Clinic's capital plan focuses on research

Recently unveiled details of Cleveland Clinic's $1.3 billion capital commitment significantly expand on plans to add capacity to its Neurological and Cole Eye institutes — plans first announced three years ago and then paused during the pandemic.

In addition to a new building for the Neurological Institute and expansion of the Cole Eye Institute — each of which grew substantially in scale since 2019 — the Clinic also is expanding research facilities through its commitment to the Cleveland Innovation District, a research and education partnership among five anchor institutions.

The biggest change to the capital plan over the past three years is this "major, major investment in research," said Bill Peacock, the Clinic's chief of operations.

"We haven't made a major significant capital expansion of our research capability since about 2004, when we built the Lerner Research Institute buildings on the south side of Carnegie Avenue," he said. "And we're looking at adding 400,000 square feet of research bench space, laboratories, wet lab, dry lab, computational space. We're very blessed to have money coming from the state, from both JobsOhio and our own purse to make this happen."

The Clinic is collaborating with community partners "to transform Cedar Avenue," Peacock said. In the fall, in partnership with Brooks Automation, the Clinic opened a 22,000-square-foot BioRepository on the south side of Cedar Avenue between East 97th and East 110th streets. The health system also is collaborating with community partners on a $52.8 million mixed-use project now under construction that will bring a Meijer store and apartments to the corner of East 105th Street and Cedar Avenue.

Across from the BioRepository, the Clinic is building two structures to expand its research capacity for the Clinic's new Global Center for Pathogen Research & Human Health, which is part of the Cleveland Innovation District.

The district, unveiled in 2021 as a $565 million project, is a collaboration among the Clinic, MetroHealth, University Hospitals, Case Western Reserve University and Cleveland State University. The initiative draws on $300 million from the Clinic, $110 million from JobsOhio and $155 million from the state.

From JobsOhio, the Clinic will receive up to $45 million. The state money consists of a job-creation tax credit for the Clinic, worth an estimated $55 million based on hiring and payroll over a seven-year period; and a $100 million forgivable loan for construction of research facilities as part of the pathogen center.

For the combined estimated $200 million investment from JobsOhio and the state, the Clinic made a series of commitments, including creating 1,000 jobs in seven years.

As part of its agreements with JobsOhio and the state, the Clinic committed to creating 8,500 jobs, including 1,000 direct positions and 7,500 indirect roles in everything from healthcare and research to support services.

The system estimates the current capital projects it announced will add 2,100 direct jobs, 1,000 of which would be related to JobsOhio targets, while the remaining 1,100 is new staff for the Neurological and Cole Eye institutes and construction. The Clinic also anticipates adding a total of 7,500 indirect jobs.

Most of the Clinic's $1.3 billion capital spend for 2022 will be on its main campus. Of that, $82 million is related to the Innovation District. Philanthropy will help offset some of the costs. The capital spend includes $700 million in recapitalization (equipment & infrastructure), $200 million in IT systems and $400 million to support projects including the Neurological and Cole Eye Institutes, as well as regional projects like the construction of Mentor Hospital.

Other capital projects include renovations at Fairview Hospital, an expansion of the top floor of the bed tower of Cleveland Clinic Florida's Weston Hospital and Cleveland Clinic London, which opened in March.

At 1 million square feet, the building for the Neurological Institute is more than double the initially announced footprint, and when complete, it will be the tallest building on campus, Peacock said.

While the old plan was for an outpatient building, this one added inpatient services with more than 200 beds and a floor dedicated to operating and procedural rooms, said Dr. Andre Machado, chair of the Cleveland Clinic's Neurological Institute. The facility, to be built between East 86th and East 90th streets, also will house imaging and surgical services, as well as research laboratories.

The construction requires the demolition of the "P" building (a surgery center at the corner of East 90th Street and Carnegie Avenue), the attached "PP" parking garage, as well as the "PL" building, which is the former home of the Cleveland Play House.

Once demolished, the area where the Play House complex now stands will serve as a construction staging area during the project.

Long-term, the Clinic is considering future development at the location, "particularly as we expand our research capability," Peacock said. Possible development could be a clinical or research facility or some sort of mixed-use project.

"We're very open right now, and we're exploring all possibilities," he said, noting the changes in the plans over the past three years for the Cole Eye expansion and Neurological building. "And just as in the space of time that passed between the last baseline you have in our discussion today ... I am sure that as we deliver these new facilities, other opportunities will emerge and give us greater clarity on how we'll develop that western side of our campus."

In 2021, the Neurological Institute had about 261,000 outpatient encounters on the main campus, which is projected to be 277,000 by 2025, with a big spike to 341,600 encounters in 2026 when the building is expected to open.

In addition to accommodating growth, the new building allows neurological services to be centralized in one spot rather than the five or six main campus locations they're currently spread across.

"I can give you a very long alphabet soup of Cleveland Clinic buildings where we practice," Machado said. "And this is going to allow not only for the consolidation, but also growth and a very significant improvement in the technology that we can use to provide care, and in the experience of the patient."

A $10 million donation from the Charles L. Shor Foundation has supported design and planning of the building, for which construction is slated to begin this year.

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For the Cole Eye Institute project, the Clinic held a ceremonial groundbreaking on Friday, May 20, and the project is expected to begin later this summer with an expected completion at the end of 2025. The 150,000-square-foot expansion also is larger than the previously announced version and aims to meet a growing demand. The $177 million project includes renovating the existing 130,000-square-foot Cole Eye Institute building.

On Euclid Avenue between East 100th and East 105th streets, the expansion will add operating rooms and procedure rooms and enhance research and education. In total, the Clinic has raised $125 million to support the expansion, including raising funds for capital expenses and expanding patient care, research and education, according to a news release from the Clinic, which noted a lead gift of $31.5 million from Jeffrey A. Cole and his wife, Patricia O'Brien Cole, made the expansion possible.

Dr. Tom Mihaljevic, president and CEO of the Clinic, has had an "unwavering commitment" to continuing the capital projects, Machado said.

"He made it clear that we had to pause just because of this worldwide disaster that was the COVID pandemic," he said. "But even through the thick of the pandemic, his commitment never wavered. It was just postponed for need."

Allan Baumgarten, a Minnesota-based healthcare consultant who studies the Ohio market, among others, said health systems generally took one of three approaches to capital investments during the pandemic: accelerate capital projects in case they need the capacity during the pandemic, continue as planned if projects were already funded and designed, or temporarily put those capital investments on hold. At this point, those that paused them are picking them back up.

Once the new Neurological Institute building opens in a few years, Machado is excited about what will be discovered inside of it.

"The idea is to provide outstanding neurological care today, when we open the doors, right?" he said. "And have under that building, working there, the minds that will come together to develop the neurological care of tomorrow. There are many neurological disorders that are untreatable, and certainly incurable. What excites me is the opportunity to change that."

This story first appeared in our sister publication, Crain's Cleveland Business.