In the blink of an eye, Oxford went from having zero hospitals to having two well-known health systems competing for state approval to build facilities there.

“I think it’s good for Oxford to have one hospital. I don’t think there’s a need for two, but I think there’s a need for one,” said township Treasurer Joe Ferrari. “As someone (who) has a little one with health issues, we’re out at Beaumont Royal Oak (hospital) quite a bit. It’d be nice to have a closer location.”

Given the 117 hospital beds the state has determined are needed in this area, only one facility can be approved.

Will it be Beaumont Health or Henry Ford Health System?

Beaumont announced via a press release on March 19 that it’s looking to build a 117-bed, $140 million hospital on a 25-acre parcel located on the east side of M-24, just south of E. Market St. and just north of the village limits.

Based on paperwork submitted to the state, Henry Ford wants to build a 116-bed, $161.8 million hospital at 1955 Lakeville Rd., which is the address for the 1,200-acre Koenig Sand and Gravel property.

“I just hope that somebody builds a hospital up here because I know it’s a community need,” said Glenn Pape, executive director of the Oxford Downtown Development Authority.

Right now, the Michigan Department of Health and Human Services (MDHHS) is saying only Beaumont Health followed proper procedure when it submitted a comparative review application for a certificate of need (CON) on Feb. 1, one of three dates designated for that purpose each year.

But, Henry Ford disagrees with that.

In a statement emailed to the Leader by Henry Ford Media Relations Manager David Olejarz, the health system asserts it “did in fact submit a CON application by the Feb. 1 deadline, and (is) confident that the state will have a strong interest in our approach to meeting the needs of the community.”

Olejarz added that Henry Ford would not comment beyond its written statement.

What’s the process?

Enacted in 1972, the CON program is a state regulatory program that’s intended to ensure only needed services are developed in Michigan. Building a new health facility, such as a hospital, is one of those things for which a CON must be obtained.

The first step in the CON process is submitting a letter of intent to the MDHHS. Both Beaumont and Henry Ford did that.

According to the MDHHS website, Beaumont’s letter was received on Jan. 11 while Henry Ford’s was received on Jan. 25.

After the MDHHS notifies the applicant of the forms required for its project based on the letter of intent, an application can be submitted for one of three types of reviews – nonsubstantive, substantive and comparative.

Both Beaumont and Henry Ford submitted applications for a comparative review, which is required for projects involving a limited need such as hospital beds and transplantation services. Applications for comparative review must be submitted on Feb. 1, June 1 or Oct. 1 each year, according to MDHHS administrative rules.

Both Beaumont and Henry Ford submitted CON applications on Feb. 1.

However, according to the MDHHS, there was a problem with Henry Ford’s application because of when the health system sent its letter of intent.

A Feb. 5 letter from CON Evaluation Section Manager Tulika Bhattacharya to Robert G. Riney, the chief operating officer of Henry Ford, stated that materials submitted by the health system “do not constitute an appropriate application filing” because “at the time,” the MDHHS “had not processed” the letter of intent.

“The (MDHHS) cannot review CON applications received  prior to the corresponding (letter of intent) being processed,” Bhattacharya wrote.

Bhattacharya went on to cite MDHHS administrative rules – “The department shall not review any application it receives before the department finishes processing the letter of intent for that application.”

According to Bhattacharya’s letter, Henry Ford’s letter of intent was submitted on Jan. 24 “after 5 p.m.” so it was “deemed received as of” Jan. 25.

“The department did not have appropriate time to process the (letter of intent),” she wrote. “The (letter of intent) for this project is currently under review by the department and you will be notified after the department finishes processing the (letter of intent) under the rules.”

Henry Ford’s application fee, along with the materials it submitted were returned with Bhattacharya’s letter.

Last week, Crain’s Detroit Business reported Henry Ford had requested a meeting with state officials over its CON application.

Lynn Sutfin, public information officer for the MDHHS, indicated “Henry Ford can submit an application on June 1,” the next designated date, but there might be no point by then.

“If the beds have already been approved (for) another application (Beaumont), then there are no beds to apply for in (Henry Ford’s) application,” Sutfin wrote in an email to this reporter.

Beaumont applied for all 117 acute care hospital beds identified by the state last September as the projected need for 2021 in what is labeled as Limited Access Area (LAA) 6 on a map posted on the MDHHS website.

LAA 6 encompasses three zip codes – Oxford 48371, Ortonville 48462 and Clarkston 48348.

An LAA is an underserved area where patient day demand meets or exceeds the statewide average of patient days used per 50,000 residents in the base year. An underserved area is a geographic area that’s not within a 30-minute drive of an existing licensed acute care hospital with 24-7 emergency room services.

Now that Beaumont’s application has been submitted, the MDHHS has 150 days, from Feb. 1, to issue a proposed decision.

If the proposed decision is an approval, a final decision by the department director must be issued within five days. If it’s a denial, Beaumont will have 15 days to request a hearing.

Beaumont’s plan

Based on the information Beaumont released to the media, the health system plans to build a 225,000-square-foot facility that spans five floors and a mechanical penthouse.

“Additional details regarding the future hospital will be revealed at a later date as the process continues,” Beaumont stated in its release.

In an email to this reporter, Bob Ortlieb, senior media relations specialist for Beaumont Health, stated the proposed hospital will “have an emergency room, obstetrical services, surgical services and imaging,” all of which is required by CON standards, plus other services.

The hospital plan contained in Beaumont’s CON application, which is more than 700 pages long, is smaller than what was described in its Jan. 11 letter of intent.

In that document, the number of beds was still 117, but the project cost was $162.9 million and the hospital was going to be approximately 248,000 square feet spanning six floors and a lower level.

Ortlieb explained the letter of intent contained “an initial cost estimate.”

“After that, we developed a more refined cost estimate, which is the number in (the March 19) news release: $140 million,” he wrote in an email.

Beaumont is looking to build its proposed hospital on the 25-acre property currently owned by the Bloomfield Hills-based JFK Investment Co.

“We have a contract to purchase the land, but do not officially own it now,” wrote Ortlieb in his email.

In its letter of intent, Beaumont listed the cost of the land purchase as $4 million.

The property on which Beaumont wants to build is zoned for C-2 General Commercial use. Based on the township ordinance, the maximum building height in that zoning district is two stories and 35 feet. In order for Beaumont to build what it’s proposing, township planner Lauren Carlson, of the Ann Arbor-based Carlisle/Wortman Associates, said it would have to either seek a variance from the  zoning board of appeals or submit the project as a planned unit development, which is a special form of rezoning.

In 2008, this site is where JFK Investment was proposing to build a 180,000-square-foot shopping center containing seven retail buildings, including a 100,000-square-foot Kohl’s department store. That never happened due to Kohl’s pulling out and the downturn in the economy.

Township Trustee Jack Curtis, who also serves on the planning commission, said building a hospital on that property “is a better fit for our community than some sort of a Kohl’s or a Target.”

“I think (there is) less chance of (a hospital) failing than . . . a retail facility,” he said. “Look how many big box stores are not building anymore because people are buying (online).”

Curtis noted Beaumont has not submitted a site plan to the township nor has it filed any applications.

“Nothing has been presented to the township yet,” he said.

But, the township is “already thinking about” and discussing potential issues, such as infrastructure needs and potentially having Beaumont make payments in lieu of taxes should the hospital seek a property tax exemption, according to Curtis.

“There are a lot of pieces to the puzzle that we have to work on,” he said. “We can only guess right now at what the impact would be on our community and try to move forward thinking positively . . . We’re not sitting on our hands waiting for it to happen.”

Curtis noted whatever additional infrastructure needs the proposed Beaumont hospital may have, they should “not be paid for by the taxpayers of Oxford.” He believes Beaumont should “step up” and fund them, and that should “ be part of the site plan approval.”

Ferrari said it’s “premature” to comment on anything specific regarding Beaumont’s proposal “until we actually see what they want to do.”

“The only thing we have is a press release,” he said. “That doesn’t really tell you too much . . . We don’t know anything yet. (Once) we see a plan saying, ‘we want to do X, Y and Z on this property,’ then we can comment. Right now, it’s all speculation.”

That being said, Ferrari believes if Beaumont does seek a property tax exemption, some type of payments in lieu of local millages should be made.

“That is something we definitely have to take a look at . . . Our services have to be paid for,” he said.

What do local officials think?

“I think (having a hospital) a good thing,” said Oxford Village President Joe Frost. “There’s still, obviously, a lot of unknowns, so I’m eager, and I think the village is eager, to learn more  of the details as they unfold. It’s certainly something that is needed given (Oxford’s) proximity to other major hospitals. And it sounds like there will be jobs that come along with this. That may allow some folks to not commute as far or bring new people into the community, which helps grow everything . . . Certainly restaurants will benefit and the housing market will benefit if there is an influx of people.”

In Pape’s opinion, it doesn’t matter whether it’s Beaumont or Henry Ford that ends up building in Oxford because “either one’s going to bring in (hundreds of) jobs” and “that’s a good thing” for the downtown as it will “increase housing demand.”

He explained medical professionals “tend to like to live in downtowns” or “within a walkable distance of downtown.”

“That’s going to be a big bonus for us,” Pape said.

Having more people working and living in the community could lead to an increase in economic activity downtown.

“Anytime you’ve got that type of injection of people into your trade area, it’s going to help,” Pape said. “We might see some new businesses spring up as a result of this.”

Pape noted downtown’s existing commercial spaces are “pretty booked up right now,” but he “would love to see some construction on some of the vacant lots.”

Curtis believes construction of a hospital would lead to the opening of businesses that Oxford needs such as hotels and dry cleaners. He thinks it would also help check some of the boxes on people’s wish lists.

“Everybody on social media wants a Vince and Joe’s (Gourmet Market), they want a Nino Salvaggio’s, but there’s nothing here to draw them,” he said. “I think that this hospital system would bring them to our community.”

Curtis believes home values “will increase” as doctors, nurses and other health-care professionals look for places to live near the proposed Oxford hospital.

“This is a windfall for us if all the pieces fit,” he said.

Fire Chief Pete Scholz believes having a hospital in Oxford “would be a good thing” because it could result in his firefighters spending less time outside of the community on medical calls that require ambulance transports.

Right now, depending on the type and severity of the case, Oxford firefighters are taking patients to Beaumont hospitals in Troy and Royal Oak, St. Joseph Mercy Oakland and McLaren Oakland in Pontiac and Ascension Providence (formerly Crittenton) in Rochester Hills.

“(Having a hospital in Oxford) would probably ease the load on us considerably,” Scholz said.

That being said, given the protracted political and legal battles that often accompany attempts to build new hospitals, Scholz is skeptical about Beaumont’s plan becoming a reality. “I’ll believe it when I see it,” he said.

“I don’t see it happening quickly,” the chief added. “Nothing moves that fast through the state health department on that sort of thing.”

Curtis said the township can discuss, examine and investigate every aspect of a hospital potentially coming to Oxford, but in the end, “it’s all hinging on the certificate of need being approved,” something that’s beyond local control.

If the plan clears state hurdles, Curtis believes Oxford would “welcome” a hospital.

“It is great for our community,” he said.