A Health System Thrives . . . In Detroit?

One of the most depressed states in the country right now is Michigan, for a lot of reasons, and Detroit is the epicenter of that economic suffering. And this economic blight didn't start two years ago with the bursting of the housing bubble—Detroit's experienced economic malaise for a couple of decades now, not just a couple of years. So how is Henry Ford Health System thriving amidst all the economic carnage?

It's not easy. It's certainly not as easy as many competitors have made it by abandoning the city altogether for the relative economic safety of the suburbs. In fact, if you were looking for the worst place to situate a hospital, you couldn't do much better. Henry Ford, which made $30.4 million margin on nearly $4 billion in revenues last year, is investing right in the middle of Detroit's downtown, which hovers around a nearly 16% unemployment rate.

Sure, they have a presence outside the city as well at four different hospitals, but the flagship still sits downtown, an 802-bed beacon that proves the power of ignoring the naysayers and blazing your own path.

"Instead of getting caught up in the victim mentality, we have a lot of opportunity to make it better," says Nancy Schlichting, the health system's CEO. "Here in Detroit, for years, even in our own health system they said we can't make it downtown. That is hogwash."

Forgive me, Nancy, but the prevailing wisdom about making healthcare work in downtown Detroit seems fairly reasonable. But her contrarian instinct has served Schlichting well, especially given the system's nonprofit status, an advantage meant to help systems stay in locations where healthcare is needed, but where it's not necessarily profitable. That mission, however, is taken seriously by some and taken advantage of by many others. In other words, a charitable mission and broad tax exemptions haven't stopped many nonprofits from following the money. That's not a judgment; it's just fact.

"We've grown substantially in last few years by investing in Detroit," she says. "If the quality and service is second to none they will come downtown."

I've heard a lot from hospital leaders about quality and service lately in helping attract and keep paying patients. And this time, it doesn't seem as much like lip service as it once did. Maybe that's because the health reform legislation gives CMS some real authority to change payment based on demonstrable quality. I know, for all the posturing, we're still in a fee-for-service world, but the momentum is finally behind paying for quality, and senior leaders, sometimes pushed by their boards, are finding more of their salary based on quality measures.

Henry Ford is well set up for the new payment regime, in which the hospital or health system might well be the natural focal point for coordination of care. As an integrated delivery system with home care, a large physician group practice, a health plan, and other ancillary services, Henry Ford is ready to compete under a payment system that rewards quality and coordination of care—if it comes to pass. For now, Schlichting is as excited about the future as you might expect from someone who follows her own instincts.

"It's so important not to just follow the pack. You have to be thinking differently all the time," she says. "All hospitals have a lot to learn from non-healthcare organizations in this country."

In Detroit. I know. I wouldn't have believed it either.