20121105-NEWS--1-NAT-CCI-CL_--
11/2/2012
3:01 PM
Page 1
$2.00/NOVEMBER 5 - 11, 2012
Metro nearing end of CEO search
INSIDE
New leader will face budget challenge, must carry out outpatient plan
The region’s AgBio industry cluster has a new leader, and he’ll push the group’s most promising ideas. PAGE 11
By TIMOTHY MAGAW tmagaw@crain.com
The MetroHealth System is down to the final four candidates in its quest to find the next CEO to steer the hard-pressed health system that is subsidized by Cuyahoga County. “We’ve been working with a
Biz travel becoming a more costly proposition Creativity, agencies help minimize spending
couple of those (candidates) a little more intensely than the others,” said MetroHealth board chairman Ronald Fountain, though he wouldn’t share details about the candidates or say whether any were current MetroHealth employees. “If things work the way we hope and expect them to, we should have
a candidate for consideration by the board before the end of the year,” Dr. Fountain said. MetroHealth’s current CEO, Mark Moran, announced nearly a year ago that he would step down from the post once his successor was named. Mr. Moran, whose contract expired last March, joined
INSIDE: Southwestern Cuyahoga County is a focus in the region’s competitive health care market. Page 3 MetroHealth on an interim basis in 2008 and expected to stay on board for two years at the most. “He’s been great,” Dr. Fountain said about Mr. Moran. “We didn’t have somebody as quickly as he
A boost for local agriculture, bioscience
ALSO: ■ Legal experts say new breach of contract statute makes Ohio more attractive to business. PAGE 4
See METRO Page 18
BROWNS, HASLAM SEE BUSINESS DOWNSTATE New owner looks to Columbus as battleground to woo more customers Full story by JOEL HAMMOND ■ PAGE 7
By GINGER CHRIST gchrist@crain.com
Soaring airfares are bringing out the creativity in business travelers, while providing travel agencies with an opportunity to gain clients eager to hold down their costs. Marc Insul is among the business travelers struggling to find affordable flights — a problem exacerbated by fewer flights. The president and chief INSIDE: Shutoperating officer tle operators, of Commercial hoteliers balk Asset Preservaat latest city tion, a provider of proposal to property mainteincrease pernance and buildtrip fees to ing preservation airport. Page 3 services, spends 20% of his time away from his Cleveland office as he travels for conferences and sales calls and conducts business at his company’s headquarters in Salt Lake City. So, Mr. Insul is adjusting. He recently was going to stop at the corporate office on his way to a meeting in Southern California, but rescheduled the visit to Utah as a separate trip later because the revised arrangements saved roughly $500.
NEWSCOM/ STEVE BENNETT ILLUSTRATION
43
See TRAVEL Page 17
0
NEWSPAPER
74470 83781
7
SPECIAL SECTION
FINANCE Banks more frequently entering schools to teach financial literacy ■ Page 13 PLUS: CAMPUS EXCLUSIVITY ■ ADVISER ■ & MORE
Entire contents © 2012 by Crain Communications Inc. Vol. 33, No. 43
20121105-NEWS--2-NAT-CCI-CL_--
2
11/2/2012
3:24 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
COMING NEXT WEEK It’s that time of year again ... A Geauga County Christmas tree farm will celebrate the season under new ownership. How’s the transition going? Plus, is the holiday optimism being felt nationwide trickling down to Northeast Ohio’s small retailers?
WWW.CRAINSCLEVELAND.COM
NOVEMBER 5 - 11, 2012
THEY’LL MANAGE Among employed men, 17% of Asians and whites worked in managementrelated occupations at the end of 2011, compared with 10% of blacks and 8% of Hispanics, according to new federal government data. For employed women, smaller percentages of Asians and whites were in management compared with men, while larger percentages of blacks and Hispanics occupied such positions. Here’s how the demographics break down:
Men 16+
White
Black
Asian
Hispanic
Management
17.4%
9.7%
16.9%
7.7%
REGULAR FEATURES
CORRECTION
Professional
17.6
13.8
32.3
7.9
Classified .....................18 Editorial .........................8 Going Places ................10 Letter.............................8 List: Largest hospitals ..16 Milestone .....................19 Reporters’ Notebook ....19
An Oct. 29, Page One story incorrectly reported the budget period for the proposed budget under consideration by the Ohio Third Frontier Commission. The proposed budget is for calendar year 2013. The commission until recently operated under a fiscal year that started on July 1.
Sales
16.6
18.0
17.1
14.6
Women 16+
White
Black
Asian
Hispanic
Management
14.7%
11.2%
15.4%
8.9%
Professional
27.6
22.9
29.0
16.3
Sales
31.8
30.8
26.3
31.8
700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 Phone: (216) 522-1383 Fax: (216) 694-4264 www.crainscleveland.com Publisher/editorial director: Brian D. Tucker (btucker@crain.com) Editor: Mark Dodosh (mdodosh@crain.com) Managing editor: Scott Suttell (ssuttell@crain.com) Sections editor: Amy Ann Stoessel (astoessel@crain.com) Assistant editor: Joel Hammond (jmhammond@crain.com) Sports Senior reporter: Stan Bullard (sbullard@crain.com) Real estate and construction Reporters: Jay Miller (jmiller@crain.com) Government Chuck Soder (csoder@crain.com) Technology Dan Shingler (dshingler@crain.com) Energy, steel and automotive Tim Magaw (tmagaw@crain.com) Health care and education Michelle Park (mpark@crain.com) Finance Ginger Christ (gchrist@crain.com) Manufacturing, marketing and retailing Research editor: Deborah W. Hillyer (dhillyer@crain.com) Cartoonist/illustrator: Rich Williams Marketing director: Lori Yannucci Grim (lgrim@crain.com) Marketing/Events manager: Christian Hendricks (chendricks@crain.com) Assistant Events Manager: Jessica Snyder (jdsnyder@crain.com) Advertising sales manager: Nicole Mastrangelo (nmastrangelo@crain.com) Senior account executive: Adam Mandell (amandell@crain.com) Account executives: Dawn Donegan (ddonegan@crain.com) Andy Hollander (ahollander@crain.com) Lindsey Nordloh (lnordloh@crain.com) Sales and marketing assistant: Michelle Sustar (msustar@crain.com) Office coordinator: Toni Coleman (tcoleman@crain.com) Digital strategy and development manager: Stephen Herron (sherron@crain.com) Web/Print production director: Craig L. Mackey (cmackey@crain.com) Production assistant/video editor: Steven Bennett (sbennett@crain.com) Graphic designer: Lauren M. Rafferty (lrafferty@crain.com) Billing: Susan Jaranowski, 313-446-6024 (sjaranowski@crain.com) Credit: Todd Masura, 313-446-6097 (tmasura@crain.com)
Crain Communications Inc. Keith E. Crain: Chairman Rance Crain: President Merrilee Crain: Secretary Mary Kay Crain: Treasurer William A. Morrow: Executive vice president/operations Brian D. Tucker: Vice president Robert C. Adams: Group vice president technology, circulation, manufacturing Paul Dalpiaz: Chief Information Officer Dave Kamis: Vice president/production & manufacturing G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) Subscriptions: In Ohio: 1 year - $64, 2 year - $110. Outside Ohio: 1 year - $110, 2 year - $195. Single copy, $2.00. Allow 4 weeks for change of address. For subscription information and delivery concerns send correspondence to Audience Development Department, Crain’s Cleveland Business, 1155 Gratiot Avenue, Detroit, Michigan, 48207-2912, or email to customerservice@crainscleveland.com, or call 877-812-1588 (in the U.S. and Canada) or (313) 446-0450 (all other locations), or fax 313-446-6777. Reprints: Call 1-800-290-5460 Ext. 125 Audit Bureau of Circulation
20121105-NEWS--3-NAT-CCI-CL_--
11/2/2012
2:48 PM
Page 1
NOVEMBER 5 - 11, 2012
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
3
Local med device maker growing under new owner Dutch firm expands role of Medina’s OrthoHelix By CHUCK SODER csoder@crain.com
MARC GOLUB
Shuttle operators wait for passengers in the arrivals area at Cleveland Hopkins International Airport on Friday.
DRIVERS SHARE AIRFARE Airport shuttles, limousine operators latest target of increased per-trip cost to Hopkins as city aims to hold down landing fees By JAY MILLER jmiller@crain.com
A
irport shuttle and limousine operators are honking their horns in anger over the possibility of a per-trip fee to pick up and drop off passengers at Cleveland Hopkins International Airport. For its part, the city of Cleveland, which owns and operates the airport, says it only is bringing its ground transportation fee in
line with its costs and with fees charged by other airports around the country. In the middle, the head of the Airport Ground Transportation Association, members of which include parking lot owners and airports, says the Cleveland fee increase isn’t out of line with what airports nationwide are asking, though he questions the fairness of not easing in such a big increase.
See ORTHO Page 18
THE WEEK IN QUOTES “The first thing right off the bat this person needs to have is the ability to craft a vision for the organization and communicate it in a way that’s credible to the people listening.” — Bill Ryan, president of the Center for Health Affairs. Page One
“This is a big state, with a lot of people and a lot of successful businesses, and we need to get them more involved with the Browns.” — Jimmy Haslam, owner, Cleveland Browns. Page 7
See FARE Page 6
INSIDE THE CRAIN’S VAULT In October 2007, Crain’s reported that taxicab operators excluded by the city from picking up fares at Cleveland Hopkins International Airport sued the city. From that story: The suit charges the city with breaching its contracts with the four licensed cab companies and the citylicensed drivers, and with discriminating against the companies and drivers. The cab companies also asked for a temporary restraining order to prevent the city from instituting its new cab system at Cleveland Hopkins.
The volume of business that officials at OrthoHelix Surgical Designs in Medina oversee is about to double, thanks to its new Dutch parent. Stripe Tornier N.V., which acquired the orthopedic device maker Oct. 4, plans to put OrthoHelix in charge of its foot and ankle product line, said Dennis Stripe, president of OrthoHelix. That line brings in about $25 million in revenue per year; by comparison, OrthoHelix as a whole is expected to generate $30 million in sales this year. The move is just one piece of evidence suggesting that Tornier not only plans to keep OrthoHelix in
Medina, but also to help the fast-growing operation expand even faster now that it’s a division of the Amsterdam-based medical device company. Even without the new products, OrthoHelix already plans to hire 20 to 30 people over the next six to eight months, said Mr. Stripe, whose company makes implantable screw-and-plate systems surgeons use to fix bone deformities and fractures. “That number could go up,” he said. Tornier (pronounced torn-yay) announced in August that it would buy OrthoHelix for $135 million in cash and stock. The figure could
That plan gave three cab companies exclusive rights to pick up passengers at the airport terminal. It also added a $3 surcharge to rides originating at the airport and raised taxi fares from the airport significantly, nearly doubling some fares. Attorney Gordon Friedman, who represented ABC Taxi, Airport Taxi, USA Taxi and United Cab Co., said the financial thresholds set by the city to qualify for the right to serve the airport were set high to rule out his clients. To read the entire story, follow this URL: http://tinyurl.com/b3tvl3b.
“If a customer is more financially literate and makes better decisions … they’ll be a better customer for the bank.” — James Thurston, spokesman, Ohio Bankers League. Page 13
“We like student customers because they will be higher wage earners in the future; they’ll ... probably stay inside our footprint.” — Nick Certo, PNC’s senior vice president and manager of university and workplace banking. Page 13
INSIGHT
Cuyahoga’s southwestern tip now ground zero in health care fight Hospitals see Middleburg Heights as prime target for revenue generation By TIMOTHY MAGAW tmagaw@crain.com
In the next five weeks, steel will start to rise from the toiled earth surrounding Southwest General Health Center as it makes headway on a $128 million expansion project that will alter dramatically the hospital off Bagley Road in Middle-
burg Heights. About two miles southeast, at the border of Middleburg Heights and Strongsville, MetroHealth is erecting a 57,000-square-foot multispecialty health center — a $23 million investment that officials hope will bring more paying patients into the fold of the health system subsidized by Cuyahoga
County. Then there is the Cleveland Clinic, which doubled the size of a rehab site in Middleburg Heights last year and plans to expand services at its health center in Strongsville, which records more than 210,000 patient visits each year and remains one of medical giant’s busiest facilities. This frenzy of activity has made
the southwestern portion of Cuyahoga County — an area that includes Berea, Middleburg Heights and Strongsville — the latest battleground in Northeast Ohio’s competitive health care market. And as these expansion plans take hold, industry onlookers say, suburban health care seekers could find themselves awash in a marketing onslaught as medical providers vie for their health care dollars. “These communities are doing
quite well as a whole,” said Southwest General president and CEO Thomas Selden. “Everybody who needs paying patients looks at our area. We have a good demographic in terms of patients and their ability to have insurance and to pay for their care.”
Coping with volume Middleburg Heights saw its population inch upward about 3% See HOSPITALS Page 17
20121105-NEWS--4-NAT-CCI-CL_--
4
11/2/2012
2:31 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
NOVEMBER 5 - 11, 2012
Another investor buys up AG stock Former Pulte CEO’s firm secures 5.49% stake amid go-private offer for American Greetings By MARK DODOSH mdodosh@crain.com
Wednesday, December 5, 2012 Executive Caterers at Landerhaven B N t #SFBLGBTU /FUXPSLJOH B N t 1BOFM %JTDVTTJPO
Sustainability In the Supply Chain Innovation is what good businesses do best. Learn how to affect change across your supply chain.
$ $
Sponsored by
$ $
Underwritten by
3&(*453"5*0/ Contact Jessica Snyder at
Another investor — this time, a Michigan investment firm controlled by James J. Grosfeld, a former CEO of homebuilding giant Pulte Homes — has secured a 5% stake in the Class A common stock of American Greetings Corp., which is the object of a go-private offer by members of the Weiss family. In an Oct. 26 filing with the Securities and Exchange Commission, Dawson Investments LLC of Southfield, Mich., said it had acquired 1,580,614 shares, or 5.49%, of American Greetings’ Class A stock as of Oct. 23. Dawson Investments paid nearly $26.9 million for those shares, which it bought from Oct. 8 to Oct. 23 on nine different trading days. The stock was bought at pershare prices ranging from $16.83 to $17.15. The Weiss family and other related parties have offered $17.18 a share for the Class A stock of American Greetings that they don’t already own. According to the SEC filing, Dawson Investments is solely owned by the James J. Grosfeld Trust, of which Mr. Grosfeld is trustee. The filing states that the sole business of Dawson Investments is holding investments on behalf of the trust. The money used to buy the American Greetings shares came from contributions to Dawson Invest-
ments from the personal funds of Mr. Grosfeld and from the trust, according to the filing. Dawson Investments is the second investor in American Greetings to file an SEC Schedule 13D since the company’s Sept. 26 announcement that the Weiss family formally had approached the American Greetings board with an offer to take the company private. A 13D filing is required once a buyer secures at least 5% of a company’s stock. TowerView LLC, an investment firm controlled by New York investor Daniel R. Tisch, notified the SEC in a 13D filing on Oct. 3 that it had increased its stake in American Greetings to 1.45 million Class A shares, or 5% of the Class A stock outstanding. Contacted by Crain’s last Thursday, Nov. 1, Mr. Tisch declined to comment on whether TowerView had either bought or sold any American Greetings stock since its SEC filing. He also would not comment on whether he has had any contact with American Greetings executives or board members, and he would not say what TowerView’s plans are for its investment in American Greetings. Mr. Grosfeld was chairman and CEO of Pulte Homes from 1974 to 1990. He has been a director of investment management giant BlackRock Inc. since 1999 and has served as a trustee of commercial real es-
tate investment firm Lexington Realty Trust since November 2003. According to the Lexington Realty Trust website, Mr. Grosfeld is 74 years ago. According to an April 22, 1997, story in the Detroit Free Press, most of Mr. Grosfeld’s remaining ties to Pulte were severed after he settled allegations that more than 22,000 investors were bilked by a Florida securities firm Mr. Grosfeld owned. The Free Press story said Mr. Grosfeld in January 1997 reached a $40 million settlement with the investors who had sued him in 1990 for alleged fraud in connection with commodities options they had bought through Multivest Options Inc. Mr. Grosfeld’s secretary called last Friday to say he would not comment for this story. An American Greetings spokeswoman who spoke to Crain’s last Friday morning did not provide by the publication’s deadline a response to a question about whether Mr. Tisch or Mr. Grosfeld had contacted either American Greetings executives or board members about their investments in the company. Besides the two 13D filings, at least three lawsuits have been filed in Cuyahoga County Common Pleas Court by American Greetings shareholders who object to the Weiss family’s attempt to take the company private on the grounds that it isn’t a fair offer. The lawsuits name as defendants the company itself and members of its board of directors, which include CEO Zev Weiss, president and chief operating officer Jeffrey Weiss, and their father, chairman Morry Weiss. â–
216-771-5388 or jdsnyder@crain.com
www.CrainsCleveland.com/BREAKFAST
Ohio breach of contract statute shrinks Experts say eight-year limit makes state more attractive to business By MICHELLE PARK mpark@crain.com
In a change that many legal experts say makes Ohio more attractive to business, plaintiffs no longer have the equivalent of nearly four presidential terms to sue someone over the breach of a written contract. The state of Ohio has reduced the statute of limitations for breach of written contract to eight years from 15, bringing Ohio more in line with the rest of the country, local lawyers say. Effective Sept. 28, the change means companies should face less legal exposure because the years for which damages can be sought are seven fewer. It also means companies no longer need to keep 15 years of data and records relating to contracts, the collection and storage of which can prove expensive. Some attorneys can’t believe it took this long for the change to occur. Prior to the change, Ohio had one of the longest statutes of limitations for breach of written contract in the United States, according to a number of local litigation attorneys. “In the past, (when) we explained that Ohio had a 15-year statute of limitations, the response was always, ‘Are you kidding me?’� said Rodger Eckelberry, a partner in litigation in Baker Hostetler’s Columbus office.
“They couldn’t believe that Ohio had such a long statute of limitations for breach of contract.� Driven by their own frustration with what they call an “excessively long� limitations period, Mr. Eckelberry and Mark Johnson, also a litigation partner for Baker Hostetler, co-authored a 2011 article published by the Columbus Bar Association, “Bad for Business: Ohio’s Statute of Limitations for Written Contracts.� For one, most states have limitation periods of six years or less for these kinds of suits, said Mr. Johnson, who also testified before legislators in support of Senate Bill 224, which reduced the limitations period. And Messrs. Eckelberry and Johnson agree: If a contract is breached, it’s unlikely someone will wait 15 years — or even eight years — to sue to recoup their losses. “Court dockets are crowded to begin with,� Mr. Eckelberry said. “There are enough current disputes. We shouldn’t be wasting time on something that happened 12 years ago, 13 years ago. How bad could they have been damaged if they waited 13, 14 years to file suit?�
More certainty welcome The change to an eight-year limitations period benefits the legal system as a whole, according to David A. Schaefer, who chairs the litigation group for McCarthy, Lebit, Crystal & Liffman Co. LPA in Cleveland. “Eight years is certainly more in line with the rest of the country,� he wrote in an email. “By requiring the
suits to be brought sooner, there is a better chance that witnesses are still available and that their memories are fresher. It also benefits the system because it should lead to a somewhat quicker resolution of contractual disputes.â€? Given that breach of written contract is a more common type of consumer class action lawsuit, Mr. Johnson anticipates that smallersize class actions will be filed in Ohio state courts, too. Frank Carrino, chief legal counsel and secretary for Westfield Insurance, a property and casualty insurance company based in Westfield Center, said the reduced limitations period should benefit the insurer and its clients. “It gives us more certainty and gives our clients more certainty about when they’re exposed,â€? Mr. Carrino said. “All kinds of things occur where passage of time is a disservice to the law.â€? Even plaintiffs’ attorneys aren’t crying foul. “I’d be surprised if you find anyone who is too offended by this eightyear statute of limitations,â€? said Kathleen J. St. John, a partner at Nurenberg, Paris, Heller & McCarthy, a Cleveland personal injury firm that also pursues consumer class actions. Ms. St. John said she never understood why written contract plaintiffs were afforded 15 years to sue when the statute of limitations was much shorter for other legal actions, particularly the single year people can file for medical malpractice in Ohio. â–
20121105-NEWS--5-NAT-CCI-CL_--
11/2/2012
3:17 PM
Page 1
NOVEMBER 5 - 11, 2012
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
5
Valley View industrial distributor finds its bearings nationwide Western, southern U.S. next as company tries to top last year’s revenue jump By GINGER CHRIST gchrist@crain.com
Bearing Distributors Inc. is tackling the country — and even a bit of the globe — one customer at a time. The industrial distributor and supplier based in Valley View is following its customers to new markets, using that business as a starting point for national and international growth. The company has 175 branches in the United States, Canada, Mexico, Europe and Asia and has 1,300 employees worldwide, 520 of whom work in the United States. Bearing Distributors in 2012 has opened five locations — it generally opens five or six per year — and plans to open three more before the end of the year. “Our goal is to cover the balance of the U.S.,” said Bill Shepard, director of North America sales and marketing for Bearing Distributors. The company distributes bearings, mechanical power transmission, electrical power transmission, linear motion, fluid power, material handing and safety products. Bearing Distributors is focusing on expansion in the western and southern United States, said John Ruth, the president and chief operating officer of BDI-USA. It also will target growth in Western Europe, South America and the Asia-Pacific region, he said. The company chooses new office locations based on where its existing customers do business but then works to diversify its business in those markets, Mr. Ruth said. The strategy appears to be working. Bearing Distributors’ revenue in 2011 was $590 million, 18% higher than $502 million in 2010 and 47% above 2009 levels of $402 million, according to figures provided by the company. If the company’s current growth streak continues, it plans in 2014 to open a second distribution center to supplement its 48,800-square-foot building on Hub Parkway in Valley View. The center likely would be in Cleveland or another U.S. city, Mr. Shepard said. Mr. Shepard said one reason the company — owned by privately held Forge Industries Inc. of Youngstown — has been able to become a global player while many of its competitors are not is its ability to take risks. “The owner is willing to be a bit more risky than a public company would be,” Mr. Shepard said. “The real issue for us is, ‘What’s the return for us?’” Because a new office can cost several hundred thousand dollars, Bearing Distributors helps minimize the risk in foreign countries by studying the business environment of that country, Mr. Ruth said. “We don’t operate in foreign countries like we’re a U.S.-based
Volume 33, Number 43 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the third week of May and fourth week of May, the fourth week of June and first week of July, the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2012 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136
company. We integrate,” he said. The company hires local people to run and staff the foreign offices, he noted.
One for all To manage its global footprint, Bearing Distributors is rolling out One BDI — an enterprise resource planning software package — to all its offices. Rather than operating nine different systems in 10 countries, Bearing Distributors now will have one system across the board. One BDI provides an opportunity for growth for the company even as the global economy remains uncer-
tain, according to Mr. Ruth. The system, which now is being installed in Europe and will be integrated globally by 2015, allows the company to develop insights on customers’ distribution habits based on historical data, he said. Among the company’s customers are General Electric, Kraft Foods and John Deere, as well as automakers Ford, General Motors and Chrysler. Guy Blissett, wholesale distribution lead at IBM and author of “Facing the Forces of Change,” a book on the future of wholesale distribution, said distributors such
as Bearing Distributors are trying to find ways to provide more services to their customers in an effort to stay competitive in a consolidating market. To win — and keep — the business of large manufacturers, distributors need to offer “everything and anything a factory manager might need,” Mr. Blissett said. “More distributors are broadening their product lines and offering a wider range of products. It helps them soften some of the volatility in the economy,” he said. “Somebody like (Bearing Distributors), if they’re selling bearings into a manufacturing plant, they will also now offer electrical equipment, electrical wiring, conduit, boxes.”
“More distributors are broadening their product lines. ... It helps them soften some of the volatility in the economy.” – Guy Blissett, wholesale distributor lead, IMB Bearing Distributors serves the automotive, material handing, health care, package handling, food processing, power generation, steel, chemicals, wastewater treatment, paper, printing and ethanol industries, among others. Food processing, auto manufacturing and oil and gas are among its strongest growth areas, Mr. Shepard said. ■
YOUR BUSINESS ISN’T JUST A JOB — IT’S A PASSION. You get to know your customers, treat them fairly, and build relationships. Don’t you deserve that same kind of treatment from your bank? With Citizens Bank, you’ll get the right solutions and products from people with the experience to know what’s right. After all, we’ve been around over 140 years, helping businesses just like yours grow. So if you want a bank that shares your passion, call us. BECAUSE WITH US, IT’S PERSONAL. $ ) & $ , * / ( 4 "7 * / ( 4 r -0 " / 4 - * / & 4 0 ' $ 3 & % * 5 r . & 3 $ ) " / 5 4 & 3 7 * $ & 4 5 3 & " 4 6 3 : . " / " ( & . & / 5 r 4 1 & $ * " -5 : ' * / " / $ * / ( r 8 & " -5 ) . " / " ( & . & / 5
1-800-946-2264 CITIZENSBANKING.COM/BUSINESS
20121105-NEWS--6-NAT-CCI-CL_--
6
11/2/2012
2:08 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
IMPROV COMEDY CLUB & RESTAURANT BOOK YOUR HOLIDAY PARTY NOW! Dinner & Show Packages Available 40-400 people
West Bank • Flats • Next to Shooters
(216) 696-IMPROV(4677) ask for the “partyman� www.clevelandimprov.com
WWW.CRAINSCLEVELAND.COM
Fare: Operators object to increased fee continued from PAGE 3
Any time an airport can increase its revenue from vendors and concessionaires, it can reduce the cost airlines pay for their airport operations in the form of landing fees. The lower the charges to the airlines, the thinking among airport operators goes, the greater the likelihood an airport will get more flights or at least not lose flights in the constant reshuffling of airline schedules. The city in January proposed charging limousine companies and airport parking and hotel shuttle operators a $3.50 trip fee whenever they come onto airport grounds. A license plate recognition system would count the trips. The companies currently pay an annual $550 fee per vehicle to use the airport. The airport initiated a similar fee with taxicab operators in 2007, charging a $3 trip fee that could be added to the metered fare and passed along to passengers for each trip leaving the airport.
Cost conscious
2603 W. MARKET ST., FARILAWN ‡ ‡ ‡ ‡ ‡ ‡
$YDLODEOH IRU 6DOH 6TXDUH )HHW /DUJH 6XUIDFH 3DUNLQJ $UHD 7KUHH 6WRU\ $WULXP /RFDWHG 1H[W WR WKH )DLUODZQ &RXQU\ &OXE &ORVH 3UR[LPLW\ WR ,
-DFN : 'UHVFKHU &3$ 6,25 * ) &R\OH ,,, 6,25 ZZZ RVWHQGRUI PRUULV FRP
Ricky Smith, the city’s director of port control and chief of the Cleveland Airport System, told Crain’s in a telephone interview last Thursday, Nov. 1, that the last fee increase, to $550 a year from $500, was four years ago. Before that, for as long as airport staff could determine, the charge was $450 a year. The current fee, Mr. Smith said, generates about $150,000 a year for the airport. The new fee would push that closer to $2 million. His argument in favor of the fee is that it would cover the cost of airport roadway maintenance that’s attributable to commercial vehicles, about $1.2 million, with something left over to reduce the costs the airlines pay.
Turns out the distance between middle management and upper management is one degree.
Executive MBA Open House Friday, Nov. 16, 2012 12:00 p.m. – 3:15 p.m. Register at: weatherhead.case.edu/emba or call 216.368.6411.
NOVEMBER 5 - 11, 2012
“What we’re trying to do is position the airport and its cost structure to have the most favorable happen,� Mr. Smith said. “We want the airlines in a position to add service.� Airports continually worry that cost-conscious airlines will divert flights to places with lower charges. At most U.S. airports, including Cleveland Hopkins, airlines pay all of an airport’s operating costs under a master lease, minus revenue received from non-aeronautical sources, such as parking, concessions and other rental fees. At Cleveland Hopkins in 2011, the airlines accounted for $87.4 million of $115 million in total revenue, according to published income statements. That thinking doesn’t add up for the ground transportation operators, however. Stephen Qua II, president of Company Car & Limousine, said the fee increase could cost his firm another $180,000 annually. He said his 38 vehicles make 1,000 airport trips a week. Mr. Qua said his company is willing to pay its fair share of the cost of parking its cars in the limousine parking lot while they wait for customers. But he questions this new fee. “I don’t know why I should pay anything more to pick up your mother at the airport than you do,� he said. “I wouldn’t complain if they put one of those little baskets at the end of the roadway and everybody threw in a quarter.�
Pay to play Mr. Smith said he thinks it’s fair for a profit-making business to contribute to the cost of maintaining the airport. “The private citizen who is dropping his mother off at the airport is not doing it for a profit and making multiple trips a day to the airport,� he said. At a Cleveland City Council Aviation and Transportation Committee hearing Oct. 24, parking lot and hotel operators offered similar objections to the fee. Susan Kane, a vice president of Park ‘N Fly, a national airport parking company that operates a lot on Snow Road near the airport, said she was worried the fee could put the company out of business in Cleveland. “Cleveland’s proposed fees clearly are out of line (with the industry) and not based on the actual cost of ground transportation service,� Ms. Kane said. She said the fee would raise the fees associated with operating the company’s shuttle services from its parking lot to $228,000 a year from $5,500. Dan Pora, assistant general manager of the Cleveland Airport Marriott, made a similar plea, saying
“I believe there are valid arguments on both sides.� – Martin Keane, councilman, city of Cleveland the fee would add $38,800 to the cost of the hotel’s free shuttle to the airport. He said he couldn’t pass that cost along to hotel guests. Mr. Smith discounted that argument, saying the airport’s analysis suggested that the fee would add at most 25 cents to the cost of a room night at the hotel. He added that when the airport proposed the fee earlier in the year, the city was willing to forgo it until 2013, which gave companies time to build the added cost into their 2013 budgets. Mr. Smith said he is willing to hear alternative proposals for raising revenue.
Could be worse Ray Mundy, executive director of the Airport Ground Transportation Association, said the Cleveland fee only would be slightly above the average of what U.S. airports are charging shuttle and limousine operators. His organization is comprised of ground transportation operators, such as parking lot and limousine firms, airports and industry suppliers. “At $550 per vehicle, the Cleveland airport, for an airport its size, would be in the lowest quartile, probably in the lowest 10% of trip fees being charged,â€? Mr. Mundy said. “Three dollars-fifty cents per trip would put them a little bit above average, but not a great deal.â€? Mr. Mundy said some airports even are charging off-airport parking operators a percentage of their revenue, in the 8% to 10% range, as a condition for access to the airport grounds. “Those operators would love to have a per-trip charge — that’s cheaper for them,â€? he said. Mr. Mundy said Cleveland might be trying to make up for lost time by pushing through a big fee increase all at once, though he suspects there might be room for negotiating a middle ground. Councilman Martin Keane, who chairs the aviation committee, said he isn’t sure how this issue will be resolved. “I believe there are valid arguments on both sides,â€? he said. “We’re still getting responses to our requests for more information.â€? Mr. Keane said he has been told part of the problem is that some of these service providers may be locked into long-term contracts with clients, including the airlines, which negotiate room rates at airport area hotels for their flight crews. Still, he said he hopes legislation can be passed before the end of the year. â–
Salt for Ice Control Bag and Bulk
• Halite • JiffyMelt • Calcium Chloride
Big Savings on Truckload Orders! Minimum Delivery = 1 Pallet Forklift Delivery Available
John S. Grimm, Inc. 1-800-547-1538 Authorized Dealer
20121105-NEWS--7-NAT-CCI-CL_--
11/1/2012
3:09 PM
Page 1
NOVEMBER 5 - 11, 2012
In effort to enhance marketing, Haslam targets state capital By JOEL HAMMOND jmhammond@crain.com
Jimmy Haslam intends to turn Ohio into a battleground state even after this week’s election is over. The newly approved Cleveland Browns owner said in a meeting with Crain’s editorial board last Wednesday, Oct. 31, that the Browns need a “jolt of energy� that could be accomplished by “re-firing up the fan base.� But it isn’t just Northeast Ohio fans that could use a recharge: Mr. Haslam said he’ll venture outside the immediate area, into Columbus and other parts south, in an effort to build ticket sales by energizing a fan base leery of still more losing and another push of the reset button. “We’re selling the Browns,� Mr. Haslam said, “and it’s not just in Cleveland. It’s Northeast Ohio; it’s all of Ohio. We’re very respectful of the Brown (family that owns the Cincinnati Bengals), but there are a lot of Browns fans in Columbus. I don’t know that we’ve taken advantage of that. “This is a big state, with a lot of people and a lot of successful businesses, and we need to get them more involved with the Browns,� Mr. Haslam said. Data from New York-based Scarborough Research, a pioneer in studying fan tastes in individual markets, seems to back up Columbus’ status as a battleground market, at least in terms of pro sports loyalty. As one might expect, Ohio State University football and basketball rank Nos. 1 and 2, respectively, among the 1.8 million or so adults in the Columbus area. According to Scarborough, 66% of that group either have watched, attended or listened to — the research firm’s “WAL� measure — an Ohio State football game in the last year, while the WAL for Ohio State basketball registered 50%. For the Browns, the WAL measure was 37%, and for the Bengals, 32%. Jim Kahler, former vice president of sales and marketing for the Cleveland Cavaliers and now executive director of the Center for Sports Administration at Ohio University, finds encouragement for the Browns in the 37% figure. “That number, in a market that isn’t their home, is good,� said Mr. Kahler, who sees Columbus as “a neutral battleground� for fans of professional football.
Tricks of the trade One way the Browns might expand their footprint is with an improved network of radio affiliates. Crain’s reported in mid-October that the Browns were seeking bids from media companies for the rights to the team’s flagship radio broadcasts. As part of that process, senior vice president of business development Jim Ross said, the Browns are aiming to increase the number of radio affiliates statewide and to hook up with stronger affiliates in markets where the team already has a radio presence. At present, the Browns’ radio network spans 28 affiliates, with only four in Columbus or markets south. Its Columbus affiliate, WBWR-FM 105.7, is a 2,400-watt station. By comparison, the team’s flagship station in Cleveland, WTAM-AM 1100,
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
JAY LAPRETE/THE ASSOCIATED PRESS
Jimmy Haslam at his introductory news conference in Berea in August. broadcasts at 50,000 watts, while its sister station, WMMS-FM 100.7, which simulcasts Browns games, broadcasts at 34,000 watts. “The whole communications aspect is something we can do a lot better,� Mr. Haslam said, referring in general to how the team connects with the marketplace. “There’s an opportunity to more aggressively market the Browns,� he said. For example, sports marketing observers said, Mr. Haslam could link his two most valuable assets — his family’s $6 billion truck stop company, Pilot Flying J, and the Browns — in cross-promotional efforts. Pilot Flying J operates a dozen truck stops in Ohio, including eight outside Northeast Ohio. One way Mr. Haslam could increase the Browns’ exposure outside the team’s traditional market is by upgrading a sponsorship of the Browns to include Browns-related promotions in Pilot stores statewide. Dan Gilbert already engages in such cross-promotional ploys with his teams that play at Quicken Loans Arena in downtown Cleveland. The Lake Erie Monsters, Mr. Gilbert’s American Hockey League team, and the Arena Football League’s Cleveland Gladiators each are promoted and displayed prominently at The Q during Cleveland Cavaliers games, and vice versa. Mr. Kahler said other Browns sponsors could benefit from an increased emphasis by the Browns on marketing. Discount Drug Mart, based in Medina, already is promoted as the place to buy tickets outside the team’s box office — a privilege for which the retailer pays the team a lump sum. In return, Discount Drug Mart can up-sell its vendors to be a part of team-themed promotions in its stores.
Elephant in the room As the Scarborough data suggest, the Bengals aren’t the Browns’ top competition in the state. Cincinnati long has struggled with fan apathy, and consistently is forced to black out home games on local television because of its inability to sell out games at Paul Brown Stadium. (This season, the Bengals have improved, to an average of 62,536 in three home games.) Instead, Ohio State — and fans’ busier schedules — are the real challenge to the Browns, said Jackie Reau, CEO of Cincinnati-based Game Day PR. “I think there is a way to re-estab-
lish Browns Country through the I-71 corridor and make it more of a year-round brand,â€? Ms. Reau said. “But a concern is, if fans in Columbus are giving up their entire Saturday, will they give up their full Sunday (for Browns games)? Most people these days can’t do both, and OSU has delivered for fans.â€? â–
7
Browns, GCP exploring how best to work together New Browns owner Jimmy Haslam met with Crain’s last Wednesday to talk about his experience in Cleveland so far and his plans for the organization. Aside from trying to expand the Browns’ footprint, Mr. Haslam hit the following high notes: ■Mr. Haslam met last week with the leadership of the region’s chamber of commerce, the Greater Cleveland Partnership, to talk about “points of intersection in economic development� between the Browns and Cleveland, according to Browns general counsel Fred Nance. “We are engaging directly through the vehicle that is the voice of the business community,� Mr. Nance said. ■The Browns are part of a committee formed by Cleveland Mayor Frank Jackson that put together an RFP for developers to pitch their ideas for the lakefront, but neither Mr. Haslam nor Mr. Nance would commit to the team being a partner in development efforts. However, Mr. Haslam did say, “It’s in Cleveland’s interest and in the Browns’ interest to develop that spectacular property.� ■The Browns have been involved
in negotiations with potential naming rights sponsors for Cleveland Browns Stadium, and there will be a naming rights deal in place for the 2013 season. Asked why not Pilot Flying J — the large truck stop company owned by his family — Mr. Haslam said, “I think there are other companies that would have more interest.� ■He reiterated that the team would bring in top architects to study improvements to the stadium. ■Mr. Haslam said part of his motivation for buying the team was his competitive nature, which famously was displayed when CBS TV cameras caught him reacting emotionally to a late drop in the end zone by receiver Josh Gordon in the team’s loss to Indianapolis on Oct. 22. ■The Browns continue to talk with Hall of Fame running back Jim Brown, who took exception to outgoing team president Mike Holmgren’s attempt to minimize Mr. Brown’s role with the team. But no specific role for Mr. Brown within the new regime has been determined as of now. “We’ve developed a great relationship,� Mr. Haslam said. — Joel Hammond
Health care reform in the election’s aftermath: Now what? Cleveland - Thursday, December 6, 2012 A M s "REAKFAST .ETWORKING
Sponsored by
,OCATION 4HE 5NION #LUB %UCLID !VENUE #LEVELAND /(
!KRON 4UESDAY $ECEMBER
Sponsored by
A M s "REAKFAST .ETWORKING ,OCATION 'REYSTONE (ALL % -ILL 3TREET !KRON /(
Registration & Sponsorship: Contact Jessica Snyder at 216-771-5388 or jdsnyder@crain.com
www.CrainsCleveland.com/BREAKFAST
Underwritten by
20121105-NEWS--8-NAT-CCI-CL_--
8
11/1/2012
4:33 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
NOVEMBER 5 - 11, 2012
PUBLISHER/EDITORIAL DIRECTOR:
Brian D. Tucker (btucker@crain.com) EDITOR:
Mark Dodosh (mdodosh@crain.com) MANAGING EDITOR:
Scott Suttell (ssuttell@crain.com)
OPINION
Nice digs
W
e wouldn’t go back to the old form of Cuyahoga County government for a second, nor was there much to praise about the former Board of County Commissioners during the last few years of its existence. We’ll give the now-imprisoned Jimmy Dimora credit for one good move, though — that was voting to pass the increase in the county sales tax that made possible the construction of a new convention center and medical mart in Cleveland. It was back on July 26, 2007, that then-commissioner Dimora and his colleague, Tim Hagan, bypassed a public vote on the tax hike by approving the one-quarter percentage point increase at a meeting of the three-member board. Commissioner Peter Lawson Jones voted against it. The action was not universally popular, and immediately prompted talk about a petition drive to revoke the tax hike. However, the increase remained in place, and money began to pile up for the new convention and med mart complex even though the site for it had yet to be determined. More than five years later, construction of the $465 million project is on track for completion next July, ahead of schedule and on budget. It didn’t hurt during negotiations with contractors and property owners that the county had money in hand and was ready to move ahead with the project once it settled upon the site of the old convention center as the home for the new one. It’s impossible to say what would have happened had the commissioners decided to put on the ballot the tax hike for the convention center/med mart. Our guess is that it would have been rejected. Convention centers aren’t like ballparks or arenas, which sports fans lovingly embrace. They also aren’t like tax levies for mental health services or park systems, which appeal to voters’ sense of doing good. Convention centers are cold, hulking buildings that many local residents never will step into their entire lives. If commissioners Dimora and Hagan hadn’t taken matters into their own hands, it’s likely Cleveland would be no closer now to a new meeting complex than it was 30 years ago, when it already was apparent that its convention center was obsolete and that the city was missing out on tons of meeting business because of it. The man who is now Jailbird Jimmy may have seen the tax hike for the convention center complex as a fresh pot of money for his contractor friends to tap into so that he could enjoy a few more favors from them. It’s hard not to question the motives of someone found guilty of accepting bribes. However, the need for a new convention center was beyond dispute if Cleveland hoped to capitalize on hundreds of millions of dollars of public and private investment in its meeting and tourism business. The proof is in the conventions that already are lining up to come to the city once the new complex is open. Cleveland essentially was out of the convention game for a generation. Now it’s months away from re-entering the business in a grand way. And it can thank two guys for their roles in giving it a fresh start.
FROM THE PUBLISHER
No monkeying around on this issue
T
ake a deep breath and repeat afor lose them, it spurred my thinking ter me: “It’s just one more day. about government and the legislative It’s just one more day. It’s just process. one more day… It’s inarguable that we need govern“And I’m going to put my foot ment, and reasonable folks can agree to through my TV if I have to stomach one disagree about how much is too much or more commercial with some politician enough. But when some guy sets loose calling his or her opponent a liar!” his lions and other beasts and then kills Seriously, now… himself, leaving authorities to Wait. I was being serious. clean up the mess, it’s right for OK, so it’s time for me to BRIAN government to step in. take a deep mental breath, and TUCKER You might recall that Terry repeat after myself: “There are Thompson did just that a year some good people in governago at his property outside ment, despite how they act in Zanesville. He released 56 public during campaign season. animals, among them lions, And there really is some good tigers, leopards and bears. The that comes out of our public police, who were ill-prepared servants.” for such a mess, were forced to Take Ohio’s new exotic animal kill 48 of the animals and Ohio law, for example. made national news. And no, this is not going to be some Gov. Kasich, correctly, stepped in and cheesy joke about politicians and animals. issued a temporary moratorium on the Right about now, I’m siding with the ownership of exotic animals, and lawanimals. makers helped establish new laws conBut when I read in The Columbus trolling ownership and mandating regisDispatch that today is the deadline for tration by owners. The newspaper owners of exotic animals to either register reported that 40 owners — some of them
zoos, obviously — had registered by last week. The state plans to build a $3.5 million holding facility that will house seized animals until they can be relocated to a zoo or some other appropriate facility. That’s a good investment. “Our last resort would be that we have to take custody of an animal,” state Agriculture Director Terry Daniels told the newspaper. “We want the public to be safe.” Hear, hear, Mr. Daniels. We want that as well, and so do the hundreds of sheriff’s deputies, state troopers and police officers across the state that get plenty of training about dealing with bad guys but next to none about caging a lion. Mr. Daniels says the state estimates there are 500 to 600 exotic animals in Ohio, and he couldn’t say why more owners hadn’t registered by now. The state’s veterinarian worries that owners don’t trust the state. I don’t know about you, but on this issue, I’m putting my trust in government. People who want pets ought to go to their local animal shelter. ■
LETTERS
For much-needed port reform, defeat levy
T
he Cleveland-Cuyahoga County Port Authority levy, known as Issue 108, must be rejected to force needed reform to a faulty, mistake-prone government board. The current proposal is more bailout of the city of Cleveland by suburban voters, who are 70% of the county population and would pay more than 80% of the taxes. The bailout is mostly for spending not related to the port, orchestrated by representatives of the city of Cleveland — a bridge from City Hall to the Science Center, repairing Franklin Hill to save city water and sewer lines, and so on. Less than 20% of the taxes even go to existing port-related activities. For its 44 years, the Cleveland-Cuyahoga County Port Authority has been
city-dominated, with two-thirds of its board selected by Cleveland’s mayor. For at least the last five or six years, it is a government in search of some purpose as its base mission has diminished, taking on economic development revenue bonds, failed plans to move the port, various lakefront real estate development ideas not within its core expertise, and now the role of “river keeper” for Cleveland and its infrastructure. These various changes of direction and mission have been taken with little effective public input, and certainly little input by government that represents most of the taxpayers. Actual port operations are largely limited to bulk cargo (iron, stone, cement, grain, salt), as St. Lawrence Seaway shipping and general cargo has never
really taken off and the Seaway was actually destined to fail from its opening day as shipping passed its capacity by. The appointed authority has also had its share of serial gross mismanagement, and recent involvement in special perks, favoritism and fallout in the scandalplagued old county government, which appointed three of its nine board members, one of whom just resigned under a cloud. Having reformed county government, we must continue the housecleaning by replacing the authority with a new government structure, appointed by the new government. With the county’s new economic development powers, whether the port should continue as the bonding conduit for county development See LETTERS Page 9
20121105-NEWS--9-NAT-CCI-CL_--
11/1/2012
3:59 PM
Page 1
NOVEMBER 5 - 11, 2012
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
THE BIG ISSUE Do you think the destruction from Hurricane Sandy will improve the chances the country begins to take more aggressive action on climate change?
STENCIL LOVE
SANDRA BELL
AMANDA ORENCHUK
Cleveland
Parma
Mundelein, Ill.
Yes. It’s about the ozone (layer) and various things. It makes you think. You shut down New York City, that’s bad stuff.
I’m not sure. I don’t see where there is a big major climate change, other than maybe our times of year — our summers are later and the spring’s later.
I do think that will be on people’s minds. I think climate change is a pattern, so it’s tough to (judge on) one isolated event or a couple events in a small period of time. You have to understand it over time, a long period.
AUGUSTINE PONCE DE LEON Shaker Heights Yes, certainly. I just told my son this morning on the way to school that the reason we are having such strong weather phenomena has to do with the seas being warmer.
➤➤ Watch more people weigh in by visiting the Multimedia section at www.CrainsCleveland.com.
9
Office 28,300 Sq. Ft. 16035 Industrial Parkway
Furnished -- Price far below market Former PNC/National City Comptroller Building Ceilings 9 ft. - Bottom of Deck 18’9” (1) Dock Near to Cleveland Hopkins Airport, between I-480 & I-71
CALL 216-469-6170
wesleyrberger@aol.com
WEDNESDAY, NOVEMBER 14, 2012 11:30am Registration • 12 Noon Lunch & Program BAIJU SHAH
DR. LUIS PROENZA
JIM FREE
Moderated By,
LOU MAGLIO
NEOMED building debt worries analyst Moody’s leery of $88M to finance infrastructure By TIMOTHY MAGAW tmagaw@crain.com
The rate at which Northeast Ohio Medical University is piling on debt to finance a roughly $166 million expansion of its aging campus in Rootstown has spooked a prominent credit ratings agency. As part of the dramatic campus overhaul, NEOMED plans to issue upward of $88 million in debt to finance a 215,000-square-foot health, wellness and education center, which according to Moody’s Investors Service would “severely leverage the university against its small operating base.” As a result, Moody’s downgraded the university’s underlying rating from A1 to A2 and said there was potential for a further downgrade. NEOMED is undeterred by the downgrade. “We understand there is a risk component of us undertaking this … but we feel there is a much bigger risk by not doing this and staying where we’re at,” said John Wray, NEOMED’s
vice president of administration and finance. “Our goal is to grow this university and do it in a way that expands our academic programs and improves the quality of the students we produce.” The wellness center project — the cost of which nearly has doubled since it was conceived — is expected to be a collaborative effort between NEOMED and several other organizations. NEOMED officials have shied away from identifying which partners might be involved, though they likely would include some of the area’s health care organizations, such as the Summa and Akron General health systems. Akron General already operates a joint venture with Signet Development Corp. in Akron that is aimed at commercializing the health system’s wellness efforts. Signet is involved with the $36 million, 270,000-squarefoot housing component of the NEOMED expansion. Moody’s said the university hasn’t signed any agreements with organizations to lease space in the wellness center; those leases are expected to foot the bill for the bulk — if not all — of the project that’s slated to open in July 2014. Moody’s
also noted that the “inability of the university to substantially lease up the building or secure favorable pricing or terms that mitigate risk of the increase in debt service payments could further pressure the rating downward.” However, Mr. Wray expects the leases to be shored up by December. “What we are doing is we are relying on a significant amount of these external dollars to carry the debt,” he said. “That’s why Moody’s pointed that out, but the negotiations are ongoing.” Despite the downgrade, Mr. Wray said NEOMED is solid financially. The Ohio Board of Regents, which assigns a score determining the fiscal health of each public higher education institution, gave NEOMED a perfect score. No other university hit that milestone. Moreover, Mr. Wray said Moody’s didn’t account for the $9 million in added revenue the university will bring in on an annual basis due to a new partnership with Cleveland State University, which will expand NEOMED’s medical student enrollment to 650 from 500 over four years. “That’s one of the major drivers (for) expanding,” Mr. Wray said. ■
LETTERS continued from PAGE 8
should be decided and controlled by the new government. Though embarrassments and resignations have led to better management at the moment, history teaches this will not last. If a semiautonomous board is needed for port operations, it should have majority appointment by the county residents who pay the bills. Since the port’s operations remain mostly in Cleveland, it should have a seat at the table and respectable representation of county appointees. But the needed change and reforms will not happen voluntarily, just as they haven’t for 44 years despite commitments to do so. Only by defeating the levy and ending spending of public money by this entity will the city and county ever come to the table for a better,
port-focused operation. Homer S. Taft Bay Village
Forget moderation ■ Brian Tucker in his Oct. 29 commentary, “Desperate for a strong third candidate,” again takes a shot at the Tea Party. Those right-wing radicals are always standing in the way of compromise, in Mr. Tucker’s view. He goes on to say, “Barack Obama is too smart to believe that all the ills facing our country will be solved if we can just get those wealthy Americans to pay more.” Mr. Tucker’s jaw-dropping naiveté is stunning. The last four years Mr. Obama has been engaged in class warfare to convince a majority of Americans exactly that. This is what politicians
do when they are unable to run on a failed record. Mr. Tucker and his liberal — oh, sorry — moderate buddies have been asleep at the wheel. We now have unsustainable spending and $16 trillion in debt that is crushing our country. The 2010 mid-term election, with the will of the Tea Party, got America back on track. Now we need to finish the job. Jeff Longo North Royalton
President, The Deputy Director, NASA Emmy Award-Winning University of Akron Glenn Research Center Anchor, Fox 8 News For more info: www.ExecutiveCaterers.com and click on Corporate Club or call 440.449.0700 CEO, BioMotiv
For daily on-line updates, sign up @ CrainsCleveland.com/Daily
Peering over the fiscal cliff
A post election analysis: What is the potential impact on business?
ROUNDTABLE EVENT Wednesday, November 14, 2012 11:30 a.m. to 1:00 p.m. EST Location: McDonald Hopkins, Fifth Third Center 600 Superior Avenue, East, Suite 2100 Downtown Cleveland
RSVP: mcdonaldhopkins.com or call: 216.348.5400 to register.
McDonald Hopkins LLC 600 Superior Ave., East, Suite 2100, Cleveland, OH 44114 • 216.348.5400
WRITE TO US
Carl J. Grassi
Shawn M. Riley
Send your letters to: Mark Dodosh, editor, Crain’s Cleveland Business, 700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 e-mail: mdodosh@crain.com
President
Cleveland Managing Member
Chicago • Cleveland • Columbus • Detroit • Miami • West Palm Beach mcdonaldhopkins.com
20121105-NEWS--10-NAT-CCI-CL_--
10
11/2/2012
3:25 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
Attn: Manufacturers & Warehouses
WWW.CRAINSCLEVELAND.COM
NOVEMBER 5 - 11, 2012
GOING PLACES
Missed out on FirstEnergy’s Lighting Rebate?
JOB CHANGES
FINANCIAL SERVICE
Learn how to get a rebate for upgrading your lighting
ARCHITECTURE
MCMANUS, DOSEN & CO.: Erin M. Connors to accounting supervisor.
• Replace HID high bays • Upgrade T-12 fixtures • 50% Energy Savings • Utility Rebates • Tax Incentives • Brighter lighting • Fast Payback
Independence, Ohio Thurs., Nov. 8, 9-11:30 a.m. $69.00/person Registration limited to first 40
CALL TODAY! Don't squander this opportunity! Register at www.ROI-Energy.com/seminar or call 330-931-3905
Presented by FirstEnergy and ROI Energy
VOCON: Susan Austin to chief human resources officer; Scott Ashley to head, workplace strategy.
DISTRIBUTION
SS&G: John Hollo, M. Lynne Baranek, Brandon Morris, Lisa Smith, Jennifer Seeling, Kelly Pulling and Jennifer Ludwig to senior associates; Dennis Vaughn Jr., Michelle Hawkins, Ronald Reed Jr., Sharon Sturgill, Jaysen Mercer and Donald Grassler to managers; Jeannette Schwartz to executive administrative assistant.
PARTS ASSOCIATES INC.: Michele Hicks to human resources manager.
HEALTH CARE
Hoffman
SUMMA BARBERTON AND SUMMA WADSWORTH-RITTMAN HOSPITALS: Dr. Joseph P. Myers to vice president, medical affairs.
BOARDS
BIOTECHNOLOGY NEUROS MEDICAL INC.: Joe Schwoebel to vice president, clinical and regulatory affairs.
EDUCATION KENT STATE UNIVERSITY: Jose C. Feliciano to the 2012-13 President’s Ambassador; Said Sewell to assistant provost for academic affairs.
ENGINEERING MS CONSULTANTS INC.: Jonathan Hren to Northeast Ohio transportation business unit leader.
FINANCE KEYBANK: Tracy Dowe, Linda Skinner, Paul Steiger and Robert Helton to portfolio managers, assetbased lending.
MANUFACTURING GE LIGHTING: John Strainic to general manager, North America Consumer Lighting. SPECTRUM SURGICAL INSTRUMENTS CORP.: Jim Hoffman to vice president of endoscopy and field operations. TIMKEN CO.: Blake Scanlon to director of global sales and engineering development.
MARKETING TRIAD/NEXT LEVEL: Adam Mullen to media specialist, traditional and emerging technology.
NONPROFIT
Feliciano
Sewell
Myers
Dudek
Okel
AMERICAN SOCIETY OF INTERIOR DESIGNERS OHIO NORTH CHAPTER: Cristina McCarthy to president; Laura Gills to president-elect; Kara Hungate to at large director; Lisa Thomas to communications director; Tracy Hartong to financial director; Kaleigh Cody to membership director; Lisa Perfetto to professional development director. ASIAN AMERICAN BAR ASSOCIATION OF OHIO: Deborah W. Yue (Gallagher Sharp) to president; Barbara A. Lum to president-elect; Sanjiv Kapur to secretary; Edward Chyun to treasurer; Elaine Tso to vice president, membership; James W. Chin to past president. COUNCIL OF INTERNATIONAL PROGRAMS USA: Marc Safier to treasurer.
HUNGER NETWORK OF GREATER CLEVELAND: Angela Dudek to director of special events and public relations; Kristin Okel to development associate.
GREATER CLEVELAND SOCIETY OF ASSOCIATION EXECUTIVES: Chris Johnson (Thomas Associates) to president; Karen Lewis to vice president; Charles Schmidt to secretary/treasurer; James A. Hieb to immediate past president; Ellen Kelley to director, industry partners.
SERVICE
AWARDS
FREEDONIA GROUP: Ken Long to manager, durable goods; Jennifer Mapes to manager, consumer and commercial products.
ERC AND CLEVELAND SOCIETY OF HUMAN RESOURCES MANAGEMENT: Christa Lenko (Skoda Minotti) received the Organizational & Employee Development Award.
CLEVELAND SIGHT CENTER: Patrick J. Ertle to chief development officer.
VEDISCOVERY LLC: Paul Cervelloni to vice president, sales.
SPORTS CLEVELAND CAVALIERS SPORTS AND ENTERTAINMENT: Patrick M. Scanlon to director of guest experience, Quicken Loans Arena.
LEADINGAGE OHIO: Steven Willensky (Chair, Montefiore) received the Board Member of Distinction Award.
Send information for Going Places to dhillyer@crain.com.
NorTech extends deadline for 2013 Innovation Awards Technology advocacy group NorTech has extended the deadline for nominations for the NorTech Innovation Awards, which recognize Northeast Ohio’s most innovative organizations and leaders. Nominations now are open through 1 p.m. this Friday, Nov. 9. NorTech, in partnership with Crain’s Cleveland Business, in March 2013 will recognize and honor “breakthrough innovations” that have demonstrated a dramatic impact on a specific industry or market sector, or that have the clear potential to do so. Individuals, businesses or organizations meeting those criteria are encouraged to submit an entry. Download a nomination packet
at this address: http://tinyurl.com/ cox44cl. The NorTech Innovation Awards event is attended by hundreds of people who share a common interest in developing and commercializing emerging technologies in Northeast Ohio. For more information about the program and the nomination process, contact Beth Elliott at belliott@nortech.org or at 216-3636889. And for editorial coverage of past NorTech Innovation Award sections, including photo slideshows and videos from the annual NorTech Innovation Awards event, visit http://crainscleveland.com/section/ NORTECH. ■
20121105-NEWS--11-NAT-CCI-CL_--
11/1/2012
1:56 PM
Page 1
NOVEMBER 5 - 11, 2012
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
11
New leader pushing AgBio cluster’s most promising ideas By KATHY CARR clbfreelancer@crain.com
The Agriculture-Bioscience Industry Cluster — a coalition of more than 100 stakeholders that includes the Wayne County Economic Development Council and the Ohio Agricultural Research and Development Center — has found a point man for its efforts to connect participants in Northeast Ohio’s agriculture sector and so boost the region’s stake in the nation’s $60 billion specialty crops market. As the AgBio cluster’s portfolio manager, Brian Gwin is working to mobilize economic development officials, business planners and financial institutions to cultivate Northeast Ohio’s agriculture and bioscience industry. His plan includes working with those stakeholders to advance the feasibility of 150 business “cases” — early stage ideas that have the potential grow the sector. “We’re hoping to build grassroots economic development,” said Mr. Gwin, who assumed his job Aug. 1. Of those 150 concepts, Mr. Gwin is shepherding the advancement of 15 business cases — representing ideas in areas such as waste-to-energy, dairy processing and crop season extension — by helping them seek capital from investors. As part of its initiative to accelerate development of Ohio’s largest industry, the cluster in 2008 identified 12 business projects that demonstrated to economic development officials how those concepts could evolve into businesses that contribute to Northeast Ohio’s food production system. Those projects evolved into various states of viability; they included Cleveland-based Quasar Energy Group’s work to convert food waste to energy and the establishment of Lucky Penny Creamery in Kent. The latter is an artisan goat dairy that has doubled its production in the last three years, said owner Abbe Turner. “The AgBio Industry Cluster is great for developing infrastructure for entrepreneurial agriculture in Ohio and developing networking opportunities,” Ms. Turner said. Mr. Gwin’s role should bolster that potential, Ms. Turner added. “He’s a talented human being,” she said. “He’s comfortable going from mud boots to blue suits.”
and Development Center over the last two years has been working on building the agriculture-bioscience infrastructure through a mapping system at LocalFoodSystems.org. The mapping system, which functions as a social networking website, allows both existing companies and planned businesses to post information about themselves and connect with potential customers and supply chain participants. “It allows for more collaboration,” said Casey Hoy, professor and Kellogg Endowed Chair in Agricultural Ecosystems Management at the Ohio Agricultural Research and Development Center. “We want to build local ownership and local
wealth.” Mr. Gwin will work with economic development organizations to populate the social networking site by encouraging entities with a stake in agriculture to create profiles online. Mr. Gwin also is helping to establish greater connections among the cluster’s entrepreneurs, the Ohio Agricultural Research and Development Center’s research programs and the resources of JumpStart Inc., a Cleveland-based nonprofit that finances and assists young companies. The latter is looking for business cases that fit its portfolio requirements for advancing entrepreneurial ventures, Mr. Gwin said, and could serve a financing outlet for business
cases that demonstrate high growth potential.
Planting seeds for jobs The hope is that the cluster with Mr. Gwin’s stewardship will create 400 jobs by June 2016, said Emily Garr, manager of research, grants and evaluation for the Fund for Our Economic Future, a philanthropysupported group that looks to advance Northeast Ohio’s economic development. Mr. Gwin’s efforts over the next year should facilitate 60 new jobs and $1.5 million in payroll, Mr. Hoy said. The AgBio Industry Cluster since 2008 has been supported by a $1.13 million U.S. Department of Agriculture grant, $1.13 million in
matched state and industry support, and $450,000 in grants from the Fund for Our Economic Future. Part of the latest Fund grant of $175,000, issued in June, is supporting Mr. Gwin’s position, and $25,000 is allocated to study over the next year the cluster’s potential, said Brad Whitehead, the Fund’s president. The agriculture industry in Northeast Ohio generates about $8.2 billion in annual revenue, according to the Fund. “We’re not quite sure how large and how fast the markets are growing,” Mr. Whitehead said. “In Northeast Ohio, agriculture is huge. One in 10 jobs are accounted for by the agriculture industry.” ■
Could your global banking needs use some local advice?
Experience worldwide capabilities with hometown sensibilities.
Connecting the dots
From advisory, trade, and payment services to working capital and foreign exchange,
The Ohio Agricultural Research
FirstMerit combines all the international banking products and services you’d expect
CALLING OHIO HOME Northeast Ohio is home to more than 16,000 food-related establishments, many of which are small businesses. ■ The region spends about $15 billion annually on food, but only between 1% and 5% is produced locally. ■ A movement is afoot by public, private and nonprofit entities in Northeast Ohio to increase food localization to 25% over the next decade, which would generate more than 27,000 new jobs, increase annual regional output by $4.2 billion and expand state and local tax collections by $126 million, according to a 2010 study called “The Northeast Ohio Local Food Assessment,” commissioned by the Cleveland Foundation and the Kent State University Cleveland Urban Design Collaborative, among others.
from a larger institution, with the personalized service of a trusted neighborhood bank.
TO L E A R N MOR E, C O N T A C T :
Chris Pilkington at 800-237-6384. Follow the latest market trends @firstmerit_mkt
PERSONA L
BUSINESS
COMMERCI A L
W E A LT H
Member FDIC 294 _FM12
20121105-NEWS--12-NAT-CCI-CL_--
12
11/1/2012
1:57 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
Type: Employer’s withholding, employer’s annual federal tax return Amount: $40,626
TAX LIENS The Internal Revenue Service filed tax liens against the following businesses in the Cuyahoga County Recorder’s Office. The IRS files a tax lien to protect the interests of the federal government. The lien is a public notice to creditors that the government has a claim against a company’s property. Liens reported here are $5,000 and higher. Dates listed are the dates the documents were filed in the Recorder’s Office.
LIENS FILED A Caring Alternative Inc. 1220 Huron Road, Cleveland ID: 34-1801887 Date filed: Sept. 11, 2012 Type: Employer’s withholding Amount: $113,236 Medical Care Center LLC 1250 Superior Ave. E., Cleveland ID: 34-1905631 Date filed: Sept. 11, 2012 Type: Employer’s withholding Amount: $92,226 American Phoenix Hospitality LLC Phil the Fire 3750 Orange Place, Beachwood ID: 27-4843446 Date filed: Sept. 18, 2012 Type: Employer’s withholding, unemployment Amount: $91,576
Pure Seal Inc. 1300 W. Hill Drive, Gates Mills ID: 20-1978231 Date filed: Sept. 18, 2012 Type: Unemployment, failure to file complete return, employer’s annual federal tax return Amount: $91,313
Renaissance Center for Comprehensive and Cosmetic Dentistry 2211 Crocker Road, Suite 110, Westlake ID: 01-0688742 Date filed: Sept. 6, 2012 Type: Failure to file complete return Amount: $37,237
Elite Academy of the Arts 12200 Fairhill Road, third floor, Cleveland ID: 25-1921477 Date filed: Sept. 11, 2012 Type: Return of organization exempt from income tax Amount: $65,000
Terra Serra LLC Café AH-Roma 32 W. Bridge St., Berea ID: 34-1943631 Date filed: Sept. 18, 2012 Type: Employer’s withholding, unemployment Amount: $36,022
MJS Repairs & Home Remodeling Inc. P.O. Box 201724, Cleveland ID: 34-1954881 Date filed: Sept. 6, 2012 Type: Employer’s withholding Amount: $46,252 Tremont Electric LLC 2379 Professor Ave., Cleveland ID: 26-0316466 Date filed: Sept. 7, 2012 Type: Partnership income Amount: $42,120 Jay-Lor IV Inc. 56 West 32737 Cedar Road, Mayfield Heights ID: 32-0258497 Date filed: Sept. 18, 2012
Arcelor Mittal Cleveland Works International Steel Group Inc. 3060 Eggers Ave., Cleveland ID: 04-3634622 Date filed: Sept. 6, 2012 Type: Employer’s annual railroad retirement tax return Amount: $35,521
NOVEMBER 5 - 11, 2012
ID: 26-3781519 Date filed: Sept. 6, 2012 Type: Employer’s withholding, unemployment Amount: $33,021 Sunman Mechanical LLC 17830 Englewood Drive, Middleburg Heights ID: 20-3303457 Date filed: Sept. 7, 2012 Type: Employer’s withholding Amount: $32,095 CEU4U Inc. 3681 Green Road, Suite 100, Beachwood ID: 31-1560488 Date filed: Sept. 6, 2012 Type: Corporate income Amount: $27,989 Everything and Then Some Inc. 16405 Euclid Ave., Cleveland ID: 34-1420827 Date filed: Sept. 26, 2012 Type: Employer’s withholding, unemployment, failure to file complete return Amount: $25,518
MSB Holdings LLC 24481 Detroit Road, Westlake ID: 20-0897380 Date filed: Sept. 6, 2012 Type: Employer’s withholding, partnership income Amount: $35,481
First Choice Homecare Inc. 601 Towpath Trail, Suite C, Broadview Heights ID: 34-1876809 Date filed: Sept. 18, 2012 Type: Employer’s withholding Amount: $25,505
Outside Design Financial Management Inc. 1560 Brainard Road, Lyndhurst
Kahl & Co. P.O. Box 461, Berea ID: 34-1595042 Date filed: Sept. 6, 2012 Type: Employer’s withholding, corporate income Amount: $25,215 Avon Pizza LLC Coleones Pizza & Subs 1260 Smith Court, Rocky River ID: 26-3021097 Date filed: Sept. 20, 2012 Type: Employer’s withholding Amount: $21,900
Take the work out of your company’s voice and data plan.
Eagle Precision Products LLC 13880 Progress Parkway, North Royalton ID: 58-2672418 Date filed: Sept. 7, 2012 Type: Employer’s withholding Amount: $21,814 EC Financial LLC 8555 Sweet Valley Drive, Valley View ID: 26-3324371 Date filed: Sept. 11, 2012 Type: Employer’s withholding Amount: $19,744
LIENS RELEASED Sono Inc. Shinano Restaurant
28500 Miles Road, Solon ID: 26-2802385 Date filed: March 29, 2012 Date released: Aug. 1, 2012 Type: Employer’s withholding, unemployment Amount: $35,702 Terrence L Ochterski DVM Co. PA 5257 Warrensville Center Road, Maple Heights ID: 34-1577130 Date filed: May 4, 2004 Date released: Aug. 1, 2012 Type: Employer’s withholding, unemployment Amount: $29,711 Terrence L Ochterski DVM Co. PA 5257 Warrensville Center Road, Maple Heights ID: 34-1577130 Date filed: April 30, 2008 Date released: Aug. 1, 2012 Type: Employer’s withholding Amount: $18,856 Terrence L Ochterski DVM Co. PA 5257 Warrensville Center Road, Maple Heights ID: 34-1577130 Date filed: April 5, 2005 Date released: Aug. 1, 2012 Type: Employer’s withholding, failure to file complete return Amount: $13,037 University Circle Used Cars Inc. 11730 Euclid Ave., Cleveland ID: 34-1184460 Date filed: May 5, 2008 Date released: Aug. 14, 2012 Type: Employer’s withholding, failure to file complete return, corp. income Amount: $28,355 Walter E Martens & Sons Inc. 9811 Denison Ave., Cleveland ID: 34-1314080 Date filed: Dec. 3, 2007 Date released: Aug. 8, 2012 Type: Unemployment Amount: $7,803 Weekare Daycare Inc. 4834 Broadview Road, Cleveland ID: 34-1695141 Date filed: April 20, 2010 Date released: Aug. 1, 2012 Type: Employer’s withholding, employer’s annual federal tax return Amount: $7,795 Westlake Pizza Inc. 24533 Center Ridge Road, Westlake ID: 20-8706195 Date filed: Oct. 13, 2009 Date released: Aug. 1, 2012 Type: Employer’s withholding Amount: $18,023
Every business has different communication needs. That’s why Cox Business offers customizable services that are right for you. Get fast, reliable “Highest Customer Satisfaction among Data Service Providers for Small/Midsize Businesses”
Internet and feature-packed digital phone for
Largest national staffing firm headquartered in North East Ohio. Call today to see how we can help you improve your overall staffing experience.
a bundle that just makes sense.
Cox Business Bundle
$
79.99
Fewer than 1% of North American staffing firms with revenue exceeding $100M annually have been named to the 2012 Best of Staffing™ Client and Talent Lists. Best Of Staffing is presented by Inavero and CareerBuilder.
/MO*
+ UNLIMITED NATIONWIDE LONG DISTANCE + INTERNET SPEEDS UP TO 10/2 MBPS
1-866-791-2688 | coxbusiness.com
*Offer valid until 1/1/3. Call the number listed for important offer details. ©2012 Cox Communications, Inc. All rights reserved. Cox Business received the highest numerical score among small/midsize business data service providers in the proprietary J.D. Power and Associates 2012 Major Provider Business Telecommunications Data Services StudySM. Study based on 5,143 total responses measuring eight providers and measures opinions of small/midsize businesses (companies with two to 499 employees). Proprietary study results are based on experiences and perceptions of businesses surveyed in October 2011 and February 2012. Your experiences may vary. Visit jdpower.com.
www.nescoresource.com
www.talentalley.com
20121105-NEWS--13-NAT-CCI-CL_--
11/1/2012
2:25 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
NOVEMBER 5 - 11, 2012
INSIDE
13
FINANCE
15 ADVISER: LEASES SOON COULD IMPACT BOTTOM LINE.
INVESTING IN THE FUTURE
A CRASH COURSE IN BANKING Institutions more frequently entering schools, gaining exposure to customers of tomorrow By MICHELLE PARK mpark@crain.com
W
JANET CENTURY
Mentor Lake Catholic seniors Rachael Habowski, Luke Meaney, Elizabeth Grubach and Joe Pinjun man the Cardinal Community Credit Union booth at the high school. They’re flanked by Dedric Bonner, a Cardinal member service supervisor.
hen the clock strikes lunch at Lake Catholic High School, it’s time for some of the school’s students to open and operate a bank branch. In one of many examples of local bankers stepping up to help schools educate students on personal finances, a student-run credit union branch opened in late September at the Mentor school. The SmartStart Cougar Branch is a project of the school and Cardinal Community Credit Union, and if Cardinal Community CEO Christine Blake has her way, the student-run concept will expand to other schools, too. Currently, the branch operates three days a week, primarily accepting deposits into savings accounts. See COURSE Page 14
Banks target deals offering exclusive rights on college campuses By TIMOTHY MAGAW tmagaw@crain.com
W
hile college students aren’t known for their vast wealth, that hasn’t stopped a handful of financial institutions with large footprints in Northeast Ohio from attempting to lure in young folks in hopes they’ll stick with the banks once they’re high earners. Huntington National Bank and PNC Bank — two of largest banks in the region in terms of deposits — in recent years have inked lucrative deals with local colleges and universities for exclusive access to large pools of prospective clients. And given the prevailing
financial pressures on colleges and universities, the deals also are injecting some much-needed revenue into their own coffers. Still, the banks entrenched on Northeast Ohio’s campuses say they aren’t in the game to make money off the students by pounding them with fees or pushing them to sign up for credit cards with high interest rates. Regulators, for one, have dinged institutions across the country for such efforts. “We market ourselves as a strong partner for schools with common interests for the wellbeing of students,” said Nick Certo, PNC’s senior vice president and manager of university and workplace banking. “We like student
customers because they will be higher wage earners in the future; they’ll build families and will probably stay inside our footprint.” PNC, which is headquartered in Pittsburgh, recently signed on as the University of Akron’s official bank and will operate a branch on campus. The bank also has relationships with Case Western Reserve University and Notre Dame College in South Euclid. Huntington, on the other hand, is in talks with Cleveland State University. While the details of a 10-year contract still are being hashed out, the initial proposal approved by Cleveland State trustees last year had Huntington paying the university a $1.15
million sponsorship fee for access to the university’s campus. The bank also landed a 15-year partnership with Ohio State University worth roughly $125 million in all to act as the exclusive bank for the state’s largest university. “We’re not there to make money on all their students,” said David Schamer, senior vice president and director of university banking for Huntington National Bank, which is headquartered in Columbus. “We’re there to develop relationships.”
Digging deep The relationships between banks and colleges go well beyond the installation of on-campus
branches and ATMs. The deals often call for the banks to offer internships to students and pump money into scholarships, financial literacy programs and — as with Huntington’s Ohio State deal — economic development. Huntington, for instance, pledged $100 million in community lending to support the ongoing development of the neighborhood surrounding the Ohio State campus. “Our offers are very robust in what we’ll give the university, not only in terms of services for the campus but also discounts for employees and the commitments we’ve made to support the community around campus,” Mr. See COLLEGE Page 14
20121105-NEWS--14-NAT-CCI-CL_--
11/1/2012
2:26 PM
Page 1
14 CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
NOVEMBER 5 - 11, 2012
FINANCE
College: Banks’ relationships grow deeper Course: Programs make continued from PAGE 13
Schamer said. Aside from the revenue infusion, college officials say they seek out banking deals as a service to students. Having a broad banking presence on campus, college officials say, is particularly relevant for students from outside the country or those who don’t have accounts with local financial institutions. “Depending how dense your student population from other
countries and states is, you want to provide those services here,” said Anne Bruno, director of the student union at the University of Akron. “That’s a service that’s very valuable.” While the presence of banks on campus isn’t a new phenomenon, the breadth of the relationships and offered services continues to evolve, according to Huntington’s Mr. Schamer. He noted that Huntington had “doubled down” on its efforts in the area over the
CUSTOMIZED
business banking Products & Services Include: Commercial Real Estate Commercial Line of Credit Commercial Letter of Credit Business Checking Business Debit Cards
Free Internet Banking Free Online Bill Pay Remote Deposit Capture Mobile Banking eStatements Payroll
CarrieStackhouse AVP, Commercial Lending
cstackhouse@cortland-banks.com
www.cortland-banks.com/Stackhouse For more information: 330.717.7472
last three years by investing more resources and adding more staff to its university banking division. Banks are rolling out products that are of particular interest to college students. PNC, for instance, offers a “virtual wallet” — an online banking interface with financial management tools that can link with students’ school calendars.
Credit union route? Despite the flurry of on-campus relationships with banks, some fear the institutions might not have the students’ best interest at heart. Because college students are prone to account overdrafts, some forprofit financial institutions may be looking to younger account holders to generate fee income, said Patrick Harris, a spokesman for the Ohio Credit Union League, in an email. Local credit unions, however, also have put their skin in the game. Emerald Group Credit Union of Cleveland offers a program geared toward students, including a free checking account and a low line of credit Visa card. Also, the Kent Credit Union targets students at Kent State University as a source for new members and offers them the online banking products they expect. Kent Credit Union CEO Joseph Crawfis said about 20% of the credit union’s members are college students, and by in large tend to stick with the institution upon graduation. Mr. Crawfis said the credit union also is exploring new lending options for people with no credit history, which could appeal to the student demographic. ■
National firm expertise… local attention.
O ur team of specialists brings an unequaled
combination of experience and commitment to provide you with value-added accounting and business advisory services.
Cleveland 216.363.0100 Canton 330.966.9400 Elyria 440.323.3200 maloneynovotny.com
customers more aware continued from PAGE 13
Beginning with the Class of 2014, Ohio high schools are required by the so-called Ohio core curriculum to integrate economics and financial literacy instruction into a social studies course or other class sometime between ninth grade and graduation. And the mandate, which took effect April 4, 2007, requires schools to use public-private partnerships, resources and materials in developing their curricula. In some cases, bankers are developing and delivering their own programs, and in others, institutions (Huntington National Bank, for one) are partnering with well-known organizations, such as Junior Achievement. Either way, the frequency with which bankers are going inside schools seems to have increased, said James Thurston, spokesman for the Ohio Bankers League.
September it is expanding the program this school year to 1,875 schools within the bank’s multistate footprint. Fifth Third’s delivery of the program to 357 high schools in Ohio alone represents an investment of about $441,200. Just a month into its pilot studentrun branch, Cardinal Community already is in talks with two other high schools about expanding the program, Ms. Blake said. The credit union’s investment includes not only its people’s time, but the laptops and fixtures involved in the branch kiosk, she said. “If you’ve made one student aware of one consequence, if one student rethinks buying a cell phone or determines what kind of house they can afford, you’ve achieved,” Ms. Blake said. Therein lies an intangible return most institutions anticipate: Smarter, more responsible consumers. And many say that the
“If a customer is more financially literate and makes better decisions ... they’ll be a better customer.” – James Thurston spokesman, Ohio Bankers League “From the bankers’ perspective, of course it gives them exposure to tomorrow’s customers,” Mr. Thurston said. “But also if a customer is more financially literate and makes better decisions … they’ll be a better customer for the bank.”
Future payoff Also investing in the customers of tomorrow are Parma-based Unity Catholic Federal Credit Union, which offers its awardwinning “Piggy Banks to Credit Cards” program to schools within the Catholic Diocese of Cleveland, and Cincinnati-based Fifth Third Bank, which spends about $1,500 per school to sponsor the high school curriculum of best-selling author Dave Ramsey, called “Foundations in Personal Finance.” The bank announced in late
The The The The
results of the before and after tests they administer with their programming prove that they’re making a mark. Another potential return for financial institutions: endearing themselves to young customers even before they bank. “The ‘payoff’ is that we are growing our younger membership base and building a good reputation among young families,” said Kelly C. Reddy, business development manager for Unity Catholic Federal Credit Union. “Hopefully, they will think of Unity Catholic when they need a financial product in the future.”
‘A dangerous place’ Though teaching financial literacy is a relatively new, unfunded continued on NEXT PAGE
relationships. expertise. financing. personal touch.
www.BellwetherEnterprise.com
The Premier Source for Commercial & Multifamily Real Estate Capital FOR MORE INFORMATION CONTACT: Jim Doyle, Jr. | Senior Vice President | 216-820-4502 | jdoyle@BellwetherEnterprise.com VISION
KNOWLEDGE
PEOPLE
20121105-NEWS--15-NAT-CCI-CL_--
11/1/2012
3:54 PM
Page 1
NOVEMBER 5 - 11, 2012
CRAIN’S CLEVELAND BUSINESS 15
WWW.CRAINSCLEVELAND.COM
FINANCE mandate, Sal Miroglotta, president of Lake Catholic High School, is not sorry it’s required. “Finances are more complicated than they used to be, and students get hit with financial matters a lot faster than they used to,” he said, citing as examples college loans and credit cards. “(The world of finance) is a dangerous place to walk into and have no knowledge.” If the Ohio Department of Education’s steering team for financial literacy proceeds as hoped, it will have drafted financial literacy academic content standards for grades kindergarten through 12 and have them approved by the end of this school year, said Tom Rutan, the ODE’s associate director in the office of curriculum and assessment and the chair of that steering team. Already, legislative changes made in 2008 call for financial literacy education for middle grades, too, Mr. Rutan noted. “We believe that an educated population does a much better job of managing the financial affairs for themselves, for the community and for the nation than a generation of kids that are taught at the knee of Mom and Dad,” Mr. Rutan said. Luckily, many banks and credit unions — among them, Dollar Bank, Huntington and KeyBank — also offer programs for students in elementary and middle schools. Gayle Gadison, social studies curriculum manager for the Cleveland Metropolitan School District, which welcomes volunteers from several banks throughout the year, is glad to see students get both the mandated lessons and the career exposure. “To me, as an educator, the institutions and their support make all of this real,” she said. “If the purpose of education is to prep kids for life after high school, well, this is it.” ■
Leases soon could impact businesses’ balance sheets
I
n today’s world, leases are a routine financing tool in operating a business. From copiers to drill presses to office space, leasing can provide access to assets that are critical to the needs of the business. When evaluating the benefits of leasing, many businesses look to issues such as total capital expenditure, potential tax benefits and cash flow requirements. Soon, however, businesses also may want to consider the impact to their balance sheet by that asset. Proposed changes by the Financial Accounting Standards Board (FASB), in conjunction with the International Accounting Standards Board, would require companies to recognize assets and liabilities arising from leasing transactions in the statement of financial position. The most notable change over existing guidance is that operating leases now will be quantified on the balance sheet. There are some exceptions based on the lease terms or type of leasing transaction; however, the majority of operating leases would be affected. Under the current guidance, firms are required to classify their leases as either capital or operating leases. Capital leases require the capitalization of assets and liabilities, and are amortized over time; operating leases are recorded as a period expense. The existing accounting models have been criticized for failing to meet the needs of the users of financial statements because they do not provide a faithful representation of leasing transactions. Why is such a seemingly small accounting change garnering so much attention? Much has been
NEVINNUSSBAUM
ADVISER made of the impact to the financial metrics used to analyze a company. Also, industries heavily invested in leasing, such as retail and transportation, have been following this closely. ■ The lessee perspective: The proposed guidance is referred to as the “right-of-use (ROU) model.” If enacted, the lessee will recognize an ROU asset and a liability for the lease contract on the balance sheet. The ROU asset represents the lessee’s right to use the leased asset for the term of the lease. The liability represents the lessee’s obligation to make lease payments. The ROU asset then would be amortized using one of two proposed approaches: the interest and amortization approach or the straight-
line expense approach. The lessee would determine which approach to apply on the basis of whether it acquires and consumes a morethan-insignificant portion of the underlying asset. ■ The lessor perspective: The lessor would account for a lease under one of two proposed models: the “receivable and residual (R&R) model” or a model similar to that used in operating lease accounting. The choice would depend on whether the lessee acquires and consumes more than an insignificant portion of the underlying asset. Under the R&R model, at lease commencement a lessor would de-recognize the leased asset and, in its place, recognize a lease receivable and a residual asset. The lease receivable would represent a lessor’s right to receive lease payments and would initially be measured at an amount equal to the present value of future lease payments, discounted by the rate implicit in the lease agreement. The lessor would recognize profit related to the receivable, if any, when the asset is transferred to the lessee. The residual asset would represent
the lessor’s claim to the residual value of the leased asset at the end of the lease term. Changes to accounting for leases have been in discussion for more than three years, and are expected to undergo further comment periods before becoming effective. Industry insiders do not expect an immediate decision on the new rules, with predictions for enactment as far out as 2016. There is a push to enact certain exceptions for private companies; however, no one expects this issue to be dropped entirely as it is a key component to narrowing the gap in the way U.S. and international accounting rules treat leases. The challenge, as always, is to find a balance between meaningful reporting and unnecessary recordkeeping. For now, companies should be informed regarding the potential changes, their existing leases and contracts that reference financial metrics derived from their balance sheet. ■ Nevin Nussbaum is a certified public accountant and partner at Cohen & Co.
Your legacy can truly make a difference. Your philanthropic support helps University Hospitals provide the highest quality of care for our patients, now and for future generations. It’s because of you that we can live our mission every day:
Add S parkle to Your Holiday Season
s To Heal – enhancing patient care, experience and access s To Teach – training future generations of physicians and scientists s To Discover – accelerating medical innovations and clinical research And it’s with your support, that we’ll continue to provide the same
We specialize in everything from corporate events to social gatherings and will customize our services to meet your needs. Whether you need drop-off service or a fully catered affair, we are ready to help you celebrate the holidays.
Please call Katie Klonowski 216-987-0100 or visit www.puravidabybrandt.com
170 Euclid Ave. on Public Square Downtown Cleveland Proud to serve only sustainable and local fare.
high-quality care we’ve been providing for nearly 150 years. Join the many who are making a difference. To learn more about ways to leave your own legacy, contact our gift planning team at 216-983-2200 or visit UHgiving.org.
20121105-NEWS--16-NAT-CCI-CL_--
16
11/2/2012
2:10 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
NOVEMBER 5 - 11, 2012
LARGEST HOSPITALS
RANKED BY 2011 NET PATIENT REVENUE
Company Address Rank Phone/Website
Net patient revenue ($ millions) 2011
2010
% change
Staffed beds
FTE employees as of 6/30/2012
Year founded
Top executive Health care system Title
1
Cleveland Clinic 9500 Euclid Ave., Cleveland 44195 (216) 444-2200/www.clevelandclinic.org
3,636.7
3,415.7
6.5
1,267
25,566
1921
Cleveland Clinic Health System
Delos M. "Toby" Cosgrove, M.D. president, CEO
2
University Hospitals Case Medical Center and Subsidiaries 11100 Euclid Ave., Cleveland 44106 (216) 844-1000/www.uhhospitals.org
1,684.8
1,567.1
7.5
807
11,823
1866
University Hospitals
Fred C. Rothstein, M.D. president
3
MetroHealth Medical Center 2500 MetroHealth Drive, Cleveland 44109 (216) 778-7800/www.metrohealth.org
669.4
681.9
(1.8)
365
5,359
1837
J. Moran MetroHealth System Mark president, CEO
4
Summa Akron City Hospital and Summa St. Thomas Hospital 525 E. Market St., Akron 44309 (330) 375-3000/www.summahealth.org
655.2
646.1
1.4
431
4,230
1892 and 1922
Summa Health System
Robert Harrigan president
5
Akron General Medical Center 400 Wabash Ave., Akron 44307 (330) 344-6000/www.akrongeneral.org
467.1
427.9
9.2
461
2,930
1914
Akron General Health System
Alan J. Papa president
6
Akron Children's Hospital One Perkins Square, Akron 44308 (330) 543-1000/www.akronchildrens.org
460.0
423.9
8.5
345
3,586
1890
NA
William H. Considine president, CEO
7
Fairview Hospital 18101 Lorain Ave., Cleveland 44111 (216) 476-7000/www.fairviewhospital.org
429.1
414.4
3.5
375
2,299
1892
Cleveland Clinic Health System
Janice Murphy president
8
Aultman Hospital 2600 Sixth St. S.W., Canton 44710 (330) 452-9911/www.aultman.org
371.5
NA
NA
643
3,733
1892
NA
Edward J. Roth III president, CEO
9
Hillcrest Hospital 6780 Mayfield Road, Mayfield Heights 44124 (440) 312-4500/www.hillcresthospital.org
365.3
343.8
6.2
406
2,203
1968
Cleveland Clinic Health System
Jeffrey A. Leimgruber president
10
St. Elizabeth Health Center 1044 Belmont Ave., Youngstown 44501-1790 (330) 746-7211/www.hmpartners.org
275.2
278.2
(1.1)
429
1,846
1911
Humility of Mary Health Partners
Donald Koenig executive vice president, operations
11
Southwest General 18697 Bagley Road, Middleburg Heights 44130 (440) 816-8000/www.swgeneral.com
274.8
268.5
2.4
346
1,754
1920
partnering with University Hospitals
Thomas A. Selden president, CEO
12
Mercy Medical Center(1) 1320 Mercy Drive N.W., Canton 44708 (330) 489-1000/www.cantonmercy.org
248.8
249.9
(0.4)
337
1,946
1908
Sisters of Charity Health System
Thomas E. Cecconi president, CEO
13
Mercy 3700 Kolbe Road, Lorain 44053 (440) 960-4000/www.mercyonline.org
198.8
192.0
3.5
317
2,122
1892
Catholic Health Partners
Edwin M. Oley president, CEO
14
EMH Elyria Medical Center 630 E. River St., Elyria 44035 (440) 329-7500/www.emh-healthcare.org
189.4
181.2
4.5
248
2,129
1908
EMH Healthcare
Donald S. Sheldon president, CEO
15
Firelands Regional Medical Center(1) 1111 Hayes Ave., Sandusky 44870 (419) 557-7400/www.firelands.com
184.0
179.7
2.4
232
1,410
1876
Firelands Regional Health System
Martin E. Tursky president, CEO
16
TriPoint Medical Center(2) 7590 Auburn Road, Concord Township 44077 (440) 375-8100/www.lakehealth.org
183.7
158.6
15.8
135
2,180
2009
Lake Health
Cynthia Moore-Hardy president, CEO
17
Parma Community General Hospital 7007 Powers Blvd., Parma 44129 (440) 743-3000/www.parmahospital.org
177.4
178.8
(0.8)
290
1,463
1961
NA
Terrence G. Deis president, CEO
18
Summa Barberton Hospital 155 Fifth St. N.E., Barberton 44203 (330) 615-3000/http://summahealth.org/locations/Hospitals/barberton
174.3
156.0
11.8
136
1,017
1915
Summa Health System
Thomas A. DeBord president
19
Marymount Hospital 12300 McCracken Road, Garfield Heights 44125 (216) 581-0500/www.marymount.org
172.3
177.8
(3.1)
232
1,173
1949
Cleveland Clinic Health System
Joanne Zeroske president
20
Trumbull Memorial Hospital(1) 1350 E. Market St., Warren 44482 (330) 841-9011/www.trumbullmemorial.net
160.3
173.5
(7.6)
311
1,470
NA
ValleyCare Health System of Ohio
Robert Wolleben CEO
21
West Medical Center(3) 36000 Euclid Ave., Willoughby 44094 (440) 953-9600/www.lakehealth.org
157.9
163.7
(3.5)
267
2,180
1961
Lake Health
Cynthia Moore-Hardy president, CEO
22
St. John Medical Center 29000 Center Ridge Road, Westlake 44145 (440) 835-8000/www.stjohnmedicalcenter.net
148.4
138.0
7.5
194
756
1981
UHHS/CSAHS Cuyahoga, Inc.
William A. Young president, CEO
23
Lakewood Hospital 14519 Detroit Ave., Lakewood 44107 (216) 521-4200/www.lakewoodhospital.org
143.4
137.3
4.4
250
895
1907
Cleveland Clinic Health System
Robert Weil, M.D. president
24
South Pointe Hospital 20000 Harvard Road, Warrensville Heights 44122 (216) 491-6000/www.southpointehospital.org
137.5
139.8
(1.7)
172
937
1957
Cleveland Clinic Health System
Brian Harte, M.D. president
25
Northside Medical Center(1) 500 Gypsy Lane, Youngstown 44501 (330) 884-1000/www.valleycareofohio.net
136.7
150.2
(9.0)
188
1,698
NA
ValleyCare Health System of Ohio
David J. Fikse CEO
26
St. Vincent Charity Medical Center 2351 E. 22nd St., Cleveland 44115 (216) 861-6200/www.stvincentcharity.com
135.5
124.5
8.8
154
845
1865
Sisters of Charity Health System
David F. Perse, M.D. president, CEO
27
St. Joseph Health Center 667 Eastland Ave., Warren 44484 (330) 841-4000/www.hmpartners.org
130.7
128.3
1.9
138
807
1924
Humility of Mary Health Partners
John Finizio president
28
Robinson Memorial Hospital 6847 N. Chestnut St., Ravenna 44266 (330) 297-0811/www.robinsonmemorial.org
121.5
124.7
(2.6)
141
1,094
1917
Summa Health System
Stephen Colecchi president, CEO
29
Euclid Hospital 18901 Lake Shore Blvd., Euclid 44119 (216) 531-9000/www.euclidhospital.org
116.2
117.5
(1.1)
231
860
1952
Cleveland Clinic Health System
Mark Froimson, M.D. president
30
Fisher-Titus Medical Center(1) 272 Benedict Ave., Norwalk 44857 (419) 668-8101/www.fisher-titus.com
110.8
108.7
1.9
145
705
1957
NA
Patrick J. Martin president, CEO
Source: Information submitted by the hospital unless the entry has a (1) footnote. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. (1) Information is from the American Hospital Directory based on Medicare cost reports, www.ahd.com. If the 2011 cost reports are not currently available through ahd.com, the information listed is for 2010 and 2009. Employee numbers represent total employees, not full-time equivalent employees. Staffed beds is the number of total complex beds. (2) Numbers are estimates and include 13 off-site locations and Lake Health Physician Group practices. Employee number also includes West Medical Center. (3) Numbers are estimates, employee numbers include West Medical Center and TriPoint Medical Center and subsidiaries.
RESEARCHED BY Deborah W. Hillyer
20121105-NEWS--17-NAT-CCI-CL_--
11/2/2012
3:03 PM
Page 1
NOVEMBER 5 - 11, 2012
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
17
Travel: Business spending rises even as trip volume falls continued from PAGE 1
“It’s an inconvenient flight, and it would have been better to do it all as one trip,” Mr. Insul said, but he couldn’t pass up the savings. The flexibility displayed by Mr. Insul is becoming a hallmark of business travelers seeking to cut costs. Rob Turk, executive vice president of North Olmsted-based Professional Travel Inc., which primarily serves corporate clients, said clients increasingly choose to travel in coach rather than business class. Others opt to fly into small airports on cheaper flights rather than into hub locations, then take ground transportation to their end destinations. “What we try to do is create and provide options for our travelers to utilize connections more effectively,” Mr. Turk said. Mr. Insul tries to double up on his trips whenever possible, especially while on the West Coast. “If I’m going to go a longer distance,
I try to coordinate that with multiple stops,” Mr. Insul said. “You can oftentimes take advantage of lowercost direct flights you may not get from Cleveland.” He also uses corporate and personal credit cards to eliminate baggage fees and earn reward points for flights, hotels and rental cars.
Timing is everything Mike Corkran, founder and CEO of China Centric Associates, a consulting firm in Beachwood that helps U.S. companies develop business strategies in China, tries to time his trips so he can get better rates. Mr. Corkran, who travels internationally six to seven times a year and domestically four to five times a month, blocks off three weeks of time for potential trips for China and then tries to find the best combination of dates within that period to make the trip. Because his company works in various regions of China, he also chooses to fly into different cities each time to reduce
Hospitals: Systems fight for future positioning continued from PAGE 3
over the last decade, according to the most recent census data, while Cuyahoga County’s population fell by more than 8%. The area’s population growth is what largely led to Southwest’s decision to beef up its campus, according to Mr. Selden. The first phase of Southwest’s expansion — an effort that broke ground earlier this spring — includes an expanded emergency department, a new critical-care unit and a new parking garage to cope with growing patient volumes. The second phase that will start to take shape in the coming weeks includes the conversion of most of the hospital’s two-person rooms into private suites and a new patient bed tower with 100 private rooms. As for MetroHealth, it has had a stake in the southwestern portion of the county since the early 1990s, when it opened its Strongsville Health Center, said Dr. Holly Perzy, medical director for the facility. Dr. Perzy said the at-capacity Strongsville site, which will close when the Middleburg Heights health center opens next summer, has allowed MetroHealth to build a strong primary care network in the area that should feed well into the new health center. She noted that MetroHealth has been in Strongsville longer than the Cleveland Clinic, which opened its health center in the city in 1998. Southwest General, which boasts a leading 42.5% market share in the area 20 miles southwest of Cleveland, expects MetroHealth to make a play for some of its patients and steer those that require more advanced care to its main campus off West 25th Street in Cleveland or to its health and surgery center on West 150th Street. “Why else would Metro build here?” Southwest General’s Mr. Selden said. “We’re going to make sure in our marketing efforts that our patients understand all the care they need is right here in Middle-
costs. “If you plan your business travel, you can get some fairly good deals,” Mr. Corkran said. “If you don’t plan it, and just say you have to go next Tuesday, prices are more volatile and a lot less predictable.” Mark Walton, vice president of strategy and account management of Orbitz for Business, said rates almost always are lower for those who can buy tickets in advance.
Cost of doing business For many travelers, though, it’s tough to be flexible on dates and times. Robert Rosenthal, president of Cleveland-based Finch Co., which does business as apparel retailer Next Stores, travels to major markets such as New York, Los Angeles and Chicago twice per month. Flights to New York that nine months ago cost $250 per person now cost $350, he said. While he and other employees might spend a few extra days in a city to avoid a return trip, for the most part the company simply must absorb rising prices, Mr. Rosenthal said. “We think about what we need to do to be successful,” he said. “If it entails being in the market to meet
people and find the best product, that’s the cost of doing business.” And that cost of doing business is rising, according to figures from the Global Business Travel Association. The group estimates business travel spending in 2012 will increase 2% to $257 billion from $251.9 billion the previous year, even though the total number of trips taken will decrease 1.6% to 438.1 million from 445 million in 2011. In its October report, the association cited “rising business travel costs” as the reason for the increase in spending. Orbitz’s Mr. Walton said domestic and international airfares are 6% to 7% higher this year than in 2011, and hotels are 5% more. Mr. Insul said he doesn’t see those costs coming down any time soon. “The fact is that these additional charges — the seat changes and the baggage rates — are such tremendous revenue drivers for the airlines that they have no reason to give those up,” he said.
Faring well While higher prices are a headache for corporate travelers, they are leading to an increase in business for travel management companies.
For example, sales at Professional Travel are 30% higher this year than in 2011, Mr. Turk said. The increase is driven by higher flying costs and the fewer number of flights available, he said. Those factors lead more travelers to hand off dealing with arrangements to the professionals. Travel management companies not only can book travel and find deals, but also can track spending data for companies to use to analyze their travel habits, Mr. Turk said. “The ultimate goal in managing travel is to reduce costs,” he said. “If you don’t have information, you can’t control the spend.” Carol Schneider, owner of Cleveland Travel Inc., said her Cleveland company has seen an increase in customers who typically would book online but are dismayed by higher ticket prices. “Today, there are so many ancillary fees involved with airline travel that more business travelers are willing to relinquish the control of making their own travel arrangements and pay a travel agent to do it because the process has once again become too time-consuming,” Ms. Schneider said. ■
burg Heights.”
MetroHealth’s play One of the reasons MetroHealth is making a stronger play in the suburbs is an attempt to lure more paying patients as it looks to prop up its finances, which have been hurt by the steadily rising amount of uncompensated care it provides to the county’s indigent. Health care leaders investing in the southwestern part of the county say the area’s exposure to patients on the Medicaid rolls and the uninsured is relatively low — an advantage for any system looking to generate more revenue. For example, only about 5.5% of Southwest General’s gross revenue through the first eight months of the year came from Medicaid patients, according to a recent report from Moody’s Investors Service. Some health care observers have likened the activity of what’s happening in Middleburg Heights and the surrounding areas to multimillion-dollar health care investments made in recent years in Medina by the Cleveland Clinic, Summa Health System in Akron and University Hospitals. Tom Campanella, who directs Baldwin Wallace University’s health care MBA program, said the Middleburg Heights and Strongsville investments are part of a broader effort by health care providers to muscle up their entire enterprises in anticipation of reimbursement cuts from commercial and government payers. “I think there’s recognition from all the players that it’s going to be much more of a competitive market in the future, and they’re trying to put themselves in a position of strength in regards to the services they offer, the geographic coverage and the overall infrastructure that’s available to meet those needs,” Mr. Campanella said. He added, “In the end, people will vote with their feet.” ■
TWO HEALTH CARE SYSTEMS WERE BATTLING IT OUT IN THE SAME MARKET. IT WASN’T HEALTHY. It was heated. There was tension. There were the doctors and the nurses and WKH H[HFXWLYHV 7KHUH ZHUH WKH DFDGHPLFV DQG WKH FOLQLFLDQV DQG WKH ÀQDQFH people. And, of course, there were the patients, whose health and well-being were at stake. In the end, we were able to bring them all together and create a health care partnership that’s not only one of the largest of its kind. It’s also one of the healthiest.
Higher standards make better lawyers.® For more information on our work in health care, visit vorys.com/health.
Vorys, Sater, Seymour and Pease LLP 1375 East Ninth Street
2100 One Cleveland Center
106 South Main Street
Suite 1100
Cleveland, Ohio 44114
Akron, Ohio 44308
20121105-NEWS--18-NAT-CCI-CL_--
18
11/2/2012
2:09 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
NOVEMBER 5 - 11, 2012
Metro: Upgrades to main campus depend on financial health continued from PAGE 1
Bill Ryan, president of the Center for Health Affairs, an advocacy group representing area hospitals. “That’s the whole ball game when you’re talking about a CEO.” If anything, Mr. Moran already has laid the groundwork for his own vision of what a financially sustainable MetroHealth would look like, though Mr. Ryan suggested it wouldn’t be surprising if elements of that plan changed somewhat under new leadership. An integral part of the plan put into gear under Mr. Moran’s watch is the construction in the county of four outpatient health centers, including a $23 million, 57,000-square-foot building under construction in Middleburg Heights. The outpatient centers are expected to bring more commercially insured patients — and thus revenue — into MetroHealth’s coffers in order to help offset the growing debt the system takes on by serving as the safety net hospital for
the county’s indigent population. MetroHealth announced plans for the Middleburg Heights building in fall 2011, and Mr. Moran then said the system was planning three more similar ambulatory sites. MetroHealth had said it would announce another health center before the Middleburg Heights building is completed by the summer of 2013. “We are continuing to look at various locations (for other health centers) and getting ready for a new CEO,” Dr. Fountain said. “The candidates we’ve talked to understand the ambulatory strategy.”
Ortho: Acquisition helps overseas targets
opportunity for OrthoHelix: Today, all the division’s revenue comes from inside the United States, whereas international customers account for nearly half of Tornier’s sales. OrthoHelix’s goal is to start selling its products in other countries early next year, Mr. Stripe said. “We’re going global … as soon as we can,” he said.
would have liked, but he has said, ‘OK, I’ll stay on until the end of the end of the year.’ He is doing what he believes is right for the hospital.” Mr. Moran’s successor will take the reins of a health care enterprise with an annual budget north of $750 million that’s seen its fair share of hurdles over the last few years. MetroHealth’s finances, for one, have been ravaged by the 35% increase in uncompensated care the health system has stomached since Mr. Moran took the helm in 2008. The absence of revenue from so many patients has resulted in layoffs and steep budget cuts. The health system also has been criticized for past expenditures on consulting contracts running into the hundreds of thousands of dollars, even as it receives a $36 million annual subsidy from the county. While it’s no secret the next CEO has a tough road ahead, the official
continued from PAGE 3
grow to $155 million if the division hits what former OrthoHelix board member Wayne Wallace described as reasonable earnings goals for the next two years. In an interview with Crain’s, Messrs. Stripe and Wallace described the acquisition as a big win for the state. Not only did the deal lead to a big payday for the company’s owners — Mutual Capital Partners of Cleveland, River Cities Capital Funds of Cincinnati and several individuals, most of whom live in Ohio — but Tornier has agreed in writing to keep OrthoHelix in Ohio for at least two years, said Mr. Wallace, who also is co-founder of Mutual Capital Partners. He would not say what document contained the statement, citing confidentiality agreements.
‘We’re going global’ Tornier, which makes products
job description for the post doesn’t go into detail about MetroHealth’s challenges or the type of candidate the search committee prefers. Instead, it says it seeks someone who is a “mission-driven individual who thrives in a high-energy, multi-focal, complex teaching environment.”
The right fit MetroHealth is different than its privately run counterparts, such as the Cleveland Clinic and University Hospitals. Its CEO job, according to health care observers, requires an individual able to balance the needs of many stakeholders, including county government, board members, staff, patients and taxpayers. “The first thing right off the bat this person needs to have is the ability to craft a vision for the organization and communicate it in a way that’s credible to the people listening and get people’s buy-in to actually execute that vision,” said
for surgeons who focus on the extremities, believes OrthoHelix’s Medina operations can become a “center of excellence” for the company’s foot and ankle products, according to comments Tornier CEO Doug Kohrs made during a September conference call discussing the deal. Whereas Tornier’s foot and ankle products accounted for less than 10% of the $140 million in sales the company posted during the first half of 2012, that product category accounts for most of OrthoHelix’s revenue. David Mowry, chief operating officer at Tornier, said the two companies create an “extremely complementary combination.” Although there are no immediate plans to move any employees to or from OrthoHelix, Mr. Mowry said he sees the Medina operation becoming a “key R&D center” for Tornier. Besides research and devel-
opment, OrthoHelix also handles shipping and receiving, quality control and other back office functions in Medina. Most of its sales are made through independent agents, and all its products are made by other companies, though many are produced in Ohio. Overall, though, Tornier wants to avoid disrupting OrthoHelix’s momentum, Mr. Mowry said during an Oct. 25 interview with Crain’s. “Not only (does OrthoHelix) have great products, but they have great processes and talent,” he said. The acquisition also could help OrthoHelix ramp up sales overseas. Tornier and OrthoHelix plan to sell each others’ products, which would give OrthoHelix access to its parent company’s sales agents throughout Europe, as well as in Australia and Japan. Those sales channels represent an
less provide for any expansion. MetroHealth’s ability to pay for such an expansive upgrade hinges on its ability to get a handle on its finances. Last November, MetroHealth laid off 104 employees and eliminated another 151 vacant positions in order to stave off heavy projected operating losses. At the time, officials said MetroHealth would stomach a $6.3 million operating loss in 2011 and an additional $21.1 million loss in 2012 if the appropriate steps weren’t taken. The financial picture, however, appears to be headed in the right direction. Mr. Moran said earlier this year the system, which boasts more than $750 million in annual operating revenue, hoped to finish 2012 with at least $10 million in operating income — a target Dr. Fountain said MetroHealth is poised to meet. “Our finances are good,” Dr. Fountain said. “We should hit our goals for the year.” ■
Hitting the target Earlier this year, Mr. Moran also laid out plans for a dramatic overhaul of MetroHealth’s aging, 38acre campus on West 25th Street in Cleveland. Hospital officials estimate it could cost as much as $435 million over the next five years just to maintain current facilities, much
sheet would have made it hard to obtain a traditional loan, they said. OrthoHelix later received two $1 million grants from the Ohio Third Frontier economic development program. The company used the money to develop two new technologies that have been incorporated into its products. Plus, River Cities Capital had raised money from the Ohio Capital Fund, a taxpayer-backed “fund of funds” that invests in venture capital firms that commit to funneling at least half of the money to Ohio companies. Mr. Wallace said that support weighed on his mind during the acquisition process. And though Mr. Wallace’s first priority at Mutual Capital Partners was to make money for the firm’s investors — they put in about $4 million and walked away with roughly six times that amount — priority No. 2 was to make sure OrthoHelix’s employees could keep their jobs. “Hey, we want this place to be here,” he said. “We want our employees to be taken care of.” ■
Setting priorities But the domestic market has been good to OrthoHelix, too. The company’s 2012 revenue is expected to beat last year’s sales figures by more than 30%, and its gross profit margins are in the 80% range. So far this year, OrthoHelix has increased the size of its staff to 82 from 65. Protecting those jobs and creating more was a high priority for both Messrs. Stripe and Wallace. For one, the company had received a lot of state support before the acquisition: OrthoHelix about five years ago secured a $750,000 loan from the Ohio Department of Development at a time when the company’s balance
REAL ESTATE CLASSIFIED Phone: (216) 522-1383 Fax: (216) 694-4264 Contact: Toni Coleman E-mail: tcoleman@crain.com INDUSTRIAL SPACE City of Lorain, OH will have a Request for Proposals (RFP) available for industrial/commercial real estate brokerage services for a city-owned commercial/industrial park, which is shovel ready with fully developed infrastructure. The complete RFP package will be available at http://www.cityoflorain.org/openbids/ The deadline for responses is 12 Noon on Wednesday November 14, 2012. Questions may be directed to Dave Gulden or Howard Goldberg at 440-204-2020
REALTORS: Now is a great time to promote your Luxury Properties to high-end prospects. Call 216.522.1383 for more details.
Copy Deadline: Wednesdays @ 2:00 p.m. All Ads Pre-Paid: Check or Credit Card
OFFICE/RETAIL SPACE
BANK/OFFICE/ RETAIL SPACE FREE RENT
BUSINESS SERVICES Haul-My-Mess.com Commercial Clean-Out and Junk Removal Services.
216-799-9911
BUSINESS SERVICE OWNERS! Submit your business card to promote your service.
To find out more, contact Toni Coleman at 216.522.1383
AUCTION
2,850 Sq. Ft. Center of City of Independence. Facing Rt. 21.
1466 E. 108th St
Call 216-319-8000
EMPLOYERS:
AUCTION Investment Opportunity
E-MAIL US YOUR AD...TCOLEMAN@CRAIN.COM
Excellent Location University Circle area excellent structure large rooms - wood floors 3bdrm 1.5bath
For daily on-line
Reach the most qualified workforce. Advertise your open positions here.
updates, sign up @
SPECIAL RATES AVAILABLE
CALL 440-454-1121
CrainsCleveland.com/Daily
Call Toni Coleman at 216-522-1383
www.ohiorealestateauctions.com
JOB SEEKERS: We now post POSITIONS WANTED in the Classified section of CrainsCleveland.com at
NO CHARGE. (Up to 150 words)
E-Mail info to cmackey@crain.com
20121105-NEWS--19-NAT-CCI-CL_--
11/2/2012
3:57 PM
Page 1
NOVEMBER 5 - 11, 2012
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
19
THEINSIDER
THEWEEK OCTOBER 29 - NOVEMBER 4 The big story:
Cleveland Clinic and GE Healthcare signed on as tenants in the underconstruction medical mart in downtown Cleveland. Thomas Gentile III, president and CEO of GE Healthcare, said the company will use its space to promote several lines of business, starting with its breast cancer, Alzheimer’s and cardiology equipment and services. The Clinic will take space on the medical mart’s fourth floor — its IT area. Chief information officer Martin Harris said the Clinic will bring together suppliers of health care information technology ranging from diagnostic equipment to warehouse management software used to keep patient floors stocked.
License to innovate: Parker Hannifin Corp. signed an exclusive licensing agreement with Vanderbilt University for the school’s exoskeleton technology, which allows individuals with severe spinal cord injury to walk and enhances rehabilitation for people who have suffered a stroke. The agreement gives Parker exclusive rights to develop, manufacture and sell the device. Parker intends to invest in further development of the technology and establish a business unit targeting commercial launch of the exoskeleton device in 2014. The (previously) missing link: University Hospitals’ cancer program continues to extend its footprint, as the health system announced a partnership that will bring new cancer care services to Lorain County. University Hospitals and Mercy, a health system with two hospitals in Lorain County, have inked a deal that will link the two organization’s cancer programs. The systems said they “have been working together to identify ongoing needs in the community and … have come up with an innovative plan to increase close-to-home access to advanced cancer care services.”
REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS
Another realty data provider? Xcellent news ■ Northeast Ohio will gain another online realty data provider at year’s end when Xceligent Inc. goes live with regional information here. The Independence, Mo.-based service said a team of 40 employees is working throughout Northeast Ohio by collecting data from brokerages and property owners, as well as by canvassing and photographing commercial property. The company has started interviewing for a local staff of at least three, according to Xceligent spokesman Sam Lewis. Xceligent was a big winner in CoStar Group Inc.’s $860 million purchase last April of the LoopNet realty service. Because the purchase combined the two major realty data services, the Federal Trade Commission required LoopNet to sell its interest in Xceligent to DMG Information Inc., provide some of its data to the firm and take other steps to help Xceligent compete effectively. Xceligent’s online subscription service costs $175 monthly. — Stan Bullard
Sermons served on the move ■ What began with a request from the pastor of The Word Church in Warrensville Heights to create a moving podium for use during his sermons has grown into a hot business for Alex Loos, a 29-year-old resident of Columbia Station. Mr. Loos didn’t know when he welded the
MILESTONE
A new pay scale: Musicians of The Cleveland Orchestra ratified a three-year contract that will be in effect through Aug. 30, 2015. The agreement sets minimum weekly compensation, benefit levels, and other terms and conditions of employment for the musicians of the orchestra. In the first year of the agreement, the minimum weekly salary is set at $2,333, unchanged from the weekly minimum at the end of the previous agreement. It will rise to $2,356 for the 2013-14 season and $2,403 for the 2014-15 season.
The state of tax loopholes: A new study of Ohio tax filings found that nearly 2,200 Ohio income tax filers with six-figure incomes — including 10 millionaire households — used the low-income tax credit to reduce their state income tax in the 2010 tax year. The study, “Closing the Loophole in Ohio’s Low-Income Tax Credit,” by the Cleveland-based Center for Community Solutions, argues that limiting the deduction with a ceiling of $50,000 in federal adjusted gross incomes for using the credit would save the state $1.36 million a year.
To keep up with business news as it happens, visit www.CrainsCleveland.com.
Stack starts anew in the shower ■ While taking a shower on Oct. 15, serial entrepreneur Charles Stack decided to start a business. Later, over breakfast with his wife, he determined that the company would focus on coaching CEOs of startups, and that it
Peter Lewis’ pledge: More for charity, and reform drug laws Hershey Lerner
Bernie Lerner
THE COMPANY: Automated Packaging Systems, Streetsboro THE OCCASION: Its 50th anniversary It isn’t just 50 years in business that’s cause for celebration at Automated Packaging Systems. In addition to hitting the half-century mark, the company’s founders — brothers Hershey, age 92, and Bernie Lerner, 85 — were inducted last week into the Packaging Hall of Fame. The Lerner brothers founded Automated Packaging in 1962 and remain active in the business today. They invented the preopened bag-on-a-roll concept called Autobag, and they have grown Automated Packaging into a global business with lines of Autobag, SidePouch and AirPouch bag and protective packaging products. Hershey and Bernie Lerner “also invented many of the unique processes used in converting plastic film into preformed bags and protective packaging materials,” according to a news release from the company. Combined, they are responsible for most of the company’s 132 U.S. patents. Art Gould, an original partner, was the company’s first salesman. All three partners were at a recent 50th anniversary celebration in Streetsboro, with more than 1,000 employees and guests in attendance. Automated Packaging has five manufacturing plants in Northeast Ohio. For information, visit www.Autobag.com.
would be called FlashStarts. That day, he set up a Wordpress blog to serve as the company’s website — and to document even the smallest steps he goes through to get the company up and running. Since then, he has used flashstarts.com to talk about formally incorporating the company, winning his first few clients and changing his tactics based on customer feedback. He also weaves in lessons for entrepreneurs. Mr. Stack knows the challenges they face. He’s best known for starting and selling online book retailer Books.com and a company that made software for software developers, Flashline Inc., both of which were based in Cleveland. His latest company, Sideways Inc. of Cleveland, continues to develop interactive books for tablet computers, but he admits that it hasn’t taken off. The company had about 15 employees two years ago, but now Mr. Stack is a one-man show, working with independent contractors. On the blog, he said he plans to highlight his mistakes and failures — or “pending successes,” as he calls them — because he believes they can be instructive. So what was his biggest mistake over the years? Taking “way too much advice from really smart people,” he said. “When you’re in a space that’s so new, so revolutionary, asking what other people’s opinions are is a recipe for cowardice. Nobody gets it,” Mr. Stack said. — Chuck Soder
BEST OF THE BLOGS Excerpts from recent blog entries on CrainsCleveland.com.
He’ll bring insight to the job: CardioInsight Technologies Inc., a Cleveland-based developer of technology that noninvasively generates 3-D images of the electrical activity of the heart, named Patrick J. Wethington its president and CEO. CardioInsight said Mr. Wethington brings to the job more than 20 years of medical device experience in the cardiovascular field. He served most recently as president and CEO of HemoSphere, a medical device maker that recently was acquired by CryoLife, also a biotech company.
primarily steel podium for the church that it had a congregation of more than 20,000 and a huge following of other pastors, too. Many of those pastors, it turns out, also liked the idea of having a podium on wheels. Mr. Loos’ company, Podiums in Motion, has sold an estimated 80 to 90 of his affectionately nicknamed “Holy Rollers” this year, up from 60 last year and 20 in 2009, when it all began. His podiums sell for $750 to $1,200. In all, Mr. Loos has sold more than 200 podiums to churches in 35 states. About two months ago, he hired a part-time person to help him keep pace. “I kept getting calls from churches all over the country,” Mr. Loos said. “(Pastors) like the freedom that they have with the wheels on the podium.” All the while, Mr. Loos works a full-time job and also is owner of Hans Noble Design, a custom steel furniture company named after his metalworker father and blacksmith grandfather — who share the name Hans — and his maternal great-grandfather, Noble, an artist. — Michelle Park
■ Fortune profiled Progressive Corp. chairman Peter B. Lewis, who it labeled the newest and “most eccentric” signer of the Giving Pledge — a group of billionaires promising to give away at least half of their fortunes to charity. The number of Giving Pledge signers grew by 11 last month and now totals 92, Fortune said. Mr. Lewis has a distinction among those 92: He’s the first with a Giving Pledge letter that calls for the legalization of marijuana. (The group normally focuses on education, health and the environment.) The story goes on at length about Mr. Lewis’ history with marijuana. But Mr. Lewis offered a bit of political analysis for the times: “If there is one area that is taboo for most philanthropists, yet exemplifies disastrous public policy, it is our nation’s outdated, ineffective marijuana laws. A majority of Americans are ready to change marijuana laws, yet we continue to arrest young people for engaging in an activity that is utterly commonplace.”
They clearly didn’t let dyslexia stop them ■ Dr. Toby Cosgrove, CEO of the Cleveland Clinic, is among the big names featured in a new HBO documentary, “The Big Picture: Rethinking Dyslexia,” that debuted last week. The Washington Post said the film “makes the case that dyslexia may cause difficulties in reading, but it doesn’t cause difficulties in broader learning.”
The documentary follows “the happyending stories of a handful of unusually bright kids,” including the son of director James Redford, who is the son of Robert Redford. “They talk about their bouts of selfhatred and disdain for school and also about the moments when they realized that their limited reading skills were not character flaws.” Charles Schwab, Richard Branson and Dr. Cosgrove are among those who talk about how they struggled in school with dyslexia.
Regardless of Nov. 6 results, there’s money to be made ■ Joe Heider, a Cleveland-based financial adviser at Rehmann, was quoted in a Reuters story about what investors might expect to see next year based on which presidential candidate wins on Nov. 6. “The stock market overall will react most favorably to a victory by Republican challenger Mitt Romney because his preferences for deregulation and tax cuts are the most friendly for businesses and the wealthy,” the chief portfolio strategist at Wells Fargo Advantage Funds said. Another observer noted that a Romney victory would help coal producers, railroads, large banks and defense companies. Mr. Heider told Reuters that small-cap stocks would gain from a second term for President Barack Obama because accommodative lending terms and low interest rates likely would remain in place. He added that an Obama victory “could also lead to a selloff in dividend-paying companies and stocks with large share price gains near the end of the calendar year as investors prepare for preferential tax treatments of dividends and capital gains to end.”
20121105-NEWS--20-NAT-CCI-CL_--
11/2/2012
3:27 PM
Page 1