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A BLUEPRINT FOR SUCCESS
BUFFALO LOOKING TO FOLLOW LOUISVILLE

Fifteen Western New York business and government leaders flew here last week on a mission to, in the words of Buffalo Niagara Medical Campus Chairman Thomas Beecher, "steal shamelessly."

The bluegrass region is in the midst of almost $2 billion worth of business investment. And while it may not be a professional sports town yet, it has blown by Buffalo in population, job creation and regional planning.

Louisville is where Buffalo wants to be: It created 50,000 net new jobs in the last three years. The Louisville-Jefferson County community built a prosperous future focused on the distribution and medical industries, starting with much less than Buffalo.

Louisville has no natural wonder of the world, no international border, no Great Lakes, no national cancer institute, no NFL or NHL team, no 90-minute drive to one of North America's most dynamic cities.

Local leaders returned from Louisville encouraged by visions of what Buffalo-Niagara might become.

The Kentucky city's secret for doing more than Buffalo with less may be one simple thing -- adopting a strategic plan committed to the principle of "a rising tide lifts all ships," said Joseph F. Reagan, the No. 2 person at Louisville's economic development agency.

"Every elected official, every business leader here, we're all on the same page. There's no argument about our direction, and that makes it so much easier to marshal the resources we need," said
Reagan, executive vice president of economic development for Greater Louisville Inc.

While Buffalo spent the last five years bickering about bridges, zoos and turf protection, Louisville launched a "10-year vision" crafted by a national consultant and a panel of 300 citizens.

While leaders in Depew and Lancaster dismissed discussion last fall about their school systems joining forces, citizens in Louisville-Jefferson County voted Nov. 7 to merge their entire city and county governments.

Streamlining local bureaucracy could further reduce the tax burden in Louisville, accelerating the region's job creation and economic expansion, officials said.

Louisville, home to a Ford plant making F-series trucks, has emerged as the kind of place to which pro sports teams from sinking cities relocate. The Ohio River city already is luring valuable assets from other communities.

Dr. Suzanne Ilstadt, a leading bone marrow transplant researcher, moved her entire team of 40 scientists from Philadelphia to Louisville in 1999.

"The thing that struck me here is that they're stealing people from other places," said Buffalo Mayor Anthony M. Masiello, who went along on last week's trip. "The biggest obstacle for us is to come to realize that we can compete with anybody right now and that we've got to get our collective act together in a hurry. And that is starting to happen."

Building a medical campus

The main reason Masiello went to Louisville with Buffalo Niagara Enterprise President Thomas Kucharski and local medical leaders was to tour the Louisville Medical Center.

The medical institutions centered around High Street in Buffalo have revived a 10-year-old idea of creating a 20-block unified "Buffalo Niagara Medical Campus." The organizations would not merge assets but operate under cooperative agreements and some shared services. They also could market the campus nationally.

The plan envisions linking a new Children's Hospital, by bridge, to Buffalo General Hospital and Roswell Park Cancer Institute, constructing 400,000 square feet of new research space and moving all the University at Buffalo School of Medicine's department chairs to the campus.

Kaleida is shifting resources from Millard Fillmore Gates Circle to Millard Fillmore Suburban and will concentrate city inpatient care at Buffalo General. The system recently applied to state regulators for a $20 million expansion at Millard Fillmore Suburban in Amherst.

Buffalo Niagara Medical Campus has two core goals -- creating a hub of excellence to draw surgery patients from outside the region and expanding local research to spin off new drugs and devices.

State officials are seriously considering investing more than $100 million in Buffalo to harness the power of UB's new supercomputer for humane genome research, bio-informatics and drug design. A big chunk of that money is in Gov. George E. Pataki's 2001 budget.

Louisville placed its hospitals on one campus years ago. In 1998, Kentucky Gov. Paul E. Patton put $33 million into the University at Louisville, a public institution, to expand medical research. The public money was matched by $33 million from the private sector.

Kentucky also is financing $69 million for 250,000 square feet of new research space either recently completed or under construction at the medical center here.

"This is a perfect template for what we're trying to accomplish," said John Friedlander, president and chief executive of Kaleida Health.

Leaders at Louisville's major institutions -- Jewish Hospital, Norton Hospital and the University of Louisville -- said their collaborative efforts help operating budgets leave capital for new equipment.

The hospitals on the campus share support services, such as a central boiler for heating, a combined laundry service and transport helicopters. Norton runs both an adult hospital and the 253-bed Kosair Children's Hospital, which are linked by bridge.

Running joint hospitals with a merged staff allows the connected facilities to share anesthesiology, radiology and other core medical services. Children at Kosair have access to state-of-the-art equipment on the other side of the bridge.

In January 2000, Norton Hospital became only the fourth U.S. hospital to install an inter-operative MRI. Surgery occurs inside the state-of-the-art MRI as the magnet constantly beams patient images to surgeons.

Norton bought the $3 million machine from GE Medical Systems.

"We were not running operating deficits at that time so, quite frankly, we had enough money to go out and buy that," said Shirley Powers, a hospital consultant and former executive vice president at Norton.

Dr. Thomas Moriarity, a Louisville neurosurgeon, told the Buffalo visitors how the equipment let him remove a tumor from the brain stem of a 12-year-old girl while avoiding permanent damage. High-risk brain surgery is much simpler using the machine, with some kids being released from the hospital in just a couple days, he said. Norton's brain surgery business has doubled in the last year.

"The time going between the magnet and the recovery room at the children's hospital is just a couple of minutes. It works great," said Moriarity, ironically a former UB student and Buffalo General volunteer.

Medical revolutions also are occurring at Jewish Hospital, one of five facilities in line to install a new two-pound artificial heart in a patient this year.

Louisville's three major institutions teamed in 1997 and put up a $5 million line of credit to establish the Louisville Medical Center Development Corp. The new organization focuses on luring businesses to the campus and helping scientists form start-up companies to commercialize discoveries.

The city spent $2.3 million acquiring a three-building complex, totaling 87,000 square feet, on the edge of the medical campus for the development corporation. The new biomedical park, which is not yet renovated, already has attracted the U.S. distribution arm of a German medical device company, a health informatics company from Atlanta and a company founded by a University of Louisville researcher to make biochips.

"We've been able to find ways to bring value to the community beyond what we provide in health care services," said James Taylor, a Lewiston native who is president and chief executive of University of Louisville Healthcare, about the medical community's new economic development focus.

Buffalo has assets, too

Despite Louisville's accomplishments, which include increasing grant funding by 20 percent last year to $32 million and launching a plan to create 1,800 jobs in its biomedical park, some of its leaders have a case of Buffalo envy.

They said Buffalo could turn its medical campus into a powerful economic development tool.

"We're not the research engine that Buffalo is, and it breaks my heart that we're not the research engine that Buffalo is," said Steven Spalding, executive director of the Louisville Medical Center Development Corp., who toured Buffalo last year.

Louisville's primary medical goal is to get a National Cancer Institute designation in the next five years by drawing $15 million to $20 million in new grant funding for cancer research.

Buffalo already has Roswell Park Cancer Institute bringing in almost $40 million annually from grants and royalties, despite recent criticism of the hospital by a government watchdog group.

Louisville also wants to establish a structural biology program because it thinks human gene research is "the future of medicine," as one hospital official said.

Buffalo has an advanced structural biology research program at Hauptman-Woodward Medical Research Institute, the home of Nobel Laureate Herbert Hauptman.

"The thing that strikes me the most is we not only have all the pieces already in place, but as we look at some of these peer cities, we see that we have a much broader and deeper foundation," said Cynthia Schwartz director of corporate projects for Roswell Park Cancer Institute.

Although Buffalo has valuable assets, there are also big challenges to overcome. The National Cancer Institute has threatened to remove Roswell's national designation in the next three years.

The institute, following a 1999 study, said Roswell Park needs to recruit more scientists "capable of contributing at the highest levels" and add more research space.

Roswell Park has made strides since the report, recruiting several new researchers in immunology and oncology. The state gave Roswell Park more operating flexibility by changing it to a public benefit corporation in 1998.

The structural change freed Roswell Park from the state's salary scale, which capped new researchers at less than $100,000 a year. Those starting salaries made it tough to compete against private institutions offering upwards of $150,000 a year, Schwartz said.

The change also gives Roswell Park greater freedom to commercialize products and take equity in start-up companies. A major drug discovery at Roswell Park today could lead to much broader local economic impact than the modest royalties generated by Photofrin, a cancer therapy drug developed by Dr. Tom Dougherty at Roswell Park in the 1980s, Schwartz said.

Funding in Pataki's budget could lead to several new research buildings on the medical campus. But the state typically does not provide additional funding for new building operating expenses, which can force cuts in other programs, according to local medical leaders.

The University of Louisville also has a more liberal intellectual property rights policy than UB. Researchers at the Louisville university can get as much as 90 percent of all royalties from discoveries funneled back to their departments, a powerful incentive, while UB researchers almost never get more than 50 percent.

From the economic development standpoint, Louisville has the advantage of being a much cheaper place than Buffalo to run a business. The community's regional government approach, which includes one countywide school system, holds down local property taxes.

Despite the challenges in Buffalo, Kaleida Health Chairman Anthony Gioia thinks the medical campus is ready to flourish. Gioia, a local businessman and prominent Republican fund-raiser, said the state's new focus to prime the research pump at Roswell Park and UB is a major reason why "all the stars and planets align" for the campus.

But Beecher, a veteran attorney who chairs the Buffalo Niagara Medical Campus, knows Buffalo residents have heard all this talk before about doing great things on High Street.

"I don't think the community should believe this will be any different until we've been able to accomplish something. I'm not asking them to believe it," Beecher said.

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