October 11, 2011

An Inapplicable Model

Justin Katz

Honestly, something about Governor Chafee's fact-finding missions makes me very nervous. Consider this, from his latest trip, to Pittsburgh. It focuses on the University of Pittsburgh Medical Center (UPMC), which is attracting all sorts of federal money and expanding the prominence of the University's medical program:

Dr. Edward Wing, now dean of medicine and biological sciences at Brown's Alpert Medical School, worked 23 years at the University of Pittsburgh. He notes that the western Pennsylvania medical school — with massive collaboration, clinical-research dollars and consolidation — has since catapulted from the middle of the pack to among the nation's top-tier medical schools.

UPMC is now a $9-billion global health enterprise that operates more than 20 hospitals and 400 outpatient sites; employs more than 2,800 physicians and 54,000 employees; ranks as western Pennsylvania’s largest employer and the state’s second-largest. ...

In the midst of the tour, Wing noted, "It's very hierarchical, so they can make decisions easy. It's much harder in Providence." ...

At UPMC, it's clear that money drives activity.

So, you've got a massive, hierarchical structure fueled with giant infusions of public money and absolutely central to the local economy. That sounds extremely risky, and while I don't know enough about Pennsylvania politics to know how they're handling it, out there, I simply wouldn't trust the power brokers of Rhode Island with such an entity.

And that's if the feat would be possible to reproduce. One need only look at a map to see one way in which Pittsburgh differs tremendously from Providence: There's no urban competition in proximity. We've got Boston and New York City within easy striking distance.

The governor should turn his sights away from top-down behemoths and look toward making Rhode Island notable, in the crowded Northeast, for being an easy and inexpensive place to start and grow business. Our economic development people look to UPMC and see the flow of money that they could use to get entrepreneurs and innovators over the hump of high expenses and difficulty, in RI, when they should be looking to flatten it, instead.

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And in Houston, there was an investment of $3 billion of public monies to build out the 1,000 acres for their complex.

None of these models apply well to Providence at all.

Rhode Island should package up the remainder of the $125 million EDC 'Curt Schilling' dollars - I believe this is $50 million - and bundle it with the 195 land. Then, take the whole package out and shop for a national class company to put up an office tower here and re-locate a few divisions to the prime waterfront acreage.

To make an impact, the 195 land needs to support thousands of permanent new jobs. Let's all hope that the 195 land does not turn into another Quonset Point, where each acre of land on average supports 8 or 9 jobs.

Posted by: Ken Block at October 11, 2011 9:58 AM

Ken, you refer to the $75M "Curt Schilling money" as if it was spent. It's not spend, actually, not a dollar of it has been lost, correct? All that the state did was put up a guarantee against loans that 38 Studios got from banks. And even at that, it's impossible for the state to lose the full $75M, right? It's all graduated. Little bits at a time.

I understand that the state can't put up new guarantees with the same money, but I think it confuses the public to make it sound like that money is "spent".

Posted by: Patrick at October 11, 2011 10:33 AM

$50 million of the $125 million is not promised to anyone as far as I know.

Didn't the State lose all of the $250K that was loaned to Mike Trainor. Was that also a loan guarantee, or was it an outright loan? Does it matter? If the State guarantees a loan that then gets defaulted on, then the State is the one that is out the $$.

Posted by: Ken Block at October 11, 2011 11:14 AM

After one quick reading, it's not entirely clear to me who the "it" is that Dr. Wing is referring to as very hierarchical -- the government, the hospital or some subset of both or either?

Posted by: Andrew at October 11, 2011 11:34 AM

"Honestly, something about Governor Chafee's fact-finding missions makes me very nervous."

Funny, the same thing occurred to me this morning when I heard he was off to attend a conference in Hartford. Can't imagine why we've become apprehensive about the governor's "fact-finding" missions.

He goes to Pittsburgh and comes back with ideas about geographically inappropriate, government funded development.

He goes to Utah and comes back with ideas about handing out tuition subsidies and drivers licenses to illegal aliens.

What ideas is he going to return from Hartford with???

Posted by: Monique at October 11, 2011 12:17 PM

He wants to bring the Hartford Whalers to Providence. None of his minions have the heart to tell him that (A) they moved to North Carolina and (B) Providence already has a hockey team.

Posted by: Max Diesel at October 11, 2011 2:16 PM

"He wants to bring the Hartford Whalers to Providence"

Max do not be so hard on Gump. He is a Gordie Howe fan and heard he plays for the Whalers.

Actually Chafee is doing what all failed pols do. They get the heck out of their states.

Posted by: ANTHONY at October 11, 2011 2:25 PM

Ken, the $250k to Trainor was a loan, not a loan guarantee.

Yes, if the state guarantees a loan and the company defaults, the state is out the money. However it is not possible for RI to be out the full $75M. The amounts are graduated through time and 38 Studios needs to hit certain requirements along the way.

I'm not saying I'm in support of what the EDC did there, just trying to clear up some misunderstandings.

Posted by: Patrick at October 11, 2011 4:18 PM
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