“Urban Renewal”—Pretext for a DMC Land Grab

May 10, 2010

In 1946, the city of Detroit began what became known as the “Detroit Plan.” It was sold as a plan for clearing the city of slums, promising that residents from the area would find places in public housing projects to be constructed.

The real aim, however, was to clear the land–not for public housing, but to hand it over to businesses and private developers.

The Detroit Medical Center (DMC) was one of the eventual beneficiaries of the Detroit Plan. Starting in 1954, administrators of four privately-run hospitals, Grace, Harper, Women’s and Children’s, offered a proposal for a “fully self-contained” medical center complex complete with a medical school and residential housing, businesses and parks. They formed the Detroit Medical Center Citizens Committee and brought in the dean of the Wayne State School of Medicine, which would soon become part of the DMC.

The Detroit Plan Commission readily took up the Medical Center proposal, which covered a square mile area in the vicinity of the four hospitals. By 1971, most of the area that became the DMC had been cleared.

Money for the project came from both the federal government and the city; the city contributed one-third and the federal government two-thirds of the money needed. The city then sold the land to DMC for less than a quarter of what the city had paid to buy the area and clear it. The total given this way to the Detroit Medical Center was 300 million dollars–what would amount to almost 1.5 billion dollars in today’s money.

From 1971 to 1981, DMC moved a number of hospitals to the newly cleared area, either by expanding older hospitals or building new ones from scratch.

In 1981, the city of Detroit transferred ownership of its only public general hospital, Detroit Receiving, to DMC, which moved Receiving from its downtown location into the DMC campus. The city also gave DMC 200 million dollars to put up the new building. The transfer of the public Detroit Receiving Hospital to the private DMC meant that Receiving was no longer required to accept all patients. Yes, DMC promised to provide a certain amount of “indigent care,” but all hospitals do that.

DMC incorporated as a non-profit in 1985, which made it exempt from all federal, state, and local taxes.

In 1995, DMC began operating a cancer program at Harper Hospital. In 2005, it sold the cancer center to the Karmanos Foundation, named after the wealthy owner of Compuware, selling it at one-fourth its market value, the only requirement being that it stay on DMC’s campus.

Despite its promises to provide “indigent” care, DMC eliminated inpatient services at Receiving Hospital in 2003 and laid off 1,000 workers, and threatened to drastically reduce the number of deliveries performed at Hutzel Women’s hospital.

The state of Michigan gave DMC another 50 million dollars and DMC backed off on the threat.

The for-profit Vanguard Health Systems thus receives a DMC that remains consolidated, built with a great deal of public money–more than two billion dollars when you add up the government money spent clearing the land, the money the city gave DMC when it handed over Receiving Hospital, and the tax breaks DMC has received over the years. Hundreds of millions of dollars also went to real estate developers and construction companies to put the deal together, all coming from the people of Detroit, including from the ones whose homes had been stolen from them.