RTA to unveil millage - Crain's Detroit Business

Health care costs for Southeast Michigan midsize companies are expected to increase by 4 percent this year, a slight uptick from 2015’s near-historic low of 3 percent, but still below national projections of 4.3 percent, according to a new re-port from Troy-based Marsh & Mc-Lennan Agency LLC.

Most employers managed health

care costs by boosting deductibles for PPO and HMO benefi t plans, us-ing high-deductible health insur-ance plans, wellness programs tied to incentives, aggressive prescrip-

tion drug management and tele-medicine programs, according to the 440 employers that participated in Marsh & McLennan’s 13th annual Southeast Michigan Mid-Market Group Benefi ts Survey.

But some employers lowered health care costs by shifting from fully insured plans to self-insurance. Troy-based NS International Ltd.shifted to self-insurance with Blue Cross Blue Shield of Michigan, cut the number of dental and vision carri-ers to three from 10 and reduced company health benefi t costs by 14.6 percent, said Brittany Nessel, HR business partner.

“We have a younger workforce, and looking at our numbers with claims, we are hoping to reduce our costs,” Nessel said. The company of-fers two PPO plans with $500 and $1,000 deductibles, which is similar to the fully insured plan offered the past several years with Blue Cross, she said.

NS International, an automotive supplier that employs 240 people, mostly engineers in Michigan and Ohio, is owned by Nippon Seiki Co. Ltd. of Japan.

Rebecca McLaughlan, vice presi-dent with Marsh & McLennan, said drug price increases are driving higher employer costs and leading some employers to add higher co-payment tiers for specialty medica-tions.

For example, 30 percent of com-panies now offer a fourth tier of drug copays, which range from $60

to $75, compared with 23 percent of companies in 2015. Tier one usually includes lowest-cost generic drugs and features the lowest copays, with a second tier for brand-name drugs and a third tier for nonpreferred b r a n d - n a m e drugs. General-ly, the higher the tier a drug is in, the higher the copayment.

Drug costs “are the highest in years, especially for biotech drugs,” McLaughlan said.

While employers continue to of-fer high-deductible health plans (47

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© Entire contents copyright 2016by Crain Communications Inc. All rights reserved

Survey: Midsize employers adjust to reduce health care cost increasesBy Jay Greene

[email protected] “We are trying to � gure out how to incorporate wellness to drive down costs for employees.”Brittany Nessel, NS International Ltd.

Rebecca McLaughlan: Drug prices are a challenge.

MAY 30-JUNE 5, 2016

Homeis where Andy Appleby’s heart is.Sports entrepreneur launchesa league of his own, Page 3

The Regional Transit Authority of Southeast Michigan on Tuesday will unveil a proposed four-county tax that would raise billions of dollars over 20 years to pay for a bus rapid transit system in the region and a commuter rail line between Detroit and Ann Arbor.

The specifi cs of the tax, which is intended for the November ballot in Oakland, Wayne, Macomb and Washtenaw counties, won’t be made public until the RTA releases its master plan during a news conference at 10 a.m. Tuesday at Lawrence Technological University in Southfi eld.

RTA CEO Michael Ford told Crain’s recently that the tax likely would be about 1 to 1.2 mills, which would raise money to build bus rapid

transit lines on the Woodward, Michigan and Gratiot avenue corridors, and on Washtenaw Avenue between Ann Arbor and Ypsilanti, create the long-discussed commuter rail service, and cover annual operating costs.

Once the master plan is released Tuesday, a four-week public comment period will begin. The RTA will process the opinions and suggestions it receives from a series of public meetings and refi ne the plan, if necessary. After that, the master plan will be presented to the RTA’s 10-member board for approval. The board will vote on the plan, its budget and the language for the ballot proposal.

A multimedia "vote yes" campaign, created by and fi nanced largely by the pro-transit Detroit Regional Chamber Founda-

tion and Troy-based Kresge Foundation, is expected to begin a month or two before the Nov. 8 vote. The RTA itself is forbidden by state law from advocating a yes vote but will conduct an informational campaign through the election.

If voters approve the transit tax, all property owners in the four counties would pay it — there would be no opt-out provision, unlike the suburban bus tax. The RTA millage would be atop the other transit taxes already in place in the Ann Arbor area and Detroit suburbs.

To build public support for another transit tax, Ford and other RTA offi cials have spent a

By Bill [email protected] to

unveil millage

20-year proposal would raise billions to pay for bus rapid transit, commuter rail

SEE SURVEY, PAGE 17

SEE RTA, PAGE 16

JEFF JOHNSTON/CDB

Michael Ford: Rapid bus lines, commuter trains hang in balance.

2 C R A I N ’ S D E T R O I T B U S I N E S S // M AY 3 0 , 2 0 1 6

MICHIGAN

BRIEFSINSIDE

THIS ISSUECALENDAR .........................................13CLASSIFIED ADS ...............................15DEALS & DETAILS .............................13KEITH CRAIN....................................... 6MARY KRAMER .................................. 6OPINION .............................................. 6RUMBLINGS .......................................19WEEK ON THE WEB ..........................19

COMPANY INDEX:SEE PAGE 18

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Correctionsn The headline on the May 23 article about Bank of America Merrill

Lynch naming Senior Vice President Matt Elliott as head of business banking for the Midwest region should have abbreviated his title as SVP. n A May 23 story about Aghogho Edevbie should have said he worked

at Butzel Long PC for two years and that while there he prepared deposi-tions in a federal lawsuit. n A May 23 story about Tyson Gersh should have said his urban farm

has produced 50,000 pounds of food over the past five years.

Snyder halts Flint probes a�er prosecutors objectGov. Rick Snyder last week tempo-

rarily halted civil and administrative investigations into how the state De-partment of Environmental Qualitycontributed to Flint’s lead-tainted drinking water crisis, after being warned they are hampering state and federal criminal investigations, The Associated Press reported.

Snyder’s office released letters from state Attorney General Bill Schuette and U.S. Attorney Barbara McQuade raising concerns about an already-concluded state police investigation of the DEQ’s role in the lead contamination of the city’s tap water. Schuette also complained about an ongoing inquiry targeting the state Department of Health and Human Services that is being con-ducted by the state auditor general and the department’s inspector general at the governor’s request.

Also last week, key Republican lawmakers and Snyder’s adminis-tration agreed on the framework of a spending plan that would direct $165 million more to the Flint water crisis and significantly scale back a

plan to address underground infra-structure needs statewide. The Re-publican governor and GOP legisla-tive leaders still have to sign the accord, but unsettled details were described as small.

Army to test driverless vehicles on I-69 in June

A convoy of U.S. Army vehicles will cruise along I-69 in Lapeer and St. Clair counties in late June as part of an initial testing of driverless military vehicle equipment on public road-ways, officials from the U.S. Army Tank Automotive Research, Develop-ment and Engineering Center and the Michigan Department of Transporta-tion said.

The vehicles will test a piece of technology critical in the develop-ment and testing of driverless and connected vehicles, the Times Her-ald of Port Huron reported. Someone will be behind the wheel of each ve-hicle, which is equipped with fea-tures from the driverless vehicle sys-tems. I-69 will remain open to traffic.

If the testing is successful, the driverless-vehicles technology could save the lives of soldiers serving over-

seas by reducing accidents and dan-gerous combat situations for sol-diers, especially in places where bombs and improvised explosive devices could be hidden, officials said. The I-69 stretch was chosen for testing because of its proximity to an international border crossing and to the R&D center’s headquarters at the U.S. Army Detroit Arsenal in Warren.

MICH-CELLANEOUSn Coopersville-based Admiral Pe-

troleum Co. — a long-standing price leader at Michigan gas pumps — has been sold to Sun Capital Partners Inc., a Boca Raton, Fla.-based pri-vate equity firm. The acquisition in-cludes 130 Admiral-branded gas and convenience stores and nine Lemmen Oil Co. stores across Michi-gan and northern Indiana, MLive.com reported. Terms of the sale were not announced.n Six volleyball courts or four

full-sized basketball courts will re-place the roller skating rink at the Woodland Skating Center in Grand Rapids, DV5 Properties LLC, a sports academy owned by Amway Corp. heir Cheri DeVos, announced. MSA Woodland, the new 105,000-square-foot facility, will offer indoor turf for lacrosse and soccer and have an outdoor sand volleyball league and outdoor soccer fields. It replaces what was built in 1969 as West Mich-igan’s largest skating center. DV5 bought the facility for $2.075 million in April, according to city property records. Renovations are expected

to be completed by November.n Manistique-based Mackinac Fi-

nancial Corp. will extend its footprint in Wisconsin with a planned acqui-sition of Niagara Bancorp. The two banks expect the $7.3 million deal to close in the third quarter or early fourth quarter of this year, MiBiz re-ported. Mackinac Financial, with assets of $732.9 million as of March 31, is the parent company of mBank, which has 13 offices in the Upper Peninsula and three in the northern Lower Peninsula, including one in Birmingham, plus three in Wiscon-sin. Niagara Bancorp., the holding company of First National Bank of Niagara, has four offices in Wiscon-sin with assets of about $70 million.n A cafe in the northern Lower

Peninsula has to change its name after a couple was accused by coffee store chain Caribou Co�ee of trade-mark infringement. Eric and Kelly Chorley have to change the name of the Blue Caribou Cafe in Beulah., the Grand Rapids Press reported. The Minneapolis-based chain claimed the name and logos were too similar

and filed suit. Caribou Coffee said it has contributed to a GoFundMe fundraising page to help with the Chorleys’ rebranding efforts.n Long a favorite of Lansing

sports fans, Tripper’s Sports Bar & Grill closed last week after 27 years in business. Owner Steve Tripp told the Lansing State Journal that more and more people are staying home to watch games on their big-screen TVs, and that with new state regula-tions, its business for charity poker tournaments had diminished.

C R A I N ’ S D E T R O I T B U S I N E S S // M AY 3 0 , 2 0 1 6 3

When Andy Appleby owned the Single-A Fort Wayne Wizards base-ball team, he’d make the three-and-a-half hour drive from his sports management business in Rochester to northeast Indiana and often dream of building a sta-dium closer to home.

“It was probably 12 years ago, coming back from Fort Wayne, I was thinking I’d like to build a ballpark near my house,” he said.

That dream becomes reality on Monday when Appleby’s Jimmy John’s Field opens for play along

M-59 in Utica.And Appleby doesn’t just own

the 2,000-seat ballpark he built for $15 million. He also owns the three-team developmental United Shore Professional Baseball League, which he plans to expand to 20 teams in 10 Midwest stadiums over the next decade. By 2017, he wants at least four to six teams playing, and 10 to 12 teams by 2020.

And all of those teams, unaffi li-ated with Major League Baseball’s minor leagues, would be owned by Appleby through his

Mackinac Policy ConferenceLive coverage next week at CrainsDetroit.com/mackinac.

Banks of the futureMobile banking is drastically changing the shape and purpose of the traditional bank branch, Page 9

MUST READS OF THE WEEK

By Bill [email protected]

Hoping for hits

Straith Hospital remolds

itself

Straith Hospital for Special Sur-gery, a hospital in Southfi eld found-ed by a plastic surgery pioneer, is branching out under new CEO Jan Rys, CFO Bradley Bescoe and long-time Chairman James Straith.

Founded and open for business in 1954 by Claire Straith and his physician son Richard, 34-bed Straith Hospital is looking to expand medical rehabilitation, eye surgery and general inpatient services.

“People either think we only do plastic surgery or they have never heard of (Straith),” said Rys, who be-came CEO last October after being a nurse at the hospital since 1984.

“We have a new team here and are looking to rebrand the hospital,” she said. “We have fi ve new (operating rooms), good OR times, and have underutilized space. We are also looking at adding other inpatient services,” including cardiovascular care.

Straith Hospital is the last inde-pendent, nonprofi t hospital in Southeast Michigan.

The other three independent hospitals in metro Detroit are for-profi ts Oakland Regional Hospi-tal, also in Southfi eld; Michigan Surgical Hospital in Warren; and Pontiac General Hospital, which emerged from bankruptcy earlier this month under new manage-ment.

“They have as good a quality as anybody in the market for surgery and rehabilitation, and they are low-er cost because they don’t have a lot of overhead,” said Harry Dalsey, president of Dalsey & Associates in

By Jay [email protected]

Grand Prix organizers believe they’re on right road nowOrganizers of the Chevrolet De-

troit Belle Isle Grand Prix have found the winning formula for IndyCar racing in Detroit.

The seventh race weekend since the event’s return , Roger Penske and partners have invested $13 million in the track and other improve-ments to Belle Isle to create one of the largest events in the city, with no

signs of slowing down. The Grand Prix was mothballed

after 1997 until Roger Penske, the Bloomfi eld Hills-based Penske Corp. founder and Penske Racing

team owner, championed and in-vested in the 501(c)(3) nonprofi t race’s return to Detroit in 2007. The Great Recession also crippled the event, which was not held in 2009, 2010 and 2011.

Penske is past chairman of the Downtown Detroit Partnership, of which the race is a subsidiary.

“We’re starting to stabilize; we know what to expect now,” said Bud Denker, executive vice president of

Penske Corp. and Grand Prix chair-man. “And we’re going to keep doing it for years to come.”

The event, set for June 3-5, has sold 74 sponsorships — an all-time high — and has sold out all 33 of its corporate and spectator chalets. The race is expected to have an eco-nomic impact on the region of near $50 million.

“We’ve got the same amount of

Utica baseball stadium, which opens Monday, part of wider Midwest expansion plan

Jan Rys: More than 30 years at hospital, now CEO.

By Dustin [email protected]

“Why do we want to buy teams in other markets when I can create just as good

here, and create the mascots, colors, nicknames and uniforms?”

Andy Appleby, General Sports

Focus moves beyond plastic surgery roots

SEE HOSPITAL, PAGE 18

SEE STADIUM, PAGE 15

PHOTOS BY JACOB LEWKOWOf the stadium’s 24 suites, all but three have been leased under � ve-year contracts that range in annual cost from $35,000 to $55,000.

SEE GRAND PRIX, PAGE 17

Chevrolet Detroit Belle Isle Grand PrixWhen: Friday through Sunday

More details: Page 17


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Ford to buy nearly 2 blocks in downtown Dearborn

By Kirk [email protected]

Ford Motor Co. is purchasing near-ly two blocks of prime property in west downtown Dearborn, includ-ing a historic former hotel and a pair of well-known restaurant sites.

Ford Land Development Corp.Chairman and CEO Donna Inch confirmed Friday the planned pur-chase of property on the south side of Michigan Avenue between Ma-son Street to the west and Oakwood Boulevard to the east.

She declined to provide specifics on plans for the properties, but re-development is expected with office and retail space.

“Ford Land is exploring options to acquire and develop office and retail space in downtown Dearborn to support its campus transforma-tion plan,” Dawn Booker, commu-nications manager for Ford Land De-velopment Corp., the real estate division of the Dearborn-based au-tomaker, said in a statement.

“Ford Land will continue to work with the city of Dearborn and share more detail when finalized.”

That could be in a couple weeks, Inch said.

The properties — which include the former La Shish and Talal’s restaurants at 22039 and 22041 Michigan Ave. — have a mix of pub-lic and private ownership.

For example, the Dearborn City Council on Tuesday passed a resolu-tion authorizing the sale of those two buildings totaling about 10,000 square feet to Ford Land, which is in the beginning stages of an ambi-tious 10-year plan to transform its headquarters campus and research and engineering center through new construction and demolition to the tune of at least $1 billion.

The city resolution called for a purchase price of $200,000.

Another one of the properties, the historic 120-year-old former Wagner Hotel at the corner of Mich-igan and Monroe, is part of the rede-velopment. Last year, a technical assistance panel of the Urban Land Institute Michigan drafted a 40-plus-page report that called for the devel-opment of 26,000 square feet of new retail space along with 71 units of residential housing ranging from 440 to 900 square feet, renting for $1.57 per square foot in the area.

Last year, a technical assistance panel of the Urban Land Institute Michigan drafted a 40-plus-page proposal on the historic 120-year-old former Wagner Hotel at the cor-ner of Michigan and Monroe. The report called for the development of 26,000 square feet of new retail space along with 71 units of residen-tial housing ranging from 440 to 900 square feet renting for $1.57 per month in the area.

According to data from CoStar Group Inc., a Washington, D.C.-based real estate information service, the

two blocks bounded by Michigan to the north, Oakwood to the east, Mason to the west and West Village Drive to the south contain about 20 buildings totaling nearly 130,000 square feet. Some of the properties in that area are expected to retain the same ownership.

West downtown runs on both sides of Michigan between Outer Drive to the west and east of Brady Street. East downtown generally surrounds the intersection of Mich-igan Avenue between west of Schlaff

and Oakman Boulevard and Schae-fer between Ruby and Bryan streets.

Both of the city's downtown de-velopment authorities were estab-lished by ordinance in 1977.

The automaker has also signed a lease for about 220,000 square feet in the former Lord & Taylor department store in Fairlane Town Center as well as a connected wing of the mall. The store is about 120,000 square feet and the connected wing is about 100,000.

Kirk Pinho: (313) 446-0412Twitter: @kirkpinhoCDB

“Ford Land is exploring options to acquire and develop oce and retail space in downtown Dearborn to support its campus transformation plan.”Dawn Booker, Ford Land Development Corp.


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Trademark squawk This is the tale of two Shacks — the locally beloved Chicken Shack and the New York phenomenon Shake Shack — and their squabbles over the ‘Chicken Shack’ name, told in a graphic-novel format. The text and art are by Crain’s reporter Chad Halcom. It’s an experiment in form for Crain’s; let us know what you think by sending an email to Managing Editor Michael Lee at [email protected].


There are a couple of events every year that are now a part of the fabric of Detroit.

Every January, we celebrate the car and the car companies on an in-ternational stage. Thousands of journalists from around the world descend on Detroit to cover the North American International Auto Show. The impact on the economy is substantial, and it certainly puts Detroit in the most positive light possible. It re-establishes Detroit as

the motor capitol of the world. It is a great week for publicity and a sec-ond week for giving the public a chance to see hundreds of cars on display. By now, it has become an institution for Detroit.

This weekend, we have what has become the second half of our Mo-tor City spectacular.

Three days of racing on Belle Isle, following the 100th running of the Indianapolis 500 on Memorial Day. Lots of motor racing events will

share the spotlight during the week-end.

But the stars of the show are still the Indy race cars — all still vying for the very coveted national champi-onship. If you ever want to see De-

troit shine, get a look at how the tele-vision cameras show off Detroit from the Belle Isle vantage point. There is some spectacular racing, but for a global audience, Detroit has never looked better.

Over that three-day weekend, tens of thousands of race fans from all over will descend on Belle Isle to watch first-hand some very com-petitive racing. It has become a rare doubleheader that has Indy cars racing for victory both Saturday and Sunday.

It's a great way to enjoy Belle Isle. And like our motor show, it is a won-derful way to enjoy the heritage of

racing. I understand that there are plenty of packages for the whole family to enjoy.

I have always said that the first automobile race happened five minutes after the second car was built. Well, this weekend, Chevrolet and Honda will be duking it out for bragging rights. And they, and their teams, are very serious.

The Detroit Belle Isle Grand Prix is a second great automotive event of which our city can be proud. It's another one of those must-see events.

Be sure and put it on your bucket list; it's worth it.

OPINION

You can’t really say employers had no warning. The new overtime rules — announced by President Barack Obama earlier this month — had been drafted 10 months ago and will require companies to pay overtime to salaried workers earning $47,476 or less. That’s a big jump from the current level of $23,660.

The U.S. Department of Labor estimates 4 million more Americans will be eligible for overtime. But how many of those folks are working OT now? Estimates vary.

Employers — and their human resources and legal coun-sels — are scrambling to figure out how the ruling applies be-fore a Dec. 1 deadline.

If companies want to keep their payroll costs stable, the monitoring of the hours people actually work will begin now. In some cases, employers may figure out which is cheaper — bump up the pay of some employees to make them ex-empt — which is the compensation-boosting goal Obama had all along — or converting salaried jobs to hourly.

Or employers could opt to begin “editing” job assignments in ways that could hurt people in the early stages of their ca-reers. An employer may refrain from sending a junior worker out of town because of difficulty in tracking hours worked.

Whatever the strategies, employers have until Dec. 1 to figure it out.

Paying the whistleblower: A necessary evil?Tattletale, snitch, disloyal” were

among the words two well-known whistleblowers said were used to describe them after they went public with corporate mis-deeds.

Sherron Watkins, who blew the whistle on energy giant Enron Corp., and Cynthia Cooper, who did the same at now-defunct WorldCom Inc., told attendees at Crain’s Gener-al and In-House Counsel summit earlier this month that they paid heavy personal and professional penalties for their actions.

Similar whistleblowers today, however, can be eligible for finan-cial incentives — 10 percent to30 percent of what the government recovers for violations of securities and federal laws. Whether it’s a boon or a bane depends on where you sit. It certainly has created a new legal niche for some lawyers who are now experts on the terms of whistleblow-er laws.

The Dodd-Frank Wall Street Re-form and Consumer Protection Act of 2010 came too late to help Wat-kins and Cooper. But they applaud the incentives because some inside officers and executives don’t blow the whistle on corporate misdeeds

because they fear retaliation — the kind both Watkins and Cooper ex-perienced.

One such drama is playing out lo-cally in the case of George Karad-sheh, the former practice manager in Farid Fata’s oncology practice who so far has earned nearly $2 mil-lion for alerting authorities to Fata’s scheme to intentionally poison pa-tients by treating them for cancer they didn’t have. Fata is serving a45-year prison sentence.

Karadsheh knew enough to call attorney David Haron after several employees shared concerns about Fata with him. That led to the filing of a sealed lawsuit in federal court that allowed him to claim some of the money feds seized as part of the fraud recovery. Haron told reporters

his client settled for 10 percent of dollars recovered because he want-ed more money to go to Fata’s vic-tims. But Haron has also amended the original complaint with addi-tional allegations and new parties. The U.S. Attorney’s office has until July 15 to determine whether addi-tional actions will be taken.

Hardly a day passes without a news story about new ethical lapses, investigations and attorneys’ fees, whether it’s Detroit’s Land Bank, Medicare fraud allegations, Detroit Public Schools or the Flint water cri-sis. But Haron’s own caseloads show that whistleblowing is alive and well in corporate America, too. One case involved two former drug salespeo-ple who alleged a drugmaker was il-legally marketing a drug for non-FDA approved uses.

Maybe it has ever been thus. And I guess that’s why taxpayers, ulti-mately, now pay tipsters.

MARY KRAMERPublisher

Mary Kramer is publisher of Crain’s Detroit Business. Catch her take on business news at 6:10 a.m. Mondays on the Paul W. Smith show on WJR AM 760 and in her blog atwww.crainsdetroit.com.

KEITH CRAINEditor in chief

Detroit as the “fintech capital of the world.” With that offhand remark, Dan Gilbert hinted at a strat-egy that may lie behind his reported bid for Yahoo,

the ailing digital behemoth that put itself on the block. Ya-hoo Finance is a major asset of the online portal.

Gilbert’s Quicken Loans is as much a technology com-pany as a mortgage originator. And the growth of Quicken is helping to fuel Gilbert's downtown investments.

Gilbert, whose bid is backed by financial help from inves-tor Warren Buffett, has been largely silent on Yahoo, but was asked about it during a panel discussion about finan-cial technology companies last week during Detroit Start-up Week. Many suitors are after Yahoo, but the confidential auction process is expected to conclude in early June.

You can say a lot of things about Gilbert, but “he thinks too small” isn’t one of them.

Dec. 1 looms for new OT rules

Once again, Detroit shines

Yahoo bid hints at Gilbert’s vision


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Food companies sought for Aug. 22

Crain’s summitCrain's Detroit Business is seeking

food companies looking for invest-ment to take part in an event this summer tied to the state’s food economy.

The Crain's Food Summit on Aug. 22 at Eastern Market will shine a light on the state’s dynamic food compa-nies and the innovative players in that space.

Part of the event is designed for investors to meet investment-wor-thy food-related companies. Food companies interested in taking part can apply at CrainsDetroit.com/foodcompanies.

Crain's is looking for companies that fit into three categories:n Impact companies, those that

are helping to bring healthy food to underserved communities, and that with some coaching and mentoring can take their business to the next level.n Early-stage companies that

have some investment and revenue but are looking for additional inves-tors to get the company to the next level.n Second-stage companies that

have more than 100 employees and $1 million in revenue and can show-case the kinds of investment-wor-thy companies we have in the state.

A team of food executives and ex-perienced investors will help Crain'svet the companies. On the day of the event, a small panel of judges will help pick three winners.

The Michigan Good Food Fund is title sponsor of the investor portion of the event and will also be spon-soring the award for the impact companies. The fund is a new$30 million effort that provides fi-nancing and business assistance to healthy food production, distribu-tion, processing and retail projects.

Deadline for companies to apply to be part of the event is July 1. Email questions to Dan Duggan [email protected].

Wayne County helps win $700,000 grant to boost

summer jobs programWayne County has helped secure

a $700,000 grant that will employ up to 1,000 people enrolled in Grow De-troit’s Young Talent summer jobs program.

The grant from the Michigan Child Care Fund, announced Thursday, will be paired with $700,000 raised from the philanthropic community and the Detroit Employment Solu-tions Corp.

The money comes one week af-ter the Obama administration and Mayor Mike Duggan announced that the summer jobs program would receive a $2 million federal grant. The jobs program teams youths with employers for summer jobs and provides work readiness training, transportation and em-ployer support services.


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Departing DSO’s Paul Hogle looks back at legacy, memories

By Sherri [email protected]

The Detroit Symphony Orchestra’s second-in-command, Executive Vice President Paul Hogle, will depart after July 8 to become president of the Cleveland Institute of Music. He spoke with Crain’s Senior Reporter Sherri Welch about his six-year ten-ure at the DSO. His remarks have been edited for length and clarity.

Q: You joined the DSO in 2010 with the musicians’ strike on the horizon. Ever have second thoughts? The thunderclouds were beginning to form, but I never had a second thought. Anne (Parsons) told me that when I got to Detroit I would know quickly whether the Detroit story, character and excellence was for me. I knew before the first morn-ing was over that Detroit was for me. Detroit doesn’t hide who she is. That is either really attractive to you or it’s not. To me, it was very attractive.

Q: In what way has your position at the DSO prepared you for your new role in Cleveland? I truly have been the clas-sic No. 2. I’ve been responsible for day-to-day operations, from artistic to education to fundraising and marketing programs. I’ve spent my

whole career working with boards of direc-tors and some of the world’s best musicians in Detroit and oth-er places. I got into this field 30 years ago be-cause I wanted to run an institu-tion. Last June when I became acting CEO, I re-

connected with that mission and got to see it play out when Anne went on her sabbatical. I knew I wanted to get back to that early ambition.

Q: What legacy do you think you have le� at the DSO? People. We brought and promoted more than 30 people from across the region and the country to the staff. That is the most obvious legacy I will leave here — strong people, well-pre-pared for work here or whatever their futures might hold. There will be other things that will be my lega-cy, but I will be most proud of the people, because they will continue the work.

Q: What other things do you see as part of your legacy? I would never say it was all me, but we are definite-ly a stronger organization now than in 2010. Fundraising and ticket sales have grown. Webcasts were estab-lished, neighborhood concerts were launched.

Q: Did you play a role in launching the DSO’s $125 million endowment campaign in 2012, which has raised $40 million to date? Of course it was the full enterprise behind the cam-paign. Sustainability is something that will be a permanent challenge for arts organizations in Detroit un-less they can capitalize through en-dowment. Was I a voice? Certainly, but not the only voice. As result of the endowment fundraising over the past few years, we will have dou-bled the size of our endowment when the gifts are all paid in to $80 million.

Q: What memory stands out the most for you as you prepare to leave the DSO? Carnegie Hall, the DSO’s first time back in 17 years, in 2013. That opening night when every-body was waving their red, Detroit flags; I’ll never forget that. Half the hall was from Detroit.

Paul Hogle: Never had second thoughts coming to Detroit.

Q&A: PAUL HOGLE


What do tiny Clarkston State Bank and big Ally Bank have in common? Almost nothing except their approaches to banking in the 21st century. For both, mobile banking and the in-ternet are replacing brick-and-mortar branches.

Clarkston, which has $178 million in assets, introduced mobile banking two years ago. The almost-immediate dropoff in branch vis-its by customers was shocking, said J. Grant Smith, the bank’s president and CEO. Half of

his customers now do mo-bile banking.

“We analyzed our data and saw such a decline in traffic, we closed two of our four branches a year ago,” he said. That closing included what had been the bank’s headquarters building, a stately historic stone structure on Main Street in Clarkston. It didn’t have a drive-thru, and small-town down-towns don’t get the foot traffic they used to, so his-toric or not, it was closed.

“We go see prospects now; we close deals at their offices. Fewer people come to banks. The feed-back you get is there’s no reason to go to a bank,” said Smith, who said his bank has been aggressive in teaching older custom-ers how to go mobile, “We’ve migrated a lot of customers over who weren't using technology.”

Carrie Sumlin is the dig-ital consumer executive at Utah-based Ally, a division

of Detroit-based Ally Financial Inc. (NYSE: ALLY), which means she oversees all online and mobile banking. In 2013, Ally was hon-ored by the research firm Forrester for having the most customer-friendly mobile banking platform in banking.

In 2009, the former GMAC Bank rebranded

itself as Ally Bank with the premise of building a bank entirely without branches, a decision Sumlin said has never been second-guessed. Even as banks around the country were being shut down during the Great Recession by fed-

eral regulators and were available for cents on the dollar, bank officials never considered get-ting into the brick-and-mortar business.

By Tom [email protected]

How important is culture? All-im-portant, says Mat Ishbia, president and CEO of Troy-based United Shore Finan-cial Services LLC.

In 2011, the company did about$1.8 billion in mortgages, with most of its employees crammed into 25,000 square feet of space in a former Farmer Jack grocery store in Birmingham.

Last year, United Wholesale Mortgage, United Shore's fast-growing wholesale division, was the top wholesale lender in the U.S., according to Inside Mortgage Finance. It did $12.96 billion, a year-over-year increase of 54.6 percent and nearly $1 billion ahead of the runner-up.

The company is on track to set an-other record this year. It had its best first quarter ever, ending what is normally a slow three months by closing 14,576 loans worth $3.9 billion. It did $1.8 bil-lion in March alone.

Nobody is crammed anymore. The company occupies 250,000 square feet in the former Entertainment Passbook building at Stephenson Highway and Maple Road. Employees are offered plenty of amenities. There is free valet parking for the 1,500 employees, about 250 of whom were hired this year. The parking lot that surrounds the building is often filled, so employees are offered off-site parking with a free shuttle bus.

On the ground floor, there is a Star-bucks, a deli and a fitness facility. There is a concierge available for any employ-ee who might need a card picked up for a spouse’s birthday, or flowers bought for a sick mom. On a recent midday tour, I got to catch up on the Tigers game as I walked past the various large, flat-screen TVs scattered about on the walls.

Fifty-eight percent of employees are millennials. Renee Harmon is definitely not one of them. She started in the mort-gage business 30 years ago and had her own mortgage company in Wyandotte for 10 years. She's been at United Shore for five years.

“When I first walked in, I thought, ‘I’m older than all these kids. What have I got myself into?’ ” she said. “But I love it here. I’m here for life, or until I retire to that boat in the Florida Keys.”

Ishbia, who learned about teamwork as an end-of-the-bench guy for Tom Izzo at Michigan State, has several rules. No one is allowed to eat at his or her desk. They need to take a break from the job. Get out of the office, go for a run, go shopping.

The other? What he calls the “firm 40.” At some other mortgage outfits, work often means coming in early, staying late, full days on Saturdays and maybe Sundays. The “firm 40” means work hard when you work. No tweeting or sharing on Facebook. But go home after eight hours, have a life.

And on Thursday afternoons, every-one is invited to a 15-minute dance party. Shake some booty, shake off the cobwebs, then get back to business. “I want people to love coming to work,” Ishbia said.

TOM [email protected]: @tomhenderson2

SPECIAL REPORT

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Institutions big and small adapt with more mobility,

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“It seems like we have had smart-phones forever, but it’s only been since 2007.”Carrie Sumlin, Ally Bank

LARRY PEPLINComerica’s interac-tive teller machine connects customers with a live teller if needed.

Troy-based Talmer Bank and Trust (le�) just opened this 1,500-square-foot branch in Birmingham, replacing one of 6,000 square feet.

SEE BANKS, PAGE 10

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“We never had any serious discus-sion about doing that,” she said. “We were seeing such growth from what we were doing, we didn't see any ad-vantage to going to a brick-and-mor-tar environment.”

In 2012, Ally surpassed the mil-lion-customer mark. This year it passed $55 billion in deposits, and for the fifth straight year it was named the nation’s best online bank by Mon-ey magazine.

“In the last five years in the U.S., there has been a 333 percent increase

in weekly banking mobile users and a 60 percent drop in weekly branch us-ers, so the numbers are going our way,” Sumlin said. “The mobile bank-ing shift and speed of adoption has been amazing.”

In March, Ally launched Apple Pay, in which customers with Ally debit cards could pay merchants with their Apple devices.

Area bankers say the mobile revo-lution in banking has changed nearly everything about branch banking, from either their disappearance or shrinking footprint, to the mix of em-ployees who work at them.

“The adoption of mobile contin-ues to accelerate,” said Matt Elliott, the Michigan market president for Bank of America.

The result is a different look to the inside of a branch. Instead of walking in and immediately seeing a line of teller windows, there are now more small conference rooms and offices. Instead of seeing tellers, customers see bankers who can handle a range of duties, from starting a mortgage to to small-business lending.

“We want to use branches less as a place to do a transaction than a place where you come in and speak to someone face to face about what you need,” Elliott said.

That often includes, he said, branches that have on-site financial advisers from Merrill Lynch, one of Bank of America’s business units. There are no tellers behind bars at Bank of America’s newest branch on Adams Road in Rochester Hills. There’s someone to greet you at the door and lead you to a meeting room. There’s a smart ATM that will give you money in denominations you ask for.

On May 23, at a Google confer-ence in Mountain View, Calif., BofA announced it was rolling out its card-less ATM technology to 5,000 ATMs nationwide, including 40 in branches in metro Detroit. Using what is being billed as a digital wallet stored on smartphones, customers can make withdrawals, transfer money or check balances without a bank card.

Earlier this year, BofA rolled out the ATM technology in Boston; Charlotte, N.C.; New York City; San Francisco; and Silicon Valley.

Still a demand for brick and mortar

“We’ll still have a demand for brick and mortar. Some people want to go in and interact with peo-ple,” said Dave Girodat, president of the east Michigan region of Cincin-nati-based Fih Third Bank. “But we won’t need a 4,000-square-foot branch on every corner any more.”

Girodat said that when the bank began offering online banking in 2005, usage plateaued for a while at 15 percent, slowly climbed to 25 percent, then a couple of years ago began spiking. Sixty-three percent of customers now use digital regu-larly, and 73 percent of new custom-ers use it regularly. Mobile is up21 percent year over year to 39 percent of the customer base, and is at 59 per-cent for new customers.

He said banks will carve out a bigger presence in malls and shopping cen-ters, with 1,000- or 1,500-square-foot branches that will have smart ATMs and computer screens that allow you to access tellers or other service providers.

Girodat said in his teller days in the early 1980s, on Fridays, a branch might be staffed with a dozen tellers awaiting the onslaught. The tech fear then was about the pneumatic tubes being installed to make drive-thrus more efficient.

One branch he worked at had a drive-thru unattached from the main building, but it didn't have pneumatic tubes. Tellers accessed it through an underground passage.

“When pneumatic tubes came along, it was, ‘My God, is technology going to replace us?’ With tubes, one teller could do more than one trans-action at once.”

Girodat said the prototypical new

branch is Fifth Third’s at the North-west Activity Center in Detroit. Cus-tomers can open accounts there, but it is a cashless branch, except for a full-service ATM.

Another prototype branch is a so-called end-cap branch at the end of a retail center in Redford that opened two years ago.

Columbus, Ohio-based Hunting-ton Bank has been at the forefront of putting small-footprint branches in retail settings. It has 85 branches in Meijer stores in Michigan and 91 in Giant Eagle stores in Ohio, ranging from a few hundred square feet to about 1,000, with bankers’ hours now including 11 a.m. to 4 p.m. on Sunday and staying open until 8 p.m. Monday through Friday.

Like Girodat, David Provost, pres-ident and CEO of Troy-based Talmer Bank and Trust, remembers what it was like as a teller early in his career, when 15 teller stations would be manned on a Friday, with backup tellers ready to relieve those who had to go to the bathroom.

“Automatic deposit of paychecks was the start,” he said. “It began the process of ‘Why do you have to go into a bank?’ ”

“Staffing has been dramatically af-fected. You always had to overstaff for the rush hour at lunch or at closing. Now, we have more cross-trained employees. Fewer tellers and more relationship officers,” he said.

One of Talmer’s oldest branches, the former Detroit Commerce Bank in the Penobscot Building in down-town Detroit, has 10,000 square feet. Typical branches now have 2,000. Talmer just opened a 1,500-square-foot branch in Birmingham, replac-ing one of 6,000 square feet nearby.

In April, Pittsburgh-based PNC Bank had a ribbon-cutting for its prototype 21st century branch on Woodward Avenue in downtown Birmingham. In two years, the bank has seen non-branch banking activ-ity go from 38 percent to 55 percent.

Teller windows are gone, replaced by an employee known as a univer-sal banker who stands at a kiosk in the middle of the office and is cross-trained to handle a wide range of customer needs. “We're turning coming into a bank from a transac-tional event into an interactional event,” said branch manager Jose-phine Obasuyi.

There’s fresh coffee brewing all day, and two smart ATMs where you can deposit a check or get money in denominations you choose. In one alcove in a corner are self-service safe-ty-deposit boxes.

Since 2011, web banking at

Comerica has increased from under 10 percent to more than 75 percent. Comerica opened a prototype branch of what it calls an “experience center” in Auburn Hills in 2014. There are now 32 nationally, and more are

BANKSFROM PAGE 9

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COURTESY OF PNC BANKNo more teller windows: Pittsburgh-based PNC Bank’s new branch in downtown Birmingham features a cross-trained “universal banker” who helps customers from a central kiosk.

FROM PREVIOUS PAGE

David Girodat: Expect smaller branches in malls, shopping centers.

SEE NEXT PAGE

Josephine Obasuyi: From transactions to interactions.


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Still a demand for brick and mortar

“We’ll still have a demand for brick and mortar. Some people want to go in and interact with peo-ple,” said Dave Girodat, president of the east Michigan region of Cincin-nati-based Fi�h Third Bank. “But we won’t need a 4,000-square-foot branch on every corner any more.”

Girodat said that when the bank began offering online banking in 2005, usage plateaued for a while at 15 percent, slowly climbed to 25 percent, then a couple of years ago began spiking. Sixty-three percent of customers now use digital regu-larly, and 73 percent of new custom-ers use it regularly. Mobile is up21 percent year over year to 39 percent of the customer base, and is at 59 per-cent for new customers.

He said banks will carve out a bigger presence in malls and shopping cen-ters, with 1,000- or 1,500-square-foot branches that will have smart ATMs and computer screens that allow you to access tellers or other service providers.

Girodat said in his teller days in the early 1980s, on Fridays, a branch might be staffed with a dozen tellers awaiting the onslaught. The tech fear then was about the pneumatic tubes being installed to make drive-thrus more efficient.

One branch he worked at had a drive-thru unattached from the main building, but it didn't have pneumatic tubes. Tellers accessed it through an underground passage.

“When pneumatic tubes came along, it was, ‘My God, is technology going to replace us?’ With tubes, one teller could do more than one trans-action at once.”

Girodat said the prototypical new

branch is Fifth Third’s at the North-west Activity Center in Detroit. Cus-tomers can open accounts there, but it is a cashless branch, except for a full-service ATM.

Another prototype branch is a so-called end-cap branch at the end of a retail center in Redford that opened two years ago.

Columbus, Ohio-based Hunting-ton Bank has been at the forefront of putting small-footprint branches in retail settings. It has 85 branches in Meijer stores in Michigan and 91 in Giant Eagle stores in Ohio, ranging from a few hundred square feet to about 1,000, with bankers’ hours now including 11 a.m. to 4 p.m. on Sunday and staying open until 8 p.m. Monday through Friday.

Like Girodat, David Provost, pres-ident and CEO of Troy-based Talmer Bank and Trust, remembers what it was like as a teller early in his career, when 15 teller stations would be manned on a Friday, with backup tellers ready to relieve those who had to go to the bathroom.

“Automatic deposit of paychecks was the start,” he said. “It began the process of ‘Why do you have to go into a bank?’ ”

“Staffing has been dramatically af-fected. You always had to overstaff for the rush hour at lunch or at closing. Now, we have more cross-trained employees. Fewer tellers and more relationship officers,” he said.

One of Talmer’s oldest branches, the former Detroit Commerce Bank in the Penobscot Building in down-town Detroit, has 10,000 square feet. Typical branches now have 2,000. Talmer just opened a 1,500-square-foot branch in Birmingham, replac-ing one of 6,000 square feet nearby.

In April, Pittsburgh-based PNC Bank had a ribbon-cutting for its prototype 21st century branch on Woodward Avenue in downtown Birmingham. In two years, the bank has seen non-branch banking activ-ity go from 38 percent to 55 percent.

Teller windows are gone, replaced by an employee known as a univer-sal banker who stands at a kiosk in the middle of the office and is cross-trained to handle a wide range of customer needs. “We're turning coming into a bank from a transac-tional event into an interactional event,” said branch manager Jose-phine Obasuyi.

There’s fresh coffee brewing all day, and two smart ATMs where you can deposit a check or get money in denominations you choose. In one alcove in a corner are self-service safe-ty-deposit boxes.

Since 2011, web banking at

Comerica has increased from under 10 percent to more than 75 percent. Comerica opened a prototype branch of what it calls an “experience center” in Auburn Hills in 2014. There are now 32 nationally, and more are

planned. They are much smaller than a typical Comerica branch.

The first thing a customer sees is a service pod in the middle of the floor, where a banker greets those coming in. More employees are being cross-trained, as customers coming in need more advice and fewer deposit or withdrawal transactions.

There is a digital teller on-site for after-hours transactions, where the customer is connected via comput-er screen to a live teller if needed. A program called Expert Connect al-lows customers during normal business hours at the branch to talk via Skype to off-site mortgage bank-ers or wealth managers.

Surprised by the numbers

When Pat Fehring, president and CEO at Farmington Hills-based Lev-el One Bank, launched his communi-ty bank eight years ago, “I thought I'd need more than 10 branches to have more than $1 billion in assets. But part of all the digitization that is going on means you don’t need that many branches. More than half of all our consumer transactions are done dig-itally.”

He said as branches see fewer customers, “we see more complex transactions in branches. We’re more consultatively oriented. We do more small-business lending, and more wealth management.”

Level One recently opened its first branch in downtown Detroit. It

has 2,500 square feet, compared with 3,500-4,000 in a typical branch. Gone there, too, are the teller cages.

One interesting result of convert-ing brick-and-mortar customers to mobile customers? “You get an in-crease in loyalty with customers who are digitally savvy. Customers who set up digitally score a lot higher on loyal-ty,” Fehring said.

Sandro DiNello, president and CEO at Troy-based Flagstar Bank, has somewhat of a contrarian view of banks and their branches.

“This year, I’ll be celebrating my 40th year in banking. When I first got in, people were talking about the death of branches, and here we are. Despite ATMs and mobile, branches are still here and continue to be a ma-jor way people do their banking, and will do their banking for a long time,” he said.

And yet, Flagstar launched a new digital platform last year and began doing mobile deposits two years ago.

DiNello said Flagstar began building a lot of branches in 1994, with teller windows in the back and sit-down areas up front.

“We were ahead of our time for 1994,” he said.

The design has worked well with customers doing more simple things online and coming in for things like loans. “Our sit-down branch model lets us be less transactional and more consultative,” he said.

Tom Henderson: (313) 446-0337Twitter: @TomHenderson2

SPECIAL REPORT: BANKING SPECIAL REPORT: BANKING

COURTESY OF PNC BANKNo more teller windows: Pittsburgh-based PNC Bank’s new branch in downtown Birmingham features a cross-trained “universal banker” who helps customers from a central kiosk.

FROM PREVIOUS PAGE

David Girodat: Expect smaller branches in malls, shopping centers.

SEE NEXT PAGE

The alternative financing mar-ket, including crowdfunding and peer-to-peer lending, is explod-ing, according to a report by KPMG LLP, the Cambridge Centre for Al-ternative Finance and the Polsky Center at the Chicago Booth School of Business.

Alternative financing generat-ed more than $36 billion in 2015, up from just $11 billion in 2014, according to the report.

Peer-to-peer lending totaled more than $25 billion last year.

U.S. businesses are learning how to tap into these alternative funding sources. In 2013 and 2014, such funding totaled $10 million. It was $6.8 billion last year.

Council: PE returns better than public markets

According to the Washington, D.C.-based Private Equity Growth Capital Council, private equity re-turns continue to outperform public markets on both short- and long-term horizons.

For the year that ended Sept. 30, 2015, the median private equi-ty return was 6.4 percent, while the return for the Russell 3000 In-dex was a minus 0.5 percent and the return for the S&P 500 was a minus 0.6 percent.

Over 10 years, the median pri-vate equity return was 11.8 percent on an annualized basis, compared to 6.9 percent for the Russell 3000 and 6.8 percent for the S&P 500.

Over five years, the PE return was 14.4 percent, compared to 13.3 percent for the Russell 3000 and 13.3 percent for the S&P 500.

Lake Michigan CU listed 2nd in performance

The Grand Rapids-based Lake Michigan Credit Union was ranked as the second-best-performing credit union in the U.S. in 2015, accord-ing to SNL Global Market Intelligence, based on a variety of metrics.

The other state credit unions in the top 50 were Genisys Credit Union of Auburn Hills, at No. 11; and Consumers Credit Union of Ka-lamazoo, No. 24.

Level One Bank ranks 10th in performance

Farmington Hills-based Level One Bank ranked as the 10th-best-performing bank in the U.S. with assets under $1 billion for the year that ended Dec. 31, 2015, based on a variety of asset and revenue metrics, according to SNL Global Market Intelligence.

Report: Alternative �nancing growing fast

Josephine Obasuyi: From transactions to interactions.


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Turmoil in Brazil stalls student exchangeA recent impeachment move

against Brazilian President Dilma Rousseff likely cements a $5 mil-lion-plus revenue loss this fall for Michigan universities, who have hosted more than 1,000 engineer-ing and science students, including more than 140 this past year, under a program Rousseff launched.

Local university officials said the Brazil Scientific Mobility Program, which has placed about 25,000 stu-dents in the U.S. since 2011 for up to a year of undergraduate study funded by the Brazilian govern-ment, is on hold. The country stopped sending applications around the time legislators first convened a panel to explore pro-ceedings against Rousseff late last year, some said.

The Senate in Brazil voted 55-22 in mid-May to put Rousseff on trial on accusations she padded a defi-cit by borrowing from banks to make Brazil’s budget look healthier before her 2014 re-election. The move automatically suspends her from office pending those pro-ceedings.

Michigan was a top-five desti-nation state for BSMP students for several years, and Wayne State Uni-versity was its third-largest host in-stitution nationwide, according to reports from the Institute of Interna-tional Education, a nonprofit that administered the program in the U.S.

Other host universities have in-cluded Western Michigan University,

the University of Michigan, Michigan State University, Lawrence Technologi-cal University and the University of De-troit Mercy, according to IIE.

“Every year they have been an-nouncing a group of students who were coming to the U.S., and we are one of the destination schools and we start regularly getting applica-tions,” said Ahmad Ezzeddine, as-sociate vice president of education-al outreach and international programs at Wayne State, the largest BSMP program recipient in Michigan since its inception. “(But) in light of political transi-tions within the country, the program is on hold, and we’re waiting to see what occurs.”

Other university administrators said they stopped receiving appli-cations either toward the end of 2015 or at the beginning of this year, and were told that no new cohorts would be arriving for the fall. IIE did not return phone calls seeking comment.

Wayne State was hosting 22 stu-dents on campus in fall 2013, ac-cording to data from the institute in New York, but that number swelled to more than 200 the following year as the BSMP program ballooned in size.

That made Brazil the No. 4 home country in 2014-15 for the school’s 2,000-plus international students from 70 nations. But WSU was still a leading host university in Michigan even when the program scaled back last year to 54 students, according to IIE and Ezzeddine.

Most universities reported a smaller cohort of BSMP students that arrived last fall for the aca-demic year ending in April or early May. A handful of those students are continuing their studies through the summer, but Wayne is not currently expecting new ap-plications to attend this coming academic year.

“Mexico has also attempted its own version of the program, and we have seen some students at-tending for shorter periods fo-cused on more limited studies,” Ezzeddine said. “But nothing so far has been on the scale of this (Brazil’s) program.”

The Senate vote automatically put opposition party Vice President Michel Temer in power in Brazil, pending the outcome of Rousseff's trial.

The BSMP program aims to give overseas training to more than 100,000 Brazilian science and engi-neering students to help the coun-try’s college graduates become globally competitive. Students typi-cally study two years in Brazil, one year abroad as an upper-class un-dergraduate plus a summer re-search project or an internship with a local employer, before a final year of study back home.

Internship sponsors with the program have included Ford Motor Co., Delphi Corp., Daifuku Webb Hold-ing Co., Kelly Services Inc. and Pzer Inc.

Western Michigan, the sec-ond-largest Michigan host school to date, according to IIE, peaked around 54 students in fall 2013 but had declined to 31 students who wrapped their studies in April, said Cheryl Roland, executive director of university relations at WMU.

“The type of program they were in is sometimes called a sandwich exchange program ... (and) classes they took here were at the third-year level of undergraduate educa-tion,” Roland said in an email.

But at full-time, out-of-state tui-tion rates of more than $11,000 per semester at Wayne State and $13,000 at WMU, the program likely generated nearly $1 million of an-nual revenue at Western last year and double that at Wayne, to say nothing of the other schools.

Lawrence Tech and Michigan Tech-nological University both reported re-ceiving 13 students apiece for the program last fall, but no new stu-dents since then.

As with the other schools, they expect the last of the exchange stu-dents to complete summer intern-ships, research projects or other studies, but all had been told no more are coming in the fall, with lit-tle explanation.

“It’s a shame since we actually had some great students come be-cause of the program. We’re sad-dened to see this happen,” said Darnishia Slade, director of inter-national programs and services at Michigan Tech. “There were rumors starting early this year, but they didn’t go into much detail.”

Chris McKenzie, assistant direc-tor in the Office of Study Abroad at MSU, said the school was hosting 36 BSMP students last fall, of which fewer than half a dozen remain for the summer. But most said the Rousseff trial means they expect no decision soon from Brazil on re-suming the program.

Rick Fitzgerald, director of public affairs at UM, said the school’s Col-lege of Engineering does not partic-ipate in the BSMP program. But IIE reports indicate nearly 100 had at-tended the institution as of late 2014, mostly at the University of Mich-igan-Dearborn.

Chad Halcom: (313) 446-6796Twitter: @ChadHalcom

By Chad [email protected]

Ahmad Ezzeddine: Taking a wait-and-see approach.

“It’s a shame since we actually had some great students come because of the program. We’re saddened to see this happen.”Darnishia Slade, Michigan Technological University

C R A I N ’ S D E T R O I T B U S I N E S S // M AY 3 0 , 2 0 1 6 13ACQUISITIONS &

MERGERS

Oxford Cos., Ann Arbor, a commercial real estate portfolio manager, has acquired Concord Center. The building consists of 92,000 square feet and expands Oxford’s commercial portfolio to more than 2.2 million total square feet. Website: oxfordcompanies.com.

Soaring Pine Capital, Birmingham, a Simon Group Holdings company, said it purchased Technology Solutions Inc., Chicago, a fulfillment and construction services company, by Soaring Pine Capital Growth Fund I. Website: soaringpine.com.

CONTRACTS

PublicCity PR LLC, Southfield, a public relations agency, has been retained to manage and execute all media relations activities and assist with the event’s sponsorship and community partnerships initiatives for the 2016 UAW-GM Spirit of Detroit HydroFest, a hydroplane race on the Detroit River. Website: publiccitypr.net.

Qualitech, Bingham Farms, a technology integrator and software reseller, was selected by Seabolt Law Firm, Livonia, to provide a new office system, including an Intel Xeon server, workstations, office cabling, hosted phone service, conference room with necessary hardware, installation and Tab3

Practice Master software. Website: qualitech.net.

Minacs Ltd., Farmington Hills, a global outsourcing business solutions partner, will work with Nippon Systemware Co. Ltd., Tokyo, an IT provider, to offer customer experience management for connected devices and the IoT market. Websites: minacs.com, nsw.co.jp.

zipLogix LLC, Fraser, a real estate technology company, announced that CurbCall Inc., Boston, a real estate technology company, is joining its zipAlliance program to help CurbCall Protect get into more agents’ hands faster, creating safer showings and keeping brokers connected to their agents with a tracking tool. Websites: zipform.com, curbcall.com.

EXPANSIONS

Martin Midwest Group LLC, Northville, a cleaning chemical developer, opened its newest subsidiary, Detroit Garage Works,

Detroit, offering innovative industrial cleaning products designed for niche industrial and automotive markets. Website: detroitgarageworks.com.

NEW PRODUCTS

Henkel Corp., Madison Heights, a subsidiary of Germany-based Henkel AG & Co., announced that Henkel Adhesive Technologiesintroduced two interior adhesive technologies for passengervehicles: Aquence PL 5101, a one-component waterborne laminating adhesive, and Technomelt AS 8383, a nonreactive APAO hot melt. Website: henkel-northamerica.com.

Humantech Inc., Ann Arbor, an ergonomics consulting firm, announced a new e-book, Three Ways to Establish a Strong Foundation for Your Ergonomics Process, the second in a series about the five steps required to build and sustain a successful ergonomics process. Website: humantech.com.

Gale Group Inc., Farmington Hills, part of Cengage Learning Inc., and a publisher of research and reference resources, launched Gale Researcher, a research platform and curriculum tool designed to help students easily connect to citable content aligned to introductory college courses, and American Fiction, 1774-1920, a new digital archive. Website: gale.cengage.com.

Acromag Inc., Wixom, a designer and manufacturer of industrial electronics, measurement and control products, announced a new series of general purpose I/O modules for embedded computing applications. Website: acromag.com.

Freudenberg-NOK Sealing Technologies, Plymouth, developed a two-part sealing system, consisting of its radial shaft seal, Merkel Radiamatic RPM 41, and a new water guard, the deflector Merkel Enviromatic. Website: fst.com.

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DEALS & DETAILS

THURSDAYJUNE 2

Scaling Up Your Business Through Mergers and Acquisitions. 9 a.m.-noon. National Association of Women Business Owners. A strategic merger or acquisition can often be a faster, less expensive way to grow than through the traditional method of marketing and sales. Presenters from UHY tell about the advantages, how to go about it, and the risks. UHY, Farmington Hills. Free for members; $10 nonmembers. Contact: nawbogdc.org.

UPCOMING EVENTS

Driving Innovation and Engagement: The Role of the University Research Corridor in the Motor City. 11:30 a.m.-1:30 p.m. June 7. Detroit Economic Club. Guest speakers are Mark Schlissel, president, University of Michigan; Lou Anna Simon, president, Michigan State University; and M. Roy Wilson, president, Wayne State University. $45 DEC members; $55 guests of members; $75 nonmembers. Phone: (313) 963-8547; email: [email protected].

The Multi-generational Workforce. 11:30 a.m.-1 p.m. June 7. Automation Alley. Jason Morga, vice president of Kelly Services Americas marketing group, talks about the global phenomenon of a multi-generational workforce where four generations are employed in one workplace. Automation Alley, Troy. $20 members; $40 nonmembers. Phone: (800) 427-5100; email: [email protected].

Brand Storytelling. 11:30 a.m.-1:30 p.m. June 8. Adcraft Detroit. Featuring Bridget Russo, chief marketing officer, Shinola. College for Creative Studies, Detroit. $40 members; $50 nonmembers; $25 junior/student members. Website: adcraftdetroit.com/events.

2016 Detroit CIO ExecutiveLeadership Summit. 7 a.m.-5:30 p.m. June 9. HMGStrategy. A panel of IT leaders will explore, among other things, the mindset needed byCIOs to react to future trends, emerging technologies CIOsshould know about, and the future role of the digital technologyleader. Free. Westin Book Cadillac, Detroit. Phone: (203) 221-2702; email: [email protected].


Joseph RadtkaVice President, FinanceLifeSecure Insurance CompanyJoseph Radtka brings

more than 15 years of experience in � nancial accounting and leadership roles to LifeSecure. As the lead executive for all � nancial disciplines within LifeSecure, he will provide the � nancial oversight and direction necessary to keep LifeSecure on its path of continued growth. Joe received his master’s in business administration from Wayne State University and a bachelor’s degree in accounting from Eastern Michigan University.

Jamie McCarthyChief Creative O� cer

J.R. ThompsonJamie McCarthy has been appointed Chief Creative O� cer, Innovation at J.R. Thompson. He’s in charge of driving the innovation process by focusing on the key principles behind innovation including leadership, creating networks and leveraging the right incentives. A creative leader with over 15 years of experience, McCarthy will identify new strategies and business opportunities. JRT is a creative marketing services � rm specializing in communications, digital and technology services.

Marc CorriveauVice President of

Government A� airs

Henry Ford Health SystemCorriveau will lead all government a� airs and public policy work for Henry Ford Health System. Most recently, he was Director of Michigan Advocacy for Trinity Health System. Additionally, he was a government relations attorney and lobbyist for the Lansing-based Kelley-Cawthorne law � rm and served in Michigan’s House of Representatives from 2006-2010, as Chairman of both the Health Policy Committee and Ethics and Elections Committee. Marc is a native of metro Detroit.

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Tony Malinowski & Salvatore Giammarusti IIISenior Vice President, Resident Sales Director / Senior Vice President,

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As Regional Marine Practice leader, DeLeeuw is responsible for the development and implementation of risk solutions servicing the Marine Cargo and Logistics sector. Prior to joining Aon, DeLeeuw, who has nearly 30 years of industry experience, served as a regional marine practice leader with a global brokerage in their global marine practice. He earned his Bachelor of Arts degree in Business from Wayne State University.

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Brian VestergaardVice President, Sales and MarketingLifeSecure Insurance CompanyAn expansion of his

previous position as vice president of Product and Marketing, Brian Vestergaard now leads LifeSecure’s Sales, Product, and Marketing areas. His responsibilities include directing LifeSecure’s sales strategies in order to continue the company’s national growth and expansion. Vestergaard joined LifeSecure when it was founded in 2005 and has been instrumental in the design of its trademark simple, yet � exible products, while also overseeing brand development and marketing.

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Susan KampeCorporate O� cerCooper StandardSusan Kampe also serves as chief information o� cer

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Rochester-based General Sports & Entertainment.

“We would want to own and con-trol all the stadiums and teams, so there’s that tremendous level of pro-fessional and quality in everything we do,” he said.

Appleby, 53, is relentless about quality control and customer service with his new league and stadium. He said he’s using his 30 years of sports management and marketing experi-ence to bring every best practice to Jimmy Johns Field — and avoid every mistake.

Owning all of the teams also is a safeguard against failure, he said.

“Almost always, a league is only as strong as its worst owner,” he said. “Why do we want to buy teams in other markets when I can create just as good here, and create the mascots, colors, nicknames and uniforms. We will only go into markets that make sense, and not be beholden to an owner that may be undercapitalized, who may not be a good marketer. Our league scales extremely well to other towns across the Midwest.”

Appleby’s future stadiums would be home to two teams each. Jimmy Johns Field has three, and they’ll play their 75-game May-September schedules round-robin style, mainly on weeknights and weekends. He termed summer weekends “the Holy Grail of scheduling” because those are the most attractive times to get families to the ballpark.

“Every new ballpark will have two home teams. That’s the trick behind allowing you to play every Saturday night in the summer,” Appleby said, as opposed to starting in April.

The three-team league’s inaugu-ral game is the Birmingham-Bloom-�eld Beavers vs. Utica Unicorns at 2 p.m. Monday. The third team is the Eastside Diamond Hoppers.

While the stadium idea isn’t new, it was just a couple of years ago Ap-pleby decided to also create his own league.

“When you do own your own league, you have a much greater level of control and professionalism,” he said. “We’ve got to service the heck out of customers — suite holders, di-amond table holders, our sponsors. Everyone that comes here will want to come back again and again.”

The financial success of the stadi-um is one business metric for Ap-pleby. The other is the actual base-ball, and his long-game strategy there is to get players into Major League Baseball.

“All I need is my first major leaguer,” he said. “It’ll happen. We’re trying to make every kid better, to the majors. The minute I get a major leaguer, we will have 100 percent validation for this league.”

The USPBL, whose teams will have up to 25 players each, is for players ages 18-25 who have not yet made it into Major League Baseball’s minor leagues. Rosters were put together af-ter tryouts in recent weeks, and Ap-pleby said players are both local and from elsewhere in the country.

He said he’s spending $1 million this year on baseball operations alone, and termed his league a “fin-

ishing school” for players en route to the affiliated minor leagues and, one day, “the show” — what aspir-ing ballplayers call the majors.

Appleby launched General Sports & Entertainment in 1998. The com-pany does about $30 million in rev-enue annually, and specializes in consulting, team management, marketing, sponsorships, financing, and education, and had a synthetic turf division. Before starting his company, Appleby had risen to se-nior vice president at Palace Sports and Entertainment LLC, the Detroit Pistons’ parent company in Auburn Hills, where he worked from 1986 until launching General Sports.

Appleby cites former longtime PS&E President Tom Wilson as one of the major influences on his career.

“Working for Wilson was a figura-tive Ph.D. in sports management at age 23,” Appleby said.

Wilson, who now is president of Olympia Entertainment in Detroit, praised his former employee and said he intends to visit the new sta-dium within a couple of weeks.

“He was always studying every aspect of the business. He always had higher aspirations. ..., ” Wilson said. “If anybody can make this work, it’s Andy.”

With General Sports, Appleby has owned the Fort Wayne baseball team (an affiliate of the San Diego Pa-dres he bought for $4.75 million in May 1999 and sold for an undis-closed sum in 2006) and the sec-ond-division British soccer club Derby County. He also unsuccessful-ly tried to buy the National Hockey League’s St. Louis Blues.

Appleby and his ownership group sold Derby last year for an undis-closed sum, but one he confirmed is more than the $100 million they paid for it in 2008.

Owning Derby was a learning ex-perience that Appleby said he’s us-ing to ensure the USPBL is a success. After owning teams in both baseball and soccer, he opted to invest in baseball as his legacy project.

“Soccer is great, but the cost structure in minor league baseball is better, and it’s still more of America’s pastime,” he said. “It’s still a great model. To me, there is nothing like baseball, baseball under the stars.”

Appleby, a former Crain’s 40 under 40 honoree, usually is the front man of an investment group, the same strategy he’s using with the Utica baseball stadium. He is the stadium and league’s majority owner, and said there is a small group of minority owners from “all over the world,” but he declined to identify them or say if any of them also were part of the group that owned Derby County.

The local business community has been impressed enough with Appleby’s baseball effort to write some big checks.

Of the stadium’s 24 suites, all but three have been leased under five-year contracts that range in annual cost from $35,000 to $55,000, he said. And all 18 of the half-moon-shaped “On Field Diamond Tables” that each seat four have been leased under five-year contracts for $20,000 annually.

Appleby previously thought his stadium and league would do about $1 million in corporate sponsorship revenue this year, but he’s since re-

vised that to around $3 million.Among the companies with suite

or other corporate sponsorship deals at the ballpark are Budweiser, General Motors Co., Ford Motor Co., AAA, Scotts Miracle-Gro Co., Pepsi, and Birmingham-based Belfor USA.

A year ago, Troy-based mortgage lender United Shore Financial Ser-vices LLC signed a 10-year deal to put its name on Appleby’s baseball league, and Champaign, Ill.-based Jimmy John’s Franchise LLC and its franchisees jointly signed a 10-year contract for the stadium name.

Financial terms were not disclosed.Appleby said he negotiated al-

most all of the deals himself, and he relied on 30 years of relationships to get them done. “Every one of those decisions (to do a deal with the league) was made either by the global chief marketing officer or the president of that company,” he said.

About 500 season tickets have been sold, he said. Season ticket plans range from $475 to $3,000, and single-game tickets are $6 for the lawn to $40 for front-row seats.

“We’re selling a lot right now since the ballpark is almost opera-tional,” Appleby said.

Minor-league baseball, especially at the lower levels, traditionally thrives on being an entertainment product rather than on its players — most of whom will never reach the majors. Appleby knows that, and plans to make USPBL games fun be-yond balls and bats. There will be fire-works after Friday night games, and theme nights such as “Star Wars.”

“It’s as much about the extrava-ganza,” Appleby said.

Games will be played at 7:25 p.m. Wednesdays, Thursdays and Satur-days; 7:45 p.m. Fridays; and 2 p.m. on Sundays.

The past week has been a scram-ble to get the stadium done. “It’s re-ally just finishing the details,” Ap-pleby said. The locker rooms were getting their black walnut lockers installed, and the suites were getting furniture and carpet.

Part of the stadium’s $3 million cost escalation was because of the ground underneath it, the former town dump. The trash turned out to be just under the surface. “We’re on 20 feet of trash,” Appleby said.

The turf comes from Kogelmann’s Creek-Side Sod Farm in Macomb Township, he said.

Appleby said the biggest challenge was a lack of state funding for the site cleanup. State law forbids such fund-ing for stadium sites, he said.

“We could have put a bump shop on their property on this site and got more than what we got,” he said.

Because the land is a capped brownfield site, Utica’s Downtown Development Authority provided $400,000 in federal brownfield rede-velopment funds for cleanup.

Other spending upgrades include an elaborate scoreboard, upgrades to the VIP club, and full netting to protect fans from foul balls.

“We invested in the very best net-ting that MLB teams use,” Appleby said. “We pretty much have the best of everything here. It’s very much a bou-tique ballpark. I wouldn’t trade this ballpark for any ballpark in America.”

The stadium has 1,900 seats with capacity for 4,000 with premium

STADIUMFROM PAGE 3

and lawn seating.The Utica stadium will have Wi-Fi,

and green aspects such as LED field lighting, separate trash and recycling receptacles and waterless urinals.

The stadium sits on 7.8 acres east of Moscone Drive and north of Au-burn Road. Appleby said he private-ly financed the stadium and league through General Sports.

A second phase, to be built at a date yet to be determined, is a retail and condo development just across the Clinton River on 1.4 acres.

Utica’s DDA, which owns the 15.7-acre project site, is leasing the land to General Sports for $1 annu-ally under a 30-year lease with two 10-year options. General Sports owns the stadium.

The stadium’s general contractor is Rochester-based Frank Rewold & Son Inc., and Kansas City-based Pen-dulum is the architect. Pendulum’s local current Detroit work is as de-signer of the proposed $15.5 million Detroit Police Athletic League head-quarters and training facility at the old Tiger Stadium site.

There are skeptics of Appleby’s

field of dreams. “The component that is mi-

nor-league baseball sounds to me to be very difficult. Very few indepen-dent teams are consistently profit-able. The market has to be exactly right,” Andrew Zimbalist, a sports economist at Smith College and au-thor of several sports finance books, previously told Crain’s.

There are other hurdles, he said. One is that independent teams must pay the salaries and equip-ment costs that aligned mi-nor-league teams have covered by their MLB parent clubs.

How does Appleby define a suc-cessful first season?

“It will be to sell out at least half the games, but we’re hoping to sell out most every game,” he said.

Additionally, the baseball itself has to be good, and the players have to develop into professionals.

“There are a plethora of excellent baseball players out there. (Critics) think it’s ‘Bad News Bears.’ It’s not,” he said.

Bill Shea: (313) 446-1626Twitter: @Bill_Shea19


year hosting meetings with the public and business, political and civic leaders to get opinions about transit needs and to educate the public about mass transit plans.

The RTA tax would be the local money required to access matching federal funding to build and oper-ate bus rapid transit and train sys-tems. The RTA would have to apply for such funding from the federal government, and the process is vig-orously competitive and often lengthy.

Under a bus rapid transit system, buses operate much like a rail line, with specialized train-like wheeled vehicles with dedicated lanes, priori-ty traffic signaling and higher speeds.

Bus rapid transit lines typically cost $15 million to $25 million per mile, meaning the Woodward proj-ect could range from $405 million to $675 million, according to a 2014 estimate from Carmine Palombo, deputy executive director of the Southeast Michigan Council of Gov-ernments regional planning agency.

Ford said the bus rapid transit system would cost about $17 mil-lion annually to operate.

The commuter rail line, which has been on the books for many years, initially would have eight round trips per day between De-troit and Ann Arbor, with other like-ly stops in Dearborn, at Detroit Met-ropolitan Airport and in Ypsilanti. More trips could be added, Ford said.

The RTA would buy the locomo-tives and passenger cars for the line, and use tracks now used by

Amtrak.“We want to have enough band-

width and frequency that people can use it to get to their jobs,” Ford said.

The millage also is expected to fund new traditional Detroit Depart-ment of Transportation and Subur-ban Mobility Authority for Regional Transportation bus service, a uni-versal fare card for the region, and an express service across the region from the airport, Ford said.

A regional mass transit system will boost economic development — advocates say every $1 invested in transit systems generates $4 in new development — and is aimed at connecting residents with jobs, school and to access medical ser-vices, facilitating commerce and improving mobility for the disabled and elderly, supporters say.

The RTA’s intent is to link the new system into the region’s other trans-portation agencies, such as the bus lines, Detroit People Mover, Ann Ar-bor Area Transportation Authority and M-1 Rail streetcar system now under construction on Woodward Avenue.

M-1 Rail, which is handling the public and private financing for what is now called the QLine street-car line that goes into service next year, will eventually fall under the RTA’s operational control within 10 years, organizers have said.

The RTA was created in 2012, after 40 years of failed attempts to do so, with the intent of creating a regional transportation plan and network for the metro area. It is responsible for coordinating mass transit operations and funding across the four counties, including cooperation among agen-cies such as DDOT and SMART.

Bill Shea: (313) 446-1626Twitter: @Bill_Shea19

RTAFROM PAGE 1

Detroit Wayne Mental Health Authority wins temporary restraining order over Gateway Health

The Detroit Wayne Mental Health Authority last week was granted a temporary restraining order against Gateway Community Health by the Third Judicial Circuit Court in Detroit that protects against improper ex-penditures of state Medicaid funds and preserves documents, accord-ing to Circuit Judge Brian Sullivan.

Gateway Community Health is a Detroit-based mental health pro-vider network that has been under contract with Detroit Wayne the past 10 years to offer mental health, substance abuse and developmen-tal disability services through pro-viders to about 50,000 people.

In a 10-0 decision May 18 after a closed executive session, the Detroit Wayne board voted to terminate Gateway’s three-year, $120 million contract, effective June 17, after three audits found potential finan-cial problems with Gateway, accord-ing to documents obtained by Crain’s. Sources told Crain’s that De-troit Wayne’s decision to terminate and file a lawsuit against Gateway stemmed from long-term problems with the network’s operations and its ability to pay mental health pro-viders for services rendered.

For example, Gateway in 2013 opened a clinic, Gateway Integrated HealthCare, which some believe was in violation of the contract with De-troit Wayne because it provides di-rect clinical services to patients with

mental and physical health prob-lems. Gateway’s contract with De-troit Wayne is to administrate a pro-vider network.

Problems with the treatment center were documented in Febru-ary by a WDIV-Channel 4 news re-port. Clients of the clinic were seen going to and from counseling ses-sions at Gateway to purchase alco-hol at a liquor store next to the clinic and openly drinking on the streets.

After the state of Michigan last year mandated mental health pro-vider networks to divest themselves of provider ownership, Gateway re-portedly complied. The complaint does not state who now owns the clinic, and Gateway officials did not respond to interview requests from Crain’s.

However, Detroit Wayne alleges in its 121-page complaint that Gate-way “had improperly transferred approximately $20 million between it and the provider it was in the pro-cess of divesting.”

Audits performed on Gateway’s accounting and business practices came from Detroit-based UHY Advi-sors LLC and Troy-based Rehmann Robson. Detroit Wayne hired De-troit-based Alan C. Young & Associ-ates P.C. to conduct its own audit.

“Those reports have raised con-cerns about, among other things, (Gateway’s) long-term ability to pay providers,” the Detroit Wayne board said in a statement last week signed by Detroit Wayne CEO Thomas Wat-kins and Herbert Smitherman, M.D., board chairman.

The Alan Young audit also deter-mined that Gateway CEO Radwan Khoury, M.D., received $70,000 in bonus payments in 2014 and an ad-ditional $41,000 in expense reim-bursements. Other Gateway execu-tives also received bonus payments for unspecified work. The former COO received a $62,000 severance package only to return to his job several months later.

Gateway paid vendors nearly $1.5 million without a contract, and without validating whether the ser-vices were properly completed, said the Alan Young audit.

The UHY audit concluded Gate-way had negative assets of $7.5 mil-lion in 2015 and “auditors effectively concluded that (Gateway) was in-solvent.”

According to Detroit Wayne’s complaint, Khoury informed the authority it would need a “cash infu-sion from an outside source, pre-sumably (from Detroit Wayne) to avoid insolvency.” Audits estimated at least $12.2 million in provider-re-lated liabilities and only $5.6 million in cash and accounts receivable.

The Detroit Wayne board also au-thorized the release of the Alan Young audit on Gateway to Michi-gan Attorney General Bill Schuette, the Michigan Department of Health and Human Services and the U.S. De-partment of Health and Human Ser-vices’ office of inspector general.

Sources said that Schuette and U.S. Attorney Barbara McQuade in Detroit launched an investigation into Gateway several months ago.

Meanwhile, Detroit Wayne plans to transition services formerly provided by Gateway to CareLink Network Inc., another Detroit-based manager of a provider network with which the health authority contracts.

Last week, Khoury said in a state-ment to its providers that Detroit Wayne gave no warning to Gateway about the impending action and characterized the audits as routine with no willful illegality or fraud iden-tified.

“A fair-minded person reading the reports would conclude that there is no disclosure or negative information that would justify a sudden contract termination,” Khoury said.

Khoury did not respond to an in-terview request from Crain’s.

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

By Jay [email protected]


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chalets as last year, but we’re sold out way earlier,” Denker said. “We’re working hard to find places to put people.”

Race sponsors include Chevrolet, Cadillac, Quicken Loans Inc., Metro Detroit Chevy Dealers and Metro De-troit Cadillac Dealers. Other sponsors include American Axle & Manufactur-ing Holdings Inc., Blue Cross Blue Shield of Michigan, Cooper-Standard Holdings Inc., Dykema Gossett PLLC, MotorCity Casino Hotel and Lear Corp., among others.

The weekend’s race includes the Verizon IndyCar Series’ “Chevrolet Dual in Detroit” presented by Quicken Loans; the IMSA Weath-erTech SportsCar Championship; and the SPEED Energy Stadium SUPER Trucks series.

The Trans Am Series’ “Motor City 100” also returns this year for the first time in 15 years. The series last participated in the Grand Prix in 2001.

The opening day will once again be the Comerica Bank Free Prix Day Gate, where admission to Friday’s races is free of charge. Denker said he expects more than 100,000 at-tendees over the event’s three days of activities, thanks to a favorable weather forecast calling for low-80 degree highs and sun (at least as of last week). Last year's attendance, estimated at 65,000, was impacted by rain and thunderstorms.

“Last year was terrible,” Denker said. “The forecast looks good so far, and we’re expecting a big (ticket sales) push after the Indy 500 (May 29). I ex-pect great attendance this year.”

Dustin Walsh: (313) 446-6042Twitter: @dustinpwalsh

GRAND PRIXFROM PAGE 3

When: Friday through Sunday

Friday: Free Prix Day. Practice and qualifying. Speed Energy Stadium Super Truck Series race

Saturday main events: IndyCar Series race, 3:30-6 p.m.; The Romantics, 6 p.m.

Sunday main events: Morris Day & The Time, 12:30 p.m.; IndyCar Series race, 3:30-6 p.m.

Tickets: $40 and up. Children under 12 free. Call (866) 464-7749, visit www.DetroitGP.com/tickets, or purchase in person at the Grand Prix o�ce in the Renaissance Center.

Shuttle service: Shuttles will run from various parking options; round-trip cost is $10. Shuttles will run continuously from 7 a.m. to 10 p.m.

Parking: Cobo Hall roof, Joe Louis Arena deck, marina lots at Atwater and Orleans streets

Parking Saturday-Sunday only: Street-level lots east of the Renaissance Center; Renaissance Center parking decks at Beaubien Street, Port Atwater and Franklin Street

Broadcast: ABC, FS1, CBS Sports Network

Details: DetroitGP.com or the DetroitGP mobile app available in the Apple or Google Play app stores

Chevrolet Detroit Belle Isle Grand Prix

percent in 2015), the big change was the increase in median de-ductibles for PPO plans, which in-creased to $600 from $500 for sin-gle coverage and $1,200 from $1,000 for family coverage, Mc-Laughlan said.

“This was the first increase in six years,” she said. “More employers are adding HMO deductibles, and consumer-driven health plan de-ductibles went up for the first time since 2008.”

For example, 78 percent of em-ployers this year had an HMO de-ductible ($1,000 for single and $2,000 family), up from 68 percent last year, the survey showed.

However, many employers held down employee HMO premium costs. Average single monthly pre-

miums dropped to $96 from $101 and average family premiums de-clined to $332 from $349.

“HMOs are still popular in Mich-igan, and for many employees (are) still the lowest-cost option,” Mc-Laughlan said. “Employers want to keep that attractive.”

Interesting trends continue to feature employers adding wellness and telemedicine programs.

“There is huge interest in tele-medicine programs by employers with vendor participation and health plan participation,” Mc-Laughlan said.

Some 38 percent of employers surveyed offer telemedicine as a care provider option, up from 20 percent last year and only 4 per-cent in 2014, the survey said.

McLaughlan said employers are just starting to understand that if an employee can avoid a high-cost

emergency department visit and instead use their smartphone to talk with a doctor or nurse, savings and convenience can pay divi-dends.

“My daughter used telemedi-cine” at college for strep throat, Mc-Laughlan said, and got a prescrip-tion.

Nessel said NS International’s telemedicine program through Am-well and Blue Cross also allows em-ployees and their families to be “seen” over the phone and avoid a

time-consuming office visit. Em-ployee copayment is $10 with NS’ cost another $45.

NS International also is launch-ing a wellness program for the first time this year, Nessel said.

“We are trying to figure out how to incorporate wellness to drive down costs for employees,” Nessel said. “We are looking at getting peo-ple engaged and (building) aware-ness for their health.”


SURVEYFROM PAGE 1


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INDEX TO COMPANIESThese companies have signi�cant mention in this week’s Crain’s Detroit Business:

Ally Bank ................................................................. 9Bank of America ...................................................10Chevrolet Detroit Belle Isle Grand Prix ...............3Chicken Shack ........................................................5Clarkston State Bank ........................................... 9Detroit Institute of Arts....................................... 8Detroit Wayne Mental Health Authority ..........16Fi�h Third Bank ....................................................10 Flagstar Bank .........................................................11Ford Motor.............................................................. 4Gateway Community Health..............................16General Sports & Entertainment ...................... 15Grow Detroit’s Young Talent.................................7

Level One Bank ......................................................11Marsh & McLennan Agency.................................. 1Michigan Technological University.................... 12NS International......................................................1PNC Bank................................................................11Providence-Providence Park Hospital................3Regional Transit Authority of Southeast Michigan.1Straith Hospital for Special Surgery ...................3Talmer Bank and Trust..........................................11United Shore Financial Services LLC.................. 9United Shore Professional Baseball League ......3Wayne State University....................................... 12Western Michigan University ............................. 12

HOSPITALFROM PAGE 3

West Bloomfield Township.Originally based in Detroit and

known as a hospital specializing in plastic, reconstructive and orthope-dic surgery, Straith added eye sur-gery in 1984 and later rehabilitation services in 1993. It built a new hos-pital in Southfield in 1973.

After World War I, Claire Straith, who originally was a dentist, decid-ed to become a surgeon after so many doughboys returned home with facial injuries. He pioneered re-constructive surgery techniques and built one of the largest plastic surgery practices in the Midwest. In 1951, he patented the auto indus-try’s first crash pads, which are now presented in the Smithsonian Na-tional Museum, to protect riders from disfiguring injuries.

James Straith, grandson of the founder and chairman of the eight-member board, which is mostly made up of Straith family members, also heads up Troy-based Straith Group, a bou-tique commer-cial and invest-ment real estate

company. The board members are shareholders in the nonprofit cor-poration.

“I remember my grandfather Claire very well and remember climbing around when the hospital was being built in 1954,” said Straith, who is now 66 and has been on the board the past 25 years, the last eight as chairman.

“We are trying to get the message out that we are very efficient, have low infection rates, and are very well managed,” Straith said. “Because of our small scale, we can provide state-of-the-art OR space, rehabili-tation care and other care to special-ists who can really appreciate it.”

Straith said hospital officials are looking to attract new physicians to the 39-member medical staff and develop new relationships with physician groups and account-able-care organizations.

“We have a surplus of unused OR time, and we can offer orthopedic surgeons or eye surgeons, cardiac surgeons or interventional cardiolo-gists a better choice of OR time,” he

said.In 2009, Straith built the new five

operating rooms and renovated its facade, private rooms and pre- and post-surgical areas.

One of the hospital’s bright spots the past two decades has been its 24-hour rehabilitation unit for post-acute care patients. The 24-bed unit’s average census is 13 patients with an average stay of 6.5 days. They are mostly seniors with an av-erage age of 82 who have had sur-gery on knees and hips and require physical and occupational therapy.

Straith said the combination of surgery and rehabilitation can be a plus for surgeons who want to offer patients quality post-acute care.

“It’s this synergy that we want to promote,” Straith said. “Orthopedic surgeons and cardiologists can offer their patients proximity access.”

Dalsey, who has provided con-sulting services to Straith over the years, said the challenge for Straith is how to survive in a competitive landscape that is dominated now by multi-hospital systems that have tight relationships with multiple physician groups.

“Straith also needs to create ap-propriate packages of services be-cause insurers are looking for low cost, price and good outcomes,” Dalsey said. “There shouldn’t be any reason why Blue Cross Blue Shield of Michigan, Priority Health and Health Alliance Plan shouldn’t support them.”

But Bescoe acknowledged that Blue Cross pays Straith less than Medicare for certain services be-cause the hospital isn’t a designated inpatient rehabilitation unit.

“We don’t want to be, because that limits us to just 13 procedures,” he said. “But we are a much low-er-cost option for insurers. It is very

icult for commercial insurers to au-thorize payments. We are working on it.”

One of the competing hospitals in the market, St. John Providence Hospital in Southfield, which is 2 miles from Straith, also operates a 16-bed inpatient rehabilitation unit.

“Straith has branded themselves as a specialty surgical hospital,” said Joe Hurshe, president of Provi-dence-Providence Park Hospital. “They have aspirations into other things.”

Hurshe said rehabilitation ser-vices generally are driven by patient preference. “They have an ability to choose where care continuum is to be provided, and there is a criteria for admissions.”

Because Providence Hospital is part of the St. John Providence Health System, Hurshe said, “we would look within our own system first for referrals” when the rehab unit is full.

Competition and other forces have changed Straith into diversify-ing into other service lines.

A decade ago, Straith conducted up to 6,000 cataract surgeries each year. Beginning around 2006, entre-preneur surgeons started opening competing ambulatory surgery centers, cutting Straith’s annual to-tals to about 250, Rys said.

Total eye surgeries amount to about 1,200 annually, including reti-nal and corneal transplants.

“We tried a transitional care unit few years ago, but it didn’t fit with our service mix,” Rys said.

Bescoe said discussions are un-derway with several physician-led accountable-care organizations. An Obamacare initiative, ACOs are groups of physicians, hospitals and other providers who agree to accept flat payments from Medicare and share in the savings.

“We could help providers avoid readmissions by using our rehab unit,” Rys said. Straith’s readmission rate is less than 5 percent, much lower than the region’s 20 per-cent-plus average.

Dalsey said contracts with ACOs could boost patient volume and be-come a good arrangement for phy-sician partners.

“The challenge is to overcome the politics. If you have a Beaumont or (Henry) Ford-related medical group, do they want to take patients out of the mother hospital?” Dalsey said. “You have to find the right kind of doctors and patients to make it work.”

Bescoe said the hospital also is looking into participating in Medi-care’s bundled payment pilot for hip and knee joint replacement. “We can partner with orthopedic sur-geons for knee and hip payments because we are low cost and high quality,” he said.

While many hospitals have reaped bankable revenue increases because of the Affordable Care Act and Medicaid expansion, Bescoe said Straith’s Medicaid revenue in-creased only slightly. Still, Medicaid revenue doubled last year to 2.5 per-cent of total revenue, up from about 1.2 percent, and bad debt declined by 30 percent. The bulk of revenue, 70 percent, comes from Medicare, with the rest from commercial and self-pay, he said.

“We saw an increase in Healthy Michigan patients. They probably didn’t have insurance before. We hope that trend continues,” Bescoe said.

Financially, the hospital has had good cash flow, Straith said, but it has lost money on operations the past several years.

From 2010 to 2014, Straith lost $4.6 million on operations, but over the past two years net income to-taled $2.8 million when investment income and other revenue is added, according to Medicare cost reports provided by Louisville-based Ameri-can Hospital Directory. Net patient revenue has averaged about $10 million the past five years.

But end-of-year cash and cash equivalents have averaged $2.6 mil-lion the past three years, according to the hospital’s audited financial statements. When investments are included in the cash metrics, the hospital shows a steady cash flow increase to $8.6 million last year from $7.2 million in 2013.

“We are fiscally sound with tre-mendous ratios, and our debt cov-erage is excellent,” said Straith, add-ing that the board expects steady increases in patient volume and revenue over the next several years.

“We are a small hospital, and small hospitals have been going by the wayside for years,” Straith said. “The trend is economy of scale with big hospitals gobbling up smaller hospitals. Our mission is to stay in-dependent, and we can do so be-cause we have an excellent adminis-trative and staff at the hospital with strong loyalty.”


STRAITH HOSPITALStraith Hospital for Special Surgery, Southeast Michigan’s only independent nonpro�t hospital, was started by a local pioneer in plastic surgery and is now trying to navigate a changing health care world.

Brad Bescoe: Pitching Straith as lower-cost for insurers.


RUMBLINGSWEEK ON THE WEB MAY 21-27

Detroit DigitsA numbers-driven look at last week’s headlines:

$95 millionThe amount to be invested by Illinois-based automotive parts manufacturer Flex-N-Gate Corp. to buy 30 acres of Detroit land to build a new plant that will create up to 750 jobs. A $3.5 million performance-based state grant has been approved for the project.

$2 millionThe amount of a grant by the Detroit-based DTE Energy Foundation to the Detroit Symphony Orchestra in support for the orchestra’s community concert series, held each September.

7,410The team-record attendance for the inaugural match for Detroit City FC at Hamtramck’s Keyworth Stadium. DCFC and AFC Ann Arbor played to a 1-1 draw in the �rst National Premier Soccer League game at the renovated site.

Workshop to oer late help for NEI applicants

The New Economy Initiative will host a last-minute workshop for businesses seeking to apply for its third Small Business Challenge, the deadline for which is Wednesday.

The Last Call NEIdeas Info Session & Workshop on Tuesday will be at the Northeast Guidance Center at 2900 Conner St. in Detroit from 6-8 p.m. The session is for interested business owners to get more information on NEIdeas or to talk about their ideas before turning in their applications.

About 1,200 small businesses from Detroit, Hamtramck and Highland Park applied to the NEIdeas challenge in 2014 and 2015. NEIdeas has given $500,000 to 32 small businesses in those cities.

Industries have spanned sectors ranging from barbers to manufacturers, mechanics to bakers and more. Seventy percent

Gilbert joins lineup for Mackinac conference

Fresh from a billion-dollar soccer stadium proposal and a reported bid to buy Yahoo

Inc., Dan Gilbertwas a late addition to the event roster for the 2016 Mackinac Policy Conference, the Detroit Regional Chamberannounced last week.

Gilbert, chairman of Detroit-based Quicken Loans Inc., will appear Wednesday at the annual conference on Mackinac Island, which runs Wednesday through Friday. He is expected to talk about the city’s progress in recent years as his Bedrock Real Estate Services LLC has purchased more than 80 properties downtown. It’s not known if he’ll come bearing more news.

Gilbert is scheduled to participate in a one-on-one discussion with Dennis Archer Jr., president of Archer Corporate Services and this year’s conference chairman.

Gilbert’s involvement comes amid reports that he is seeking to acquire internet pioneer Yahoo with the backing of investor Warren Bu�ett, founder of Berkshire Hathaway Inc.

Gilbert joins a three-day roster of speakers that includes Gov. Rick Snyder; Flint water crisis whistleblower Mona Hanna-Attisha, M.D.; Detroit Mayor Mike Duggan; former CNN anchor Soledad O’Brien; and Daymond John, CEO of the FUBUclothing line who appears on ABC’s

of the idea winners are minority-owned businesses, 64 percent were woman-owned and 53 percent were both woman- and minority-owned. Businesses range from 3 to 93 years old. Businesses must be 3 years or older by the application deadline to be eligible for an NEIdeas award.

NEIdeas features two types of awards: $10,000 for businesses that gross under $750,000 annually with ideas to grow, and $100,000 for businesses that gross more than $750,000 and less than $5 million annually with ideas to grow “big.”

Thirty applicants will be awarded $10,000 each, and two businesses will be awarded $100,000 each.

The application is available at NEIdeasDetroit.org.

NEIdeas is operated in partnership with the Detroit Economic Growth Corp. The NEI is a special project of the Community Foundation for Southeast Michigan.

Rakolta Jr. to speak on rebuilding city at JVS lunch

Walbridge Aldinger Co.Chairman and CEO John Rakolta Jr. will give the keynote address on rebuilding Detroit at JVS’19th annual Strictly Business Networking and Awards Luncheon on June 23.

Rakolta co-chairs the Coalition for the Future of Detroit School Children,which issued recommendations on improving education for children in the city last year and continues to advocate for stabilizing the troubled school district.

During the fundraising event, which is expected to draw nearly 800 business and community leaders, JVS will also present Detroit Labs and its co-founder and CEO Paul Glomski with its Business Leadership Award; and Zack Sklar, majority owner and chef of Peas & Carrots Hospitality, with its Rising Entrepreneur Award, during the luncheon.

The event is set to begin at 11:30 a.m. at MGM Grand in Detroit.

Tickets are $150. For more information, visit www.jvsdet.org/strictlybiz.

Dan Gilbert: Late addition to Mackinac Policy Conference.

John Rakolta Jr.: To give keynote address at JVS luncheon.

Zack Sklar: Chef to receive Rising Entrepreneur Award.

Longtime supporters leave $2.9M gi� to DSO

The Detroit Symphony Orchestra received a$2.9 million gift — the

second-largest in its 129-year history — from the estate of longtime supporters Clyde and Helen Wu to help sustain music education programs provided through the Wu Family Academy for Learning & Engagement. The gift brought the couple’s total giving to the DSO to more than $5 million. Clyde Wu, a cardiologist at Oakwood Hospital in Dearborn, died last year. He was preceded in death by his wife, a concert pianist.

COMPANY NEWSn Diversi�ed Restaurant Holdings

Inc., the Southfield-based company that owns the Bagger Dave’s restaurant chain and is the largest Bu�alo Wild Wings franchisee, is getting a new CEO and plans to explore strategic alternatives for Bagger Dave’s, the company said. Michael Ansley, Diversified’s founder, chairman, president and CEO, will turn over the president and CEO titles to CFO David Burke on Jan. 1, the company said. Bagger Dave’s endured two waves of closings last year that shrunk it by 11 restaurants, including one in downtown Detroit, to 16.n Athletic apparel maker Nike

became the latest addition to downtown Detroit’s retail offerings when the Nike Detroit Community Store opened Thursday in the former F.W. Woolworth building. Michigan State University basketball coach Tom Izzo was on hand for the opening; the school has an apparel contract with Nike.n Dan Gilbert played deaf and

dodged a question during a Detroit Startup Week event about whether he is going to buy internet pioneer Yahoo Inc. “What was the question?” Gilbert said jokingly to an audience member during a question-and-answer session about financial technology startups at the Masonic Temple in Detroit. “I wish I could comment on that.” His response is believed to be the first public comment by the chairman of Detroit-based Quicken Loans Inc. since reports surfaced he was seeking to acquire Yahoo with the backing of Warren Bu�ett’s Berkshire Hathaway Inc.nMetropolitan Hotel Partners

LLC, a joint venture between the Detroit-based Means Group and Roxbury Group, will own and develop the Element Detroit at the Metropolitan Building, the city’s only extended-stay hotel, planned for a July 2018 opening..n Cosworth Group, the United

Kingdom-based high-performance engine technologies company, will invest $30 million and create at

least 50 jobs at a facility in Shelby Township. The company plans to refurbish a manufacturing facility it will lease at the Cherry Creek Business Park.n John Krafcik, CEO of Google’s

self-driving car project, said the Silicon Valley tech firm would open a 53,000-square-foot development center in Novi. n Ford Motor Co. announced it

will launch a pilot program to hire adults with autism on June 1. Ford will create five positions in product development suited to the skills and capabilities of workers with autism for the program, called FordInclusiveWorks and developed with the nonprofit Autism Alliance of Michigan, which is funding the training program tied to the jobs.n Ilitch Charities and its affiliate

Detroit Tigers Foundation have donated $135,000 to state and local law enforcement agencies to purchase three highly trained, bomb-detecting dogs. The Michigan State Police, Wayne State University Public Safety Department and Detroit Police Department will each get one of the dogs.n New York state Attorney

General Eric Schneiderman sued Ann Arbor-based Domino’s Pizza Inc., affiliates and three franchisees, alleging they underpaid workers based on payroll reports generated by the parent company’s computer system, AP reported. n The state of Minnesota is

suing professional fundraising company Associated Community Services and its affiliate Central Processing Services, alleging the Southfield-based firms are deceptively soliciting money for the

Foundation of American Veterans. In 2013, Michigan Attorney General Bill Schuette ordered ACS to stop its use of what he said were misleading telemarketing tactics.n United Auto Workers members

at Detroit Diesel ratified a contract that includes a wage increase and commits Daimler Trucks North America to new engine production, Automotive News reported. n The University of Michigan

Health System in Ann Arbor has joined Together Health Network as a referral provider for complex, or quaternary, health care services. Together Health is a joint venture between Warren-based Ascension Health Michigan and Livonia-based Trinity Health Michigan.n The Michigan Department of

Environmental Quality approved two new air permits for the Marathon Oil Corp. refinery in southwest Detroit. The state said the update will lead to reductions in air pollution, The Detroit News reported. n A Bloomfield Hills-based

organization that aims to connect companies in Israel and Michigan will pilot an effort to boost Israeli firms’ Michigan supply chains with help from the state. Michigan Israel Business Bridge, founded in 2007, will team with the Michigan Economic Development Corp. and its Pure Michigan Business Connect program, which matches suppliers to in-state vendors. n Sports Authority Inc., which

filed for bankruptcy protection three months ago, is closing all 460 of its stores, including four in Michigan, after it was unable to adapt to consumers’ move online. The Englewood, Colo.-based sports retailer has Michigan stores in Auburn Hills at Great Lakes Crossing Outlets, Clinton Township, Dearborn and Flint.n Shake Shack, the popular New

York City fast-food restaurant chain, said it will open its first Michigan location in downtown Detroit sometime next year, in the Dan Gilbert-owned First National Building at 660 Woodward Ave.

OTHER NEWSn Prosecutors filed more

charges in an investigation of Detroit Public Schools corruption, accusing a former district official of obtaining more than $1.2 million for tutoring services that were never provided, AP reported. A charge filed last week said Carolyn Starkey Darden submitted fraudulent invoices over seven years after leaving DPS. Darden worked for the district for 37 years and was director of grant development.n An appeals court affirmed the

45-year prison sentence for Farid Fata, the Oakland County cancer doctor who put hundreds of patients through needless treatments. n Five of seven people accused

in a cheating conspiracy at MotorCity Casino Hotel in Detroit pleaded guilty in the case and are awaiting sentencing, officials said.

Y O U W I L L F I N D T H I S S P E C I A L R E P O R T O N 1 0 0 O F T H E M O S T I N F L U E N T I A L W O M E N I N T H E U P C O M I N G J U N E 6 I S S U E O FC R A I N ’ S D E T R O I T B U S I N E S S A N D O N L I N E AT C R A I N S D E T R O I T. C O M / W O M E N

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