Sweatin` The Oldies

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@Entire contents copyright 2005 by Crain Communications Inc. All rights resered
IN
JUST
THIS
PP0M
lebrato acquire
Health insurance giant
Aetna on Friday said it has
agreed to buy HMS Healthcars, a regional PPO network which operates as
PPOM in Michigan, for $390
million in cash.
The deal is still subject
to closing conditions and
federal antitrust regulatory approval. Aetna expects
the deal to close by Sept. 30.
HMS Healthcare is controlled by Denver-based
KRG Capltal Partners L.L.C.,
which bought PPOM from
Blue Cross Blue Shleld of
Mlchlgan last year.
Aetna (NYSE: AET) said
the deal will give it the
strong provider network it
needs to expand in Michi
gan and Colorado. HMS
also operates in Ohio, Indiana and Kentucky.
PPOM has about 1 million PPO enrollees and had
$58.7 million in 2004 revenue. It is No. 2 to the
Blues, which have about
2.9 million PPO customers.
President and CEO Jeff
Connolly said Aetna's size
gives PPOM a strong national presence and the
ability to expand products.
- Michelle Martinez
dip
Finals
ratings
l{BA
WXYZ€hannel 7 recorded
a 47.8 rating for Thursday's
game seven of this year's
Finals.
compared
NBA
with a 49.8 rating for game
five of the 2004NBA Finals,
when the Detrolt Pistons
won the championship.
During the last 45 minutes of the game, the station reached a peak of53.3,
said Mike Murray, general
sales manager for Channel
?. During 2004's game five,
viewership peaked at 59.9.
By comparison, ABC's
"Desperate Housewives,"
one of TV's hottest shows,
gets a rating of 28 to 30,
Murray said.
He said the slight dip
most likely could be attributed to the Pistons' losing.
Each Detroit rating point
tracked by Nielsen Media
Research is worth about
19.000households.
- Andrew Dietderich
See This Just In, Page 2
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:
feud
famlly
Duncan
leads
tobankruptc
Hospitals
fearcutsin
Medicaid
MoA lose
more tltan
ff90M
BY MIcHELLn
MantlNnz
CRAI N'S D ETRO IT AUSINESS
Medicaid cuts could cost the Detroit area's four largest hospital
systems more than $90 million, de-
pending on how
Michigan
PorrnrnLthe
Legislature re-
COSTS
What local
health systems
estimate the
plans would
cost them:
I Henry Ford
Health; $11
million-$20
million.
I St. John
Health: Up to
$20 million.
I Oakwood
Healthcare:
$9.8 millionto
$13 million.
I Detroit
Medlcal
Center: Crain's
estimates a
cost of up to
$38 million.
solves its wrangling over three
different proposals.
Gov. Jennifer
Granholm proposed a 4 percent cut to hospitals
and
physicians for
2006 starting
Oct. 1 as part of
a plan to reduce
Medicaid spending by $121million next year.
The state House
and Senate recently passed
their own plans
that would add
more and deeper cuts.
Any of the
plans would "devastate" Southeast
Michigan hospital systems, said
Bob Riney, COO
of Henry Ford
Health System.
Now, he said,
it's a question of
degree.
"We're
on
track to meet
budget targets,
which were a little lower than Riney
2004,"
said
Riney. "As we look forward to
2006, that's where we begin to get
really concerned about the dialogue around Medicaid. Depending on which version of the plan
SeeMedicaid, Page 24
Chamber of Commerce. i'They
have been so deeply involved in
the community, Dick and Gail ...
peopleknow them so well."
Duncan, who turned 80 last
Wednesday,did not want to say
much last week about the deep
vember 2003 by
rift that has developedbetween
Richard
father and daughter, but said he
against Gail in
Macomb Gounty expects to regain control of the
dealership and will return it to
Glrcult Court is
profltability.
cited
by
He also did not want to discuss
Jerome-Dunanother pendingcasein the same
general
can's
court: Barbara Duncan. Gail's
manager as a
mother, alleges the dealership
reason for the
broke its agreementto use Parkfiling. The SterGailDuncan
way Agency Inc., an insurance
ling
HeightsagencyBarbara owns, as its only
baseddealership owes $68million
vendor for credit-Iifeand disabili
to FordMotorCredltCorp.and was ty policies.That casewas f,rledin
trying to renegotiatea $5.5million August 2003.
line ofcreditjust beforethe filing.
In his lawsuit, Richard Duncan
"For a family that was so close allegesthat Gail Duncan and her
for so many years,it's just such a husband, Shashi TejPaul, have
sad state that this happens,"said treated the company Richard
Lillian Adams,executivedirector
of the Sterling Heights Area
SeeDuncan, Page 25
Father, daughter battleoaer
dealersh,'ip,otherinterests
BY BRENT SNavgT,Y
CRAI N'SDETROITBUS/NESS
Last Tuesday night, father-anddaughter auto dealers Richard
and Gail Duncan, her husband
and others gathered at a Birmingham restaurant. They were there
to celebrate the graduation of her
from
Cranbrookdaughter
School in
Kingswood
High
Bloomfield Hills.
It was an ordinary family occasion being held under extraordinary circumstances.
Gail Duncan, company president, had filed for Chapter 11
bankruptcy protection for Jerome
Duncan Inc. only a few days before,
on June 17. A long-running, bitter
shareholder lawsuit filed in No-
ffi
Sweatin'theoldies
general
reyenue
manager
looks
toraise
l{ewIl|(lMC
Bv ANonnwDrntonnrcn
CRAI N'SDETROITBUSINSSS
Forget possible format changes,
increasing competition, an aging
audience, and even the pending expiration of Dick Purtan's contract,
Kevin Murphy has one goal for
WOMCFM 104.3: Increase revenue.
Murphy started as general manager at WOMC a week ago and said
his marching orders are to pump
up sales for metro Detroit's top-rated FM station. That's led some to
speculate that a change to a new,
called
largely
DJ-Iess format
"Jack" may be on the way.
According to Inuesting in Radio
2004, a report by Chantilly, Va.based glA Researchlnc., WOMC had
estimated 2003 revenue of about
$21.3 million, good for No. 2 in the
Detroit area. behind wwJ 950. according
to
Crain's list of
largest radio stations. For 2004,
BIA
estimates
the station had
revenue of about
$21.8million.
reMurphy
places
Steve
Schram, former
Murphy
president
vice
and general manager of WOMC.
Schram remains general manager
of wYcD FM 99.5 and director of
sales for six Detroit stations owned
by New York-based Inflnlty Broadcasting corp., which includes WOMC.
SeeWOMC,Page24
Asour
W0MC
Revenue:$21.8 millionin
2004 (estimated)
Ratln6: Overall,toprated FM
station in metro Detroit.
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Pricing:Dealerslike'.*ployee' promo
I From Page 3
usually move the most units during the final week of the
month.
Sam Slaughter, president of Bob Seilers pontlac cMC in
Farmington Hills, said he expects similar increases. The
dealership sold about 200 vehicles in May, about the
same as in June 2004. Slaughter said he expects to complete the month with about 300 vehicles sold.
The dealership typically gets Z0 percent of its business
from those eligible for the employee discount, but most
ofthe new sales are people who have never had access ro
the discount and people who "wanted to try a GM product," he said. "This (employee discount) kicked them
over the edge."
David Builer, general manager ofthe Subu6an Goilee
tlon, is a little less entlusiastic.
"We're not seeing the lift that the
rest of the country is seeing," Butler
said.
Still, Bufler said Troy-basedSuburban Colleetion,which operates24dealerships in Michigan and Florida. is
seeingan increasein salesof about 25
percent at its GM dealershipsin Troy
comparedwith last year.
For the month, Butler said he expectshe will sell about 800new Cadillacs, Buicks and Hummers in Troy, up
from about 240 last June.
The success of the program nationally helped boost
GM's share of new vehicles to g0.g percent through June
12, according to data from more than 6,000 automotive
dealerships gathered by the power Informailon Network. a
division of J.D. Power and Assoclates.
The data, released earlier this month, showed that
GM's market share is up nine points from April and seven points from June 2fi)4.
Chrysler Group's retail market share, meanwhile,
droppedmore than two points from May, while both Ford
MotorCo.and ToyotaMotorGorp.'ssharesfell by more than
a point. AmerlcanHondaMotor Co.,NlssanMotor Co.and
HyundalMotolCo.saw smaller declines.
StevenBrown, CEOof RochesterHills-basedauto dealer consultantS.H.BrownResearch,
said the problem now
becomeswhat GM will do to keep sales going when the
program endsJuly 5.
"My only hesitation and reservation on a program of
that nature is what do you do to endit? How do you stop it?"
Brown said. "Now what do you say?,We'regoingto charge
you more money,just becauseyou are an outsider?,,'
Brown said now non-GM employees will be more
aware than ever before that employeesget a better deal
than nonemployees.
GM had no plans to extendthe program as ofJune 22.
said Deborah Silverman, the company's communications manager.Any decision on extendingthe program
would be madeonceit concludes,shesaid.
However,GM will cut baseprices on g5 percent to fl)
percent of its 2006Chevrolet,Buick, pontiac and Saturn
models,accordingto AutomotiueNeu)s,a sister publica_
tion to Auin's Detroit Businzss.
The cuts are intended to wean buyers from incentives
and attract Internet shoppersby advertising lower prices.
David Cole, chairman of the Ann Arbor-basedCenter
for Automotlve
Research,
said the movescould signal some
significant shifts in the industry.
After 10 years of manufacturers inllating prices and
then offering rebatesand other incentivesto buyers as a
discount,Colesaid he believesGM could take the lead in
getting back to "real prices," or lower manufacturer
prices.
Anjali Fluker: (315)44G6796,
afluker@rain.corn
Brent Snauely: (JIJ) 44G040i,bsnauely@crain.com
W0MG:New boss'goul?Raiserevenue
J From PageI
Murphy, an Infinity manager
from Rochester,N.Y., said he was
brought in to bring more focus to
WOMC.
"By having one individual here all
day, every day, and focusedon the
station, ratings and revenuewill improve," Murphy said. "Steve is a
great guy and did a great job here,
but he wasbeing torn in many different directions and spread rather
thin. Having one
person dedicated
to a station ofthis
heritage and magnitude is the right
thing to do."
Schram did not
return
calls to
Crain's
made
Wednesday,
Thursday and F?i
day.
Murphy didn't want to say how
much he hopesto increaserevenue
by or how he plans to do it.
Murphy said he still is getting his
bearingsin Detroit. He plans to have
his first lunch with Purtan today, a
"getting to know him" session.Murphy said.
Purtan referred calls to Henry
Baskin, his attorney. Baskin said
Purtan works under five-year contracts and the current oneexpires in
May. Baskin said he and the station
will begin negotiations in the late
summer and that he believesPurtan
wants to remain with WOMCfor another five years.
Murphy said Purtan is the "franchiseplayer" of WOMCand that the
station hopesto keephim.
But WOMC,like all radio stations,
faces increasing competition from
growing use of MP3 players, such as
the popular iPod,and satelliteradio. but "wouldn't rule out a changetwo,
New York City-basedVlacomInc. three, four years down the road asthe
(NYSE: VIA), which owns Infinity, population getsolder."
took a $10.9billion write-down in asAlso, Murphy said WOMC'ssituasets for its Infinity Broadcasting di- tion isn't comparable to WCBS in
vision on Feb.25.Infinity owns near- New York and WJMK in Chicago,
ly 200radio stations.
which both recently went to the Jack
And the oldies audience is dwin- format. "Those were failing stations
dling. In general, the term "oldies" in their demos."
refers to songsfrom the 19S0s,1960s
Playlists at Jack stations are largand, more often than not, 1g?0s.
er than at most stations. For examAccordingto Columbia,Md.-based ple, a Jack station could have up to
ArbltronInc,,which tracks radio lis- 1,200songson its playlist, compared
tening trends, the oldies format has with a normal playlist of no more
seen its nationwide audienceshare than 500.Rosssaid.
fall from a high of 6.b percent in
Similar stations are popping up
spring 1999to a low of4.5 percentfor acrossthe United Statesand Canada.
t}te winter 2005.The number is the Detroit has Doug FM, airing on
percentageof thoselistening to a ra- WDRQ FM 93.1, which recenflv
dio station in a given market for at droppedits top-40format.
least five minutes during a 1bKBPA FM 108.8in Austin, Texas,
minute period in an hour.
switched to the format last Aug. 28.
Locally, WOMC is performing In spring 2004,the last full ratings
well. For the winter 2005period, the period before the format change,
station had a 5.3percentshare of lis- KBPA held a 9.4 percent market
teners 12and older from 6 a.m.-mid- shareoflisteners betweenthe agesof
night, Monday-Sunday,accordingto 25and 54.For winter 2005,however,
Arbitron. That was secondto WJR KBPA held an 8.1 percent share of
AM 760, which had a 6.8 percent listenersin the sameagegroup.
share, and tied with WWJ AM 9b0,
WWJK FM 94.2in Jackson,Miss.,
which alsohad a b.3percentshare.
switchedon Sept.2. The station held
WOMCis No.2 in cumulativeau- a 2.5 percent market share of those
dience for adults 35-64from 6 a.m.- between25and 54in spring 2004.For
midnight, Monday-Sunday,behind the winter 2005period, the station
WWJ. WOMC's cumulative audi- held a 7.1percent sharefor the same
ence, comparable to a newspaper demographics.
subscription, is 361,000for that age
But Rosssaid he's unaware of any
group,Murphy said.
market where two Jack-format staSean Ross,executivevice presi- tions exist.
dent of Sommerville, N.J.-basedEdl"There's no market yet where there
sonMedlaResearch,
said the Jack for- are two companies,both with full sigmat appealsto the 25-54age group nals, doing this," Rosssaid. ',It,s inattractive to advertisersand may be evitable there will be some market
in the cardsfor WOMC.
where somebodytries to do two."
Murphy said he doesn't see a forAndrew Dietderbh: (SIg) 44G0AIS,
mat switch as"an immediateoption," adintderbh@arain. cont
lune27.2OOS
Medicaid:
Localcuts
mayhir $eOM
lFromPage I
goes through, we could be tients. Its costsfor treating palooking at betweengll million tients who cannot pay at all
and $20million in cuts."
have increasedfrom about $?3
Warren-based st. John million in 2000to more than
Healthestimatesreductionsin $127million in 2004.
Medicaid could cost it up to
That number could grow as
$20 milliou Dearborn-based groups are dropped from MedOakwood Healthcare System icaid. Hospitalsmust treat the
saysit could losebetween99.8 sick when they show up at the
million and 913 million. De- emergency room, regardless
trolt MedlcalCentercould lose oftheir ability to pay.
as much as g3Bmillion, ac"One way or another those
cording to Crain's estimates. costs are borne by the delivDMC said it is waiting for a fi- ery system," said Raj Wiener,
nal budget decision before partner at WlenerAssoclates,
a
completingits analysis.
Lansing law and lob,bying
The Medicaid proposals, firm, and former director of
part ofa seriesofdecisionsbe- what is now the MlchlganDe
ing made to close an almost partmentof Communlty
Health.
Michigan's flagging econo$800million state budget gap,
will likely go to a conference my has led to employersshedcommitteewhere a final bud- ding jobs and dropping beneget will be hammeredout.
fits. Such moves have helped
Rollbacks the committee boost Michigan Medicaid enrollment from about 1 million
would considerinclude:
I A Houseplan to end Med- in 2000to more than 1.4 milicaid coveragefor 18,000
single lion in2(X)5.
Hospitals already absorbed
19-and 20-year-oldsand about
30,000state residents who re- about 94(X)million in reduced
ceive benefits because they reimbursement when Medicaid switched to managedcare
care for a child on Medicaid.
I A Senateplan to charge in the late 1990s,said Kevin
patients co-paysand premi- Kelly, managing director of
ums: 910for physician visits; the Lansing-basedMtchtgan
$25for nonemergencyvisits to State MedlcalSocletyin an inhospital ERs; and a 925 de- terview last month. Health
care
ductible for hospital stays.
providers
The Houseplan co-paywould
receivedanbe $3per physician visit.
other 4 pera e $t monthly premium.
cent
reducThe Senate would create a
tion
sliding scalefor enrolleeswho
in
quit smoking or loseweight.
Medicaid
reimburseI Elimination of retroacment rates
tive Medicaid coverage for
for
fiscal
uninsured patients admitted
year 2005on
into hospitals.
Kelly
May 1.
"The decision was made
To navigatethat cut, as well
early on that we would balas
higher
costs
and
levels of
ance the budget without raising taxes," said Matt Resch, uninsured, hospitals have cut
press secretary for Republi costsand balancedbudgetsby
can Speaker of the House. aggressivelycompeting to atCraig DeRoche."To do that, tract paying customers.
we had to make difficult deci amongother measures.
Henry Ford, Oakwood and
sions, including changesto
Medicaid. There were tough St. John made a collective
profit
of $159.3million in 2004.
decisionsthat had to be made
But low Medicaid reimbursethroughout the budget."
It's unclear what the final ment and ballooning costs of
budget will hold. But health uncompensatedcare are concare analysts say even the stant pressures.DMC manbest scenariowill mean hard- aged a 92.8 million proflt in
2004after facing a near-melter times for hospitals.
The average hospital re- down in 2003with lossesof
about
$107million.
ceivesabout 73centsfor everv
Unintended consequences
dollar it spends in treating
Medicaid patients, said Brian are a danger, said Laura ApPeters, senior vice president pel, senior director of legislaof advocacyfor the Lansing- tive policy for the association.
basedmbhlganHealthandHos Charginglow co-paysand prepltal Assoclatlonduring an in- miums soundlike goodideas,
but in practice,hospitalstend
terview in May.
More than 30percent of De- to take the hit.
Low-incomepatients would
troit residents are covered by
Medicaid, which provides ba- find even a 910 co-pay diffisic health care coverage to cult, particularly with multilow-income children, preg- ple visits for chronic illnessnant women,the disabledand es,and aren't likely to switch
some elderly. Medicare cov- to healthier lifestyles because
ers another 11.5percent and the Legislaturemandatesit.
about 19 percent have no in"You don't generate that
surance at all.
overnight with a 910co-pay,,'
Henry Ford figures it loses she said. "(The co-pay)is virabout $35million a year treat- tually uncollectible."
ing Medicaid patients, who
Mirhelle Martirwz: (JtJ) 44G
make up 11 percent of its pa- 1622,mlmartinez@crain.com