Talks of medical center spark controversy

By Eli Murray

The West Urbana Neighborhood Association listserv, or WUNA list, has seen a growing discussion of the impact of a newly proposed medical facility. Some area residents are even suggesting a “grassroots movement” to oppose the venture, which is backed by both the University and Carle Foundation Hospital.

Area resident Dr. Andrew Scheinman shared with WUNA list an open letter to Chancellor Phyllis Wise. In the letter, he called on Wise to address community concerns regarding a public-private partnership between the University and Carle.

“If you’re serious about following the advice of the reports you’ve commissioned, at what point do you intend to follow the advice of the first report on the importance of responsiveness to and interaction with the local community?” he wrote.

A proposed biomedical facility is outlined in the report titled “Evaluating the Feasibility of a New College of Medicine in Urbana-Champaign” published on April 18. In it, the University discussed the benefits of adding a full-scale academic hospital to the Urbana campus.

The report, jointly commissioned by the University of Illinois Foundation and Carle Foundation Hospital on Jan. 24, for up to $97,750 ($85,000 base pay and up to 15 percent for out-of-pocket expenses), outlines a plan to create a “specialized engineering-based college of medicine in Urbana-Champaign” through a partnership between the University and Carle Foundation Hospital.

According to the report, the proposed medical center would begin admitting students by Fall 2017 and “aim to revolutionize the delivery of health care through the integration of advanced technology, transform the quality and efficiency of regional health care delivery, strengthen the University statewide, grow statewide bioscience economic development and serve as an international magnet for innovation, research and scholarship.”

The University declined comment on this story, but, in a letter attached to the April 18 report, Wise and Carle CEO James Leonard said, “There is no U.S. public research university better positioned than Illinois to leverage the convergence of engineering with medicine and be a leader in the transformation of health care research, education, practice and delivery.”

Although the report was released April 18, discussions about developing an academic hospital have been happening for some time now.

“Some early, high-level discussions are occurring within the university regarding the idea of creating an expanded medical school and academic hospital,” states the Identification of Technology Clusters for Economic Development report shared by Chancellor Wise via Campus Massmail on Jan. 27.

The economic development report, commissioned by Research Park on Aug. 27 for $35,000, identifies three major avenues the University may pursue to encourage economic development in the area: “Data Analytics and Management, and Computing,” “Biomedical and Bioengineering” and “Energy.” Research Park reached out to Business Cluster Development, a firm created “to assist clients with the start-up and development of their business incubators (such as Research Park),” according to BCD’s website.

While the report makes a case for encouraging the growth of all three clusters, the “Biomedical and Bioengineering” cluster is the only cluster individually discussed in the summary:

“To grow the bioengineering and biomedical cluster will also require the addition of an important asset, a full-scale medical school and academic hospital, which would create new research and funding opportunities as well as attract and train skilled professionals. Without this asset, the community will continue to struggle to retain early stage bioengineering and biomedical companies, as they will seek capital and test facilities outside the region and state. The amount of technical talent in this field will also be limited. Early discussions on the possibility of creating this asset are already underway.”

Before a contract had been drawn for this report, Research Park Director Laura Frerichs contacted Carol Kraus Lauffer, partner at BCD, specifically indicating that the University was interested in pursuing an academic medical facility. In her email sent July 22, Frerichs defined two scopes she would like Kraus Lauffer to investigate at the University:

PM Subject: Consulting the University of Iliinois at Urbana-Champaign

“Carol, … I am the Director of the Research Park, which is located on campus as[sic] has 90 companies (large and small) and a vibrant and award winning incubator. We know we can do more in technology based economic development and would like a consultant to help us plan and focus our priorities.

Scope #1: Sector Definition and validation of key themes for cluster development. Key areas in our community: data analytics, advanced manufacturing, enterprise software, optics. New areas might grow agriculture technology, medical devices, and advanced materials.

Scope #2: Other large universities without medical schools have been able to successfully add them. The University of Illinois has medical schools in Chicago and Peoria, but recognizes a much different potential would arise if a medical school was located next to our flagship campus with $600 million in annual research and 42,000 students. We want to look at other communities that have added medical schools and or created a new biotech cluster for economic development to understand their strategies and roadmap of success.” 

The report also mentions an Economic Development Advisory Group (EDAG) convened by Chancellor Wise.

In response to a Freedom of Information Act Request filed by Scheinman, Thomas Hardy, University of Illinois system spokesman and chief records officer, said EDAG is composed of 10 members.

The EDAG member list includes Chancellor Phyllis Wise; Vice Chancellor for Academic Affairs and Provost Ilesanmi Adesida; Peter Fox, a Champaign businessman and founder of Fox Development Corporation and partner with Research Park; Research Park Director Laura Frerichs; Carle CEO Jim Leonard; and Greg Lykins, chairman at First Busey Corporation. The group does not, however, include representation from either city or from any member of University Administration. 

According to the National Institute of Health award budget for 2014, The University of Illinois at Chicago received $31,011,258 in grant funding while the Urbana-Champaign campus received $11,338,972 this year. A new medical center on the flagship campus will likely affect future NIH funding rates.

Champaign Mayor Don Gerard said the proposal will likely cause waves when brought to the attention of University Administration and the Board of Trustees as both University branches at Chicago and Peoria already have medical schools.

“There’s interschool competition. I can presume that the Chicago campus isn’t going to be happy about this,” Gerard said. 

Carle and Urbana

In 2012, SB2194 passed in the Illinois General Assembly, allowing not-for-profit hospitals to deduct charity care from their property taxes. In accordance with this bill, Carle filed for, and was granted, tax-exempt status. Because of this exemption, Urbana School District 116 lost more than $3 million in funding for the 2012-2013 fiscal year.

Last year, Carle also reached a settlement agreement with School District Unit 116 which will return nearly $6 million of Carle’s tax funds that were being held in an escrow account for educational purposes over the next five years. This settlement left the school district with less than $2 million in the account.

Both Presence Health and Carle have been approved for tax-exempt status for fiscal year 2013-2014, but the tax figures are not yet available.

These tax-exemptions have put pressure on Urbana to find a new source of revenue for many of its services. Urbana residents will see an average 10 percent property tax increase because of these exemptions.

Urbana Mayor Laurel Prussing said it was unfair to Urbana residents to place the tax burden on them when Carle provides charity care to the entire county. Plus, she said, Carle has the money to provide charity care, as well as to pay its share of taxes.

“Carle can afford to be a better neighbor,” she said.

Alderman Charlie Smyth, Ward 1, said he was fed up with the issues the city has been facing regarding Carle’s tax contribution.

“(Carle’s) long term goal seems to have been to get the city to give them everything they needed to expand, and then turn around and do everything they could to avoid having to pay anything back by getting their ‘charity’ care deducted from property taxes,” he wrote in an email to WUNA list. He also noted that Carle has a “heavy demand for services, such as fire response and police protection” but no longer contributes to the funds that support those services.

Community involvement

In light of the recent spat between Urbana and Carle regarding property taxes, a bill, HB3634, is in committee in the Illinois house that would remove Carle’s property tax exemption in Urbana. The bill is sponsored by Naomi Jakobsson, D-103. 

Diane Marlin, Ward 7, expressed concerns that decisions were being made at the University without input from the cities.

On page 59 of the Identification of Technology Clusters for Business Development report, the 10th recommendation reads ‘add leadership representation from the cities of Champaign and Urbana and the CEOs of successful technology businesses to the advisory group.’

“As I went through (the report), I continued to see references to the Economic Development Advisory (Group) and at some point, it dawned on me that it didn’t include representation from either Champaign-Urbana nor Champaign County,” Marlin said. “The recommendation from the consultant was to include somebody from each community on the committee.”

Prussing said the city hasn’t been involved in the decision to the degree she would have liked to have been.

“(The medical facility has) been mentioned to us, but there haven’t been any big, formal talks,” she said.

Smyth said he did not support this cooperative venture if it was going to lead to more non-taxable property in Urbana. He said he would much rather see the Research Park taking advantage of research opportunities to advance economic development by developing tax-paying businesses and industries in the area as a way to alleviate the tax issues Urbana is facing.

Noting that the park and school districts both rely primarily on property taxes, he wrote to WUNA list, “We do need to come up with both short and long term solutions to this issue.”

Eli can be reached at [email protected] and @Eli_Mur.