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Dots on the spot Bankruptcy filing outlines difficult challenges ahead for women’s retailer By MICHELLE PARK LAZETTE

Like the high heels it sells, the task before Dots LLC is tall. According to the Chapter 11 bankruptcy petition Dots filed Jan. 20 and sources close to the situation, the women’s apparel and accessories retailer turned off its core customer base by carrying lowerquality inventory, and now faces the strain of suppliers that won’t extend it credit. While the bankruptcy code lets Glenwillow-based Dots shed fixed costs, in part by allowing it to reject leases on underperforming locations, it won’t relieve Dots of all its challenges, said John M. Mueller,

who worked for a private equity fund that invested in distressed retailers in the early 1990s. And convincing the discontented to shop again at the retailer’s 400some stores is no small feat, said John K. Lane, former president of the Ohio chapter of the Turnaround Management Association and managing director and CEO of Inglewood Associates LLC, a turnaround and business improvement advisory firm. “Customers have a lot of retail choices, and people are creatures of habit,” Lane said. “Once you’ve offended someone so much that you’ve changed their habit, trying to win them back is a huge challenge.” See DOTS Page 7

Clinic is keeping Akron General in its wide-ranging sights By TIMOTHY MAGAW tmagaw@crain.coms


If you thought the Cleveland Clinic’s interest in a deal for Akron General Health System was dead, you thought wrong. Cleveland Clinic CEO Dr. Toby Cosgrove told Crain’s the health system still is interested in a takeover of Akron General, even after a joint venture to do so with

University Hospitals, a suspected suitor, says it isn’t interested in Summit County health system as potential expansion target Community Health Systems — a large, for-profit hospital chain out of Tennessee — fell apart in early January. At the same time, University Hospitals, which recently took over community hospitals in Parma and Elyria, said it wasn’t interested in the Akron hospital.

Should the pursuit of Akron General by the region’s largest health system prove successful, it would make for a commanding move by the Clinic in Summit County, where its presence is sparse at best. The Clinic, which boasts about $6 billion in annual operating rev-

enue, had similar talks with Akron General back in 2007, but those negotiations fizzled. The Clinic, of course, likely isn’t alone in its pursuit for Akron General. Without naming names, Akron General said it’s considering “mul-

INSIDE: Bringing two hospitals together is a complicated process that might require a “test drive.” Page 13 tiple partnership opportunities.” Like University Hospitals, though, other large Ohio health systems — including Summa in Akron and ProMedica in Toledo — confirmed they are not in discussions with Akron General. See CLINIC Page 17



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Entire contents © 2014 by Crain Communications Inc. Vol. 35, No. 5




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One question Cuyahoga County voters may want answered before they decide on whether to extend the sin tax for improvements to Cleveland’s sports facilities is whether their tax money will keep the teams here during the entire time they’re paying the tax. Under the proposed 20-year extension, Cuyahoga County would be collecting the tax on cigarettes and alcoholic beverages until 2035. The Indians’ lease at Progressive Field, though, runs through the 2023 baseball season, while the Cavaliers and Browns are committed to Quicken Loans Arena and FirstEnergy Stadium, respectively, through 2027 and 2029. None of the teams have given public officials any reason to believe they are eager to move on after their current leases expire, either to a new city or to a new facility in Northeast Ohio. Indeed, all have acted to cement their relationships with their existing facilities. But Neil deMause, who follows public financing of sports facilities at his website,, said it’s rare for communities to commit to expenditures on stadiums and arenas without ensuring that the leases in place bind the teams during at least most of the term of the public financing. “Typically you see the leases matching up pretty well with the stadium (financing),� said deMause, who also is author of the book, “Field of Schemes: How the Great Stadium Swindle Turns Public Money into Private Profit.� “The issue here is making sure you’re getting a promise back from the team,� he said. DeMause cited a deal in 2013 to renovate Bank of America Stadium in Charlotte, N.C., as typical. There, the city council voted to provide $87.5 million for upgrades to the 17-year-old home of the Carolina Panthers football team in exchange for the team agreeing to add six years to its lease. Other cities that failed to ensure that leases matched their financial obligations are finding themselves spending millions of dollars on facilities that have been abandoned by professional teams. On his website, deMause has been following the situation in Kansas City, Mo., where the abandoned Kemper Arena is costing the city $1 million a year in maintenance costs while it’s paying off $2.2 million in debt annually until 2016. The Kings basketball team that once played in Kansas City now is in Sacramento, Calif. Likewise, the New Jersey Sports

Proposed extension would last until 2035; ‘clarity’ on three pro teams expected soon


The Cleveland Indians’ lease at Progressive Field runs through the 2023 season. Meanwhile, the Cavs’ lease at Quicken Loans Arena lasts until 2027, and the Browns’ lease at FirstEnergy Stadium goes through 2029. and Exposition Authority will be paying off $110 million in debt until 2025 for the demolished Giants Stadium. It has been replaced by MetLife Stadium, which like its predecessor is part of New Jersey’s Meadowlands complex; the new stadium opened in 2010 and was host over the weekend to this year’s Super Bowl.

Expect ‘some clarity’ Though it’s unlikely to happen, all the teams in Cleveland could be gone from their current homes by 2029 under their existing lease arrangements. For the moment, team executives and officials with the city of Cleveland and Cuyahoga County are reluctant to talk about what lease issues might be discussed among the teams and the building owners prior to the election. But all the teams have been willing to go beyond the terms of their existing leases in the past. In 2004, both the Indians and the Cavaliers voluntarily renegotiated their leases to ease the financial burden on the Gateway Economic Development Corp., the quasi-public corporation that manages Progressive Field and Quicken Loans Arena and is the depository for the sin tax revenue. Last year, the Browns put forth a plan for $120 million in improvements to FirstEnergy Stadium. Though the team will pay most of that amount, a substantial sum — at least $30 million — will be covered by the city. Matt Carroll, chief of staff for County Executive Ed FitzGerald,

said last week in a telephone interview that the status of lease extensions, as well as a prioritizing of capital improvements, will be made known publicly before the vote. “People will expect there will be some clarity provided about that,� Carroll said. “It’ll have to be part of the discussions.�

Mum’s the word Others who will be at the table were more circumspect. Asked what can be negotiated with the teams before the election, Ken Silliman, chief of staff to Cleveland Mayor Frank Jackson, said in an emailed statement, “We look to the campaign for the sin tax to help ensure that voters know the details, particularly for Progressive Field and Quicken Loans Arena. For FirstEnergy Stadium, additional funding will provide a continued revenue source for improvements and maintenance.â€? Len Komoroski, CEO of the Cavaliers and Quicken Loans Arena, would say only, “All of the teams will be supportive of the (the city of Cleveland’s and Cuyahoga County’s) efforts.â€? Browns spokesman Zak Gilbert was reluctant to comment publicly and would say only that the team was not interested in discussing an extension of its lease at this time. Curtis Danburg, an Indians spokesman, said the team would defer to the city’s Silliman on this issue, but he noted in an email, “There will definitely be a juncture in the near future for us to provide some more detail.â€? â–


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Ship repair heats up during freeze Ashtabula company led by father-son tandem is emerging as force in industry


On Wednesday, Jan. 29, Lake Erie Ship Repair & Fabrication LLC dive supervisor Brian Burns went underwater for a hull inspection on the Nautica Queen. The temperatures in the water were supposedly better than the single digits out of it, but Burns took measures such as heating his gloves with boiling water. The Coast Guard and the crew on land followed along by watching video footage from Burns during the hour-long dive.


Winter is the ideal season for ship repair and maintenance on the Great Lakes, because it’s pretty hard for ships to carry cargo or passengers when the water is frozen. That’s precisely why on Jan. 29, one of the coldest days yet in this very cold winter, Brian Burns, the dive supervisor for Lake Erie Ship Repair & Fabrication LLC, donned a dry suit and dove under the ice of the Cuyahoga River with a camera. The Nautica Queen cruise ship in Cleveland was due for a routine hull checkup, and the crew and the U.S. Coast Guard needed a set of eyes under the water. Commercial dives are just one of the many services Lake Erie Ship Repair, based in Lenox Township in Ashtabula County, offers to its customers across the country. The small father-and-son company has grown and expanded its services since launching in September 2012. President Joseph J. Craine said he’s working to get a lease signed to move the company off the family’s property and into a 10,000-squarefoot shop in Ashtabula, and he expects to double last year’s income in 2014. “Our focus is to get the marine industry back in Ashtabula,” Craine said. Craine and his son, company vice president Justin Gee, had been working for the Great Lakes Group when they decided to break off and start their own business in fall 2012. Craine, a Navy veteran with years in the ship repair business, said he always wanted his own business and it was time to do it.

In the picture at left, Burns, second from right, is shown with company superintendent Chris Kane, left; company president Joseph J. Craine, second left; diver tender Jim Rakovan, center; and company vice president Justin Gee.

See SHIP Page 18

MORE FROM THE DIVE To see Lake Erie Ship Repair & Fabrication LLC dive supervisor Brian Burns prepare for an underwater hull inspection on the Nautica Queen, watch the video that is included in the online version of this story at:

Industrial real estate market makes room for hope Northeast Ohio vacancy rate falls to 8.8% in 2013; increased lending provides boost By STAN BULLARD

Blender maker Vitamix, cosmetics producer Art of Beauty and factory crane installer Expert Crane Inc. have something in common. Each consummated an industrial expansion or move last year best compared to the size of a football

field: three in Strongsville for Vitamix, and about one each for the other concerns in Bedford and Cuyahoga Heights, respectively. Such moves were part of a big decrease in vacancy last year in Northeast Ohio’s industrial real estate market. The Newmark Grubb Knight Frank real estate brokerage esti-

INSIDE: A year-by-year look at the industrial vacancy rate in Northeast Ohio since 2008. Page 11 mates in a new report that industrial vacancy fell to 8.8% at the end of 2013 from 9.9% a year earlier. Higher occupancy, rising rents and, most of all, more lending interest among banks to real estate developers also paved the way for boosting construction in the category. Terry Coyne, an executive managing director at Newmark Grubb’s Cleveland office, said the reality of

the improving market is not widely appreciated by companies in the hunt for industrial real estate to buy or lease. “Most people Coyne don’t believe the run-up in occupancy,” Coyne said. “They think there is always a building they can get when they want one. Now people are finding they can’t make last-minute

decisions.” The pendulum also has swung enough that companies interested in manufacturing or warehouse space will need to think about building again to get what they want for the first time since before the recession struck in 2008. The recently announced decision by retailer Arhaus Furniture to build a 770,000-square-foot distribution center and headquarters in Boston Heights is a bellwether of the shift, Coyne said. See MARKET Page 11




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Converting Omnimax theater to digital would require about $1.9M in donations By TIMOTHY MAGAW

The Great Lakes Science Center’s Omnimax theater might dwarf the region’s independent cinemas in terms of sheer size. However, it shares a similar problem in converting its operations from analog to digital, which comes with a hefty price tag. As a result, the science center is looking to raise about $1.9 million to outfit its 320-seat, iconic domed theater with digital projectors and an upgraded sound system. Much like with standard theaters, foregoing the upgrades could threaten the science center’s ability to secure the latest pictures as movie studios phase out traditional film. “Within five years, we’ll be reduced to simply going back to old films in the library,” said Kirsten Ellenbogen, president of the science center. The Cleveland International Film Festival recently secured a $500,000 loan from the George Gund Foundation to convert nine theaters at Tower City Cinemas in downtown Cleveland — the festival’s head-


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The Great Lakes Science Center hopes to outfit its 320-seat Omnimax theater with digital projectors and an updated sound system. quarters of sorts — to digital projection equipment. Ellenbogen said the science center is exploring similar options and looking for private backers to support the project. Ellenbogen said a timeline for the project hasn’t been determined, but she stressed the need for the upgrades was immediate considering 20% of the science center’s admission revenue comes from the theater. About half the science center’s guests opt to see a film. “The scale of this transformation is not as simple as changing over a typical screening format given the

dome situation,” she noted. “There is some urgency to this as we lose access to quality films.” Ellenbogen said the science center also hopes to receive state money through the coming capital budget. If secured, she expects Title 1 schools, which now can visit the science for free, also will get to see Omnimax films at no charge. “This particular capital bill has an economic development focus on it,” she said. “This theater is a significant landmark — even the dome itself — on the lakefront. And all eyes are on the lakefront right now.” ■

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latest examples of the city’s gastronomic ingenuity. Hobbyist baker Shelley Fasulko conceived of the idea of spicing up her homemade donut recipe with suds from different area brewers on a whim. Before long, she and boyfriend John Pippin were filling small personal orders out of their home kitchen at the Water Street Condominiums in Cleveland’s Warehouse District. Securing in October a shared kitchen space at Cleveland Culinary Launch & Kitchen in the city’s MidTown neighborhood enabled their concept to make faster inroads to the Cleveland marketplace. Now they’re selling their scrumptious gourmet indulgences at Pour Cleveland in the 5th Street Arcades, Tremont Tap House and as of Saturday, Jan. 25, Rising Star Coffee Roasters. “I’ve always loved scheming and creating sweet products. Cleveland has this world-class food scene and these amazing craft brewers, and we wanted to play a part in it,” said Fasulko, a boomeranger who has lived in Austin and Chicago. The menu is seasonal and reflects what is on tap at area breweries, from the stalwarts such as Great Lakes Brewing Co. and Market Garden Brewery to smaller-batch producers such as Hoppin’ Frog Brewery in Akron. Flavors such as the Symon — a chocolate peanut butter donut made with Willoughby Brewing Co.’s peanut butter coffee porter, peanut butter beer sauce and a smoky pork rind dust garnish — may occupy the display case along with about five other varieties. Ingredients are sourced from the West Side Market and Bickford Flavors in Cleveland. “Brewnuts are the quintessential gourmet Cleveland treat,” Fasulko said. Brewnuts’ production in its first


WHAT’S COOKING three months has increased to 15 dozen per week, and with potential new partnerships in the works, Fasulko expects production to escalate. Meanwhile, Fasulko and Pippin are trying to develop a realistic growth strategy that doesn’t overwhelm their day job responsibilities. Fasulko is a clinical researcher at MetroHealth System and Pippin handles finance and accounting at Cleveland-based Club at Key Center. Beyond its coffee shop and gastropub offerings, look for Brewnuts at the monthly Cleveland Flea. An Ohio City storefront is on the radar, though the couple hasn’t yet identified a potential location. “The brewery block seems like a great fit,” Fasulko said.

Sustaining seafood Local chefs Douglas Katz (Fire, Food & Drink, Katz Club Diner, Provenance) and Jonathon Sawyer (Greenhouse Tavern, Noodlecat, Trentina, Sawyer’s Street Frites, See Saw Pretzels, Tavern Vinegar Co.) have joined 18 other leading national chefs and culinarians in a task force aimed at improving seafood’s sustainability. The Blue Ribbon Task Force members will help guide the Monterey Bay Aquarium’s Seafood Watch program and work with seafood industry suppliers, restaurants and media to advocate for healthier oceans and seafood. ■



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Dots: Sources say company is trying to return to former ways continued from PAGE 1

How exactly did a retailer, bought three years ago by a private equity firm that guided the ubiquitous brand Aéropostale Inc. to an initial public offering and that currently owns the well-known New York & Co., end up with bankruptcy as its only option for viability? CEO Lisa Rhodes, in a declaration in support of Dots’ bankruptcy petition, blamed the retailer’s decline in store traffic and overall financial performance on merchandising strategies and operational tactics instituted by prior management. For one, Dots introduced product lines that were too young for its customer base, Rhodes’ filing stated. A source who asked not to be identified agreed that Dots lost its merchandising way. “There’s a difference between trashy and sexy,” the source close to the situation said. “We went to trashy, and we should have been sexy. She (Dots’ core customer) doesn’t want to buy something that’s trashy or something that’s basic. She wants some razzle-dazzle from us, and we didn’t deliver it. “We just had the wrong product,” the source continued. “We kind of failed the first rule of retailing: We didn’t give the customers what they wanted. We disappointed and disaffected some of our customers. It doesn’t take that many people to not come back to inflict harm on a business. Combine that with a very, very fragile retail environment … (and) that can kill a retailer.”

Customer’s always right In August 2012, Dots brought in Rhodes, who previously served as senior vice president of Wal-Mart’s U.S. apparel merchandising division. She brought more than three decades of retail experience, but she “inherited a business that was going downhill quickly,” the aforementioned source said. “We underestimated how quickly,” the source added. While a repositioning strategy focused on pricing, product merchandising and marketing initiatives has begun to improve trends in comparable-store sales, overall sales remain below projections, Rhodes’ declaration stated. Now, the company seeks “to swiftly and effectively move toward a sale of some or all of its businesses” through Chapter 11 bankruptcy. Like turnaround specialist Lane, Paul Swinand, an equity analyst who covers retailers including Macy’s and Sears for Morningstar Inc., an investment research firm in Chicago, said in an email it is “VERY hard to get the bad taste out of consumers’ mouths once they are dissatisfied with a retail experience.” “Retail turnarounds in general are few and far between, and often have many speed bumps if they DO work,” Swinand wrote in the email. “Usually, for a turnaround to work, there has to be a great brand that people still remember, and the new owner has to pull back and go to the core brand positioning, usually culling things that cheapened the brand or changed the retail experience.” Dots appears to be attempting that return to basics. According to a second source who agreed to talk under the condition of anonymity, Dots is working to spread the word via direct mail and online that it’s back to the way it used to be.

Dots CEO Lisa Rhodes has blamed the retailer’s decline on merchandising strategies and operational tactics of the company’s prior management. That outreach follows demographic research conducted after Rhodes joined the company that revealed Dots was “misdirecting (its) merchandise,” the second source said. The Dots customer of today, the source said, is a 25- to 35-yearold, fashion-forward woman who wants clothing she can transition from daytime work to nightlife style, but Dots wasn’t targeting its merchandising or marketing to her. A post dated Oct. 21, 2013, by someone identified as a Dots “assistant manager” on — a website that promotes itself as a place where outsiders can gain insiders’ views of their employers — echoes that sentiment. The person noted there had been “complaints from customers about higher prices and styles changing that they do not like.” “Listen to your customers,” the person urged. “Changing what made Dots millions is not working.” According to Rhodes’ supporting filing and the second source, Dots’ new management has launched customer loyalty programs and private label credit cards with reward programs. The company also has changed its website and created new platforms for dialogue with customers through blogs and social media.

In its filing, Dots said it has secured $36 million from Salus Capital Partners LLC, its existing senior lender, to support ongoing operations through the bankruptcy process. The filing also said 36 stores are “chronically underperforming,” and that Dots will seek to reject leases for them as of Jan. 31, last Friday. The inventory from closed stores can be consolidated to help fill the shelves of better-performing stores, Inglewood Associates’ Lane noted. Still, Dots must make its case to vendors. “You have to go back to your vendors and explain to them why they should support the business,” Lane said. “The customers may say, ‘Great, we’re all coming back.’ But if your vendors say, ‘We don’t believe you,’ then you’re lost.” In the meantime, Irving Place Capital, which acquired Dots in 2011, is living a truth of the leveraged buyout business — “they don’t all work out as expected,” said Mueller, now managing partner of Partners Private Equity LLC, a Beachwood private equity firm he launched. “I’m sure they’ve been working very hard on this deal to try to sal-

vage it,” he said. “At this point, when it goes into bankruptcy, they by definition probably have lost their entire investment. Their choice is to double down and put more money in, or they put it into bankruptcy.”

The ‘right stuff’ Rhodes’ declaration in support of the bankruptcy petition said Dots was estimating sales of $293.7 million for the fiscal year ending Jan. 31, 2014. That total would be down 13% from sales of $338.8 million in fiscal 2013, which in turn was down 2% from sales of $346.2 million in fiscal 2012. Despite that trend, Dots is “optimistic,” Rhodes’ filing stated, citing the company’s history of positive cash flow, for one. “Dots believes that the combination of fresh merchandise, coupled with other repositioning strategies and a streamlined lease portfolio, will enable it to thrive as a profitable player in the retail market,” the filing stated. Those with inside knowledge of Dots say the greatest goal is to save its jobs. According to the bankruptcy filing, Dots employs roughly 3,500 people in 28 states.

“I could still say and did say yesterday … that the vision of Dots as a 1,000-store chain is still a reasonable and possible outcome,” said the first unidentified source. According to the second unidentified source, Dots’ executives believe they’re “on the right path.” “All signs are pointing to the fact that a lot of this is working and taking hold,” the second source said. “Dots is very hopeful that they are going to come back from this. They think the voluntary petition (for bankruptcy) gives them the time.” Mueller has seen distressed retailers turn things around. Retailers, he said, operate with high fixed costs, but make a “pretty good margin” on every item of clothing they sell. “So, if (they) sell enough to cover those fixed costs, every additional sale is very, very accretive to the bottom line,” he said. “A small improvement in sales can create a dynamic improvement of the bottom line. “If they pick the right stuff, promote it properly and get the right people to wander into their store … it could turn pretty quickly,” he said. “All you need is a good season, and you can build on that.” ■

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Vendors make demands Also, higher-quality selections, including more plus-size offerings, are on the floor inside Dots’ stores, priced at “competitive and compelling prices,” the second source said. However, store inventory is down by about a third because Dots has suffered a lack of vendor support brought on by “eroding results,” according to the first unidentified source. Vendors generally ship garments to retailers on credit. However, beginning about October 2013, Rhodes’ filing stated, certain vendors tightened credit terms and/or began demanding that Dots pay for goods faster or upon delivery. That’s an expensive predicament, Inglewood Associates’ Lane said. “If … your vendors give you 60 days to pay your bills, that 60 days is financing you don’t have to go to the bank for,” he said. “If all your vendors are upset with you and want cash on delivery, you have to find some funding source for that.”

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Scott Suttell (


Fair’s fair


magine for a moment that your business underpaid its taxes to the state of Ohio (not that any of our readers would ever do such a thing). How long do you think it would be before someone from the Ohio Department of Taxation contacted your business to let you know that it still owes the state money? We suspect it wouldn’t be very long — likely a matter of a few months, if not a few weeks. And that’s perfectly understandable. It is, after all, an obligation that must be met under the law. But what if that same business unknowingly overpaid its taxes? Would the state be as quick to return the overpayment to the business to which the money rightfully belongs? Well, for the last couple years under the administration of Gov. John Kasich, the state has made an effort to refund such overpayments to businesses. However, under current law, the state is under no obligation to let businesses know about their overpayments, and for many years the tax department did not notify businesses about them. So, it kept money it didn’t deserve, and after four years would move the overpayments to the state’s general fund. Rather than assume the next governor also will direct the tax department to inform businesses of their overpayments, a few legislators are pushing bills that would require the state to tell businesses they’re owed money. Those dollars then would be automatically refunded in the form of checks or tax credits. State Rep. Al Landis, a Republican from Dover who is a co-sponsor of the Ohio House’s version of the bill, sees it as a case of what’s fair is fair. “If you overpaid your taxes, why should the government keep your money?” Landis told The (Youngstown) Vindicator. “The short answer is, they shouldn’t hold the money.” Even Joseph Testa, the state’s tax commissioner, is appalled by what he called “an outrageous practice” and thinks a change is in order. “For way too long — for decades — the Department of Taxation just kept silent, and overpayments that were made by business taxpayers were retained,” Testa told The Vindicator. He said procedures should be put in place “so that in the future these (overpayments) won’t build back up again.” Ripping businesses off of money that should be theirs sends the wrong message for a state that wants to be known as business-friendly. House Bill 402 and Senate Bill 263 should be reconciled and moved forward quickly so that the state-sanctioned thievery is guaranteed not to continue into the future.

Sin isn’t in

Civic leaders who want Cuyahoga County voters to extend for 20 years the six tax that devotes its proceeds to Cleveland’s three major league sports palaces might not want to read the comments on this page in our Talk on the Web feature. There is no love expressed for an extension. Likewise, a poll on our website was running 42% for and 58% against an extension of the tax late last week. While the poll is unscientific, the numbers can’t be encouraging given the makeup of our audience. Looks like extension proponents may have their work cut out for them.


Feel overworked? You probably are


e Americans work like mules. Consider:

Last week’s issue of The New Yorker included a piece with the headline “The Cult of Overwork.” It outlined the sobering damage long hours inflict on us. As we fatigue ourselves, we lose our creativity and effectiveness. The quality of work suffers. If we work an industrial job, we increase the chances of a workplace accident. Our diets, immune system, family life and mental health all get torpedoed. And we make mistakes. I’ve made some doozies. I was in charge of putting out the paper on Jan. 1, 1997, at The Morning Journal in Lorain. At the end of a 14-hour workday, I put the finishing touches on what I thought was a souvenir front page that celebrated Ohio State’s last-second victory over Arizona State in the Rose Bowl. “Best Rose Bowl ever,” screamed the headline. It was a keeper all right, because on the top of Page 1, I had typed in the wrong year: Jan. 1, 1996. It ran in all 40,000-or-so copies. For white-collar workers, the effects of overwork are cumulative. Work yourself


■ This week, 94% of professionals — that’s 15 out of every 16 — will work more than 50 hours. About half will work more than 65 hours. ■ Today, more than twothirds of American workers either will eat lunch at their desks or skip it altogether. ■ During 2013, six in 10 Americans said they worked during their vacations. That number was higher — 73% — for millennials. ■ The typical American worker ended 2012 with a staggering 9.2 days of unused vacation. If you dig, you can find dozens of stats and surveys that show the hard work and long hours we are putting in — and I haven’t even mentioned the time-sapping revolution that is the smartphone. In lots of ways, all this work has, well, worked: We are the most successful nation in history. Our work ethic is unmatched. But there’s a problem. It’s not smart.

silly for a few years and you’ll find that your ideas — and your edge — are gone. It’s called burnout. Research also has shown that working shorter days and adding “strategic renewal” to your life — naps, workouts, vacations — can improve creativity, health and productivity. Last month marked the 100th anniversary of Henry Ford cutting his factories’ shifts to eight hours, helping create the modern workday. He knew something. I’m going to try to embrace that knowledge and spend the year focused on goals and results, not hours worked. I am going to try to keep telling myself that time spent away from work is not lost. It’s needed; it’s time on our own personal charging stations. It’s not going to be easy to turn that ship. We live in a culture where long hours are celebrated, even expected. It’s easier to measure time worked than something more imprecise, such as quality and creativity. And many of us bill by the hour, so cutting work would mean cutting income. Still, I’m not giving up on a smart, sane and creative 2013. … um, … I mean 2014. ■

TALK ON THE WEB Re: Expanding school calamity days ■ This makes no sense. The law is written allowing five days, and if there are more, the days must be made up. Why would you say “this year the weather is unusually severe” and allow extra days. The law accounts for a bad weather year. The days must be made up. — Tburd

Re: Browns nostalgia ■ Publisher John Campanelli’s sentiments are right on in his Jan. 20 column, “Good times fade in the distance.” The characters of the old stadium certainly added to the atmosphere and the passion but got priced out of the games with the new stadiums. I attend maybe one Browns game a

Reader responses to stories and blogs that appeared on:

year, and now I feel like a large percentage of people are there for the party, not for the football. Granted, we haven’t had much to cheer about the last 15 years, but the connection between the city and the team has finally devolved into what it’s always been — a business relationship. — Anthony Kure

Re: Sin tax extension ■ I say don’t spend a dime that we are not contractually committed to spend. I would go further and tell all three bums we are kicking them out of town in three years unless they are competent teams by then. — Robert Fritz

■ I’m sick of paying for luxury items I never even use!!! At least be fair with taxing something everyone uses, not just smokers and drinkers! — Denise Galoski Turrene ■ Why are the taxpayers footing all of the bills for these sports teams? They, the owners and players, are making millions and we the taxpayers have no sa in any decisions. I will not vote to renew the sin tax. — Monalea Hutchins ■ I say “So what?” Vote down the sin tax extension, stop penalizing those who do smoke and drink, and let the owners of these three losing institutions carry their own weight. Hell, we all have our own bills to pay; let them pay theirs, too. And if they leave, so what? Let some other town be duped into thinking they’re getting a deal. See WEB Page 9



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Port raises Cleveland’s profile new spaces. By BETTY SUTTON

There’s a spark in the St. Lawrence Seaway System — a spark that holds the potential for more big things to come for the system and its users. The spark was lit last Oct. 23 with the announcement of the first-of-itskind regularly scheduled express freight shipping service between Cleveland and major European ports through the St. Lawrence Seaway. Set to commence next April, the Cleveland Europe Express Ocean Freight Service (CEE) will be the only scheduled international container service on the Great Lakes. As such, it will be the fastest and greenest route between the heartland of North America and Europe. This is big! The CEE represents a potential breakthrough for shipping on the Great Lakes. It will further link the Port of Cleveland into the vast network of global trade. Ninety percent of all global trade by volume is transported over water. Cleveland already is an important international port, but with the introduction of the CEE, it will play even more a role as part of the global trade system. With the CEE, it will be easier for manufacturers and shippers to connect with the rest of the world, which will raise the profile of the entire system. More ships moving in the Great Lakes St. Lawrence Seaway System ultimately means increased cargo and more opportunity for businesses at all of our ports to grow. It also gives us the opportunity to promote greater use of maritime transportation and its as-

Betty Sutton is administrator of the Saint Lawrence Seaway Development Corp. sociated environmental benefits and to raise the profile of the Seaway System. By carrying a combination of breakbulk, project cargo and containers, the CEE will provide a competitive service designed to meet today’s dynamic needs. Everything from consumer goods, industrial products, steel and automotive parts as well as other kinds of freight can now ship directly from Cleveland to the rest of the world. This allows goods to come and go directly into the manufacturing and agricultural core of North America. Businesses always are looking for ways to be more competitive and to gain an edge in the global marketplace. The CEE will help companies to do this by moving their goods and supplies faster, cheaper, and greener. And it will mean more jobs and positive economic impacts. This new service will generate new U.S. economic development not only in Ohio, but throughout the Great Lakes St. Lawrence System region. The Great Lakes and Seaway basin possess economic and natural assets that are the envy of the world. We are uniquely endowed with resources that allow us to reach for new opportunities. The CEE service is an example of how we can create new opportunities in powerful and sustainable ways. Because maritime transportation is the most environmentally friendly way to move goods, companies will be able to export their goods in a way that helps reduce their car-

bon footprint. This is a project that can balance the needs of commercial development and the environmental protection. That’s what we are all striving for in the Seaway System — balancing the needs of commercial navigation with the preservation of the ecological quality of the region. The new Cleveland liner service represents one of the important positive economic development initiative in the Great Lakes St. Lawrence Seaway System in many years. But this is not the only spark in the system igniting a great interest in the 2014 season. The Ironville Terminal in Toledo will be up and ready for business; the Port of Oswego Authority in New York was awarded a $1.5 million TIGER grant from the Department of Transportation that will help build new roads and rail tracks to connect the main East Terminal to an open storage for cargo; the Duluth Seaway Port Authority also received a $10 million TIGER grant from DOT for an intermodal project that will rebuild and expand a cargo dock; the Port of Milwaukee is upgrading roads and rail track and purchasing a new heavy lift crane; and last but certainly not least, the “Clean Bay Backers,” a polluted runoff awareness campaign to inform citizens throughout the FoxWolf Basin area in Green Bay, Wis., continues to help the public make informed decisions about water resources and freshwater coastal management. The 2014 navigation season is shaping up to be one of the most exciting in years. The innovative sparks are flying. Let’s keep it going. ■

Web: At least new coach will be paid well continued from PAGE 8

These teams are like crack... nothing more than three monkeys on Cleveland’s back. It’s high time this town got clean. — scotto452

Re: Browns hire Pettine ■ Good luck. But don’t be sur-

prised to hear the old “We decided to go in another direction” speech. At least you will get a few million stuffed in your back pocket as you walk out of the office. Job security? Not many jobs pay you millions as they fire you. — Mahi Tuna

Re: Crain’s diversity ■ As a first step, I hope you will expand the diversity on the “Going Places” page. Usually, and particularly in the Jan 6 issue, this page is virtually all white. I know people of color are getting promoted and changing jobs. It might take a little work to find where they are; maybe they don’t self-report as often. But please, it is well worth your effort. You could start with the Cleveland Area Black Professionals organization. — Marie Kittredge ■ I am pleased to hear that you recognized the narrow lens through which you were viewing this wonderful town. I notice when I read through a publication and see only white and usually male faces in its pages. The rich ethnic diversity of Cleveland is one of its greatest assets, and I have been surprised not only by Crain’s but by many of the business-minded publications and websites that look as if only middle-aged white men worked here! We all know better. Glad you do, too! Be assured, we will hold you to your word! — PRFerry

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New program to help startups Boot camp for new businesses hopes to coach entrepreneurs and foster area jobs By CHUCK SODER

The Civic Innovation Lab is coming back to life as a Silicon Valleystyle business accelerator. Later this year, seven local organizations plan to launch an accelerator akin to a boot camp for startup companies that aim to help the community while creating jobs and making money. The SEA Change accelerator — a working title that stands for Social Enterprise Accelerator — was inspired by the Civic Innovation Lab. Before it closed in 2010, that organization provided grants and mentoring to 55 young companies and nonprofits designed to have a positive impact on Northeast Ohio. Among them are the high-performing E-Prep elementary school and Ray’s MTB, an indoor bicycle park in Cleveland that attracts riders from other states to spend money in Northeast Ohio. However, SEA Change also is expected to resemble the high-tech business accelerators that have been popping up nationwide over the past few years. Like those accelerators, SEA Change plans to provide selected entrepreneurs with three months of intensive mentoring and the opportunity to receive financing for their businesses. The entrepreneurs will receive coaching from staff at the Shaker LaunchHouse business incubator and other mentors in the local busi-

ness community. LaunchHouse already runs one of three accelerator programs in Northeast Ohio. The organizers behind SEA Change want to improve on the Civic Innovation Lab model using lessons learned from its former director and help from new partners such as LaunchHouse, said Bill Leamon, managing director of the Business of Good Foundation, one of several organizations that has committed money to the accelerator. “This is really Civic Innovation Lab 2.0,” Leamon said.

Doling out dollars One difference is that the coalition is raising money from multiple organizations, which could help the accelerator become sustainable, Leamon said. By contrast, the Civic Innovation Lab was run entirely by the Cleveland Foundation, which closed the program in 2010. The Business of Good Foundation has signed on to donate $50,000 in 2014 and expects to provide similar amounts in future years, Leamon said. About $10,000 will be carved out for a grant or a loan to an entrepreneur, and the rest should cover SEA Change’s operating expenses, he said. Some of those operating dollars will be used to pay LaunchHouse and the Civic Commons division of the Ideastream media group, which is helping organize the effort and plans to market the program, he said. The rest of the money dedicated to the accelerator will go straight to

entrepreneurs, Leamon said. Backers also will be able to make grants, loans or equity investments in the startups, he said. The GeneraLeamon tion Foundation has committed to providing $20,000 this year, and both the Gund Foundation and CEOs for Cities — a network of leaders led by former Ohio Lt. Gov. Lee Fisher — have said they’ll chip in an undermined amount of cash, Leamon said. Among the organizers is the Cleveland branch of the Economic Community & Development Institute, which makes small “microloans” to businesses and could end up making loans to some accelerator companies, Leamon said. Plus, LaunchHouse expects to invest in some of the businesses, said Todd Goldstein, one of the incubator’s three partners. “There’s an opportunity to build businesses and ultimately have a large impact on the community,” Goldstein said.

Social impact considered It has yet to be determined how many entrepreneurs will be selected for the accelerator or when this year it will begin. However, this much is known: To get in, entrepreneurs will need to show they have a viable plan to make money and will have a positive impact on the region beyond creating jobs and wealth, said Mike Shafarenko, co-founder and president of Civic Commons, an organi-



Story from

zation that specializes in community engagement. For instance, one company might help former inmates gain job skills, while another could provide healthy food in a community dominated by convenience stores, Shafarenko said. “We would give equal rigor if not more rigor to their social impact model,” he said. Some organizations that received grants from the Civic Innovation Lab show what social impact might look like. Cleveland-based PediaWorks develops medical devices for children, whose needs often are ignored by major manufacturers. Full Circle Fuels of Oberlin converts diesel vehicles to run on vegetable oil, which burns cleaner. The Cool Cleveland website and electronic newsletter promotes local businesses and aims to get people excited about things happening in Northeast Ohio. The Civic Innovation Lab awarded grants of up to $30,000 each. Jennifer Thomas, the group’s former director, estimates about 20 of the 55 grant recipients still are active in some way. Many of the grant recipients are gone, but some “have just gone gangbusters,” she said, mentioning Ray’s MTB, which was acquired by Trek Bicycle Corp. in 2010 and opened a second location in Milwaukee soon after. A new program that involves more organizations may improve on the Civic Innovation Lab’s work, Thomas said. When the group was founded in 2003, LaunchHouse and many other local groups that help entrepreneurs didn’t exist. “There are so many more resources now,” she said. „

Colliers Cleveland adds apartment veteran to office Colliers International’s Cleveland office has added well-known apartment broker Gary Cooper to its office in a strategic move to enter the market for apartment sales. Brian Hurtuk, manager and founding principal of the Colliers office in Cleveland, said the apartment venture expands Colliers’ offerings in Ohio. The firm already has specialists selling office and industrial space in its Cincinnati office. Cooper joins Colliers as a senior vice president and principal of its Cleveland office. His first day was last Monday, Jan. 27. “We decided multifamily was the way to go to grow after adding property management to the office last year,” Hurtuk said. “We don’t want (Cooper) to be a silo,” Hurtuk said. “We want to build a team around him and eventually add someone in multifamily in Columbus.” Cooper has a sold more than 22,000 apartment units with a total value in excess of $1 billion, according to Colliers. The move pits Cooper head to head against his former firm, Marcus & Millichap, and its strong multifamily investment team here. — Stan Bullard

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Market: Occupancy level is best in 14 years continued from PAGE 5

The Arhaus announcement also is illustrative of a big change in commercial brokerage sentiment. “Every day is good news now,” Coyne said. “It’s just unbelievable. It’s getting common for me to tell people to go away because their price is too low.” The shift is even more dramatic when compared with a few years ago. At the worst of the downturn for the industrial market, vacancy hit 12.8% in the first quarter of 2011. More staggering still is a statistic unearthed by Gar Heintzelman, Newmark Grubb’s researcher in Cleveland. The last time industrial vacancy was below the current 8.8% was August 1999, when Newmark Grubb records put it at 8.6%.

Slow ‘n steady wins the race The market reaching occupancy levels it has not seen in 14 years is no surprise to Ray Fogg Jr., president and CEO of Ray Fogg Corporate Properties Inc. in Brooklyn Heights. “We did not have as much of a bubble to burst in 2009 as the rest of the country,” Fogg said. “The blip for us in 2009 was not nearly as great as the blip was in the rest of the country. Our blip was in 2002. The market is slowly tightening up. It has been a slow, steady and constant improvement since 2002.” Recent activity augurs well for the future, Fogg said. “Despite the holidays, we had showings going on when nothing is usually going on,” Fogg said. “Inquiry volume is up. Activity is good.” Construction is at a remarkably low level, just 178,000 square feet



FILLING UP FAST A look at the vacancy rates in the Northeast Ohio industrial real estate market since 2008: Year

Vacancy rate













■ Source: Newmark Grubb Knight Frank throughout the region at the end of 2013, according to Newmark Grubb’s report. That level of construction activity is below comparable Midwestern cities with Newmark Grubb offices; in Columbus, it’s 4 million square feet, 1.9 million square feet in Indianapolis, and 890,000 square feet in Cincinnati. All three cities, thanks to their locations along key interstate corridors, attract more distribution centers than Cleveland, Coyne said, with smaller manufacturing-oriented buildings dominating the Northeast Ohio market.

Momentum for 2014 Rising sale and lease prices for existing buildings will increase the feasibility of developers building industrial structures, though construction material costs continued to increase during the downturn. The strengthening market and more availability of bank loans for build-to-suit projects likely will

“Every day is good news now. It’s just unbelievable. It’s getting common for me to tell people to go away because their price is too low.” – Terry Coyne, executive managing director, Newmark Grubb Knight Frank’s Cleveland office help build momentum for construction. Fogg said his family-owned company is carrying a stronger backlog — advance orders for construction — than it has had in several years. “We’re looking at quite a few projects that are likely to get started as soon as the weather breaks,” he said. “We’re looking at a pretty good 2014 from a construction standpoint.” However, a lack of bank loans for multitenant industrial buildings without tenants in hand and little apparent developer appetite for building them after the bruising downturn is keeping a lid on the build-to-rent market, Coyne said. For instance, Fogg recently opened Northeast Ohio’s first building in several years with a substantial amount of speculative industrial-office space at its Blue Stone Business Park in Euclid. About 30% of the 100,000-squarefoot building will be occupied in February by Remedi SeniorCare of Ohio-Northeast LLC, a unit of Baltimore-based Remedi SeniorCare. Fogg said his company may weigh other speculative multitenant buildings in the region in 2014, but a lot depends on how leasing for the empty Blue Stone space goes. ■

RubberDucks make big investment in ballpark Indians’ Double-A affiliate will spend $3.5 million on new upgrades for 2014 By KEVIN KLEPS

The name and fierce logo won't be all that's new at Canal Park this season. The Akron RubberDucks, the renamed Class AA affiliate of the Cleveland Indians, have announced $3.5 million in additions to Canal Park, the team's home. The team will open “The Game Grill + Bar” — a year-round restaurant — on Saturday, March 22. The 4,000-square-foot establishment will be located in the space formerly occupied by Wing Warehouse and Menches Brothers. The space will feature “folding-glass walls” that will be opened to allow fans to get a better view of the game. The restaurant is part of $3.5 million in improvements being made by RubberDucks owner Ken Babby. According to a news release, Babby has invested $5.6 million in the ballpark since he took ownership in October 2012. Prior to the 2013 season, the Akron team, then known as the Aeros, unveiled a $1.65 million HD video board that is the largest in Double-A baseball. In addition to “The Game,” the RubberDucks will introduce new picnic and premium areas in left

ON THE WEB Story from: and right field this season. The picnic area and stands in left field will be known as “Fowl Territory.” The area will contain picnic tables that can be rented out by corporations for outings or be used by families. There also will be all-youcan-eat seating options in “Fowl Territory” for certain dates on the RubberDucks' schedule. The first two rows of the left-field stands will feature “Duck Row” seats with 360-degree swivel capabilities, a drink rail, wait staff and an upgraded menu. “Tiki Terrace” in right field will include 191 premium picnic seats. The area will feature a “Tiki Bar” that will seat 23 guests on a firstcome, first-served basis. The RubberDucks also will use the upper level above “The Game” as a private party area that will be called “The Duck Club.” The space can hold up to 150 people. The team says all the companies working on the Canal Park renovations are from the Akron area. “First and foremost, we recognize we are a local community business,” Babby said in the news release. “As a result, I believe it is our duty to look first to local partners and suppliers when it comes time to do business.” The RubberDucks' home opener is scheduled for Thursday, April 10. Akron opens its season at Binghamton (N.Y.) on Thursday, April 3. ■

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Crain’s is Neal Awards finalist ‘CLE 2030’ special report is nominated for best cross-platform package; editor is in running for top commentary honor We Solve Problems. Effectively. Efficiently. Consistently. 36 South Fr anklin Street Chagrin Falls 440-571-7777 We are a different kind of business law firm. Learn about us at, or call us to discuss your legal matter.

Crain’s Cleveland Business has been named a finalist in two categories of the 60th annual Jesse H. Neal Awards, a national competition staged by ABM, The Association of Business Information and Media Companies, that each year honors the best work in business media. Crain’s has been recognized for its July 22, 2013, special report, “CLE 2030: Facing the Future.” The project is one of four finalists in its

division in the category of Best Cross-Platform Package, which recognizes publications for reporting that combines print, online and multimedia components of coverage. CLE 2030 analyzed the importance of the urban core to Northeast Ohio and put into perspective various efforts to move the city forward. The package was spearheaded by sections editor Amy Stoessel. Others involved in the project were

reporters Tim Magaw and Jay Miller, freelance writer Dan McGraw, video editor Steve Bennett and freelance photographer Marc Golub. It is the second straight year that Stoessel has led the Crain’s staff in producing an editorial package that was named a Neal finalist. Last year, Crain’s won first-place honors in the Best Cross-Platform Package category for its April 2, 2012, special report “The Remaking of West 25th Street and the Market District.” Also, in the category of Best Commentary, editor Mark Dodosh has been named one of four finalists for a trio of editorials he wrote in 2013. Winners will be announced March 13 at a luncheon in New York. ■

GOING PLACES JOB CHANGES EDUCATION CLEVELAND STATE UNIVERSITY: Anton A. Komar, M.D., to director, Center for Gene Regulation in Health and Disease. Komar








GRANTS PLUS: Lisa McAloney, Lisa Stofan and Carrie Wilson to executive consultants; Emily Malloy, Katia Parvis-Schwarz, Karen Sayre and Dana Textoris to senior consultants; Naomi Worthington to consultant; Kathy Bakhshi to research associate; Ann O’Brien to director, operations and strategy.





HW FINANCIAL ADVISORS: Miranda C. Licursi to financial adviser.

ENGINEERING SO-DEEP INC.: Charles E. Bode to staff engineer and surveyor.

ENTERTAINMENT CEDAR POINT AMUSEMENT PARK/RESORT: Kristy Williams to events and promotions representative; Jordan Sternberg to social media representative.

FINANCE MORGAN BANK: Jessica Armbruster to mortgage loan officer.

FINANCIAL SERVICE BCG & CO.: Pam Wright to partner. ERNST & YOUNG: Julie Boland to managing partner, Cleveland.

SIEGFRIED GOUP LLP: Ezzie Goldish, Nepo Miranda and Jeff Mueller to managers; Travis Baker, Mallory Frantz, Nick Lay, Nick Pecon, Kevin Soflkiancs and Maureen Swartz to associate managers; Greg Henderson, Ross Johnson, Katie Kovacs, John Roll and Abbey Suttman to senior associates.

HEALTH CARE HOPE MEDICAL SERVICES: Regina Bartell and Awilda Rosado to data entry. METROHEALTH SYSTEM: Craig Richmond to senior vice president, CFO. PRIORITY HOME HEALTH CARE INC.: LaToya Kirkland to receptionist; Julie Fox to client service representative; Nick Daniels to branch manager; Wesley Fellure to RN clinical field supervisor; Shannon Spalek to billing coordinator.


associate director, development.

GALLAGHER BENEFIT SERVICES INC.: Greg Gordon to employee benefits consultant.

YWCA GREATER CLEVELAND: Lisa Paul Sierk to vice president, advancement.



CALFEE, HALTER & GRISWOLD LLP: Teresa Metcalf Beasley, David J. Grover and David J. Kaufman to partners.

ANCHOR MEDICAL STAFFING: JoAnne Myers to staffing coordinator and administrative assistant.

MICHAEL J. SHAPIRO INC.: Kevin E. Barcelo to associate. SUTTER O’CONNELL: Brian Roof to shareholder.

MANUFACTURING AMERICA MAKES, THE NATIONAL ADDITIVE MANUFACTURING INNOVATION INSTITUTE: Darrell Wallace to deputy director, Advance Manurfacturing Enterprise; Michael A. Hripko to deputy director, Workforce and Educational Outreach.

TECHNOLOGY CROWDENTIALS: Hunter M. Walter to vice president, business development. TURNING TECHNOLOGIES: Greg Simmons to senior vice president, chief sales officer.

BOARDS CONSTRUCTION EMPLOYERS ASSOCIATION: Don Dreier (Donley’s Inc.) to chairman; Jim Fox to treasurer.

AWARDS NONPROFIT CLEVELAND NEIGHBORHOOD PROGRESS: Alesha D. Washington to senior director, advocacy, policy and research. UCP OF GREATER CLEVELAND: Beth A. Lucas to chief operations officer; Tammy Gibson Willet to

Send information for Going Places to

MEDICAL FITNESS ASSOCIATION: Brad Higgins (Akron General Lifestyles-West) received the Rising Star Award-Central Region. TURNAROUND MANAGEMENT ASSOCIATIOIN: Harry W. Greenfield (Buckley King) received the Lifetime Achievement Award.



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HEALTH CARE LAW Lawyers feeling reform effects Increasing demand for expertise in field a boost to law firms, university programs By MICHELLE PARK LAZETTE


It took University Hospitals about six months to finalize its deal to take over Parma Community General Hospital.

TRYING TO MAKE A HEALTHY MARRIAGE Bringing two hospitals together is a complex process that sometimes requires a ‘test drive’ By TIMOTHY MAGAW


n a very basic sense, Harlin Adelman said the process of taking over another hospital — as his employer, University Hospitals, recently did with Parma Community General and EMH Healthcare in Elyria — is sort of like buying a new car. You pick one out, kick the tires and sign on the dotted line before it’s a done deal. And as one of UH’s top legal minds, Adelman was one of the folks that takes the hardest look under the hood. After all, bringing together two hospitals is much more complicated than installing new signage above the front door. These complex deals take months to complete, and involve the fusing of work forces, finances and cultures. “Sometimes you find a car that’s just right and think it is going to work out, but

“Sometimes you find a car that’s just right and think it is going to work out, but you want to test drive it and make sure everything is in order.” – Harlin Adelman vice president and deputy general, University Hospitals you want to test drive it and make sure everything is in order,” said Adelman, UH’s vice president and deputy general counsel. Hospitals across the country have been consolidating at an unprecedented rate in recent years. The deals have been driven, in part, by smaller providers’ inability to compete with larger health systems, especially in an era of declining reimbursements from government and commercial payers and the uncertainty surrounding the Affordable Care Act. This rampant consolidation only has added to the workload for hospitals’ legal teams who play an integral — if not leading — role in making these marriages happen. It took UH about six months to finalize its deals with EMH and Parma, and there’s still plenty of work to do to fully integrate the hospitals. Of course, these sorts of deals

aren’t always smooth sailing. Even locally, deals have almost or completely fallen apart. The Cleveland Clinic and Community Health Systems, a large for-profit health care system out of Tennessee, couldn’t agree on a deal to jointly acquire Akron General Health System. Also, Summa Health System’s plan to sell a minority piece of its enterprise for $250 million to Catholic Health Partners in Cincinnati almost floundered after the local bishop, who was required to sign off on the deal, bristled at the fact that Summa would remain a secular organization. “There are a lot of hurdles to overcome for these deals to succeed from a legal perspective,” said Kathryn Hickner-Cruz, managing attorney for the Cleveland office of The Health Law Partners P.C.

The dating phase Hickner-Cruz said it’s not unusual for these sorts of deals to hit road blocks. For instance, hospital leadership doesn’t always play nice with their counterparts on the other side of the table, integrating electronic health records can be a challenge and actually enacting the big-picture ideas agreed upon in the initial terms isn’t an easy task. See MARRIAGE Page 14

ome joke that health care reform was a jobs bill for lawyers. Maybe not, but it’s a definite boost: At a time when the legal job market isn’t exactly robust, particularly for newly minted attorneys, law firm health care practices are hiring, and law schools are seeing increased interest in health care-specific programs. Membership in the American Health Lawyers Association is another reflection of the niche’s growth, said Peter Pavarini, a partner in Columbus with Squire Sanders’ health care and life sciences practice group and president-elect of the association. Between 2000 and 2010, the Washington, D.C.-based organization, which offers the “most recognized credential someone can have” in the practice of health care law, counted a steady 10,000 or so members, Pavarini said. Today, that number totals nearly 13,000, he said. “Membership is up 30% in a little over three years,” Pavarini said. “The reason people would pay fairly substantial dues … is because they see economic opportunity for themselves and their clients.” Jones Day partner Jeff Kapp agreed: “People are going to go to where the work is.” “It’s been growing significantly,” Kapp said of Jones Day’s health care life sciences practice, which he said has added an estimated eight partners and roughly the same number of associates in the last 12 months. “It’s probably been a regular doubling of the growth,” agreed Steve Sozio, also a partner in the practice. In response to the demand for health care expertise, Squire Sanders — which has an office in Cleveland but most of its health care attorneys in Columbus and Washington, D.C. — last July started a health care fellowship. Its three fellows are assisting on presentations, training with senior lawyers and working with some clients to develop a proficiency in the field. See LEGAL Page 14



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FEBRUARY 3 - 9, 2014

Legal: Health care has ‘very large’ impact on firms Marriage: Legal issues can emerge continued from PAGE 13

“We recognized that there aren’t a lot of jobs available to first-year people coming out of law school,” said David Grauer, who leads Squire Sanders’ health care and life sciences group. “We thought we ought to be able to develop a hybrid educational experience. Understanding the industry is a vital component of a health care practice. I wasn’t sure when we started this how well it would be received.” He has his answer: For the first three fellowships, Squire Sanders received interest from nearly 100 “very qualified” applicants.

continued from PAGE 13

health law offerings. ClevelandMarshall’s center currently counts a doctor and a risk management health care professional among its participants, Lewis said. The Law-Medicine Center of Case Western Reserve University School of Law meanwhile is drawing increased interest from more health care providers and medical, social work and bioethics students. “They know they need to understand the legal issues that are going to affect their careers and treatment of patients,” according to Ruqaiijah Yearby, associate director.

The nitty gritty — or period of due diligence, as they call it — in hospital negotiations begins after the two institutions sign a letter of intent, according to Bill Powel, Summa Health System’s senior vice president, general counsel and secretary. Powel said the idea is to ensure that either party doesn’t find “any surprises” in, for example, the other’s books or legal portfolio. Summa had a bit of a surprise when Bishop Richard Lennon of the Catholic Diocese of Cleveland refused to sign off on the planned minority investment by Catholic Health Partners because the Akronbased health system didn’t want to become a Catholic organization. The deal was eventually restructured, as the investment ultimately came from HealthSpan, a non-religious subsidiary of the Catholic Health Partners. HealthSpan’s investment was finalized at the end of September — roughly seven months after the letter of intent was announced. “One of the challenges was that particular aspect of it,” Powel said about the dealings with the bishop. “It was an unusual transaction. It was not a takeover, if you will. Both parties had to understand this was not a consolidation or complete integration, so we had to maintain a bit of distance.”

Will this burst?

Advisers and communicators

Is the growth of law firm health care practices and in-house teams, plus the simultaneous focus on producing more health care attorneys, the making of a bubble? “I think there’s always that risk,” Squire Sanders’ Pavarini said. “We see it time and time again. There’s a new law passed (and) you have overnight experts and they seem to fade away. The reason I don’t feel that’s going to be an issue here — look at the demographic trends.” Look, too, asserted Bricker & Eckler’s Onusko, at the “trend … toward more and more regulation, not less and less.” ■

Meanwhile, Matthew Albers, an attorney in the health care group at Vorys, Sater, Seymour and Pease LLP in Cleveland, said there are several legal issues that crop up when hospitals consider merging or investing in one another, including navigating the ever-evolving federal and state regulatory framework. However, most of the sticking points that arise aren’t necessarily legally driven. CHS and the Clinic, for instance, couldn’t come to terms how a joint venture would be structured, and that’s why their deal to take over Akron General soured. “Most of what is agreed upon can be legally accomplished,” Albers said. “What tends to break down are discussions about governance, rights of control, rights of information, etcetera. When you get down to putting a deal down on legal documents, those details become much more contentious.” As such, Powel said one of his biggest roles during the transaction was communicating the complexities of the deal to Summa’s board of directors and other stakeholders within the enterprise. “Not everyone is schooled in deal terms and corporate transactions,” he said. “We did a lot of walking through the process of the transaction and what those deal terms meant.” Likewise, Adelman said UH’s legal team, which is comprised of several lawyers with corporate M&A experience, also acts as a team of trusted business advisers — not just a collective of traffic cops that combs the contract. “At end of the day, we don’t make the decision,” Adelman said. “We need to have that communication and trust to talk those things through.” ■

Dealmakers The growth in health care lawyers isn’t just taking the form of new hires by law firms. “If you look at the number of lawyers working for in-house legal departments for health organizations … it has really skyrocketed in recent years,” Pavarini said. “There’s a redeployment of legal resources within firms, including ours,” he added. “People who were not traditionally health care lawyers are now defining themselves as health care. Virtually every specialty area in our firm now touches on health care and, in some cases, in a very large way.” Two-thirds of Jones Day’s practice growth has been on the transactional side of health care, Sozio said. “There has been a lot more of that growth … health systems aligning with others, physicians leaving private practice to become employed,” Kapp said. “There is a race to be aligned. It’s going to be very difficult for the smaller players to continue to survive in the market.” The chair of the national health care practice group for Cleveland law firm McDonald Hopkins LLC expects to see continued demand for such transactional advice and “realignment projects,” and increased demand for restructuring from distressed health care entities, too. The firm recently hired one health care partner and as of last Monday, Jan. 27, had another offer pending, said Rick Cooper, who


Professor Gwendolyn Roberts Majette teaches a recent class at Cleveland-Marshall College of Law. Cleveland State University is offering a new health care compliance certificate program for the first time. also co-chairs the law firm’s health care restructuring practice group. McDonald Hopkins also has placed more focus on training its associates, asking them, for one, to attend seminars and webinars. “This is a period of fundamental change,” Cooper added. “There are a lot of health care facilities out there that are not particularly strong financially (and) whenever you have a market change like this, it can be what tips the scale.” The pressures of compliance also are a major driver of the demand for health care counsel, attorneys said. “Every major piece of health care legislation … has increased the laws and regulations that you can violate when you provide services to Medicare and Medicaid patients,” said Thomas J. Onusko, senior counsel in the health care group in the Cleveland office of Bricker & Eckler LLP. “You’re much more likely to be audited, investigated and prosecuted.” Health care providers face that at both the state and federal level, agreed David Valent, a partner in the health care practice at Reminger Co. LPA. “We’ve been getting more and more calls from providers who are

saying, ‘I’m concerned with all of the legislation. Can you help me make sure I’m doing things the right way?’” he said.

Going to school Cleveland-Marshall College of Law established the Center for Health Law & Policy in 2010, but is in just the first year of a new health care compliance certificate program, said Browne C. Lewis, center director. Seven people are enrolled in that program, while the center has graduated roughly 14 people from its other, general health law certificate program, which it started in 2009, she said. The center added the compliance program because it has learned that hospitals, long-term care facilities and others prefer compliance officers to be lawyers, Lewis said. “Local attorneys that we spoke with — especially past graduates — wanted to see us concentrate in health law,” she said. “We’re growing the program, and we’re getting a lot of interest in it. It gives students an opportunity to have a wider selection of jobs, which I think is important in this job market.” Non-lawyers are among those enrolling in local law schools’

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Social media brings chances, challenges By KIMBERLY BONVISSUTO


ocial media platforms are changing the way the health care industry connects with its patients — a move that means more opportunity and risk. About 73% of online adults use a social networking site of some kind, according to the Social Media Update 2013 survey from the Pew Research Center’s Internet Project. And despite concerns over potential compliance pitfalls, health care systems over the past several years increasingly have joined the social media party to market their brand and promote wellness. Cincinnati-based Catholic Health Partners, for one, uses a variety of social media platforms in its Mercy-Lorain network and six other markets to educate patients about individual physicians, convey basic information, promote coordinated campaigns (think “heart month”), advertise services, share job openings and give positive news stories more play beyond traditional media outlets. In the few years CHP has dabbled in social media, Mike

Boehmer, CHP media manager, said one best practice he has learned is that health systems can’t just use these outlets as advertising channels. “It’s social. You have to have content people are really interested in,” he said. “It’s really a learning process about engagement, getting people to comment, like and share.” Indeed, social media in the health care setting is still so new that institutions also are in a continual learning process when it comes to how to best balance patient privacy with social media activity. Boehmer said his institution uses monitoring software that lets them know if their organization is mentioned in social media or news outlets. Institutional social media channels are watched closely, so if something is posted inappropriately, it is removed and a private message is sent. Similarly, if someone posts something questionable to a personal Facebook page, that person is contacted directly.

Push on education Jeremy Mathis, a social media strategist with University Hospitals

Case Medical Center, said social media also is an important tool in providing a feedback mechanism for questions or concerns. “In social media, the most important aspect is two-way communication. If you’re not listening and responding to your followers, then you are missing the point,” Mathis said. “Our goal is to provide timely, relevant content every day and to respond to inquiries as quickly as possible in order to promote an engaging, active community.” Mathis said while UH doesn’t have a formal training program, his department works with other departments and physicians on an individual basis to help focus their efforts on social media. “We are very fortunate to have a number of physicians who understand the benefits of social media and are very active in using the tools,” Mathis said, adding that concerns do surface over Health Insurance Portability and Accountability (HIPAA) violations and patient privacy, as well as the time commitment. Another challenge health systems face is postings by patients — or their family or friends — that may compromise the privacy

of other patients or employees. While health systems may post social media and privacy policies on their websites or in common areas of medical facilities, this is a new area where the push is really on education. “It used to be where it was against hospital policy for someone to carry a camera into a hospital,” Boehmer said. “That’s pretty much impossible since everybody’s phone is a camera.”

Adding to the tool box In the end, Boehmer, along with others in his field, sees social media as a tool for health systems despite the uncertainty. “It holds tremendous promise for health care. It can connect patients with similar ailments and they can support each other and share information, and come to their doctors and health care providers a lot better informed,” he said. “I think we’re just really in the pioneering time of all kinds of amazing things that are going to happen.” Dwindling news staffs at media outlets also mean health systems have an added opportunity to bring their stories directly to the public. Andrea Joliet, director of

corporate communications for Akron Children’s Hospital, said her hospital sees itself as a pediatric news outlet. “People feel very compassionate about their children’s hospital and want to share their stories,” Joliet said. “It gives us an opportunity to produce the content we want to get out there, but we don’t have to rely on traditional media as our only avenue.” Last fall, Akron Children’s Hospital held its first Social Media Ambassador Training Program targeting clinical staff, who interact with patient families daily and answer the same questions repeatedly. “It has been a great way for us to connect with our patient families and even employees,” she said. “As an employee, it gives you a great sense of pride to read all the positive comments.” Boehmer said social media is poised to become an even bigger player in the health care setting in the years to come. “What we’re trying to do is just keep abreast of the best ways to use this to really reach the communities and people we serve,” he said. “I think it’s just going to grow and grow.” ■

Patient privacy is an out-front focus for hospitals By LEE CHILCOTE


rom grocery store coupons that print based on your shopping habits to Facebook ads that appear because of your posts, big data is everywhere. And in our data-driven world, health care providers also are under pressure to use information gleaned from electronic health records in order to improve the quality of care. Yet there also are tighter and tighter restrictions on patient privacy, and given recent high-profile breaches that have occurred with Target and other companies, concerns abound that patient information could end up in the wrong hands. Even as providers race to store, access and share health information, they must also be mindful of privacy. “Everyone in the health care profession is having to deal more often with electronic health records, and that creates a challenge because it’s new,” says Dave Valent, an attorney with Reminger’s health care law practice group. “When they’re dealing with protected health information, they want to make sure that they’re doing it properly.” Increasingly, the use of health care data is tied to the bottom line. That’s because insurance providers such as Medicare incen-

tivize the use of electronic health records to optimize care. Yet at the same time, new rules governing the Health Insurance Portability and Accountability Act (HIPAA) have added privacy restrictions. HIPAA’s new Omnibus Final Rule, as it’s called, requires health care providers to have updated business associate agreements; make available a Notice of Privacy Practices form to all patients; implement a breach notification policy; and honor a patient’s right to obtain electronic health records. It also requires providers to perform an analysis to address the risks of current procedures for storage and transmission of information. Providers will benefit from educating themselves on privacy issues, Valent says. “There’s no onesize-fits-all approach. It’s more a practice-by-practice approach.”

‘Boils down to a people issue’ Like most health care providers, the Cleveland Clinic offers institutional training to its providers to ensure they’re following privacy policies. “It really boils down to a people issue,” says Dr. Steven Spalding, medical director of Analytics and Business Intelligence with the Clinic. “As much as we try to control it with technology, it’s still an individual-level issue.” One of the biggest challenges for providers, Spalding says, is that electronic health information exists

in different formats depending on the institution. However, that’s finally beginning to change thanks to state health information exchanges. Additionally, providers must address the cost of complying with privacy rules. “In an era where hospital systems are getting paid less and less, we’re cognizant of the additional cost of securing data and how it gets borne by patients and providers,” Spalding says. Many hospital systems also are racing to develop their own internal methods of sharing health care information, and competition can be a barrier to sharing that data externally. “A lot of institutions have taken the position that (these methods) are proprietary,” said Luke Cleland, associate general counsel with University Hospitals. “There’s a desire to share info on one hand, but there’s also a desire to innovate, to be at the forefront of how we use it.” New privacy regulations affect health care contractors, as well. For instance, CHAMPS Oncology is an affiliate of the Center for Health Affairs that assists health care systems with cancer programs. The organization helps providers to capture and share data about cancer patients. “We work very closely with our IT department to put policies in place,” says Toni Hare, vice president of CHAMPS. “For instance, there’s no data from patients on

any of our computers — employees tunnel into another system that’s safeguarded to get access.”

Share and share alike The sharing of health information has been made easier by the creation of a statewide health information exchange. It is overseen by the Ohio Health Information Partnership, which helps facilitate the transfer of information among health care providers across Ohio. “Providers can use the technology to send direct messages with patient information in a HIPAAcompliant way,” says Andrea Perry, privacy officer with OHIP. “In the future, a physician will also be able to query the database for patient information if they opt in.” Efforts are underway locally to do a better job of sharing data among institutions, as well.

The Cleveland Clinic, University Hospitals and Case Western Reserve University Medical School recently formed the Institute for Computational Biology to take advantage of health care data collected across these institutions to improve the quality of care. Jonathan Haines, who recently moved to Northeast Ohio from Vanderbilt University to lead the Institute, says that patient records will be “de-identified” — stripped of any identifying markers — in order to ensure that complete privacy is maintained. Ultimately, the institute’s research will be used to help target interventions to individual patients’ characteristics. “We have an opportunity to really harness the power and expertise of a citywide effort across Cleveland. That’s relatively unique.” ■

Congratulations! Jonathan Mokri

OTHER PERSPECTIVES ON HEALTH CARE LAW The practice of health care law is a wide-reaching one, so we asked for some other perspectives on what might be the top issues in the coming year. We asked Sharona Hoffman, professor of law and bioethics, Edgar A. Hahn Professor of Jurisprudence, co-director, Law-Medicine Center, Case Western Reserve Uni-

versity School of Law; Tom Mlakar, deputy director for advocacy, The Legal Aid Society of Cleveland; and Robert M. Wolff, shareholder, co-chair, health care practice group, Littler Mendelson to give us their thoughts on the following question: ■ What do you see as the biggest legal obstacle, challenge or opportunity that will arise in

2014 as a result of the Affordable Care Act or other regulatory changes within health care? To find out their answers, follow us on Facebook (CrainsCleveland), Twitter (@CrainsCleveland) or our LinkedIn group; check out our daily email newsletter; or go to

CBS and the local area credit unions would like to thank our own Jonathan Mokri for another record breaking production year for CBS Northeast Ohio.

We look forward to another great year in 2014! | 440.526.8700 |




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Total local engineers(1) Local Number of registered local engineers employees

2013 projects

Top local executive Title

Company Address Rank Phone/Website

Local registered engineers


GPD Group 520 S. Main St., Suite 2531, Akron 44311 (800) 955-4731/


201 425

Akron CSO program; Frost Road, Streetsboro; Bedford Wastewater Treatment Plant

Darrin Kotecki president


Barber & Hoffman Inc. 2217 E. Ninth St., Cleveland 44115 (216) 875-0100/



Middough Inc. 1901 E. 13th St., Suite 400, Cleveland 44114 (216) 367-6000/


84 228

NEORSD projects; BP Husky Toledo refinery; PRO TEC continuous annealing line facility

Ronald R. Ledin president, CEO


Chagrin Valley Engineering Ltd. 22999 Forbes Road, Suite B, Cleveland 44146 (440) 439-1999/



URS Corp. 1375 Euclid Ave., Suite 600, Cleveland 44115 (216) 622-2400/


74 236

Cleveland Innerbelt Bridge phase 2; The Global Center for Health Innovation, Lousiana State University Medical Center, New Orleans

Dana S. Mitchell vice president, Cleveland/Akron office manager


McHenry & Associates Inc. 25001 Emery Road, Suite 200, Warrensville Heights 44128 (216) 292-4696/



CT Consultants Inc. 8150 Sterling Court, Mentor 44060 (440) 951-9000/


50 119

Avon, Mills Road 3.0 MG elevated water storage tank; Ohio Turnpike mainline pavement replacement program; ODOT, statewide water quality services

Dave Wiles president




Westlake Reed Leskosky 1422 Euclid Ave., Suite 300, Cleveland 44115 (216) 522-1350/


39 140

Cleveland Clinic Avon Hospital; Hawken Upper School; Cleveland Browns

Paul E. Westlake Jr., managing principal

Wiss, Janney, Elstner Associates Inc. 9655 Sweet Valley Drive, Suite 3, Cleveland 44125 (216) 642-2300/




Osborn Engineering 1100 Superior Ave., S300, Cleveland 44114 (216) 861-2020/


60 75

Cleveland Medical Mart/Convention Center; F. Hribar Cleveland Browns Stadium; Akron Children's Hospital Gary president commissioning; Cleveland Climate Action Plan

PSI - Professional Service Industries Inc. 5555 Canal Road, Cleveland 44125 (216) 447-1335/



58 75

GE Energy; Goodyear Tire & Rubber Co.; Lubrizol Corp.

Peter P. Jancar chairman

Brown and Caldwell 6055 Rockside Woods Boulevard, Suite 350, Independence 44131 (216) 606-1300/


HWH Architects Engineers Planners Inc. 1300 E. Ninth St., Suite 900, Cleveland 44114 (216) 875-4000/



DLZ 614 W. Superior Ave., Cleveland 44113 (216) 771-1090/


HNTB Corp. 1100 Superior Ave., Suite 1701, Cleveland 44114 (216) 522-1140/



J.R.Johnson Engineering Inc. 6673 Eastland Road, Middleburg Heights 44130 (440) 234-9972/



Hengst Streff Bajko Architects + Engineers 1250 Old River Road, Suite 201, Cleveland 44113-1243 (216) 586-0229/



M-E/IBI Group 4150 Belden Village Boulevard, Suite 104, Canton 44718 (330) 491-9000/



Atwell 7100 E. Pleasant Valley Road, Suite 200, Independence 44131 (440) 349-2000/



40 50

City of Akron Ohio Canal interceptor tunnel; I-271 lane addition project; I-90 construction inspection

Thomas G. Sisley senior vice president


TranSystems Corp. of Ohio 55 Public Square, Suite 1900, Cleveland 44113 (216) 861-1780/


65 84

I-77 add lane; Columbus Road lift bridge; Avon I-90 interchange

Hamid V. Homaee principal, senior vice president


R. E. Warner & Associates Inc. 25777 Detroit Road, Suite 200, Westlake 44145 (440) 835-9400/


29 80

RTI International, titanium plating facility: PPG Teslin project; NEORSD Easterly chemical storage; NEORSD low voltage electrical upgrades

Theodore A. Beltavski president


Thorson Baker & Associates Inc. 3030 W. Streetsboro Road, Richfield 44286 (330) 659-6688/


63 116

CSU Center for Innovation in Health Professions; Liberty Town Square; The Flats East Bank building #4 residential over retail

Gordon R. Baker Michael G. Thorson principals


ms consultants inc. 600 Superior Ave. East, Suite 1300, Cleveland 44114 (216) 522-1926/


35 93

State route 8/I-271 noise barriers; City of Akron sewer system infiltration and inflow study

Raymond J. Briya executive vice president


Michael Baker Jr. Inc. 1228 Euclid Ave., Suite 1050, Cleveland 44115 (216) 664-6493/


50 60

ODOT Lakefront West pedestrian tunnels; GCRTA Mayfield Road rail and transit station construction and bridge rehabilitation; Cleveland Hopkins Airport

Stephen C. Collar Ohio principal


MWH Global 1300 E. Ninth St., Suite 1100, Cleveland 44114 (216) 621-2407/


27 42

NEORSD tunneling dewatering pump station; Easterly Robert Pintabona WWTP secondary system expansion and electrical vice president infrastructure; Cleveland Water Plant enhancement


Karpinski Engineering 3135 Euclid Ave., Cleveland 44115 (216) 391-3700/


73 86

Cleveland Clinic Fairview Hospital Emergency Department; Cuyahoga County headquarters; Cleveland Museum of Art

James T. Cicero president


The Equity Engineering Group Inc. 20600 Chagrin Blvd., Ste. 1200, Shaker Hts. 44122 (216) 283-9519/


30 100

Odessa Brittle fracture for over 200 pieces of equipment, Flint Hills, Texas; updating API Weld Residual Stress Guidance; Insercor Fitness-ForService, South America

David A. Osage president


Burgess & Niple 1300 E. Ninth St., Suite 612, Cleveland 44114 (216) 241-9600/


23 37

Cuyahoga County, Rockside Road bridge rehabilitations; Akron, CSO long-term control plan program management; NEORSD

Charles J. Zibbel director, Great Lakes region


Arcadis U.S. Inc. 1100 Superior Ave., Suite 1250, Cleveland 44114 (216) 781-6177/


16 47

NEORSD Southerly WWTC, renewable energy facility; Akron WPCS, step feed process; ODOT Anthony Wayne Suspension Bridge/Maumee River

Nick Rodzianko operations leader, vice president


The Austin Co. 6095 Parkland Blvd., Cleveland 44124 (440) 544-2600/


28 89

BASF expanded, renovated labs, Beachwood; Airbus, Michael G. Pierce new aircraft assembly center, Mobile, Ala.; Bimbo president Bakeries new bakery, Allentown, Pa.


Hatch Mott MacDonald LLC 18013 Cleveland Parkway Dr., Ste. 200, Cleveland 44135 (216) 535-3640/


20 24

Michael G. Vitale, Euclid Creek tunnel; Stumph Road (County road 266) sr. v.p.; Michael highway F. McCarthy, vice president


Richard L. Bowen + Associates Inc. 13000 Shaker Blvd., Cleveland 44120 (216) 491-9300/


18 84

Hard Rock Rocksino; Kent Municipal Court House; Tri-C Police and Fire Academy

Richard L. Bowen president


Scheeser Buckley Mayfield LLC 1540 Corporate Woods Parkway, Uniontown 44685 (330) 896-4664/


28 41

University of Akron alumni development; NEOMED Health and Wellness Center; St. Elizabeth Bedtower expansion

James E. Eckman president


CDM Smith Inc. 1468 W. Ninth St., Suite 750, Cleveland 44113 (216) 579-0404/


NA 21

NEORSD, Southerly WWTC renewable energy facility; NEORSD, asset management Phase 2; ODOT, Access Ohio 2040

Edward J. St. John, principal; Robert Parker, associate


KS Associates Inc. 260 Burns Road, Suite 100, Elyria 44035 (440) 365-4730/


15 30

OFCC/ODNR Gordon Park lakefront reconstruction, Cleveland; GCRTA on-call surveying services Lynn S. Miggins contract, Cleveland; Ohio Turnpike and Infrastructure president Commission


CDM Smith Inc. 1468 W. Ninth St., Suite 750, Cleveland 44113 (216) 579-0404/


NA 20

Access Ohio 2040; NEORSD stormwater; Erie Waterwork plant expansion

Edward J. St. John principal


Euthenics Inc. 8235 Mohawk Drive, Cleveland 44136 (440) 260-1555/


16 28

Pearl Road widening, Strongsville; Pleasant Valley/ Bagley Road widening, Middleburg Hts.; SR 535 bridge replacement, Grand River, Fairport Harbor

Alan R. Piatak president


The Mannik & Smith Group Inc. 23225 Mercantile Road, Beachwood 44122 (216) 378-1490/


20 29

Markwest Fractionation Plant, ODOT49; I-475/U.S. 23/U.S. 20 interchange; FedEx Ground Richfield expansion

Mark A. Smoley senior vice president, principal


Environmental Design Group 450 Grant St., Akron 44311 (330) 375-1390/


12 32

City of Green, municipal engineering services; Canal Fulton Cherry Street intersection improvements; Lakefront West mainline

Dwayne Groll president


Peters, Tschantz & Associates Inc. 275 Springside Drive, Suite 300, Akron 44333 (330) 666-3702/


12 33

Southwest General Hospital Emergency Department and bed tower addition; NE Ohio Fortune 500 enterprise data center; Landmark Theatre renovation, Richmond Va.

James E. Peters president

Source: Information is supplied by the companies unless footnoted. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. Individual lists and The Book of Lists are available to purchase at Numbers as of Jan. 1, 2014. (1) Includes local registered engineers and local professional engineers who are not registered as of Jan. 1, 2014.



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Clinic: Another large health system could be looking into Akron General continued from PAGE 1

Tennessee-based Community Health Systems, which owns or operates hospitals in 29 states, also said it wasn’t in talks to acquire Akron General without the Clinic’s help. Without getting into specifics, Cosgrove said the Clinic and Community Health Cosgrove Systems couldn’t agree on how to structure the joint ownership venture and weren’t planning to pursue other acquisitions. However, it’s possible another large, multistate hospital system is sizing up the opportunity. One that carries a particularly intriguing case is Duke LifePoint, a joint venture between Duke University Health System and LifePoint, another for-profit hospital chain based in Tennessee. Asked whether Duke LifePoint was interested in Akron General, a LifePoint spokeswoman said, “As a general practice, we do not comment on speculation such as this or our potential interest in specific partnership opportunities.” However, Duke LifePoint has been developing a national expansion strategy. At present, the joint

venture owns four hospitals — three in North Carolina and one in Marquette, Mich. — and a company that offers hospital-based catheterization labs and mobile catheterization services. Last month, Duke LifePoint announced plans to acquire Wilson Medical Center, a 294-bed hospital about 50 miles east of Raleigh, N.C.

UH set sights elsewhere Locally, health care observers had honed in on University Hospitals as Akron General’s likely suitor, as the region’s second-largest health system has been scooping up Northeast Ohio’s remaining independent hospitals at a feverish pace. At the end of 2013, UH system finalized deals that rolled Parma Community General and EMH Healthcare in Elyria into its growing enterprise — one that now boasts about $3.3 billion in annual operating revenue. Last month, UH also announced plans to pursue adding Robinson Memorial Hospital, a 117-bed hospital in Portage County, to its roster. UH steadily has exuded its influence in the Akron market by acquiring physician practices, and this month announced it would open a new health center in the nearby Akron suburb of Fairlawn. While he was coy earlier in January when

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Serving the Region for Over 60 Years Middough has been recognized for its performance and leadership as an international company in engineering, architecture and management services.

“We’ve decided not to pursue Akron General as an opportunity. We decided our resources would be best used elsewhere.” – Tom Zenty, CEO, University Hospitals asked about Akron General, UH chief executive officer Tom Zenty told Crain’s last week the hospital system wasn’t negotiating a deal for the hospital. “We’ve decided not to pursue Akron General as an opportunity,” Zenty said. “We decided our resources would be best used elsewhere.” A marriage between the two might have been a long shot from the get go, as Summa — Akron General’s nearby rival — and UH have cozied up over the last year. For instance, Summa, UH, Cincinnati’s Catholic Health Partners and Columbus’ Mount Carmel Health System teamed up to form Health Innovations Ohio, a statewide alliance designed to share best practices among the four organizations. ■






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FEBRUARY 3 - 9, 2014

Ship: Winter is maintenance season continued from PAGE 5


Lake Erie Ship Repair & Fabrication LLC dive supervisor Brian Burns braves the conditions for an underwater hull inspection of the Nautica Queen.

Gee, who had studied corporate finance at the University of Akron, handles most of the financial and engineering work, while Craine, the full owner, is in the field and working on sales. The company has been marketing through its website and social media sites, as well as by word of mouth. Lake Erie Ship Repair by the end of 2013 had broken $1 million in total revenue since its inception, Craine said, and it has been adding employees. There are 11 full-time employees now, with another six or so that Craine can bring on as needed based on the workload at any particular time. The company has evolved since its founding. When Craine started Lake Erie Ship Repair, he intended for the company to serve commercial ships that haul cargo on the Great Lakes, but Gee said the company has had to branch out because that work is hard to secure. Today, Craine said, the company takes on work ranging from inspection diving to fabrication to barge construction. It even offers industrial maintenance for non-marine companies. Glen Nekvasil, vice president of the Lake Carriers’ Association in

Rocky River, which represents U.S.flagged vessel operators on the Great Lakes, said ship repair companies are vital to the industry. The association’s members are spending about $70 million in updates and repairs this winter, he said. There are 57 vessels on the U.S. side of the lakes in the group, Nekvasil said, plus another 70 to 80 in Canada that may get some work done in the United States. Most of these routine repairs take place in the winter, because downtime in the summer is money lost. “Idle time is something you avoid,” Nekvasil said.

Queen for a day That’s true for non-cargo ships, too. Jim Dale, port captain for the Nautica Queen, said the dining ship is busy from about Easter to New Year’s, which means any maintenance must take place in the winter between seasons. He said it is critical to have a comfort level with a company when it comes to this kind of repair and maintenance work. The Nautica Queen carries about 50,000 passengers a year, and it needs to be safe. Dale said he heard only positive

recommendations for Lake Erie Ship Repair and called Craine “someone you want to do business with.” For last week’s project — Lake Erie Ship Repair’s first with the Nautica Queen — the crew made some modifications to the ship’s cooling systems and conducted the underwater dive for a hull inspection with the Coast Guard, Craine said. Dale said the Coast Guard gave the ship a clean bill of health after the dive. Gee said Lake Erie Ship Repair has completed 40 to 50 projects since it was founded. The company is booked into May and has been awarded $1 million of contracts this year, he added. Those jobs have taken Lake Erie Ship Repair’s crew from Michigan to Rhode Island to Pennsylvania, but Craine’s intention is to get several commercial ships docked in Ashtabula next year for winter work. He thinks he could put up to 70 people to work if that happens. Gee said the company would need about 25 people for each boat, and it’s looking to get two to three boats booked for work.“There’s a lot of people that could use that work there,” Craine said. ■

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FEBRUARY 3 - 9, 2014

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Maloney + Novotny gains downstate beachhead

The big story: The Cleveland Clinic said nearly 700 employees accepted early retirement offers, which are part of the health system’s ongoing effort announced last September to trim $330 million from its budget. In addition, the Clinic said it eliminated “several hundred” open positions, which allowed the organization to keep layoffs to a minimum. The health system did not disclose the number of layoffs. When the budget cuts were announced in September, the Clinic said it would offer early retirement plans to 3,000 eligible employees.

■ It’s a first that begets another first: Cleveland-based Maloney + Novotny LLC said it has made its first large acquisition that has netted the accounting firm its first office in the Columbus area. On Jan. 31, the shareholders and staff of tax and accounting firm Wolf, Rogers, Dickey & Co. joined Maloney + Novotny. Terms were not disclosed. “This firm is the largest firm headquartered in Delaware County, which is just north of Columbus, and that area is growing like crazy,” said Bill Beaufait, a shareholder of Maloney + Novotny. “We have a lot of clients in southern Ohio. We’ve been wanting to get an office down there.” The deal brings roughly 25 people, including about 20 accountants, to Maloney + Novotny, which now has 125 employees, Beaufait said. It also adds a Delaware office to the firm’s existing locations in Cleveland, Canton and Elyria. — Michelle Park Lazette

Here’s looking at you, Cliffs: A New Yorkbased hedge fund, Casablanca Capital LP, which has a 5.2% stake in Cliffs Natural Resources Inc., is pushing for big changes at the Clevelandbased iron ore producer. Among the changes proposed: spinning off the company’s international assets and doubling its annual dividend. Casablanca leadership said in a letter to Cliffs CEO James F. Kirsch that Cliffs should “significantly” cut costs and convert its U.S. assets to a master limited partnership, or MLP, a specialized corporate structure that pays no taxes and gives most of its profit to investors. In the money: Local biomedical companies raised more than $200 million in venture capital last year — a strong performance, considering the headwinds that health-related startup companies face, according to the BioEnterprise Midwest Healthcare Venture Investment Report. That figure easily beats most totals from the past five years, but it’s down 11% from last year, when biomedical companies in Northeast Ohio raised $227 from investors. However, the number of local companies raising money rose from 43 in 2012 to 50 in 2013 — the highest number since Cleveland-based BioEnterprise started collecting data about a decade ago. Take care: After a month of speculation, the Cleveland Browns confirmed the team has dropped the Cleveland Clinic and selected University Hospitals — the region’s second-largest health system — as its official health care partner for the next 10 years. Financial terms weren’t disclosed. However, as the Browns’ partner, UH Case Medical Center, the health system’s flagship hospital, will cover every aspect of the team’s health care needs. UH agreed to develop a sports medicine team, which will include most medical specialties, to assist the Browns. It also will provide urgent care to Browns fans at FirstEnergy Stadium and health and wellness programs for the Browns franchise.

Join the crowd: Regional business attraction group Team NEO, in conjunction with other economic development groups, said it recruited a record 16 companies to Northeast Ohio in 2013. Team NEO said the companies represent nearly 1,400 direct new jobs and more than $85 million in new direct annual payroll. The companies “created jobs with an average payroll of more than $62,000, which is the highest in our history,” said Team NEO CEO Tom Waltermire. This and that: Gojo Industries, the Akronbased inventor of Purell hand sanitizer and a global producer and marketer of skin health and hygiene products, acquired Laboratoires Prodene Klint, a French company that specializes in professional hygiene, disinfectant products and cosmetics. Terms weren’t disclosed. .. Cuyahoga County Council voted unanimously, 11-0, to put a 20-year extension of the sports facilities sin tax on the May 6 ballot. The tax is 4.5 cents a pack on cigarettes, 16 cents a gallon on beer, 32 cents per gallon on wine and $3 a gallon for liquor. See related story, Page 4.

■ Storied but not regularly occupied for years, the offices that the builders of Cleveland’s Terminal Tower — the Van Sweringen brothers — constructed for them-selves on the 36th floor of the iconic structure are about to be restored for a

new, full-floor tenant. BrownFlynn, a corporate responsibility and sustainability consulting and training firm, has leased the floor for new offices as it exits Highland Heights for downtown Cleveland by the end of April. Barb Brown, a principal, said the firm landed at the landmark because “it’s cool space.” “We love the history,” she said. “We believe that sustainability is important in new buildings, but the best sustainability story is repurposing existing historic space that should be preserved.” The firm needed room to grow. BrownFlynn will double its size to 7,000 square feet, she said, and “will not have to worry about room as we add staff.”BrownFlynn employs 14 and projects the number may reach 21 by 2017. This move requires more than typical preparations. Jeff Linton, spokesman for tower landlord Forest City Enterprises Inc., said the office’s plaster ceilings need repairs, which could not be done until the company redid the tower’s exterior in 2010. The updating will include restoring four expansive corner offices to their original sizes that had been chopped into smaller offices over the years. BrownFlynn often has out-oftown visitors, who will be able to use public transit to reach its new office from Cleveland Hopkins International Airport, Brown said. She also noted that Forest City is a client. — Stan Bullard



COMPANY: Chart Industries Inc., Garfield Heights

Excerpts from recent blog entries on

Living sustainability and promoting it

PRODUCT: HEco series of cryogenic storage freezers Chart Industries gets most of its press these days for the products it develops and builds for the oil and gas industry. But the maker of heat exchangers, storage systems and other equipment still has its eyes on other segments of the economy, including biomedical technologies. Toward that end, the company has announced a new product, a series of cryogenic storage freezers known as the HEco series. Like other biomedical cryogenic systems, Chart’s uses nitrogen. But the company says its new devices use 20% less of the stuff, and 30% less energy than competing freezers. “Equipment reliability and efficiency is absolutely critical in the cryopreservation of biological materials,” said Steve Shaw, president of Chart BioMedical, in a statement. “This innovative line of freezers is a great example of how Chart works with end-users to develop new products that can immediately provide value,” he said. Chart BioMedical makes cryogenic freezers, vacuum-insulated products and cryogenic systems. Its devices are used in medical laboratories, biotech/pharmaceutical companies, research facilities, blood and tissue banks, veterinary laboratories, repositories and artificialinsemination operations.

By the Chromebook ■ Count Kyle Laauser, information technology director at Saint Joseph Academy, an all-girls private high school in Cleveland, among the many fans of Chromebooks. The inexpensive laptops “have come from nowhere to grab nearly a fifth of U.S. school purchases of mobile computers, posing problems for Microsoft Corp. and possibly even Apple Inc.,” The Wall Street Journal reported. Chromebooks, which run Google software but mostly are sold by other companies, “accounted for 19% of the K-12 market for mobile computers in the U.S. in 2013,” The Journal said. In 2012, Chromebooks represented less than 1% of the market. Laauser told the newspaper that the school bought about 750 Samsung Chromebooks in the fall, enough so that each student has her own. “Explaining the purchase, Mr. Laauser pointed to the devices’ low price, $279 each including a $30 setup fee paid to Google, as well as the ease with which he could set them up for the entire student body,” The Journal noted. He has bad news for Microsoft and Apple. Laauser told The Journal that Saint Joseph “will still need some PCs and Macs for engineering and design courses but plans to cut back on purchases since Chromebooks can do many basic computing tasks.”

It’s all right here ■ Do you dream of retiring someplace warm and glamorous? Forget it! You’re better off retiring here — and, specifically, in Lakewood, according to

University Circle looks to spur business growth ■ Now that the Uptown neighborhood of apartments and shops is blooming, University Circle Inc. is trying to build a base of businesses around it on Cleveland’s East Side. In April, the nonprofit development group will introduce a program called “NextStep: Strategies for Business Growth.” The seven-month program will expose 15 small business owners to all facets of business development. NextStep is based on “StreetWise MBA,” a program created by Interise, a Boston-based nonprofit. “This program has been a great success in other cities, and we look forward to seeing results of an equal magnitude here in Cleveland,” said Walter Wright, project director of the Greater University Circle Community Wealth Building Initiative at the Cleveland Foundation. The program is sponsored by University Circle Inc. with support from the Cleveland Foundation and the KeyBank Foundation. Businesses that are at least three years old, that have annual sales of at least $250,000 and have at least one employee besides the owner will be eligible. Priority will go to businesses in the University Circle and MidTown areas, but the program will accept applicants from surrounding neighborhoods, including Little Italy, Glenville, Hough, East Cleveland, Fairfax and Buckeye-Shaker. To apply, contact UCI vice president of services Laura Kleinman at 216-707-5040 or via email at — Jay Miller, which covers “the lighter side of real estate.” Lakewood came in at No. 3 on’s list of the best small cities in which to retire. What’s so great about the western suburb? “Lakewood actually has what it calls a ‘Division of Aging’ with everything from a photography club to video game get-togethers spread across several community centers,” according to the website. “This lakeside town of just under 59,000 residents also boasts ample acreage of outdoor space across myriad parks for retirees who’d rather just contemplate — or participate in activities involving — nature.” Among 140 towns analyzed by, “Lakewood ranked 46th in terms of cost of living and 38th overall for crime. As for retiree amenities, it placed 68th and ranked 36th out of 140 where weather’s concerned. It tied for 14th in terms of travel.”

Diamonds are forever ■ Walden, the luxury inn and spa in Aurora, once again finds itself in elite company: It’s one of only 124 hotels that earned a spot on AAA’s annual list of Five Diamond establishments in North America. USA Today reported that AAA selected 124 hotels and 59 restaurants for the coveted title. Six hotels and eight restaurants were added to the list. Seven hotels and two restaurants were removed. Walden was the only hotel in Ohio to earn Five Diamond status. The state does not have a five-diamond restaurant. USA Today said the awards come as luxury hotels “are making a comeback after losing a lot of their business during the recession.” Occupancy levels are even higher than they were before the recession after dropping dramatically in 2009. Average daily rates are almost what they were before 2009.



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congratulates the winners of the 2013 Accelerate Michigan Innovation Competition With more than $1 million in cash prizes, the Accelerate Michigan Innovation Competition is designed to highlight Michigan as a robust and vibrant venue for innovation and business opportunity.

Grand Prize $500,000

Second $100,000

Third $50,000

Varsity News Network is a Grand Rapids-based Web platform that makes it easy for high school athletic directors to manage social communication with teams and the community, and automatically generates media coverage for athletics in the process.

Covaron Advanced Materials is an Ann Arbor company that has created a patent-pending technology called Petraforge, a thermosetting material that can provide advanced physical properties comparable to advanced ceramics but more durable, relatively low cost and able to use raw materials from industrial waste.

REL Inc. is the leader in the development of metal matrix composite (MMC) brake technology and products, with applications in the automotive and motorcycle industries. These brakes are 60 percent lighter, leading to improved energy efciency and vehicle light-weighting.

Read about these and the other winners at Investment-worthy companies like these in Michigan will also be covered in the upcoming Crain’s special report — Michigan Deal: Biggest Deals of 2013 For advertising information, contact Marla Wise at or 313-446-6032. To receive your FREE copy, contact or 313-446-6083. PUBLISHING MARCH 10, 2014 PROUD SPONSORS PROUD SPONSORS PROUD SPONSORS PROUD SPONSORS PROUD SPONSORS PROUD SPONSORS PROUD SPONSORS

Crain's Cleveland Business  

February 3 - 9, 2014 issue

Crain's Cleveland Business  

February 3 - 9, 2014 issue