Superstar Effect: Children’s Hospitals, Pharmaceuticals

Lurie Children’s Hospital (tallest building near center). Photo credit: Ala1188, CC BY-SA 4.0

Here are a couple more small news items in my “superstar effect” series. The first shows the superstar effect within cities. It’s a piece about how Chicago’s Lurie Children’s Hospital, one of the best in the country, is growing at the same time other hospitals in the area are cutting back on beds and services for children.

As smaller area hospitals close or consolidate their pediatric wards, Lurie Children’s Hospital is doing the opposite: launching a high-profile fetal surgical center—one of only a few in the world—and, separately, beginning a $51 million project to add 48 beds for critically ill kids and newborns. Meanwhile, executives are gearing up to pitch a second expansion phase to the board later this summer.

Lurie’s pedal-to-the-metal approach stands in stark contrast to what’s happening at many community hospitals, most recently Mount Sinai Hospital on the West Side. Among those sitting on the wrong side of a decades-long shift in pediatrics toward high-end specialty care for complicated cases—and cheaper outpatient care for everything else—Sinai announced in June that it will close its 24-bed children’s ward due to lack of demand. The Chicago area has lost 140 children’s beds over the past four years, by Lurie’s count.

Meanwhile, the Streeterville-based powerhouse keeps growing, reporting an 8 percent increase in 2016 operating revenue, to $922.5 million. Five years ago, it opened a shiny new lakefront campus—adjacent to Northwestern Memorial Hospital, Northwestern’s Feinberg School of Medicine and the new Shirley Ryan AbilityLab—and it is now ​ luring big-shot faculty from the nation’s best children’s hospitals. “We’ve really created a crown jewel of an academic medicine center,” says Lurie COO Michelle Stephenson.

Here again we see the absolute best getting stronger while everyone else declines.

The second piece is also out of Chicago. It’s about how Japanese pharmaceutical firm Takeda is shrinking in Chicago while expanding in Boston.

Over the past two years, Takeda has also gradually moved its global research and development and vaccine business units, which were headquartered in Deerfield, to Cambridge. As many as 600 Deerfield-based R&D employees and 150 vaccines employees were required to relocate as a result, sources say. A spokesman declines to confirm that number or say how many employees made the move.

The shift to Boston reflects a global consolidation in business operations and the need to be close to the nation’s top biotech talent. Takeda first established a presence in Cambridge in 2008, when it purchased Millennium Pharmaceuticals for $8.8 billion. The smaller Cambridge-based company, which manufactures a type of chemotherapy used to treat the blood cancer multiple myeloma, changed its name to Takeda Oncology in 2013. In January, Takeda acquired another Cambridge-based cancer drug maker, Ariad, for $5.2 billion.

“We are committed to our Deerfield location as it is home to our commercial organization, the largest of the three business units,” the company said in a statement. “In addition to our sales and marketing teams, medical affairs and clinical operations teams also work out of the Deerfield site.”

Here we see the key R&D functions getting sucked into the Boston region, where biotech has been consolidating for some time. However, you’ll note sales, marketing, and other business functions – areas where Chicago excels – are remaining in Deerfield.

This last story is very aligned with the findings of a new study from Boston Consulting Group’s Chicago office called “Four Imperatives for Well-Being in Chicago.” They note that Chicago has underperformed on GDP relative to coastal cities. One reason is that the highest productivity workers, like pharma R&D, are more coastally based, whereas Chicago’s knowledge workers are high value, but not the highest value in many cases.

Finally, in other Chicago news, Bon Appetit magazine just named Chicago its “restaurant city of the year.”

from Aaron M. Renn


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s