Peter Iglinski: We think of colleges and universities as institutions of higher education, where students study, learn and prepare for their futures—and that’s all true. But, universities can also be powerful economic engines for their communities. Last year, the Center for Governmental Research published a report that quantified the University of Rochester’s economic impact on the local community and beyond. Three people are with me to discuss that impact; they are Peter Robinson, vice president and chief operating officer of the University of Rochester Medical Center; he is also the vice present of Government and Community Relations at the University, Sujatha Ramanujan managing director of the Luminate Accelerator, and Kent Gardner, project director for the Center for Governmental Research. Thank you all for being here. Let’s set the stage; how much different would this nine-county region be, if not for the University of Rochester? And you wrote the report Kent—I’ll start with you.
Kent Gardner: Well, the interesting part about this is that’s one of the things we do in an economic impact assessment; what we’re really trying to do is answer precisely that question. If we took the University of Rochester out of the Rochester community, what would be left? And, of course, it would leave an enormous hole, and we can think about that in two different ways. On the one hand, we can think about the services that the University of Rochester offers to local residents—and some of those services would continue. I mean, if you need an appendectomy you’re not going to go to Peoria, or drive to Buffalo for an appendectomy—so some of those services would probably be picked up by some other institution. But, when you think about the River Campus, and all the students who come here from all over the world and all over the country, and the research grants that come from the National Science Foundation—from the National Institutes of Health—the kinds of really remarkable things that are done at the Medical Center—liver transplants and all these really astonishing medical discoveries; all that would go away. It would go someplace else. I assume the National Institutes of Health would find a different place to send its grant money, but we would lose a tremendous number of people who are working here, and, of course, the spending that they bring with them.
PI: Peter, you’re at the Medical Center and that’s the gorilla, that’s the 900 pound gorilla—I always forget how much the gorilla weighs. The impact of the Medical Center on this nine-county region—how can we help people appreciate that?
Peter Robinson: Well, the Medical Center represents about 80% of the total University, both in terms of revenues and employment. So, you can’t actually talk about the overall impact of the University without first talking about the Medical Center and its contributions to the region. And obviously it transcends all of the areas that are the missions of the Medical Center, which are the delivery of healthcare, education—physicians, nurses, graduate students—and also research. And, all of those activities are, in fact, embedded in the community. We do a lot of research that’s actually community informed and community engaged. Obviously, our educational experiences are not only in the Medical Center proper, but they actually are distributed in a variety of settings around the community as well. And certainly from the standpoint of healthcare, not only are we the largest provider of healthcare services in the region, but we are also the safety net provider. So, if you look at—despite the fact that we have very low insurance rates here—there are still people who are uninsured, and the Medical Center is that repository of care for those people who have no other point of access.
PI: Sujatha, you look at this question basically from the point of view of an innovator. And, I’m wondering about, from your perspective, how important is the University in the development of your own company? And tell us about your company, first.
Sujatha Ramanujan: Well, first of all, I’m managing an accelerator and a fund, so what we really are is an organization that brings in innovative companies, a whole bunch of them, and incubates them, accelerates them, finds investment for them in this region. And this would not work without the University. So, let me put it out there that these types of programs work because we have a very strong university presence—that brings with it innovation, it brings with it technical and other guidance, it brings all of the necessary laboratory and technical facilities that you cannot immediately build when you have something like an accelerator. I don’t think it’s possible for the state and for this fund to put together the extensive capabilities that you can find at this particular University, or the skill set to advise companies. So, I think that we look at these organizations to be the seed of growth, whether or not the concept came from this University, the University feeds the growth and the nurturing of these companies, so that they can grow and blossom into something truly extraordinary.
PI: Now, you mentioned guidance. Can you give us an example of what kind of guidance the University may provide?
SR: It ranges from technical guidance—so say you’re building a particular widget, whatever it might be, and you come across a problem, a technical problem and it’s challenging. There is a wealth of information and the expertise that resides in places like the Institute of Optics, so you can get that problem resolved rapidly. There are also all of the companies that have spun out that now have the infrastructure to provide the tooling, the manufacturing, the part that you need. All of that started because there is a university here that can allow it to grow.
PR: So, if I can add to that, obviously optics, imaging, photonics, are probably the core strength in terms of this region’s economy. It is where we stand out. And the University has produced, up till now, 50 percent of the nation’s PhDs in optics—fully 50 percent. And that has spawned a whole variety of capabilities within the community; whether that’s companies that have actually developed from the expertise of the faculty and still now, the research that those faculty are doing and the technology and the commercialization that comes as a result of that research; and I think that Sujatha’s program, at HTR, is certainly the beneficiary of that.
SR: Oh, I think so.
KG: Can I comment just for a moment on what we’ve just been talking about, because we have a difficult time at a place like CGR to measure the kinds of effects that Sujartha’s talking about? I mean that connection to the entrepreneurial community, that connection to the firms in the community—we do a little bit of estimating because we know something about the connection between invention disclosures and patents and royalties and that sort of thing. We try to incorporate that into our study, but what we can’t capture is that indefinable something that a university brings to a business community, to a scientific community. It was not that long ago that I think a lot of us, including me, were saying, “Oh gee, it’s the death distance,” right? We’re talking about how proximity doesn’t matter anymore, and it doesn’t matter whether you’re collaborating with someone in Rochester or someone in Copenhagen, and it’s all just not going to matter anymore. And that’s been proven to be false. What we’ve learned it that proximity really does matter and that when you get a center like the University of Rochester where people can walk down the hall and talk to someone—that that personal connection still makes a huge difference. And so, having a concentration of firms doing something, doing the same things, this concentration of firms and researchers around optics, for example, can create something that’s greater than the sum of its parts.
PI: Now, Kent, this is your area—I want to look at the different ways a University can affect or economy, or does affect the economy. Looking at how it can do it directly; and there’s also the spillover. Can you talk to us about what those two different factors mean?
KG: So, let me just trot through this—this is boring stuff, so I’ll make it quick. So direct is anything where the University writes a check. Let’s say Peter Robinson gets a check from the University that’s got Joel Seligman’s signature on the bottom, and Peter can go to the bank and cash that check—we call that a direct impact. Then Peter takes that money out of the bank and he goes down to Wegmans, and he buys dinner, or he goes to a restaurant and has a lovely evening out, and those individuals who receive those checks, those aren’t University checks, those are Peter Robinson checks. Those Peter Robinson checks also are going to pay somebody’s salary, they’re also going to pay for supplies for the restaurant, for Wegmans to run its big warehousing facility they have—so that’s what we call an induced effect. And at the peril of boring everyone, we can also talk about what an indirect effect, and that’s where the University actually spends money in the community itself, but not on people, but on supplies. So, once again, if the University goes to Wegmans to cater an event at the University, that’s the University spending money with a supplier. Once again the supplier is going to be hiring people in the community and buying its own supplies.
PI: So, Peter’s check helps employ people at Wegmans, and it helps the families of the people who are employed at Wegmans…
KG: Yeah, exactly.
PI: Thanks, Peter.
PR: Your welcome, Peter.
KG: The University’s check to suppliers does the same thing. So, together, we call those the “spillover effect.” So, we’ve got the direct effect again, checks signed by the University, and they we have the spillover effect and that’s either a function of employee spending or it’s a functions of University spending on supplies.
PI: Now, a number of years ago the University became the largest employer in Rochester. Your report was based on 2015 data, and there were 24,000 employees—full-time equivalent employees. Now that number is up to 29,000, right?
PR: The University has passed the 30,000 mark this year and is now, we believe the sixth largest private sector employer in New York State and the largest in Upstate New York. And again I would say that the growth has been uniform, but because the Medical Center started out big, it’s growth had obviously got the higher numbers in it. So, the expansion of the University’s health system has been the principle driver of those growth numbers in the last couple of years.
PI: Now, Sujatha, does all of this make a difference in your work at Luminate—the presence of the University state-wide, the impact that the University has well beyond, and in what way?
SR: Oh, yes. So, first of all, most of these companies are really not originally from this region, they’re actually coming from outside of this region. And they’re coming, not just because we’re giving them a check—you can get money in a lot of places—they’re coming here because of everything the program and this region have to offer. So, when the University helps the entire area, when you have supply-chain elements that go all over the place, those elements are really critical to the growth of a business, particularly when you’re talking about someone who’s manufacturing something that’s not software—that has physical footprints and capital and space requirements; those are all really backed by the local businesses, the area businesses and real estate and infrastructure and all of that come from—fundamentally, the University having provided employment, and provided the ability to grow those things. So, I think that what we have to offer in this region that is so attractive—obviously it’s the intellectual power, it’s the history and all that—is really all of the infrastructure that is in this region. It is the manufacturing, it is the supply chain, it’s the ability to really build and grow a business here in an economically feasible way. So that’s what I think it does.
PI: When I look at the spillover effect, when I look at this report there are little things that just popped out. One thing was hotel stays. I’m not sure people realize how many people come to hotels here and only come here, because of this University.
KG: Well, exactly, and that’s how the University, operating its business, has to generate economic activity outside of the University’s walls. And that’s what we attempt to capture with an economic impact assessment.
PR: Strong Memorial Hospital admits and discharges approximately forty thousand patients a year. So you can imagine that some significant number of them are residents in the area, but fully one-third come from broadly in the region, and so you can assume that that represents a significant use of hotels. But the other area is actually is that—and this comes to our faculty—we do recruit the best and the brightest here, we really do, and as a result of that, our faculty over time become very senior in their national organizations, in their academic societies. Usually the people that head up those societies get to host their annual meetings for their particular disciplines. So a significant part of why the University is generating some of that business is because we actually begin to host more and more of these conventions for the National Optics Society, even in the humanities, or whatever the discipline might be. So that stature of our faculty, and the ability therefore to be the convener of these national meetings, has had a significant impact on tourism and hotel stays and other kinds of things, as well.
PI: Now, Ken, you point out that if the University disappeared, some of the jobs would just be picked up by some other entities in Rochester, but there are others that are only here because of the University of Rochester. Tell us about those.
Let’s just start with the River Campus. We’ve been talking about the Medical Center, but we know we have many other colleges and universities in the Rochester area. Certainly some of the students who come to the U of R might choose to go to one of the other institutions in town, if it weren’t for the University. But the vast majority of these students are looking for a particular kind of education, they’re looking for a certain tier of University, and I think in many cases, they probably would choose to go elsewhere. First, they don’t live here, and some of the students who live here may take advantage of the fact that they can stay in their hometown and go to a first-class University. But many of the people coming from China, from Europe, from South America, they’re coming to Rochester because they specifically want the kind of education, the quality of education, and the specific programs, that are offered at the University of Rochester. So we would lose all those jobs, a lot of faculty jobs. So how much is always a guessing game as to what share would actually stay, but I can’t imagine more than ten percent of what we see of the River Campus would remain in the community if the University of Rochester suddenly disappeared overnight. The Medical Center is more complicated. Aas we’ve discussed, it’s much larger, to the extent that the Medical Center is offering primary care. There’s a lot of primary care that’s offered through the University through its networks of physicians. The primary care really does have to happen here. When I go to my University of Rochester physician for a checkup, if the University didn’t have a primary practice, I would go someplace else in Rochester. I wouldn’t go somewhere else. But once we get into the sophisticated hospital care that’s being provided, once we start talking about the medical school itself; there’s nothing that says we have to have a medical school. The benefits of Rochester having a medical school are just really tremendous and impossible for me to capture in any economic impact study, I might point out. I mean we’re only talking about the numbers here, and I think that’s really important to recognize that not only are we talking about an economic impact, we’re talking about a cultural impact, a quality of life impact. And those are the kinds of things you really can’t put numbers to, and maybe shouldn’t even try. We should talk about the Eastman School of Music before we quit. But certainly, so those things that wouldn’t be here if the University left. And again, the medical school, absolutely. No one’s going to go starting a medical school. It’s an enormously expensive, difficult undertaking to start a medical school. So no one’s going to suddenly create a medical school, if the University of Rochester Medical Center went away. Same thing’s true again for that whole research area. We have some research, medical research, that happens outside of the University of Rochester Medical Center, but really not very much. Most of that research would happen someplace else.
PI: You mentioned the Eastman School of Music. Is that analogous to the Medical Center? Where, if somebody wants to learn to play piano, they can probably find a piano instructor in town, but if you really want to master the piano, then you come to Eastman or you go elsewhere. I mean, out of town.
Again, yeah, the competitors for the Eastman School of Music are places like Julliard, Peabody, places like that. Those are places that, the people who come to the Eastman School of Music are unlikely to end up any place else in Rochester, if they weren’t able to come here.
SR: I’d like to point something out about people who are innovative and creative—scientists, people like that. They need an environment in which to thrive. That environment is not just about the science or about their business, it is about things like the arts that are available, the intellectual growth and access they can have. And things like the Eastman School of Music are critical to bringing in good scientists, because you need that. You need that stimulus, you need the theater, you need the arts and letters, you need all of that incredible amount of intellectual stimulation that the region provides and that the University feeds. These things do not stand alone.
PR: I couldn’t agree more. I think what you really are seeing Rochester transform into is more of an innovation economy. And certainly that’s targeted now. We’re looking at focusing on downtown, the Sibley building, and the new home of High Tech Rochester, of which Luminate is a part, is intended by the University to be the center of the innovation zone for the community. And I do agree with Sujatha that this innovation environment is cultural, as well as technical. And that it is absolutely essential that something like the University of Rochester be present. If you look at other communities where this kind of thing is going on, in places like Austin, Texas, where the University of Texas is headquartered, and it’s that academic environment overlaid on a culture that is vibrant, a little edgy, and attracting people who are innovators and entrepreneurs, and that’s where I think Rochester’s going. I think the University has an amazing impact on that, and in fact, it wouldn’t exist without the University’s presence, through some of its programs, but also because of the intellectual power and the cultural overlay that it provides to the whole region.
PI: Now, we can’t talk about growth without talking about capital investments. And the University of Rochester has spent $270 million between 2011 and 2015 in capital investments. How was that money spent, and what was accomplished?
21:05 – PR: The biggest investment out of that was actually the building of the new children’s hospital, so 140 million out of that 270 went to the creation of the new Golisano Children’s hospital. And frankly, that does a whole bunch of things. It’s a Mecca for drawing the best residennts in pediatrics that we can get, the greatest faculty, but it’s also very reassuring to family that want to come here, that we can provide absolutely every level of care that’s required and available, right here in our community. So it has multiple benefits that certainly go beyond the direct economic impact and into, again, the transformation of the community into a place where innovators and entrepreneurs want to be.
KG: But remember, too, that we’re starting with those construction jobs. Construction jobs, when we do these studies, we talk about them as temporary jobs. And I said that about a year ago to a group. I had done an economic impact study of a different effort, and I said there are construction jobs, and they are temporary jobs, and a woman in the front row put up her hand, she says, “Listen, buddy. I’m in the construction trade, and it may be temporary to you, but it’s my life.” It’s an important point, that the steady pace of construction both at the U of R, and also at RIT, which has again been expanding its footprint dramatically, keeps a lot of construction workers employed in this town. So maybe it’s only a temporary project at U of R or RIT, but for these construction workers, it’s their livelihood.
PR: So, if you look at the growth downtown, in the center city of Rochester right now, the growth in residential housing in businesses relocating downtown, I think a lot of that is really driven by the University’s influence over the community’s economy. And I think that we’re even seeing faculty who are choosing to live downtown now. People that are previously in the suburbs are empty-nesters and are starting to migrate into the center city. All of that is really a function of a vibrant University community, in part, contributing to the revitalization of the inner city.
PI: Given that the University of Rochester is a research institution, I’d be remiss not to mention patents and royalties. How important are patent royalties to the impact on this region?
KG: Well, you know, again, I want to caution us in recognizing there are the pieces we can measure and then the pieces of that that we can’t. So we can look at royalty income—and royalty income for the University has been very significant over the years—and royalty income gets poured back right into the University; it supports infrastructure, it supports new research, it supports new facilities, so all of that is important, and it has its own economic impact. But it also has the effect of tying into the University the people who take those patents and run with them. I mean, the great example was the Haemophilus influenzae type B vaccine, the granddaddy of the royalties for the University of Rochester. The impact of that discovery on the Rochester community over a period of 25 years was really dramatic. And there are many others that are smaller, but still continue to have an impact, again not only on the University’s ability to be financially strong, but also on the community’s ability to start new businesses and maintain the health of those firms.
PI: Was there a point where the trajectory of growth really accelerated drastically? Was there a turning point for the University?
25:15 – PR: I think there were probably two turning points for the University. The first was when the Medical Center began to transform itself in the side the Jay Stein era, where Jay was a former CEO of the Medical Center. And I think for the first time, not only took a very aggressive stance with regard to growth and development of health care, and especially research, where we made significant investments in that—combined with a real reachout to the community. So for the first time in memory, the Medical Center started to be a very visible leading presence in the community. So those two things happened. And then I think the second turning point was when Joel Seligman became president. And I speak often about the fact that, among the first things that Joel did when he arrived at the University—I say it was the first day, he says it was within the first ten days—he walked across the bridge, the footbridge over the Genesee River, met then-Mayor Johnson, and celebrated two things. One was the Urban Fellows program of the University—and there was a big celebration around that—and another was a turning point in the development of what’s now called Brook’s Crossing, and the movement of the University physically across the river and into the 19th ward, a community that had seen better days. And that was the starting point of a much broader investment, both across the river, but broadly within the community, as the University began to recognize its responsibility to be, at least, a leading catalyst of economic development in the Rochester area.
And I’d like to wrap up by looking ahead. And I’ll start with Sujatha. Where do you see the future of Luminate going?
SR: Oh, I’m so excited about this, so glad you asked. So we have companies coming from everywhere, and we are going to grow and nurture these businesses, and I expect some of them will stay, and I expect all of them will use the infrastructure that is Rochester. They will use the manufacturing supply chain, they will use the services provided, and they will further the already stellar reputation of optics and photonics in the region on an international level. As they succeed and they do well, it will shine a really good light on all the nurturing that this region offers, and I think it will attract even more companies, so I see this as the beginning of a really extraordinary growth. And we as a community can do this together, because it’s not just these companies growing. An—this ties to what the University does—I hope to have East High students come work with us, or their optics students. I want to see the MCC optics program there feed the businesses that are created at Luminate. So I think that there is so much that’s going to happen; the next two years are really going to be a fun ride. Watch this.
PI: And Peter, what’s in your crystal ball for the University?
PR: I do see that we would continue to increase our presence in the community, physically. And with regard to programs, I think the University is poised through its current strategic planning process to further engage with the community, and I think the economic development dimension of that is going to be critically important, whether that is to be an important adjunct to the anti-poverty initiative, which is something that the president is very, very committed to, to enhancing our presence downtown through High Tech Rochester and the Innovation Zone. So, a lot of activity that is going to contribute to the local economy and growth.
PI: And, Kent, when you look at the numbers and trends, what do you see in the short and long term for the University?
KG: Well I have to say that every time we come back to this question, and we’ve been doing this study for the University every couple of years for quite some time, I’m always surprised. I’ve gotten less surprised, but every time we start this over, there is something new. And it’s not something small that’s new, so I would expect that we continue to see something new every time we do this study. But I think, too, that if you think of the larger economy and ask the question, “Is our global economy going to become less or more dependent on intellectual activities? Is it going to be less or more dependent on the quality of education that our students receive, particularly at the higher education level?” I think we know what the answer is. Universities in general are going to become more and more important to the economy, and I think the same thing’s going to be true for the University of Rochester.
PI: Well my thanks to our guests, Peter Robinson, vice president and chief operating officer of the University of Rochester Medical Center and vice president of Government and Community Relations for the University; Sujatha Ramanujan, managing director of Luminate Accelerator; and Kent Gardner, who is project director of the Center for Governmental Research. Thank you all. Thanks also to Kyle Tworek, our audio engineer. For the University of Rochester Quadcast. I’m Peter Iglinski.
All: Thank you.