rooms. In the basement of the Norwood was a fled the Jim Crow south during the tom on Detroit’s lower east side. tion, which was powered largely by
jazz club called the Congo Room. Great Migration’s first wave, tens of Housing segregation was later rein- World War II. Housing segregation still
thousands sought refuge in Detroit. forced when the Federal Housing Ad- persisted as the city’s black population
6. Biltmore Hotel A 22-room hotel in Paradise Valley, according to historian Ken
Coleman.
The city’s black population swelled ministration, created in 1934, and reached more than 300,000 and made
1926 St. Antoine
by nearly 2,000 percent between Home-Owners Loan Corp. began up more than 16 percent of the city.
7. The Michigan Established as The Detroit Chronicle in 1936 to serve the African 1910 and 1930. But racial covenants, granting low-interest loans and mort- When racial covenants were
Chronicle American community, the Michigan Chronicle became known for
often written into home deeds, gages. While white residents took ad- banned in 1948 in the Shelley v. Kram-
1727 St. Antoine politics radical for its time, including advocacy for organized labor and
the Civil Rights movement. In the 1940s, the Chronicle moved to East
barred black residents from buying vantage of the opportunity, African er U.S. Supreme Court case, it served
Vernor Street and later to Eliot Street. In 2013, the Chronicle or renting homes in many of Detroit’s American neighborhoods were out- as an early sign of the looming move-
announced that it was relocating its headquarters to Harmonie Park, white neighborhoods; some who lined in red by the agency, which denot- ment for Civil Rights. Yet the city’s seg-
site of a planned downtown black business and cultural district. tried to integrate communities were ed the habitants as high-risk for lenders. regation would persist until after 1970.
Jan. 30, 1959: Construction of the >>April 14, 1960: March 8, 1965: The first U.S. ground
Chrysler Freeway begins. Its southernmost Music executive Berry troops land in South Vietnam, beginning the
leg cuts through Black Bottom, the poor Gordy, Jr. incorporates escalation of a war that soon would become
working-class neighborhood that had the Motown Record Co. a central element of American society.
become the residential and cultural heart Aug. 11-16, 1965: Riots erupt in the Watts
of black Detroit by the mid-20th century. >>1960: Cobo Hall neighborhood of Los Angeles over allegations
and Cobo Arena open
The highway was built through the area as of police brutality. Snipers battle police, and
at a cost of $56 million.
part of the city’s “urban renewal” efforts, looting and arson are widespread. The
A $225 million
which also included creation of the violence claims 34 lives.
expansion in 1989
Lafayette Park neighborhood. The highway July 18-23, 1966: Cleveland’s densely
doubles the size of the
opened June 12, 1964. A portion of Black populated Hough neighborhood, which is 90
exhibition hall to
Bottom’s population and business had percent black, explodes into violence over
723,000 square feet. In
relocated to the 12th Street area of the
2015, work is finished inequality, racism, segregation, poor city
Virginia Park neighborhood that became
to turn the arena into services and other problems.
the 1967 riot’s epicenter.
an exhibition and event July 12–17, 1967: The arrest of a black
1960: The city’s population has declined to space at a cost of $279 DETROIT HISTORICAL SOCIETY cabdriver sparks a riot that leaves 26 dead in
1,670,144. STEVEN MIRIC VIA ISTOCK million. Cobo Hall and Arena being built in the late 1950s . Newark, N.J.
SPI
18 C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 9 , 2 0 1 7

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Engineering Solutions. More and ficer for La-
more companies are looking to lever- Z-Boy Inc.,
age the Industrial Internet of Things the company
as a means of competing globally. The said.
speaker is Michael King, president, Behen, 48,
Data Analytics & IoT at LHP Engineer- David Behen most recent-
ing Solutions. Topics will include: The ly served as
business value of IIoT, case studies of director of the Michigan Depart-
successful IIoT implementations and ment of Technology, Manage-
predictive maintenance solutions and ment and Budget. His last day
how IIoT can help manufacturers will be Friday.
meet ISO 26262 Automotive Func- Monroe-based La-Z-Boy
tional Safety standards. Automation (NYSE: LZB) said Behen will
Alley, Troy. Free for members. $20 lead all information technology
nonmembers. Phone: (800) 427-5100; functions for the furniture pro-
website: automationalley.com ducer, including expanding and
developing such areas as cyber-
security and new technologies.
Calendar guidelines. Visit Behen will report to Kurt Dar-
crainsdetroit.com and click “Events” row, the company’s chairman,
near the top of the home page. Then, president and CEO.
click “Submit Your Events” from the “In this critical role, he will
drop-down menu that will appear. Fill ensure optimal technology per-
out the submission form, then click formance for the company to
“Submit event” at the bottom of the support La-Z-Boy's future
growth and success across our
page.
manufacturing and retail opera-
More Calendar items can be found
tions,” Darrow said in a state-
at crainsdetroit.com/events.
ment. “He brings a wealth of ex-
perience to La-Z-Boy and will
undoubtedly make a significant
contribution as we continue to

Litigation Experience
expand and enhance our tech-
nological footprint.”

In Your Corner.
American Society of
® Employers replaces CFO
The American Society of Em-
ployers has hired Tracy Neil to re-
Ŷ Commercial litigation, with experience in asset place its retir-
purchase agreements, supply chain disputes, ing CFO.
trade secrets, non-competes and other business Gary Lovio
retired from
related litigation. the Livo-
nia-based
Ŷ Employment counseling and litigation on behalf nonprofit
of employers, including matters involving June 2 after 12
years there,
discrimination, harassment, wrongful discharge
CEO Mary
and employment contracts. Tracy Neil Corrado an-
nounced in a
news release.
Neil, 54, officially took over
June 5 in the Livonia office after
a month working with Lovio as
part of the transition.
Before joining ASE, which
helps Southeast Michigan em-
ployers with human resource
needs, Neil served as vice presi-
dent of finance for Que-
bec-based GDI Integrated Facil-
ity Services Inc., which has an
office in Southfield.
He received his master of
business administration from
Walsh College, a bachelor’s de-
First Tier Ranking in gree in management from Saint
Six Areas of Litigation Mary’s College of California
and a master’s degree in taxa-
tion from Golden State Univer-
Contact Brett Rendeiro at barendeiro@varnumlaw.com Ŷ Detroit Ŷ Novi Ŷ Grand Rapids Ŷ Kalamazoo Ŷ Grand Haven Ŷ Lansing Ŷ Ann Arbor Ŷ Hastings sity.

TEACHERS
FROM PAGE 1
There’s little wiggle room because
the collectively bargained contracts
set salaries exclusively by experi-
ence and education. Critics say the
restrictions put teachers’ interests
ahead of students.
“School districts that want to attract
the best teachers … for their students
would not want these kinds of poli-
cies,” said Ben DeGrow, director of ed-
ucation policy at the Mackinac Center,
a free-market think tank based in Mid-
land. It has been a frequent critic of
teachers’ unions.
Ivy Bailey, president of the De-
troit Federation of Teachers, said the
language has been in the contract
for years and acknowledges those
teachers who’ve suffered through
years of pay cuts and freezes.
“You have teachers who stayed
here and endured it all,” she said.
“They care about the children and
they’ve stuck it out.”
Bailey said the contract allows the
district more latitude when trying to
hire teachers in critical areas such as
special education. Those specialty
areas can receive salary credit for up
to eight years’ experience.
But if it’s not in a critical area, no
dice. And that’s been a problem for
principals wanting to fill vacancies
such as Jeffrey Robinson, principal
at Paul Robeson Malcolm X Acade-
my on Detroit’s west side.
“On three separate occasions, we
got people who got past the on-
boarding process, right to the point
where they were ready to sign the
contract. Then they took a better of-
fer because the salaries are just not
competitive,” Robinson told Detroit
Journalism Cooperative reporting
partner Chalkbeat Detroit recently.
Despite the obstacles in pay and a
push by officials some to consider
uncertified teachers, district spokes-
woman Chrystal Wilson said the
district “is committed to hiring cer-
tified teachers.”
Detroit is not the only district with
restrictions. They are found in union
contracts
Page 2 at districts large and small,
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wealthy and poor, urban and subur-
ban and are the result of the anger
Teacher pay presents two bad choices: Be unhappy
about crowded classrooms or be un-
stemming from pay cuts and freezes In a number of Michigan school districts, teachers have negotiated to limit the pay of new happy that new teachers make more.
that have taken a chunk out of the hires, ensuring they cannot get full credit for prior teaching experience. In other districts, For Mackinac Center’s DeGrow, the
earning power of teachers who have those decisions are left to the administration. In most cases “max pay” refers to salaries of decision should be easy: Door No. 2.
worked for years in troubled districts. teachers with master’s degree plus 30 additional hours of graduate education who have “This kind of policy is just an obsta-
the maximum number of years of experience. Below are the 25 largest districts in the cle for getting the best talent in the
Not found everywhere state. The restrictions were more common among the 21 districts that surround Detroit, classroom,” DeGrow said. “The kids
with more than half calling for limits on credit for teaching experience. (in Detroit) are already at a disadvan-
Bailey said it’s common for teach- Maximum tage. Why would we want to make it
ers who change districts to get less years of Years to top harder to bring qualified teachers in?”
than full credit for their experience. District credit of scale Max pay
“We can’t do it when we go to an- Need ‘best teachers’
Detroit 2* 10 $65,965
other district, either,” she said. “No-
body’s going to give you all of your Utica full 11 $89,563 Brad Banasik, director of labor rela-
time.” Dearborn 2* 18 $82,006 tions for the Michigan Association of
But a survey of teacher contracts School Boards, said he’s not heard
from more than 40 districts around the Plymouth-Canton 5* 14 $81,049 complaints about the contracts, but
state show that many allow district ad- Ann Arbor full 11 $80,769 noted that he thinks “administrators
ministrators to grant full credit. Chippewa Valley full 12 $89,443 would like the ability to hire some on
In Ann Arbor, Kalamazoo, Fern- the higher step (pay level).”
dale, Warren Fitzgerald, Warren Van Grand Rapids 5* 12 $68,042 Some unions agree. Doug Hill is a
Dyke, South Redford, Utica and oth- Rochester full 20 $86,420 veteran teacher who’s now president
ers, a teacher could jump to the top of of the Rochester teachers’ union in
Warren Consolidated full 12 $94,700
the scale without the teachers union Oakland County, and he said he’s
contract prohibiting it. Walled Lake full 15 $90,362 aware of painful cuts at other districts.
In the Grosse Pointe schools, which Livonia 7 12 $84,595 Hill’s union decided in a recent ne-
pays among the best in the state, new gotiation to remove a restriction on
teachers can be hired at the 13th of a Troy full 14 $92,400 pay for counselors who held teaching
14-step salary schedule. Kalamazoo full 25 $76,881 certificates. The district had seen posi-
Yet in other places, teachers have tions go unfilled but now can hire
Wayne-Westland 3* 14 $76,839
put the brakes on salaries. Those that teachers in at whatever level experi-
have are communities suburban and Lansing 8 22 $76,850 ence they want.
urban, wealthy and poor. In Oak Park, L’Anse Creuse full 16 $84,386 “I can see both sides of this,” Hill
the teachers’ contract has a provision said, but added “we’re trying to get the
Farmington 4* 11 $86,830
that says all new hires should be hired best teachers to put in front of stu-
at beginners’ wages. Forest Hills full 28 $84,590 dents.”
Hiring at higher levels “puts finan- Traverse City full 20 $74,819 Union officials say they asked for —
cial pressure on the district and cre- and got — the restrictions because
ates an environment which disenfran- Waterford 8 15 $78,351 they say without it their veteran teach-
chises staff currently restricted by Huron Valley 5* 17 $75,915 ers would be demoralized by having
contractual step freezes,” according to new hires, who had not endured the
Port Huron full 13 $69,831
the contract. same pay cuts and freezes, make more
The Walled Lake schools, the 10th Kentwood full 26 $80,403 money doing the same work.
largest district in the state, had restric- Portage full 30 $88,808 It would be hard to determine how
tions in prior contracts. But the union often these provisions have hurt dis-
agreed to take them out a few years Grand Blanc full 12 $73,588 tricts like Detroit and Dearborn. If
ago even though they continue to en- Source: Collective bargaining agreements teachers know they’d have to take a
courage the district to hire teachers at *In some cases, union contracts allow districts to acknowledge additional years of experience. $20,000 or $30,000 pay cut, would they
as low a step as possible. even apply? And they’d likely know: All
Still, the union recognized the need dates.” grams, and sometimes harsh public Michigan districts are required to post
to give the district more flexibility. To be sure, restrictions on teacher and political rhetoric directed toward teacher contracts online; Bridge did its
“It makes it really hard to have one pay for outsiders is hardly the only fac- public education almost certainly also survey using this easy-to-access infor-
blanket policy for every opening,” said tor in teacher shortages in parts of the play a role in the shortage. So too, mation.
Daryl Szmanski, president of the state. It’s difficult to say if it’s even a there are far fewer substitute teachers “I think they’re very aware of what’s
teachers’ union in Walled Lake. “As a major factor. Stagnant state funding available to fill in when permanent out there,” Rochester’s Hill said.
teacher shortage looms, it’s going to be for education, a steep drop in enroll- teachers are absent. For Detroit and other districts, that
harder and harder to get good candi- ment Cin teacher preparation pro-
RAIN’S DETROIT BUSINESS
But for unions, the teacher shortage may be a problem. June 19, 2017
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20
Startup Nation founder launches business-to-consumer app
By Vickie Elmer
Special to Crain’s Detroit Business
Jeff Sloan, founder of Startup Na-
tion and several other small busi-
ness ventures, is launching a busi-
ness to consumer app that borrows
from email marketing and aims for
a national rollout by next year.
Wantify Inc. is testing its app that
connects local merchants to their
best customers, and shares insider
information and special sales.
Since January, the beta is being run
in 15 Birmingham merchants and
now is being expanded. The first
merchants in Lake Orion signed in
on Friday, and others will follow in
Oxford, Holly, Flint and Lapeer
over the next 30 to 45 days, Sloan
said.
Backed by $2 million in venture
capital funding, the Birming-
ham-based company will have ex-
panded throughout Michigan by
year-end, Sloan told Crain’s.
“We want to be able to … scale
rapidly in the most efficient way,”
he said. He expects a $5 million
second-stage venture capital infu-
sion to support the national rollout,
with investors already interested.
He declined to name current or po-
tential funders, adding many are
individuals who have worked for
CLARK
FROM PAGE 3
“I would like for us to be
thoughtful … and smart about
whether there’s a policy lever to
pull,” in all of the foundation’s
work, she said.
“I’d like to see us lean into in-
vestments that support the policy
work that can move the needle.”
Before joining the foundation
last August, Clark served as the
White House Domestic Policy
Council’s senior policy adviser fo-
cused on criminal and juvenile
justice reform and civil legal aid
during the Obama administration,
beginning in the spring of 2013.
After a year on the job, Clark,
who was pregnant at the time with
one of her two young children,
thought a move to the U.S. Depart-
ment of Justice as chief of staff of
the Office of Community Oriented
Policing Services, or COPS, would
offer a little slower pace. But short-
ly after she took the role, 18-year-
old Michael Brown was shot by a
white police officer in Ferguson,
Mo., early in August 2014.
Clark worked to devise creative
funding strategies and partner-
ships to advance community po-
licing and police reform and, in
connection with the department’s
Access to Justice Initiative, imple-
mented a strategy to increase legal
counsel for homeowners facing
foreclosure and working with
HUD’s International and Philan-
thropic Affairs Office to engage a
group of foundations around op-
portunities for philanthropic sup-
port.
Earlier in her career, Clark led
public policy and civil rights orga-
C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 9 , 2 0 1 7
“We have seven figures
into this app in total.
We’re in the throes of
getting some traction
right now.”
Jeff Sloan
tech companies including Apple
and eBay.
Sloan and his team have
launched or assisted with the
launch of such companies as Rubi-
con Genomics and Clarity through
his Aria Ventures. He’s been work-
ing on Wantify on and off since
2012, with a few pivots in focus and
direction.
Since the new app launched at
the end of January, Sloan and his
team of five have signed up around
60 Birmingham merchants, and
around 250 consumers, all through
word of mouth. It’s been “test and
tweak, test and tweak, all under the
radar,” he said.
Wantify put itself on the radar re-
cently by sponsoring the Michigan
Downtown Association conference
in Dearborn, where Sloan shared
details of the company’s plans. The
company expects to expand by
nizations including the NAACP
Legal Defense and Education Fund.
Her career has been aligned with
identifying and litigating inequities
and policy work around them.
She’s viewing the next iteration
of Hudson-Webber’s work through
the same social justice lens.
“The thing that is so exciting
about being in this position and
particularly coming from the Jus-
tice Department where you had a
national scope … (is) you can wrap
your arms around it. It’s so exciting
to think we’ve got these broad port-
folios that inform each other. And
I’m finally in a place where it’s not
siloed,” Clark said.
In thinking about the founda-
tion’s work into the future, Clark
said it’s unlikely to abandon its
place-based work in downtown
Detroit and for over 20 years in
what is now Midtown. There’s work
yet to be done and the recovery is
still fragile. The financing gap is
creeping down, but it’s not yet zero,
she said, quoting her husband,
Moddie Turay, who was hired as ex-
ecutive vice president of real estate
and finance for the Detroit Eco-
nomic Growth Corp. in December
2015.
At the same time, there are so
many more foundations in town
than there were even 10 or 20 years
ago and a lot of dollars for the types
of physical improvements the foun-
dation has funded in the past, Clark
said. And the city of Detroit now
has an economic development ca-
pacity it didn’t have before Mike
Duggan was elected, giving Hud-
son-Webber the opportunity to
think about expanding its strategy.
“I think that what is most im-
portant to me, and I’ve been talking
working with local downtown asso-
ciations and chambers of com-
merce as the “local champion” for
the mobile phone based app.
“We have seven figures into this
app in total. We’re in the throes of
getting some traction right now,” he
told the downtown association.
Yet some experts say traction
may be difficult in the crowded
small business and consumer com-
munications app world. Businesses
already rely on tools such as Con-
stant Contact or MailChimp —
email programs — or social media
to stay in touch with shoppers.
“There’s a lot of these out there —
intermediaries between restaurants
and retail and consumers,” said Ron
Stevens, associate regional director
of the Michigan Small Business De-
velopment Center. Many of the re-
tailers and boutiques he works with
use Pinterest, Instagram and Face-
to the board about this, is how do
we get to a place of shared prosper-
ity?”
Beyond an advocacy approach,
the new strategic plan is likely to in-
clude an increased focus on ex-
panding opportunities for Detroi-
ters, Clark said.
“Part of that, to make sure that
we’re doing this right, is to also be
really explicit about acknowledging
that there are racial inequities and
structural barriers to opportunity.”
On the safety front, last summer
Hudson-Webber funded the launch
of pilot of the national renowned
“ceasefire” violence prevention
program targeted at violent crimi-
nals, in the city’s 12th precinct, in
partnership with the Detroit Police
Department.
Ceasefire’s power lies in its ef-
fectiveness in getting groups and
gangs to pressure their own mem-
bers to stop shooting, Clark said.
Coordinated community meetings
known as “Call-Ins” are held regu-
larly in which agreements are
formed between gangs, law en-
forcement and the community.
The agreement establishes harsh
consequences from law enforce-
ment to the next group to shoot or
kill someone. Community mem-
bers, faith-based leaders and wrap-
around services providers deliver a
message focused on resources and
support for pursuing constructive
alternatives.
Having safe neighborhoods
would improve the quality of life for
residents in the neighborhoods. At
the same time, it would set the
stage for business and people from
the suburbs to come back into
them.
“The most recent push of the
book to connect, and he’s seen a few
people with ideas similar to Pinter-
est or Wantify in his office in Ann
Arbor, on average two a year.
“Wantify has to have good mar-
keting — maybe marketing in the
stores” to compete with larger social
media platforms, Stevens said.
Wantify faces other challenges.
It’s hard to develop an app without
signing up a lot of consumers or a lot
of stores — and each wants to see
the other participating before they
join, Stevens said. Wantify has that
worked out: It will emulate the email
marketing services such as Constant
Contact. “It’s the businesses respon-
sibility to get the consumers on
board,” he said.
The app gives merchants a direct
way to share updates — hard-to-
find toys or a special menu item —
to consumers who opt in, cutting
through the clutter in Facebook and
Instagram. Businesses download a
merchant version of the app, avail-
able for iPhone and Android; they
send updates, almost like a text
message, Sloan said.
He acknowledges it will be tough
to develop a successful small busi-
ness “loyalty app” but believes it is
important to support small busi-
nesses. “This is not going to be easy.
foundation was about attracting
and retaining new people who
come into the city. We can’t aban-
don that because that’s vital ... we
need the taxbase,” Clark said.
In another example of an area
that could see new attention from
the foundation, Clark believes tax-
payers aren’t getting the right re-
turn for dollars invested in the
criminal justice system.
“We are putting people under
supervision, which is super expen-
sive, and not putting investments in
the system in the right places for us
to get the outcomes that presum-
ably we would want,” she said.
In Michigan, counties are reim-
bursed for juvenile services only
after juveniles hit the justice sys-
tem, Clark said.
Research shows the best out-
comes in areas such as educational
attainment and keeping ex-cons
from returning to prison are
achieved through early interven-
tion. Offenders are referred to re-
habilitative programs by the police
on their first, nonviolent offense,
not after a string of offenses that
put them into the system.
“We’ve got a policy and funding
mechanism that incentivizes pro-
grams that pick you up after you’ve
been through all of those things,”
Clark said.
Perhaps there’s a policy lever
where legislation could get passed
to provide additional state funding
before the juvenile is in the system
for prevention, she said.
“We would have moved the nee-
dle further by working on chang-
ing that policy lever than just
funding the difference,” she said.
Sherri Welch: 313 (446-1694)
Twitter: @SherriWelch
We are a values driven business” in-
tent on helping Main Street busi-
nesses, he said.
The app will carry no paid adver-
tisements. “We don’t want any ad-
vertising on it at all. Consumer
crafts the experience based on what
they’re interested in,” he told the
downtown association members.
Instead revenue will come from
merchants who after an initial free
trial, will pay $29 a month to con-
nect to consumers, plus some pre-
mium add-ons. Wantify also will
test some other revenue streams,
but Sloan declined to discuss those.
From the current 15 businesses
using Wantify, the business base
will grow to 100 within 45 days and
200 by the fall and 500 merchants
by year end, when it covers the en-
tire state, Sloan said.
Axis Music, one of the test busi-
nesses, is sold. “We love the plat-
form — the instantaneous nature of
notifications,” said Donny Klem-
mer Jr., marketing manager. Be-
cause consumers get a message
similar to a text, they’re “guaran-
teed to see it” and on a good pro-
motion, Wantify may generate up
to half of a day’s revenue for Axis,
which provides music and voice
lessons and classes.
Detroit looks for
ideas to fill Rosa
Parks Transit
Center space
By Kurt Nagl
knagl@crain.com
The City of Detroit is trying to fill
unused space at the Rosa Parks Tran-
sit Center with farmers’ markets, en-
trepreneurial vendors or anything
else beneficial that residents can think
up.
On July 6, the city is issuing a re-
quest for proposals to fill the three-sto-
ry, 26,000-square-foot transit hub at
the corner of Cass and Michigan ave-
nues.
“The city is highly interested in pro-
posals that complement the high-traf-
fic, high-energy, grab-and-go culture
of Downtown Detroit,” according to a
city news release. One idea it pro-
posed was a support services shop
offering helmet rentals and bike re-
pairs for Detroit’s new bike share pro-
gram.
Proposals are due by 5 p.m. on
Monday, Aug. 7, and can be submit-
ted via www.bidsync.com after regis-
tering for an account on the site.
Winners will have the opportunity
to negotiate a lease with the city for up
to five years, the release said.
The RFP is part of the city’s Enhanc-
ing Detroit’s Transit Center Challenge
— the challenge being to fill vacant
space on all three floors of the transit
building. It serves 6,000 transit riders
per day, according to the city’s web-
site.
Funded by state and federal grants,
the transit center opened in 2009.

Alibaba’s Group corporate campus in Xixi, Hangzhou, China.
GATEWAY
FROM PAGE 3
electronics, cosmetics, personal
care goods and health products.
How does Michigan help address
this issue? We’re a large ag
exporter, but not the largest.
Detroit is an ideal location for sev-
eral reasons.
There are many great small busi-
nesses and agriculture producers in
the Midwest that are ideal candi-
dates for selling on our platforms.
Agriculture for sure, but also con-
sumer products
It’s also a location — in the middle
of the country — that is easy for busi-
nesses and agriculture producers to
reach.
We have received tremendous
support from Mayor (Mike) Duggan,
Lt. Gov. (Brian) Calley and Gov.
(Rick) Snyder. They have really acti-
vated local business associations
and agriculture co-ops to join us and
learn about the opportunity.
What will you consider a successful
Gateway event?
Our metrics for success are fairly
straightforward:
Alibaba’s business strategy in the
United States is focused on helping
the U.S. businesses sell to the China
market. So, our objective for this
event is to help educate participating
small businesses, entrepreneurs and
agriculture producers on the China
market opportunity and how Aliba-
ba can operate as a gateway to help
them reach Chinese consumers with
a level of ease that has never before
been possible.
We set out to have 1,000 attendees
at this inaugural conference. And, I
am delighted to say we now have
well over 2,000 already registered to
attend.
It is our intention for attendees
develop a clear understanding of
how they can begin working with us,
if it makes sense for their businesses.
This is how we will scale with U.S.
businesses on our platform over the
next five years and beyond.
What are Alibaba’s plans to expand
into the U.S.?
We have made our U.S. business
C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 9 , 2 0 1 7 21
SOURCE: WWW.ALIBABAGROUP.COM
strategy very clear. Simply put, we
want to help the American business-
platforms selling to nearly 500 mil-
lion Chinese consumers.
es sell to the China market. This is a It’s not an overstatement to say
massive opportunity, which is good that most middle class Chinese lit-
for U.S. businesses and good for Chi- erally live their lives with Alibaba.
nese consumers. They chat with friends and shop —
often daily — on our marketplaces;
Is Michigan, specifically Detroit, they entertain themselves watching
being eyed as a potential area of original and user-generated con-
investment? tent on our media properties, they
Detroit is an important market for pay for nearly everything — not just
Alibaba’s long-term globalizations online purchases, but everyday real
plans, with its proximity to small world transactions like taxi rides,
businesses and agriculture, and we utility bills, restaurant checks and
are honored to be holding our first movie tickets, using our payments
Gateway conference here. That said, solutions. It’s the tremendous scale
we don’t have any plans to open a of this captive audience of active
Detroit office. Chinese consumers that we pro-
vide access to which sets Alibaba
Is there a timeline for Alibaba’s apart.
entrance into the U.S. market?
We are already very active in the
U.S. market today, with offices in
California, Washington State, New
York City and Washington, D.C. We
are here to help the American busi-
nesses sell to the China market.
Are you facing any challenges in the
U.S., given our current anti-
globalism climate?
Alibaba and our founder Jack Ma
has been very clear in its support
for “inclusive globalization” — an
open global trade environment that
allows for more and more opportu-
nities for small business every-
where. Specifically, there is a big
opportunity for U.S. businesses to
sell to China through Alibaba to-
day. Despite some concerns about
U.S. engagement in various trading
agreements, it’s clear that the U.S.
will be focused on increasing ex-
ports to other countries. We think
Alibaba is well positioned to sup-
port such a trend by helping to
build the commerce infrastructure
for the future which is beneficial for
business, economies and Alibaba
alike.
What makes Alibaba unique for
businesses that are used to more
traditional supply channels?
Alibaba’s mission is to make it
easier to do business anywhere. We
started out 17 years ago helping
small businesses in China sell to
Chinese consumers. Today there are
nearly 10 million merchants on our
22 C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 9 , 2 0 1 7

INSURE pre-existing conditions, but not

enough to stabilize the individual
ucts if the cost-sharing subsidy is ap-
proved by Trump, Blue Cross Blue
utilization, prices of services, tech-
nology advances and inflation. Other
FROM PAGE 1 markets for 2018, especially by this Shield of Michigan is asking for a 26.9 contributors to health care costs may
www.crainsdetroit.com
“The political climate continues to August when insurance commis- percent average rate increase, and a include taxes, fees and other
Editor-in-Chief Keith E. Crain make it difficult to price and the un- sioners make final decisions on pric- 13.8 percent hike for Blue Care Net- Obamacare requirements.
Executive Vice President KC Crain
Publisher/Editor Ron Fournier, (313) 446-1674 or certainty over the future of the subsi- es, experts say. work’s more closely managed HMO Priority Health filed for 17.7 per-
rfournier@crain.com dies creates the largest reason for plans. cent rate increase with cost-sharing
Group Publisher Mary Kramer, (313) 446-0399
or mkramer@crain.com
significant rate increases,” said Dan- Group markets stable However, if the federal subsidies subsidies and is requesting a 19 per-
Managing Editor Michael Lee, (313) 446-1630 ielle Devine, MeridianHealth’s Mich- — that lower-income people under cent increase without the subsidies,
or malee@crain.com igan director of operations. While the individual health insur- 250 percent of the federal poverty said spokesperson Amy Miller.
Director, Crain Custom Content Kristin Bull,
(313) 446-1608 or kbull@crain.com
Insurers say the need for the sec- ance market has always been prone level receive by insurers to help pay “With market challenges and un-
Product Manager/Marketing and Events Kim Winkler, ond set of rates is primarily because to premium spikes because of its rel- out-of-pocket claims — are discon- certainty in federal funding, Priority
(313) 446-6764 or kwinkler@crain.com the Trump administration has de- atively small size, the much larger tinued, Blue Cross is asking the state Health has had to make significant
Digital Product Manager Carlos Portocarrero,
(313) 446-6056 or cportocarrero@crain.com
layed deciding whether it will pay for employer-sponsored health insur- to approve an increase in average changes to its plan offerings,” said the
Creative Director David Kordalski, (216) 771-5169 the subsidies that help lower-income ance market historically has been rates of 31.7 percent and 22.6 percent Priority statement. “For 2018, Priori-
or dkordalski@crain.com people pay for out-of-pocket expens- more stable, increasing under 7 per- for Blue Care. ty Health will offer new plans and
News Editor Beth Reeber Valone, (313) 446-5875
or bvalone@crain.com
es. cent annually the last five years in Blue Cross is the state’s largest new narrow network options de-
Special Projects Editor Amy Elliott Bragg, The proposed increases are steep Michigan. health insurer. In 2017, Blue Cross signed to lower costs and continue to
(313) 446-1646 or abragg@crain.com even if the subsidy is continued, be- Michigan’s midsized employer av- has sold about 215,000 individual help individuals across the state ac-
Design and Copy Editor Beth Jachman, (313) 446-0356
or bjachman@crain.com cause customers are using more erage health care costs were project- policies, down 100,000 from 2014, cess high quality health care.”
Research and Data Editor Sonya Hill, (313) 446-0402 health care services, fewer younger ed to increase by 5 percent in 2017 Andy Hetzel, vice president of corpo- Total Health Care, a Detroit-based
or shill@crain.com people are purchasing policies with- after benefit plan changes, a slight rate communications, said. Blue HMO, also filed a 27.59 percent rate
Newsroom (313) 446-0329, FAX (313) 446-1687,
TIP LINE (313) 446-6766 out an enforced individual mandate uptick from last year’s 4 percent ex- Cross’ total membership in 2016 was increase that assumed no federal
and prices are sky-high for specialty pected rate and higher than the pro- 4.61 million in Michigan and 5.34 cost-sharing subsidies, according to
REPORTERS
Tyler Clifford, breaking news. (313) 446-1612 or
cancer and antiviral drugs, insurance jected national rate of 4.1 percent, million nationwide. its state filing.
tclifford@crain.com experts say. Troy-based Marsh & McLennan With the rate increase proposals, Of the health insurers participat-
Annalise Frank, breaking news. (313) 446-0416 or The majority of the state’s under Agency LLC reported last month. Hetzel said Blue Cross expects indi- ing in the Obamacare individual
afrank@crain.com
age 65 insured population, about 57 marketplace, only Blue Cross is offer-
“The political climate
Jay Greene, senior reporter Covers health care.
(313) 446-0325 or jgreene@crain.com percent, purchase health insurance ing an individual PPO product next
Chad Livengood Covers Detroit rising. (313) 446-1654 or
clivengood@crain.com
through their employers. Most of the
rest are either on Medicaid, Medi-
continues to make it year, Hetzel said. The other estimated
eight health insurers are offering a
Kurt Nagl Breaking news. (313) 446-0337 or
knagl@crain.com care or are uninsured. difficult to price and the variety of HMO plans on the ex-
Kirk Pinho Covers real estate. (313) 446-0412 or
kpinho@crain.com
The increases in the individual uncertainty over the future change. Blue Cross also is the only
market for 2018 are expected to be insurer to offer plans in all 83 Michi-
Bill Shea, enterprise editor Covers the business
of sports. (313) 446-1626 or bshea@crain.com much higher than the average 16.7 of the subsidies creates the gan counties.
Lindsay VanHulle Lansing reporter. (517) 657-2204
or lvanhulle@crain.com
percent increase insurers approved largest reason for significant Obamacare has four types of
Dustin Walsh, senior reporter Covers economic issues.
(313) 446-6042 or dwalsh@crain.com
by the state this year, according to
several health insurance executives
rate increases.” “metal” policies — platinum, gold,
silver or bronze (catastrophic) — that
Sherri Welch, senior reporter Covers nonprofits and contacted by Crain’s. Danielle Devine, MeridianHealth Michigan include the same 10 essential health
philanthropy. (313) 446-1694 or swelch@crain.com
The uncertainty over federal benefits but have different networks
ADVERTISING
cost-sharing subsidies prompted Michigan’s small-group employer vidual enrollment to decline further. and cost-sharing arrangements. For
Sales Inquiries (313) 446-6032; FAX (313) 393-0997
Director of Sales Lisa Rudy state insurance regulators to request market of 50 or fewer workers also has He did not estimate the drop. example, the most popular plan is a
Senior Account Manager Katie Sullivan that insurers submit two sets of pro- been a source of some volatility the Last year, for 2017, Blue Cross won high-deductible silver metal plan
Senior Account Manager/Political Specialist posed rates — one including the sub- past few years as the Affordable Care a 18.7 percent rate increase for the that pays 70 percent of the typical
Maria Marcantonio
Advertising Sales Gerry Golinske, Sharon Mulroy, sidies and one without. Act forced some changes in policy de- individual market. Blue Care Net- costs of that plan. Enrollees cover the
Diane Owen President Donald Trump has pub- signs. However, rates in the small work won a 14.8 percent increase. remaining out-of-pocket costs.
Classified Sales Manager Angela Schutte, licly threatened to withhold the pay- group market averaged a 2.5 percent While the overall state average was “There are a lot of dynamics affect-
(313) 446-6051
Classified Sales Lynn Calcaterra, (313) 446-6086 ments to cause the Obamacare mar- increase from the previous year. 16.7 percent, those numbers were an ing market,” Hetzel said. “Our com-
Events Manager Kacey Anderson kets to collapse and force the For 2018, an early analysis by average and did not include federal mitment is to membership. We un-
Marketing and Sales Promotions Manager Democrats to compromise on the Crain’s of the 17 plans that filed with subsidies that lowered the overall in- derstand premium increases impact
Christina Fabugais-Dimovska
Senior Art Director Sylvia Kolaski Republican-backed American the state to sell health insurance to crease for those eligible to an effec- family budgets significantly. Our goal
Special Projects Coordinator Keenan Covington Health Care Act, which the House small employers showed many were tive rate of less than 8 percent. is to try our best to get health insur-
Sales Support Suzanne Janik approved last month. Trump now requesting under a 5 percent rate re- Meridian Health Plan of Michigan ance to people as best as we can and
Media Services Manager Hussein Abdallah
says he supports a “more generous” quest hike for 2018. said its average 2018 rate increase re- help (them) afford coverage.”
CUSTOMER SERVICE
Senate version of a Obamacare re- For example, Total Health Care of quest with cost-sharing subsidies in- While Hetzel said prices on the
Main Number: Call (877) 824-9374
or customerservice@crainsdetroit.com
placement bill. Detroit is proposing to increase small tact is 8.3 percent, but it jumps to 59.4 Obamacare exchanges in Michigan
Subscriptions $59 one year, $98 two years. Out of state, Nationally, some insurers, includ- group rates in 2018 by 4.55 percent. percent without the subsidies. are “volatile,” the individual market is
$79 one year, $138 for two years. Outside U.S.A., add $48 ing United Healthcare, Anthem, Hu- McLaren Health Plan of Flint is asking HAP is proposing a 16.1 percent not the “complete disaster” it was be-
per year to out-of-state rate for surface mail. Call (313)
446-0450 or (877) 824-9374. mana and Aetna, have already an- for a 4.22 percent increase. Priority average rate increase with cost-shar- fore 2010 when Obamacare was ap-
Single Copies (877) 824-9374 nounced they will drop out of the Health Insurance Co. requests an 8.3 ing subsidies, or 24 percent without proved.
Reprints (212) 210-0750; or Krista Bora at individual market, citing the uncer- percent increase for PPO plans; Blue the subsidies, said Lee Ann Welsh, a For years in Michigan before
kbora@crain.com
To find a date a story was published (313) 446-0406 tainty of the federal subsidies and Cross a 5 percent increase in PPO HAP spokesman. The increase would Obamacare, Hetzel said people with
or e-mail infocenter@crain.com individual market financial losses. small group rates. affect 17,000 members of HAP, which health conditions were subjected to
Other health insurers have said their Other plans are asking for a cut in is owned by Henry Ford Health Sys- medical underwriting and routinely
Crain’s Detroit Business is published by
Crain Communications Inc. proposed rates could be 15 to 20 per- small group rates. They include: Prior- tem. rejected by other health insurers.
Chairman Keith E. Crain cent higher without the federal sub- ity Health, down 0.9 percent average “The primary driver of the rate in- Prices in the individual market also
President Rance Crain sidies. decrease for HMO products; down crease is the continued rise in the routinely jumped 10 percent to 20
Treasurer Mary Kay Crain
Senior Executive Vice President William A. Morrow Last week, Trump said for-profit 0.62 percent decrease for point of ser- cost of health care, which includes percent each year. The Michigan
Executive Vice President/Director of Strategic Anthem leaving Ohio and causing vice. Blue Care Network, -3.1 percent increases in the price of services Blues were mandated by a 1980 state
Operations Chris Crain (unit costs) from hospitals, physi-
nearly 11,000 people to seek another decrease for HMO rates. HAP has law to sell policies to anyone, and the
Executive Vice President/Director of Corporate
Operations KC Crain carrier on the exchange was more three HMO products; one could go up cians and pharmaceutical compa- state insurance department ap-
Vice President/Production & Manufacturing proof that insurers are “fleeing and 4.59 percent and the other two could nies,” the HAP statement to Crain’s proved rates far below what Blue
Dave Kamis
Chief Financial Officer Bob Recchia
leaving” the individual exchanges. go down 1.8 percent each. said. Cross requested.
Chief Information Officer Anthony DiPonio He said Congress needs to pass a Blue Cross covers more than HAP said factors driving its premi- Jay Greene: (313) 446-0325
G.D. Crain Jr. Founder (1885-1973) compromise bill repealing 250,000 of the estimated 360,000 um increases include higher medical Twitter: @jaybgreene
Mrs. G.D. Crain Jr. Chairman (1911-1996)
Editorial & Business Offices
Obamacare this summer that he im- people in Michigan who participate
plies will stabilize the individual in the small group market.
INDEX TO COMPANIES
1155 Gratiot Ave., Detroit MI 48207-2732;
(313) 446-6000 markets.
Cable address: TWX 248-221-5122 AUTNEW DET
But neither House-approved Proposed increases These companies have significant mention in this week’s Crain’s Detroit Business:
CRAIN’S DETROIT BUSINESS ISSN # 0882-1992 is published weekly AHCA legislation nor the Senate bill
by Crain Communications Inc. at 1155 Gratiot Ave., Detroit MI Alibaba 3 Henry Ford Health System 8
48207-2732. Periodicals postage paid at Detroit, MI and additional
still under development provides the Insurance executives in Michigan
mailing offices. POSTMASTER: Send address changes to CRAIN’S cost-sharing funding to stabilize the privately say they don’t expect a mir- American Center for Mobility 5 Hudson-Webber Foundation 3
DETROIT BUSINESS, Circulation Department, P.O. Box 07925, Detroit,
MI 48207-9732. GST # 136760444. Printed in U.S.A.
individual market, experts say. The acle in Congress that would mitigate Beaumont Health 8 Little Caesars Arena 3
Contents copyright 2017 by Crain Communications Inc. All rights Senate bill contains some funding in- the record-high premium increases Blue Cross Blue Shield of Michigan 1 Meridian Health Plan of Michigan 22
reserved. Reproduction or use of editorial content in any manner
without permission is prohibited.
tended to subsidize premiums for coming for 2018 if the subsidies are
Detroit Tigers 4 Priority Health 22
certain customers based on age and not paid.
cover some high-cost patients with For its more expansive PPO prod- Hayman Co. 5 Total Health Care 22

THE WEEK ON THE WEB
June 9 - 15 | For more, visit crainsdetroit.com
Spirit of Detroit
Plaza opens
downtown
T he Spirit of Detroit Plaza test is
now open for business, lunch,
entertainment, lounging and other
uses.
The downtown stretch of Wood-
ward Avenue at Jefferson Avenue
was shut down to traffic last week,
and Mayor Mike Duggan and city
and community leaders cut a ribbon
Monday morning to open the new
public space to accompany Marshall
Fredericks’ iconic Spirit of Detroit
statute.
Sandwiched between Campus
Martius and Hart Plaza, the
20,000-square-foot plaza offers pic-
nic and dining tables, games and
space for public activity. The goal is
to create a more walkable downtown
and civic, culinary and cultural cen-
ter. Three food trucks will park along
Woodward to serve guests
Monday-Friday.
The project’s collaborators —
the city of Detroit, Downtown De-
troit Partnership, Detroit Public
Works and other agencies — will
test the concept for the next 90
days and accept public feedback
into how the space could be used
and improved, or if the idea should
be scrapped.
“It’s a network, but they are all
complementary,” DDP Director of
Public Spaces David Cowan said
when asked how the plaza would
compete with Hart Plaza and Cam-
pus Martius. “We try to make them
all unique places. A lot of city work-
ers were having difficulty getting to
Cadillac Square in the amount of
time they have for lunch.”
The plaza is inspired by spaces
such as New York City’s Times
Square and its planners, such as
DDP planner James Fidler, hope it
can spark civic engagement and one
day rival the popular tourist destina-
tion. New York City-based
Bloomberg Associates, which creat-
ed public spaces in The Big Apple,
was enlisted to design the fledging
center in Detroit.
BUSINESS NEWS:
J A pair of early 20th century apart-
ment buildings in Detroit’s Midtown
at 3525 Cass Ave. and 624 Charlotte
St. have been put up for sale for $6.35
million.
J The four-county metro Detroit re-
gion saw a 3.4 percent increase in the
number of home and condominium
sales last month, rising to 5,556 from
5,373 in May 2016. The median sale
prices also climbed 6.7 percent to
$176,000.
J Discount supermarket chain Aldi
expects to open three more new
stores in Michigan in 2017 as part of
its plan to build 900 new stores by
the end of 2022.
J An entity tied to Bingham Farms-
based real estate company Core
Partners LLC purchased a
C R A I N ’ S D E T R O I T B U S I N E S S // J U N E 1 9 , 2 0 1 7
The Spirit of Detroit Plaza is sandwiched between Hart Plaza and Campus Martius in
downtown Detroit near the iconic Spirit of Detroit statue.
Detroit
digits
A numbers-focused look at last
week’s headlines:
$55 million
The amount Hayman Co. paid for
the 732,000-square-foot Troy
Officentre complex.
5 from it as part of a larger plan to pro-
The number of Detroit projects
that won more than $800,000
through the Knight Foundation’s
Knight Cities Challenge to help
attract and keep residents,
expand opportunities and engage
communities.
125,400-square-foot Troy office
building for about $9 million.
J Cobo Center is spending $2 mil-
lion to upgrade its broadband tech-
nology in a bid to attract e-sporting
events and exhibitions with virtual
reality exhibits.
J Detroit-based Ally Financial Inc.’s
“Hardest Working Dollar” campaign
launched, with five George Wash-
ington impersonators taking to the
streets of Detroit as the company
promotes special dollar bills put into
circulation that are worth $100,
$5,000 or $10,000.
J Waterford Township-based Cor-
porate Eagle is planning to build a
new facility at the Oakland County
International Airport after being se-
lected for a 5.7-acre parcel of land
there.
J Automotive industry design ele-
ment manufacturer I.M. Branded
plans to move from its Rochester
Hills headquarters to a space more
than double the size in a former GM
facility in Pontiac.
J John Gibbs, the son of Birming-
ham-based retail strategist Robert
Gibbs, bought The Keyes apartments
and Villa Lante apartments, 63 units
total, for an undisclosed price.
J CEOs from Michigan-based cor-
TYLER CLIFFORD/CRAIN’S DETROIT BUSINESS
porations including DTE Energy Co.,
Adient plc and Dow Chemical Co.
and around the country have com-
mitted to a best-practices diversity
initiative called CEO Action for Di-
versity & Inclusion.
OTHER NEWS:
J Focus: Hope is looking to lease its
former headquarters building on its
campus and 25,000 square feet of in-
dustrial/warehouse space across
duce revenue and attract more jobs
to its campus.
J Detroit’s three casinos reported an
aggregate revenue of $120 million in
May, up 1.2 percent from a year be-
fore and down 0.9 percent from
April, the Michigan Gaming Control
Board reported.
J Mayor Mike Duggan and the De-
troit Economic Growth Corp.
launched Motor City Re-Store,
which will provide $500,000 in
matching grants each quarter to
existing businesses to help im-
prove neighborhood business
districts.
J The Michigan Department of
Transportation plans to modernize
I-94, reconstructing a 6.7-mile seg-
ment of freeway just east of the
I-94/I-96 interchange to east of Con-
ner Avenue and constructing an ad-
ditional through-lane in each direc-
tion of the freeway.
J Dearborn and Southfield are try-
ing out their own short-term bicycle
rental systems in the wake of the late
May rollout of Detroit’s bike share
dubbed MoGo.
J Federal investigators have sub-
poenaed demolition contractors in
Detroit’s troubled blight-removal
program as part of an ongoing inves-
tigation, but Mayor Mike Duggan’s
office says it has not received a sub-
poena for records.
J At least three Michigan congress-
men were present at a shooting
scene last week and are reported safe
after a gunman shot multiple people
during baseball practice at a park in
Alexandria, Va., outside of Washing-
ton, D.C.
RUMBLINGS
Ethan Davidson (center) sings at Detroit’s Third Man Records as part of the release party
for his 11th album, titled “Crows.”
Ethan Davidson packs
Third Man for release
B irmingham singer-songwriter
Ethan Davidson’s album re-
lease party on Tuesday night packed
Third Man Records to capacity,
drawing some big names in Detroit’s
music scene.
Davidson — son of the late Detroit
Pistons owner William Davidson — and
his band delivered a cosmic folk/rock
performance with country twist to a
crowd of about 250 at the location in
Midtown Detroit, home to Jack White’s
store and vinyl pressing plant.
Several of the live cuts were off
Davidson’s new album “Crows,” a
12-track offering that is in some
ways a departure from his previous
work. “Crows” is his 11th album and
first since “Drawnigh,” released in
2015 on Davidson’s label, Seeds-
men Co.
Davidson’s wife, Gretchen, who
sings, plays lead guitar and pro-
duced the album, and Warren Defe-
ver, who also helped produce the
album and plays slide guitar and
other backing instruments on it, put
a “tight restriction on the music” for
“Crows,” Davidson said.
“The restriction was liberating
and made it easier to write the
Simoncini namechecks
competitors at benefit
M att Simoncini cupped his
mouth in his hands and
shouted above the noisy crowd at a
fundraiser he was sponsoring Thurs-
day night for the Motown Museum.
“Delphi! Delphi! Anybody here from
Delphi!”
The Lear Corp. president and
CEO was trying to shame his auto
supplier competitors into matching
his $200,000 donation toward the
museum’s $50 million expansion
plan.
Hearing no takers, Simoncini
turned his attention to another com-
petitor. “Anybody here from Adi-
ent?” The audience roared with
laughter as the hyper exuberant Si-
moncini twisted the knife.
“You want to be Lear when you
grow up? Write a check!”
Kidding aside, it was quite a night.
23
KURT NAGL/CRAIN’S DETROIT BUSINESS
songs,” he said, explaining that ’40s
and ’50s music were the template for
his latest work.
With tracks such as “My Own Bad”
and “Close to the Gallows,” the album
was inspired by a “lifetime of train
travel” and focused on interpersonal
relationships, particularly those that
are problematic, Davidson said, be-
cause “those are more interesting.”
For this album, Davidson did
away with the horns section heard
on “Drawnigh” and introduced
pedal steel for a distinct country
twang. The fuzz guitar and signature
distortion of previous albums re-
main. He also throws into the mix a
Civil War-era banjo and cello banjo.
His main instrument continues to be
electric guitar, but he hopes to even-
tually phase that out.
Between numbers, Davidson
thanked fans for support and gave
Michigan Opera Theatre founder
David DiChiera, who was in atten-
dance, special recognition for “invest-
ing in Detroit when no one else was.”
“Crows” was released Friday on
vinyl, CD and via digital download
from the album’s label, Cleve-
land-based Blue Arrow Records.
Beneath a huge tent with a clear
ceiling, hundreds of Motown fans
were entertained by the Four Tops
after a live auction that raised tens of
thousands of dollars for the cause.
“We were raised on Motown,” Si-
moncini told the crowd during brief
remarks during dinner. “It was the
song track of my life.” He said the
Motown brand represents creativity
and entrepreneurship, and linked
the 1960s music revolution to the
blossoming of modern Detroit. “This
brand represents what we are.”
UAW Vice President Jimmy Settles
Jr. urged the crowd to help make the
museum a global destination. “The
ask is easy,” he said. “Please dig deep
tonight.”
Speaking last, Mayor Mike Dug-
gan joked, “I’m the third-best politi-
cian on stage.”
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