The local governments involved have embraced the healthcare marketplace idea as a way to bring tax revenue, business travelers and jobs to their cities. But companies themselves seemed to have shown less enthusiasm for the “medical hub” concept.
The Nashville Medical Trade Center became the concept's latest casualty when developer Market Center Management Co., Dallas, pulled the plug on the project. Bill Winsor, Market Center's president and CEO, blamed the sluggish economy as well as uncertainty around healthcare reform for the inability to secure enough leases to obtain financing.
The project hit the skids despite securing the Healthcare Information and Management Systems Society as an anchor tenant, which was supposed to draw other healthcare information technology firms to the space. A HIMSS spokeswoman did not respond to a request for comment. The trade center was slated to take over the space of Nashville's existing 1.5 million-square-foot downtown convention center; the city is building a new convention center at another site downtown.
A 2009 economic assessment from the University of Tennessee's Center for Business and Economic Research, Knoxville, suggested that if the project had been completed in its entirety, the trade center would have directly created 2,760 jobs, the majority of which would be high-paying sales and marketing positions at tenant companies, as well as 4,400 indirectly in a multiplier effect.
The economic assessment also calculated that the state would see $20 million in annual revenue from additional sales and hotel taxes from trade show attendees.
LeAnn Luna, an associate professor of accounting at the University of Tennessee who conducted the economic assessment, noted that the numbers were based on the assumption that the entire three-phase project would be completed and that the space would be filled.
She added that the assessment wasn't designed to look at whether the concept was workable, and said there could be a number of reasons why it failed. It's possible, she speculated, that tenants thought the pre-built space wouldn't suit their needs, or perhaps there wasn't enough interest in the concept.
Thomas Gormley, the Nashville-based director of healthcare and life sciences services at URS Corp., an engineering and design firm, noted that despite Nashville's perception as a healthcare hub, most of the for-profit hospitals based there—including industry giant HCA—already have contracts with group purchasing organizations. “It kind of makes me think it's an idea that doesn't have any legs,” Gormley said. “That's not the way most of these hospitals buy their products.”
Dennis Daar, a Cleveland-based managing partner at Medical Strategies International, noted that hospital purchasing often involves a number of decisionmakers on the clinical and business sides. “Healthcare equipment is not bought by coming around and kicking the tires at a trade show,” he said.
Cleveland would be the first city to test the healthcare marketplace concept if it opens its Medical Mart as scheduled in July 2013.
Unlike the Nashville Medical Trade Center, the taxpayer-funded Ohio project, which is a combined Medical Mart and convention center, already has the financing it needs to proceed. Construction has already started on the $465 million, 1 million-square-foot facility, which has secured 20 tenants, accounting for 40% of the space. It also has an industry advisory board that includes some heavy hitters in the sector such as Cardinal Health, the Cleveland Clinic, Johnson & Johnson, Medtronic and Cisco Systems, among others.
In a statement, Jim Bennett, senior vice president at Merchandise Mart Properties, the Cleveland Medical Mart's Chicago-based developer, called Cleveland “the nation's medical capital” when he reaffirmed the project's completion date.
Daar said Cleveland's healthcare organizations might not be enough to ensure success. “Every major city has world-class institutions,” he said. “I think they're still going to have problems.”
Caroline Young, president of the Nashville Health Care Council, an industry group, said that she doesn't expect the Medical Trade Center's suspension to have any effect on attracting companies to the city. “As home to the headquarters of the majority of investor-owned hospital management companies, Nashville offers a combination of expertise in both healthcare facilities management and health information technology innovation,” she said in an e-mail.
In New York, the World Product Centre has faced a number of starts and stops. The project, which is being developed by a for-profit subsidiary of the Greater New York Hospital Association, was put on hold in 2010, and a spokesman said in an interview last year that it had been scaled back and did not have an active site.
A marketing director could not be reached for comment for an update on the project. Its website lists an opening date of winter 2013 as well as an address on the far west side of the city near the Javits Center.
“New York had a grand, grand vision for it,” Daar said. “It was just a costly endeavor.”
