Would a foundation help Illinois Medical District bring in money?
Thursday, May 01, 2014
Crain's Chicago Business
by Kristen Schorsch
The Illinois Medical District Commission is considering starting a foundation to help generate revenue, a potentially tough feat given competing fundraising efforts underway in the Near West Side economic development district.
The idea is to attract contributions from health care companies, such as pharmaceutical or medical device firms, that are interested in moving to the 560-acre district to collaborate on research with the four hospitals within the district, said Warren Ribley, the district's executive director. He hopes to raise up to $10 million to support initiatives such as medical programs or a new building the agency could lease, along with naming rights. He emphasized that the concept is in the early stages and must be approved by the Medical District board.
There are challenges. While hospitals in the district combined admit more than 70,000 patients a year, companies looking for access to the hospitals and their large pool of patients can donate directly to them.
“I'm not approaching this through rose-colored glasses,” Mr. Ribley said. “I understand it's a difficult undertaking.” But, he added, “I think we do have a set of assets that makes the Illinois Medical District unique and one that would lend itself to having the ability to attract that kind of investment.”
The district exists to spark economic development in a vast footprint that includes a variety of businesses and organizations, from a technology park with health care-related startups to facilities that offer services for people with disabilities and the FBI's Chicago office. The district also includes the Jesse Brown VA Medical Center, John H. Stroger Jr. Hospital, the University of Illinois Hospital and Health Sciences System and Rush University Medical Center.
Warren Batts, chairman of the foundation launched to raise money for the Cook County Health & Hospital System, a two-hospital network that includes Stroger and Provident Hospital on the South Side, said fundraising is difficult. The Cook County Health Foundation has been slow to get off the ground since the system's hospital board approved its launch about three years ago. It's raised only about $350,000, which includes seed money from the health system and a $100,000 donation from Republican gubernatorial candidate Bruce Rauner.
But having to compete with a potential foundation from the medical district doesn't concern Mr. Batts, former chairman of the Cook County Health board. People who would contribute to a foundation raising money for the Cook County health system, which treats a largely uninsured and poor population, likely aren't the same as those who would give to an economic development district, he said.
“We'll just see what happens when they try this,” Mr. Batts said.
Other philanthropic efforts have been more successful. The hospital network anchored by Rush University Medical Center has attracted nearly $160 million in donations for a multi-year campus overhaul that includes the 14-story, butterfly-shaped hospital tower overlooking the Eisenhower Expressway.
A Rush spokesman and a U of I health system spokeswoman had no comment on potentially competing with another health care fundraising initiative. A spokesman for Jesse Brown did not return messages to comment.
In an email, Jennifer Woodard, president of the seven-member medical district board, said a foundation is "something worth considering seriously given the (district's) commitment to supporting initiatives related to improving community health, supporting the enhancement of clinical trials among our stakeholders, and providing a robust environment for innovation and the commercializations of technology. These all require funding support."
RELIANT ON LEASE INCOME
The medical district heavily relies on income from buildings it owns and leases. Tenants include Cook County Health, which leases a building to process applications for CountyCare, the system's innovative Medicaid program. GreatPoint Energy, which produces natural gas, moved its corporate headquarters to the district from Cambridge, Mass., and just wrapped up an expansion of a building it's leasing from the district.
With $5 million in total operating revenue in 2013 and a nearly $430,000 operating loss, Mr. Ribley said he wants to diversify the types of revenue the agency generates. Besides bringing in new dollars through a potential foundation, he's considering creating a fiber-optic network that would let hospitals in the district zip medical images among doctors, and help attract new business. Anyone using the fiber likely would pay a fee to lease it.
“Anything that would improve economic development in that land space or surrounding it for the entities and the employees and the visitors, would be worthwhile,” said Marcia Lipetz, a senior consultant at Millennia Consulting, a Chicago-based firm that works with public and non-profit groups.
But the medical district would be competing for dollars from every other health-related organization in the Chicago area that's raising money, she said. On the upside, giving across the country has increased, fueled in part by a rebound in the stock market, Ms. Lipetz added.