Center for Studying Health System Change

he Lansing area is made up of three counties in the lower peninsula of Michigan. Nearly 65 percent of the area’s 432,674 residents¹ are concentrated in Ingham County, home to Lansing, the state capital. The county also includes East Lansing, where Michigan State University (MSU) is located. The other two counties, Clinton and Eaton, are largely rural, in contrast with the more urban Ingham County.

Lansing area residents are relatively young, with less than 10 percent of the population over age of 65,² perhaps due to the large university population. Fewer minority populations reside in the area compared with national averages, and most of them live in Lansing. The median household income is slightly higher and the percentage of families living below the poverty line is slightly lower than national averages.³ The unemployment rate generally fluctuates between 3 percent and 5 percent, based on work force adjustments at General Motors.⁴ While the area is dominated by the automobile industry, state government and higher education are also major employers. General Motors, the state of Michigan and MSU account for 57 percent of the labor force.⁵ Health services account for the second largest private industry employment in the tri-county area at almost 11 percent.⁶

Respondents in the community consider the capacity of their health services to be greater than what is needed, given the relative youth and good health status of the population. In fact, use of health care services is low compared with other communities nationwide. The Lansing area’s staffed beds, admissions per 1,000 population and inpatient days per 1,000 population are below national averages (24 percent, 13 percent and 17 percent lower, respectively).⁷ Not only are residents’ overall age-adjusted mortality rates 21 percent lower than national rates, so are death rates among these individuals from diseases such as malignant neoplasms and ischemic heart disease.⁸

The Lansing area also has a more than adequate supply of physicians, heavily weighted toward primary care. Compared with national averages, the number of physicians per 1,000 residents is almost 26 percent higher, and the number of primary care physicians per 1,000, almost 47 percent higher.⁹ This strong primary care emphasis is attributed to the primary care orientation at the two MSU medical schools, one allopathic and one osteopathic, and the absence of a major tertiary hospital.

THE HEALTH CARE MARKET

The market for health services in and around Lansing is well-defined, with the bulk of the population obtaining most of its care within the tri-county area. Despite the availability of a wide range of specialty services in Lansing hospitals, however, many residents travel to Ann Arbor, Chicago, Grand Rapids or Kalamazoo for highly specialized care because Lansing is not considered a major tertiary center in Michigan. In fact, the number of out-migrations has exceeded the number of in-migrations by an average of 16 percent between 1990 and 1993.¹⁰ Area hospitals’ current efforts to increase specialty services are directed at recapturing some of these patients.

The major hospitals primarily serve the tri-county area and are located within different Lansing neighborhoods with which they have long-standing relationships. Each of the three Lansing hospitals assumes a historic and continuing responsibility for indigent care. In the more rural areas outside of Lansing, three small (under 45-bed) hospitals have relationships with the three Lansing hospitals that include referral relationships and shared services. Good roads facilitate access to Lansing, and the rural hospitals often send patients to Lansing for specialized services and trauma. The Lansing hospitals are also establishing relationships with other hospitals outside the tri-county area to expand their service area and sources for patient referrals.

Most area physicians are in solo or small practices, although a relatively large number of primary care physicians are on hospital staffs as a result of area hospitals’ efforts to purchase such practices. The market consists of allopathic and osteopathic physicians with admitting privileges at all hospitals and who may practice together. Physicians are primarily located in Lansing/East Lansing and the immediate suburban areas, and are more concentrated within Ingham County than either Eaton or Clinton counties. In Ingham County, the health department provides direct services through its clinics as do the various hospitals that have staff physicians. Hospital-based physicians provide primary and specialty care services. In Eaton and Clinton counties, physicians are primarily located near the hospitals, often in practices and clinics that are hospital-affiliated.

A unique feature of this market is the presence of two medical schools, one allopathic (College of Human Medicine) and one osteopathic (College of Osteopathic Medicine), within MSU. Because both medical schools have decided not to operate a teaching hospital, they rely on community institutions for clinical training. This arrangement includes various staff relationships for MSU faculty at the Lansing hospitals and various staffing structures at the local clinics. In addition, the faculty practices provide clinical services to the large student (and faculty) population on the East Lansing campus in a university facility.

LEADERSHIP AND DECISION MAKING

The historically strong local focus on addressing and solving community problems has been based on the population’s relative insularity, homogeneity and small size. In the past, providers’ and purchasers’ solutions were often collaborative, and relationships and decision making were informal and based on personal relationships. Leadership was described as hospital-driven. However, hospital consolidations have changed the nature of this leadership and decision-making style related to health care in this community.

Still, all the major players -- providers, employers, unions, local government and other community groups -- continue to see community accountability as a strong value, and each group plays a role. For example, the Ingham County Health Department (ICHD) plays a central role in assessing health problems. With area hospitals as a historically important force for change in the community, major hospital CEOs are well known and viewed as part of the community leadership. Business and union leaders have been involved in various community efforts and serve on hospital and other community-based boards such as the United Way and the Chamber of Commerce, which have been active in health issues. MSU has also played a significant role in the community, especially through the community involvement of its two medical schools and its role as a major purchaser.

To counter rising competition among hospitals, business, government and community leaders are placing a growing emphasis on broadly representative groups to address community health issues and accountability of Lansing’s institutions. Among these are the Capital Area Health Alliance (CAHA), a purchaser-driven organization; the Health Status Advisory Group (HSAG), established by the area health departments to assess health problems and develop collaborative initiatives; and the Public Health Advisory Committee (PHAC), established to address continued responsibilities resulting from the sale of the county hospital. The HSAG, under the leadership of the director of the Ingham County Health Department, continues to support the major assessments and collaborative efforts in the area. The PHAC has played a very limited role in monitoring MC² community efforts, although its role is currently being re-examined as additional ownership changes are considered.

Of these three groups, CAHA is perhaps the most involved in community decision making, but has generated debate about its composition, positions and role. When area purchasers established CAHA, they created what they saw as a centralized entity that would address pertinent issues as they concerned cost and quality of care. As a result, CAHA was organized as a purchaser/ provider organization, with purchasers holding 60 percent of the voting power. Activities include reviewing certificate-of-need (CON) applications to the state, staffing recent purchaser-supported cost and quality studies and cosponsoring a public hearing on the proposed MC²/Columbia merger. While CAHA has the potential to serve as a formal source of leadership and influence, respondent opinions about CAHA were mixed. Current limited union participation and potential conflicts among provider members and between providers and purchasers represent major challenges to CAHA’s future role. In addition, some consumer groups reported they are concerned that consumers have little input into this organization.

In the meantime, community health care leadership is shifting from the hospitals to purchasers as the latter increase their visibility and efforts to reduce costs and improve quality. Purchasers testified at public hearings on the MC²/Columbia merger and influenced the negotiations to establish new hospital rates. Purchasers’ leadership role is linked to their relationship with their respective unions. In turn, unions continue to play an important role and may be the primary way in which consumers influence this market. Union power has meant that purchasers must take into account employee preferences for affordable and comprehensive health benefit packages and broad provider networks. Outside of the unions’ influence, there is little organized consumer advocacy in the Lansing area, although consumers sit on almost all of the organizations that have influence in the market. There was a flurry of consumer activity in response to anticipated changes in the Lansing hospitals, but in general, consumer power vis-à-vis purchasers is meted out through the collective bargaining process.