Crain's Cleveland Business

VOL. 38, NO. 5

JANUARY 30 - FEBRUARY 5, 2017

Source Lunch Outgoing CSU athletic director John Parry breaks down NCAA finances. Page 23

Inside Midsize banks expect 2017 to be another busy year for M&A. Page 3

CLEVELAND BUSINESS

Akron Cuyahoga Falls preps for makeover. Page 20

DEVELOPMENT

Beefed-up hotel market prepares for ‘a price fight’ By STAN BULLARD sbullard@crain.com @CrainRltywriter

When it comes to the Cleveland hotel market, you haven’t seen anything yet. Hotel occupancies are poised to fall in the coming year, even as real estate developers continue to talk up plans for more suites downtown and throughout the region. At the same time, the market is posting gains on the revenue side of the equation, showing the city is making progress toward its goal of becoming more of a convention, meeting and leisure destination. Sheer numbers and fate dictate the gloomier outlook on occupancy after Cleveland gained 2,000 hotel rooms last year — half in downtown Cleveland, and the remainder in suburbs from Avon to Lyndhurst. The 600-room Hilton Cleveland Downtown Convention Center, Drury Plaza Hotel and Schofield Kimpton Hotel will be open for a full year in 2017 after having opened between April and June in 2016. Moreover, the events that made for a stellar 2016 — the Republican National Convention, the NBA Finals and the World Series run of the Cleveland Indians — are a troika unlikely ever to be repeated, though reruns of either of the sports runs can be envisioned. SEE HOTELS, PAGE 22

Two of Cleveland’s newest hotels, the Metropolitan, left, and the Schofield Kimpton, are in historic buildings on East 9th Street. (David Kordalski)

MANUFACTURING

SPORTS BUSINESS

Bright lights will be on Indians By KEVIN KLEPS kkleps@crain.com @KevinKleps

If you’ve driven by Progressive Field at night recently, you might have noticed that the 23-year-old ballpark has a different glow. And it has nothing to do with the signing of slugger Edwin Encarnacion. Nor is it because of the Cleveland Indians’ captivating World Se-

ries run last fall and MLB’s selection of Cleveland as the host city of the 2019 All-Star Game. Progressive Field is adding LED lights as part of a $2.1 million project that will be completed prior to the first pitch of the 2017 season. Light-emitting diodes — long a part of the scoreboard and ribbon boards at ballparks, stadiums and arenas — are becoming an increasingly popular and cost-efficient choice to illuminate the playing fields and surfaces

Entire contents © 2017 by Crain Communications Inc.

of sports facilities. The Indians, according to Crain’s sources and research, are one of six MLB teams that are adding LED field lights in 2017. The Seattle Mariners became the first big-league club to make the move in 2015, and four teams followed suit in 2016. Seth Cooper, the Indians’ senior director of facility operations, said the project, which is being funded by Cuyahoga County’s tax on alcohol and cigarettes, started in December. The Indians and the Gateway Economic Development Corporation, the nonprofit landlord of the ballpark and Quicken Loans Arena, selected Eaton’s Ephesus Lighting system for the project. Progressive Field’s 674 light fixtures — all of which have been taken down — used 1,500-watt metal halide bulbs. Once the project, which is about 60% complete, is finished, the ballpark will have 456 1,000-watt LED fixtures, Cooper said. SEE INDIANS, PAGE 7

RPM is ramping up deal-making in 2017 By DAN SHINGLER dshingler@crain.com @DanShingler

RPM Inc. CEO Frank Sullivan says there’s a reason his Medina-based specialty coatings company closed on five acquisitions over a twomonth period in December and January: Donald Trump. But Sullivan said there’s another reason RPM intends to keep up the fast pace of acquisitions it's been keeping in recent years: growth. The company will continue to do a large quantity of deals, but of smaller companies, in keeping with its strategy to grow via acquisitions, he said. “We want to get as many plate appearances as we can, but we’re never swinging for the fences,” Sullivan said

in an interview with Crain's. “We’d rather hit for average and get singles and doubles.” For the record, in December RPM closed its acquisition of the foam division of Clayton Corp., which has annual sales of $60 million. It also purchased SPS Group, a Dutch decorative and specialty coatings company with annual net sales of approximately $60 million. Then, in early January, it bought Arizona-based Prochem and Missouri-based Arnette Polymers, companies with combined sales of $42 million. And on Jan. 17, RPM purchased Conyers, Ga.-based Prime Resins, a small company with just $7 million in annual sales, but one that makes products RPM hopes will be used in national infrastructure investment. SEE RPM, PAGE 21

CONTENT

SPONSORED BY

NEWS AND TRENDS FROM NORTHEAST OHIO’S TECHNOLOGY SECTOR

TECH MATTERS Q A Demystifying APIs William Fudge III, director of applications at OEC, helps us understand why APIs matter in the business world.

Q: A:

What are APIs, and why are they important? APIs, or application programming interfaces, are a technology that allows software or applications to communicate with other software or applications. So if you’re building an e-commerce website and want to provide shipping integration services, FedEx and UPS provide APIs that enable your users to track packages and print out shipping invoices from your site. It keeps users on your site, rather then having to send them to the websites of UPS or FedEx. OEC’s MyPriceLink provides GM parts pricing through its API technology. Auto industry companies such as dealer management systems and collision estimating systems providers can integrate with our APIs, which sends GM pricing back to them. They then can display and incorporate it into their online workflow. APIs expand a company’s ability to deliver more capabilities, rather than having to build all those functionalities — like shipment tracking — themselves.

Q: A:

What legal issues should businesses be aware of when accessing APIs? Most APIs are not open to the world to interact with. So if you Google “Instagram API,” for example, you’re taken to a developer portal that tells you how to register with an Instagram API. You essentially enter into a contract that describes the rules of how you interact with an API before you are authorized to use it.

Q: A:

What does the future hold for APIs? Before cloud computing and the rise of social networks, APIs were something you only heard about from the technical community. Now it’s a more mainstream term. APIs will drive us to a fully automated and connected world. We see this happening with the combined use of cloud technology. Everything’s connected. Smart cars and smart homes all use APIs and make that inter-connectedness possible.

CALENDAR OF

EVENTS

CUSTOM SOFTWARE VS. OFF-THE-SHELF: Weighing the pros, cons to each approach

W

ith relentless automation, machine learning and new technologies advancing at a breakneck pace — business owners, large and small, must consistently focus on whether their software systems are appropriately amplifying their operations. “As machine learning and intelligence continues to improve, knowledge workers will be making the broad sweeping strokes and letting the machines figure out the repetitive, detail work,” said Eric Wise, founder and chief academic officer at the Software Guild, a coding boot camp with locations in Akron, Kentucky and Minneapolis. To that end, many companies will face a critical decision as they strive to keep up with the competition and ahead of technology curve: Is it better to buy software off the shelf or go the DIY route? There are pros and cons to each approach, according to several Northeast Ohio technology experts. First, bring all key players involved in the decision-making to the table — including from finance and IT — and identify which avenue makes the most sense for your business goals, said Wise, who says he regularly fields these considerations from the owners of

small- and medium-sized businesses. The marketplace offers numerous industry-standard solutions — from accounting, finance and logistics — that can help meet an organization’s need. “I’ve always been careful to custombuild solutions that provide competitive advantages and go off the shelf with stuff that is commoditized and does not,” Wise said. In fact, Wise — whose experience leans heavily into the custom development realm because he works Wise closely with startups — usually recommends the pre-developed and consumer-ready off-theshelf route because it’s a lower-cost alternative to custom designing a Mehok product. Off-the-shelf products are made for thousands of users and have a range of uses. Plus, it’s easier to hire people who can manage the software products. “On the down side, you’re doing everything your customers are doing, but that’s OK if it’s a commodity product, like cus-

tomer relationship management,” Wise said. “Off-the-shelf can pay dividends because packages like Microsoft Office 365 communicate and integrate with other systems, which reduces the business’ workload.” That said, if a business can quantify that a customized product will give it a measurable competitive advantage, then the build-it-yourself is an ideal avenue to pursue. Just be prepared to double whatever the initial estimated project cost is. “Software estimation is hard because every piece of software is unique,” Wise said. And, companies that build their own software should also be prepared to run their own software teams. “These companies need to understand they are now running a software team and happen to sell a product,” Wise said. “For example, we work with a lot of insurance companies at the Guild, and we quip that the insurance company is a software company that happens to sell insurance.” Wise refers to one large regionally based insurer that employs more than 3,000 IT staff. “They invest a lot in their technology, and they have a competitive edge in the marketplace because of it,” he said. Wise also suggests pacing the payment structure and to seek a second opinion for businesses building their own software. “I favor the milestone approach of making payments after certain parts of the project have been met,” he said. “I often advise small businesses to spend the extra money and hire a second developer to audit their work. When you build a house, doesn’t the county come in to inspect everything?” Safeguard Properties straddles both worlds. The Valley View-based mortgage field services company made minor modifications to its off-the-shelf Microsoft accounting software. The technology differentiators in its business, however, are its apps that were uniquely developed to facilitate property management, work orders, inspections and payments with its clients (which include more than 100 mortgage banks) and some 15,000 contractors. “We’re essentially an e-business,” said George Mehok, chief information officer. Two data centers handle the transactions. “I have more than 100 software developers that do the custom development work for about a dozen apps that handle our workflow,” he said. “Our customized products have allowed us to take on more clients and volume because we automated our process. We’re able to keep delivering a high-quality level of service that keeps leading us to add new customers and clients.”

FEB. 7

FEB. 9

FEB. 18-19

MARCH 3

Women, Wine & Web Design: 6 p.m. to 9 p.m. 6701 Carnegie Ave., Cleveland. Sponsored by OEC and Tech Elevator, this beginner’s workshop shows users how to learn the basic tools of frontend development (HTML and CSS) and how to build a web page. Info: Techelevator.com

Cleveland Internship Summit: 8 a.m. to 1 p.m. at 5800 Rockside Woods Blvd., Independence. Business leaders and educators will convene at this event, presented by Greater Cleveland Partnership, to discuss how to increase and improve internship opportunities throughout Northeast Ohio. Info: GCPartnership.com

SparkAK: 8 a.m. Feb. 18 to 4 p.m. Feb. 19, 12 E. Exchange St., Floor 2, Akron. This weekend-long event brings together startup enthusiasts interested in learning how to launch their product into the market. Info: Launchleague.org.

Tech Awards nominations due: OHTec Tech Week’s Best of Tech Awards nominations are due. There is a new award category this year, “Best Tech Workspace.” Tech Week 2017 runs from April 24 to 28. Info: Cose.org/bestoftech

A PRODUCT OF

CRAIN CONTENT STUDIO C l eve l a n d

CRAIN’S CLEVELAND BUSINESS

|

J A N U A RY 3 0 - F E B R U A RY 5 , 2 017

|

PA G E 3

Midsize banks should stay active in M&A By JEREMY NOBILE jnobile@crain.com @JeremyNobile

Despite a dwindling number of banks in Ohio and across the country, conditions remain ripe for mergers and acquisitions in the finance sector to continue along a frenzied pace. The bigger question is not whether deal flow will stay strong, though, but rather: Who will the players be? And who will garner the best prices? The answer is complicated, particularly in Northeast Ohio’s highly fragmented market. But beyond the usual motivations of a buyer or seller, a major factor at this point in the cycle will be banks' emboldened currency following the sector’s recent stock surge. Hedge fund manager Fred Cummings, president of Elizabeth Park Capital Management in Pepper Pike, sees midsize banks — generally those with between $2 billion to $10 billion in assets — being particularly active buyers following a late-year stock rally that has pumped muscle into the currency they use in deals. That alone is lifting expectations for another busy year. Cummings said he’s “very bullish� on bank M&A in general, noting his portfolio saw five sales in 2016. “But we’re hoping for even more in 2017,� he said. “We think it’s going to be a big year.� Overall, bank M&A volume actually decreased in 2016 compared to 2015, but combined deal values crept upward. According to data from SNL Financial, there were 244 deals announced in 2016 with an aggregate deal value of $25.32 billion and a median price-to-tangible book value of 132%. Comparatively, there were 279

deals announced in 2015 valued at $24.24 billion with a median price-to-tangible book value of 140%. Cummings points out that the percentage of deals in the United States compared with year-end bank totals was at 4% in 2016 and 4.5% in 2015. Those are 18-year highs. “When we say activity remains at healthy levels, that’s what we’re looking at,� Cummings said. Northeast Ohio saw its fair share of deal activity across the bank spectrum. KeyCorp’s acquisition of First Niagara Financial Group and Huntington Bancshares’ acquisition of FirstMerit Corp., deals that both closed last year, rank second and fourth among the largest U.S. bank deals made since 2015, according to SNL. The market here also has seen a handful of community banks merge together and some Pennsylvania banks, like First Commonwealth Bank, enter the market through acquisitions in trailing quarters. Consolidation is chipping away at the number of banks in the state, which now stands at 198, according to the most recent data from the Federal Deposit Insurance Corp., compared with 212 in 2014 — a drop of more than 6%. So although there are fewer sellers, overall deal activity hasn’t lost any steam. And there are still plenty of players in this market, despite the consolidation. According to the FDIC, about 30% of all banks in Ohio fall into the Cleveland and Akron markets. So in terms of potential for local bank M&A, the well is certainly far from dry. Couple that with past trends, and the sheer potential for deal flow in this market and others remains quite strong.

'Santa came early' A recent report by investment bank Brown Gibbons Lang & Co. notes that general M&A across all sectors should pick up this year as a function of waning pressures from the last recession and expectations for financial deregulation and changes in tax policy. In banking, it’s those midsize companies that experts believe could be the most active in deals because of their stronger currencies and position in the spectrum. Midsize banks tend to have a good balance of scale while being small enough to escape some of the more cumbersome regulations that kick in around the $10 billion asset threshold. Bank stocks across the spectrum rallied to historic levels in the wake of the recent presidential election on the Trump administration’s favorable view of the banking industry, which, many hope, could translate to lighter corporate taxes and deregulation, among other things that could have significant impact on bank margins. Combined with the Federal Reserve Bank’s recent rate increase and market expectations for more hikes throughout 2017 — some banks, like Huntington, have factored in at least one small additional rate hike by midyear into their yearly projections — eager investors helped spike bank stocks 20% to 30% higher than their pre-election levels. And those numbers have generally stayed put. “Santa came early,� said Patricia Oliver, head of the financial services practice at Tucker Ellis LLP. “And maybe it’s the gift that keeps on giving when you look at some of these stocks up over 20%.� Oliver said she's seeing more banks looking to raise capital as a function of that as a way to support future transactions.

“Because people think this is a good time on the M&A front, we have banks very interested in getting capital raised to finance acquisitions,� Oliver said.

Currency strength That run-up of stock prices over the past few months is what’s providing the currency to make deals. “Or on the flip side, someone could sell at a price that’s been more attractive than prior years,� said Alex Schmitt, who heads the Northeast Ohio banking capital management practice for Ernst & Young. Schmitt added that shareholder activists are rather “prominent� on company boards right now, which is driving appetite for inorganic growth. Selling is obviously one way to realize that. Those hikes in bank stocks taper off with the largest national banks and smaller micro-cap ones, which is why experts see midsize banks being active in the deal world. Farmers National Banc Corp. stock, for instance, soared following the presidential election. It's still trading about 30% higher than its value on Nov. 8. Comparatively, stock for Middlefield Banc Corp., parent company of the $970 million-asset Middlefield Bank, is about 13% higher than its pre-election value. Stocks for JPMorgan Chase & Co. and PNC Financial Services are about 19% higher. KeyCorp’s is still 23% higher. With assets right around $2 billion, Farmers National Banc Corp. is a prime example of a midsize Northeast Ohio bank holding company well-positioned to pursue some kind of deal. Plus, they’ve got potential to offer a premium price coupled with the desire for additional growth — the com-

pany acquired a Cortland insurance agency in 2016 and two small Northeast Ohio community banks in 2015. Earlier this month, the bank was trading at 223% of tangible book value, their highest multiple ever, Cummings pointed out. “The valuations of some buyers are at five-year highs, and in some cases, all-time highs,� Cummings said. “That’s what’s going to drive consolidation activity.� And some lucrative paydays could persuade some targets to sell. “You’ve got a dynamic where a given buyer could put a pretty attractive premium on the table for a given seller,� said Charlie Crowley, managing director at investment bank Boenning & Scattergood Inc. “A community bank might say, we’ve been fighting through challenges since the recession, and now we’re at the point where we could probably get a good premium if we chose to sell, so maybe now is that time.� On the other hand, he said, community banks might feel like the deck was stacked against them in terms of the Dodd-Frank Act and regulations that have squeezed margins, putting an especially tight grip on banks with less size and assets to deal with new costs of doing business. “If the operation climate becomes a bit more favorable over the next few years, then maybe they’ll want to continue to build the business or raise capital to get into new markets or other things,� Crowley said. “It could be a switch from playing defense to offense.� Others still might sit tight for stocks to grow even further before considering a deal. Although they're unlikely to see a sudden spike like the one that followed the election, some might anticipate steady stock price growth through future quarters as the banking landscape becomes more favorable.

&GNN &WPECP 'ZGEWVKXG 8KEG 2TGUKFGPV )GCWIC 5CXKPIU $CPM

Ĺ‹;QW ECP EQWPV QP $GCEJYQQF !S SOMEONE WHO HAS DONE BUSINESS IN "EACHWOOD FOR MORE THAN YEARS ) KNOW THE #ITY WILL ALWAYS STRIVE TO BE RESPONSIVE AND RESOURCEFUL 7ITH @BEST IN CLASS CITY SERVICES "EACHWOOD S SUCCESS IS BUILT ON POSITIVE RELATIONSHIPS WITHIN THE BUSINESS COMMUNITY v

999 $'#%*911&1*+1 %1/

7HEN YOU RE IN "EACHWOOD YOU HAVE ARRIVED

/C[QT /GTNG 5 )QTFGP 'EQPQOKE &GXGNQROGPV &KTGEVQT ,KO &QWVV ,COGU &QWVV"$GCEJYQQF1JKQ EQO

PA G E 4

|

J A N U A RY 3 0 - F E B R U A RY 5 , 2 017 |

CRAIN’S CLEVELAND BUSINESS

Capitol Partners poised for big business in D.C.

FOR SALE 5170 WEST 130TH ST., BROOK PARK, OHIO EXTREMELY RARE HEAVY CRANE FACILITY

By JAY MILLER jmiller@crain.com @millerjh

• 55,470 SF with 2,500 SF of office space situated on 2.65 acres • 6 Cranes: (3) 20-ton, (1) 10-ton, (1) 7.5-ton and (1) 5-ton •Ceiling Clearance: 27’ clear/20’ hook heights • Heavy Power: 480 volt service with multiple mains and 4,000 amps • Docks/Drive-Ins: 3 drive-in doors and 1 dock • Terrific location near I-480 and West 130th St.

Visit

TerryCoyne.com Or call Terry at

216.453.3001

1350 Euclid Ave., Suite 300 Cleveland, Ohio 44115

YOUR NORTHEAST OHIO

LENDING TEAM

Contact Jonathan A. Mokri 440.526.8700 • jmokri@cbscuso.com www.cbscuso.com

Loans up to 10,000,000.00 + Purchase and Refinance Commercial Real Estate Business Lending in Partnership with Area Credit Unions SM

HERE WE GO AGAIN. The health insurance tides are changing once more. PROTECTED? CALL US. 216 350 5052

Cleveland lobbyist Matthew Cox has been to Washington, D.C., twice in January, including during the Trump inauguration festivities. Not because the Republican wanted to watch the transition of power from one president to the next. He was there to find opportunities that will continue the rapid growth of his lobbying and public relations firm, Capitol Partners, which took that name a year ago with the opening of a Cleveland office. Previously, he and partner Eric Weldele had only a Columbus office, a two-person firm operating as Cox Consulting Group. It’s now a six-person firm with the addition at the first of the year of two former lobbyists from the advocacy section of McDonald Hopkins law firm. Earlier last year, Rob Frost, chairman of the Cuyahoga County Republican Party, and Dora Pruce, assistant vice president and director of government and community relations at John Carroll University, joined the firm. “It was nice,” Cox said of his Inauguration Day in Washington. “It’s a singular American experience, regardless of what you think of the occupant of the White House. It’s what makes our country our country.” Of course, Cox didn’t go to the swearing in. “I watched it on TV with some colleagues,” he said. Cox was optimistic about the opportunities in the nation’s capital for his advocacy firm. He’s hopeful that there will be a thaw in the legislative freeze that kept policy decisions on hold while former President Barack Obama and congressional Republicans were at a stalemate. “Nothing happened (during the Obama years), and when that happened, people who pay for lobbying activities stopped paying for those activities because nothing was happening,” he said. “So what you’ve seen last month is a huge, dramatic increase in dollars being redirected to lobbying activities because now there’s a chance of a lot of things getting done. I think there’s a chance for us to take advantage of that.” That was only one of two observations Cox came back to Cleveland with. “The second thing is, it’s chaos,” he said. “Because no one knows where anything is going yet. So many of the second- and third-tier positions that actually do the work haven’t been confirmed or even identified yet.” Despite the bedlam, Cox said the trip was productive. As a result, he expects to head back to Washington two times in the next few months for lobbying and prospecting. Pursuing federal lobbying work will be easier for Cox this year because of the addition of two seasoned state lobbyists, Mike Caputo and Rebecca Kuhns, from McDonald Hopkins.

CLEVELAND BUSINESS

We Protect. You Grow. LEARN MORE J

www.armadarisk.us

700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113 Phone: 216-522-1383 www.crainscleveland.com Customer service and subscriptions: 877-824-9373

Caputo, a nonlawyer who was director of McDonald Hopkins’ state and local government practice, has joined the firm as a partner, joining Cox, Frost and Weldele, who leads the firm’s Columbus office, in that role. Cox himself is a former McDonald Hopkins lawyer, who in the early 2000s served in Columbus as senior deputy attorney general under Republican James Petro. Kuhns, who also is not a lawyer, was a legislative aide before joining McDonald Hopkins. He comes to Capitol Partners as vice president of government relations in the Columbus office. Caputo spent 13 years at McDonald Hopkins, where he had been director of its state and local government operation. He said he talked with the firm’s managing partners last year about the kind of expanded advocacy practice

“In order to do the job the right way, we have to have a fully built-out advocacy platform. That includes the ability to orchestrate town hall meetings in key legislative districts and the ability to secure grass-roots support for some of the things we’re working on. These things aren’t ideally suited for a law firm.” — Mike Caputo, a new partner at Capitol Partners

he thought his clients needed, and both sides agreed that a law firm wasn’t the right fit for his plans. “In order to do the job the right way, we have to have a fully built-out advocacy platform,” he said. “That includes the ability to orchestrate town hall meetings in key legislative districts and the ability to secure grassroots support for some of the things we’re working on. These things aren’t ideally suited for a law firm.” Caputo admitted, though, that not being a lawyer in a law firm had its drawbacks. “Obviously, the economics are different, and, for me, better being on my own like this,” he said. “But that’s not why I did it.” McDonald Hopkins, for several

reasons, including the death last August of Washington partner Steve LaTourette, decided to shed its advocacy practice. LaTourette, a former member of Congress, had run the law firm’s Washington-based McDonald Hopkins Government Strategies (MHGS) practice. “This past fall, the decision was made to wind down MHGS effective Jan. 1, 2017,” a statement emailed from the firm read. “We not only wish Mike and Rebecca the best, but we are continuing to work with them and their colleagues through a preferred-provider arrangement.” The clients Caputo and Kuhns bring to Capitol Partners include STERIS plc, the Cleveland Sight Center, Ohio City Inc. and University Circle Inc. Cox said Caputo and Kuhns have particular expertise in capital spending. Weldele specializes in utilities. Cox’s area of interest, professionally and personally, is education. He is registered with the state of Ohio as a lobbyist for John Carroll University, his alma matter, as well as Friends of Breakthrough Schools and School Choice Ohio Inc., a nonprofit that provides Ohio parents information about alternative educational opportunities for their children. “I’m very passionate about school choice,” he said. “Vouchers are a great opportunity to mix and match students to private schools.” Education is a focus for Cox in part because he has a son with special needs. He had hoped to attend the confirmation hearing of Betsy DeVos, a school choice advocate, to be Secretary of Education, but the scheduled hearing was postponed until after his first January visit to Washington. Cox also said he would like to see education funding move away from a reliance on the local property tax, an issue he said is “the biggest issue still facing this governor and likely the next governor.” Though a Republican, Cox is soft on the Affordable Care Act. It was critical to his being able to start his consulting practice. “I’m an Obamacare baby,” he said. In 2011, when he was creating his lobbying practice, he hit a roadblock. He learned that if he left McDonald Hopkins, where he was working as an attorney, once his extended health benefits ran out, he wouldn’t be able to get health insurance because of his son’s special needs. But then he learned that once the extended health benefits from the law firm ran out, he could get the coverage he needed under the then-new Affordable Care Act.

Corrections J The Largest Commercial Property Sales list published on Jan. 23 incorrectly stated that Forest City Realty Trust had sold Post Office Plaza to Rock Ventures. Forest City did not sell Post Office Plaza, which is at 1500 West 3rd Street in downtown Cleveland.

J A Jan. 23, Page 7 story about Cru Uncorked, a restaurant slated to open in April in Moreland Hills, incorrectly stated the size of the planned venue. The building will be about 9,500 square feet.

Volume 38, Number 5 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly at 700 West St. Clair Ave., Suite 310, Cleveland, OH 441131230. Copyright © 2017 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00.

Subscriptions: In Ohio: 1 year - $64, 2 year - $110. Outside Ohio: 1 year - $110, 2 year - $195. Single copy, $2.00. Allow 4 weeks for change of address. For subscription information and delivery concerns send correspondence to Audience Development Department, Crain’s Cleveland Business, 1155 Gratiot Avenue, Detroit, Michigan, 48207-9911, or email to customerservice@crainscleveland.com, or call 877-8249373 (in the U.S. and Canada) or (313) 446-0450 (all other locations), or fax 313-446-6777.

POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373. Reprint information: 212-210-0750

I’m like a doctor to your business. I give

legal advice health care on

.

Like any industry, health care has its headaches. Its pain points and signs of aging. Regulation, compliance, reimbursement, reform. Managing care while managing costs. The governing laws change day by day, state by state. Administration by administration. You need proactive diagnosis and treatment from more than a general practitioner. Our Health Care Practice Group handles transactional, regulatory and litigation matters. For providers and payors, private investors and third-party administrators. Our clients can’t afford to ignore warning signs. Or take risks with the health of their business. Can you? I’m ALAN SCHABES. I’m on your team.

MY BENESCH MY TEAM > Health Care Practice Group > Representing private equity and capital investors, health care providers and health care payors. > Legal Services Include: Mergers and Acquisitions, Financing, Regulatory Compliance, and Litigation. > 216.363.4589 | aschabes@beneschlaw.com

www.beneschlaw.com

PA G E 6

|

J A N U A RY 3 0 - F E B R U A RY 5 , 2 017 |

CRAIN’S CLEVELAND BUSINESS

Available - 5.25 Acre Development Site Strong Regional Shopping Area off I-71

Revamped Ridge Tool focuses on connections

13570 Falling Water Road, Strongsville, OH • 5.25 Acres of Development Land • Shopping Center District Zoning; Office an allowed use • Possible Re-Zoning for Assisted Living • Three access points: Fallingwater, The Plaza at SouthPark and SR 82

• The SR 82 access point is at the traffic signal to SouthPark Mall • Strong regional shopping area off I-71 • 15 minutes to Cleveland Hopkins International Airport • $91,656 Average HH income in 3 miles

Bill Carothers

G.F. Coyle III, SIOR

WilliamCarothers@HannaCRE.com

GeoffCoyle@HannaCRE.com

216.861.5086

216.861.5286

HannaCRE.com

Ridge Tool has a 25-acre campus at 400 Clark Street in Elyria. (Courtesy of RIDGID)

Elyria company celebrates its history with new branding By RACHEL ABBEY McCAFFERTY rmccafferty@crain.com @ramccafferty

Are you an individual with $10 million or more seeking advice? Advice and insight across generations 5PEBZ CBDLFE CZ UIF FYQBOTJWF HMPCBM SFTPVSDFT PG 6#4 BOE JUT ZFBS USBEJUJPO PG TFSWJOH TPNF PG UIF XPSMEà T XFBMUIJFTU GBNJMJFT PVS UFBN IBT OFWFS CFFO CFUUFS QPTJUJPOFE UP TFSWF PVS BGGMVFOU DMJFOUT BOE UIFJS GBNJMJFT 'SPN DPNQMFY NVMUJHFOFSBUJPOBM QMBOOJOH UP XFBMUI QSFTFSWBUJPO TUSBUFHJFT BOE USBOTGFS XF BSF ZPVS USVTUFE TPVSDF PG GJOBODJBM TUFXBSETIJQ BOE BEWJDF Cleveland Wealth Management Team William G. Murphy, CIMAŽ 4FOJPS 7JDF 1SFTJEFOUž 8FBMUI .BOBHFNFOU 1SJWBUF 8FBMUI "EWJTPS

Owen C. McBride, CFPŽ, CLU 4FOJPS 7JDF 1SFTJEFOUž 8FBMUI .BOBHFNFOU 1SJWBUF 8FBMUI "EWJTPS

Chad Arthur Hartup, CFPÂŽ, CRPCÂŽ, CLU 4FOJPS 8FBMUI 4USBUFHZ "TTPDJBUF

UBS Financial Services Inc. 4VQFSJPS "WF &BTU UI 'M $MFWFMBOE 0)

ubs.com/team/cwmt $FSUJĹ–FE 'JOBODJBM 1MBOOFS #PBSE PG 4UBOEBSET *OD PXOT UIF DFSUJĹ–DBUJPO NBSLT $'1ÂŽ and CERTIFIED FINANCIAL PLANNERĂ? JO UIF 6 4 $*."ÂŽ JT B SFHJTUFSFE DFSUJGJDBUJPO NBSL PG UIF *OWFTUNFOU .BOBHFNFOU $POTVMUBOUT "TTPDJBUJPOÂŽ JO UIF 6OJUFE 4UBUFT PG "NFSJDB BOE XPSMEXJEF $IBSUFSFE 3FUJSFNFOU 1MBOOJOH $PVOTFMPS4. BOE $31$ÂŽ BSF SFHJTUFSFE TFSWJDF NBSLT PG UIF $PMMFHF GPS 'JOBODJBM 1MBOOJOHÂŽ "T B GJSN QSPWJEJOH XFBMUI NBOBHFNFOU TFSWJDFT UP DMJFOUT XF PGGFS CPUI JOWFTUNFOU BEWJTPSZ BOE CSPLFSBHF TFSWJDFT 5IFTF TFSWJDFT BSF TFQBSBUF BOE EJTUJODU EJGGFS JO NBUFSJBM XBZT BOE BSF HPWFSOFE CZ EJGGFSFOU MBXT BOE TFQBSBUF DPOUSBDUT 'PS NPSF JOGPSNBUJPO PO UIF EJTUJODUJPOT CFUXFFO PVS CSPLFSBHF BOE JOWFTUNFOU BEWJTPSZ TFSWJDFT QMFBTF TQFBL XJUI ZPVS 'JOBODJBM "EWJTPS PS WJTJU PVS XFCTJUF BU ubs.com/workingwithus h6#4 "MM`SJHIUT SFTFSWFE 6#4 'JOBODJBM 4FSWJDFT *OD JT B TVCTJEJBSZ PG 6#4 "( .FNCFS '*/3" 4*1$ @"E@ Y @-% @.D#0 *4 &YQ

Ridge Tool Co. is putting a new face forward in many ways. In recent years, the nearly 100-year-old company has updated its factory and on-site training center in Elyria, making them brighter, cleaner and more modern. It also has revamped its branding, turning the page on the old school pin-up calendars it used to make and putting a focus on customers’ connection to its products. Ridge Tool, a subsidiary of Emerson since the mid-1960s, makes RIDGID brand products, like pipe wrenches, the first product the company ever made. Ridge Tool’s products primarily serve pipe-related industries, but it has expanded over the years to include products for industries like electrical. And while it still makes those wellknown pipe wrenches, Ridge Tool also makes drain cleaning, inspection and underground locating tools, pressing products and its own software. “We’re not just this old wrench manufacturer,� said global director of brand management Christopher Burton. From the outside, Ridge Tool’s 25acre campus at 400 Clark Street looks every inch the imposing automotive plant it used to be. But, especially after the upgrades, the inside is bright, clean and modern. In some ways, the Elyria campus best represents Ridge Tool as a company, said president Fred Pond. It’s a blend of strong tradition with stateof-the-art technology. “And that’s who we are,� he said. Elyria Mayor Holly Brinda said Ridge Tool has been an important “part of the fabric� of the city and one of its largest employers. It has tended to be a stable employer, too, and she’s

Ridge Tool’s new brand campaign focuses on the company’s history, instead of the products it produces.

glad they’ve been investing locally. Pond wouldn’t share specific numbers on how much had been invested as part of the so-called “Renew Elyria� initiative, an internal term for the facility upgrades, but he said millions of dollars had been invested at the Elyria campus in the past four to five years. In the plant, the initiative has meant new paint for the ceilings and floors, an aesthetic update that also offered an increase in safety. That’s because, for example, it was more difficult to see if there was oil or coolant on the floor with the previous, darker flooring, said plant manager Joe Hofferth. But on the lighter flooring, it’s easier to see and clean up. Hofferth said the Renew Elyria initiative began in 2014 and is about 80% complete. The plant also has seen significant investments in machining for new products, as well as reinvestments for the core pipe wrench business, Hofferth said. And it’s been updating its approach to lean manufacturing, using a more visual system in the plant that lets employees immediately see

what products are being used and what needs made, instead of just relying on forecasts or running reports. In 2016, the company focused on updating its “school house,� what it calls the training facility for distributors, new employees and customers that was once an elementary school. There were some cosmetic upgrades, like roof repairs, but it was mainly making the center more “on brand,� adding visuals like pictures of customers using the tools and patent drawings, Burton said. Ridge Tool also launched a new brand campaign in 2016, focusing on the emotional connection customers have to the tools instead of on the products themselves, Burton said. The company’s marketing often has focused on new products, as does the branding of many of its competitors, Burton said. The new branding focuses on the company’s history and on how people use its tools. The company also made a notable change to its calendar, which had been a pin-up style calendar since the 1930s. But in recent years, Burton said, the company had heard that customers were reluctant to hang it on their walls. This year, the company decided to feature art that serves as a tribute to those people working in the trades, using mantras provided by customers and art inspired by them. Today, Ridge Tool employs about 700 people in Elyria and about 1,500 across the globe, Burton said. The company doesn’t disclose annual sales. Burton said sales are tied to oil and gas, so Ridge Tool felt it when the rig count dropped, but the company is confident in the way things are going now. The company’s product diversification over the years was an effort to move it into different markets like residential construction, he said. This year, the company will launch products across all categories, from drain cleaning to pressing.

CRAIN’S CLEVELAND BUSINESS

|

J A N U A RY 3 0 - F E B R U A RY 5 , 2 017

|

PA G E 7

The Texas Rangers selected Ephesus Lighting for LED field lights that were installed at Globe Life Park prior to the 2016 season. (Contributed photo)

INDIANS CONTINUED FROM PAGE 1 The new lights will be 20% to 30% brighter, and Cooper said the Indians estimate that the annual energy savings for the field-lighting system will be in the 70% range. “It should be much brighter, it should provide a much different vibe, a different feel, in the ballpark,” Cooper said. “It should be good from a fan (experience) perspective as well.”

Bright future Eaton, which moved its global headquarters to Dublin in 2012 but calls Cleveland its North American home, purchased Ephesus Lighting in October 2015. At the time, the Syracuse company had posted $22 million in sales in the last 12 months and was best known for lighting Super Bowl XLIX between the New England Patriots and Seattle Seahawks in Glendale, Ariz., eight months earlier. Ephesus has grown quite a bit since. In June 2016, the company announced that it was doubling the space of its Syracuse headquarters and would be hiring 35 more employees in the next couple of years. Of the 11 MLB teams that have or are introducing LED lights in 2017, four are Ephesus clients, and the company is close to finalizing a deal with another big-league club that it said it couldn’t identify until the contract was done. Mike Lorenz, the president of Eaton’s Ephesus Lighting business, said the adoption of LED lighting has been more common at arenas, because the “payback is quick,” since the lights are on longer and used more often. But the perks are still considerable for outdoor venues. Cooper said the Indians used the old metal halide bulbs for about 1,000 hours a year. The outdated technology has been replaced by fixtures that have 20-year warranties. Gateway, the Tribe’s senior director of facility operations said, ensured that Progressive Field has a lighting system “that’s going to last for the next 20, 30 years — the life of the ballpark.” The lights significantly reduce glare and shadows on the field, and Lorenz said they look much better on TV. Unlike the old bulbs, which needed quite a bit of time to warm up, the LED lights can be at full power in 1.3 seconds, Lorenz said. The technology is so strong, Coo-

per said, that the Indians likely will have to dim the lights “because the 100% output will be just too bright.” The club won’t know for sure, though, until it tests the new system on its 19 light towers in late March.

Smart selection The Texas Rangers are moving into a new ballpark — a $1 billion project, complete with a retractable roof — for the 2020 season. Sean Decker, the club’s vice president of ballpark operations, admits that makes it impossible for the Rangers to get a full return on the LED investment at their current home, Globe Life Park, which opened in 1994, the same year as Progressive Field. But Decker said the Rangers are nonetheless thrilled with the LED system that was purchased from Ephesus prior to the 2016 season. Prior to Opening Day last year, the Rangers brought in high school and college teams to play under the lights — a luxury the Indians obviously don’t have in chilly Northeast Ohio. “We literally had high school coaches giving us feedback,” Decker said. Once the big-league club got its first look, the reactions were as positive as the Rangers hoped. “Walking away from it, that was one of the things I was most proud of,” Decker said. “We didn’t have a player complain — home or visiting players.” And while no news was good news in that regard, Decker said Texas got plenty of feedback about how the LED lights looked on TV. Fox Sports “was blown away” by the technology, he said. What set Ephesus apart, according to Decker, however, was what the Rangers could do for the fans at their games. “It was our belief that their level of control was greater than anything in the market at that time. We used it quite a bit,” Decker said. “Pitching changes between innings, home runs — we’d flicker the lights when we announced the starting lineups.” The chance to integrate the field lights into the monstrous scoreboard that debuted at Progressive Field in 2016 intrigues the Indians. The Tribe, Cooper said, is working with Ephesus to figure out which features it can work into the ballpark experience. “It’s a cool project,” Cooper said. “Obviously, it’s an upgrade to the 19 towers that we have here from the original (technology). It’s also energy efficient, it’s green, which is a tremendous benefit.”

Lorenz, Ephesus’ president, said the technology, because of savings in energy and maintenance costs, typically pays for itself in fewer than 10 years. And it’s designed to remain relevant throughout. “We’re trying to build our system so it’s future-proof, so it can maintain its intelligence and provide value over time,” Lorenz said.

MLB teams with LED The 11 Major League Baseball clubs that have installed LED field lights at their ballparks in the last two years: Installing prior to the 2017 season: Cleveland Indians, Atlanta Braves, Baltimore Orioles, Los Angeles Angels, Minnesota Twins, San Francisco Giants 2016: Houston Astros, New York Yankees, San Diego Padres, Texas Rangers 2015: Seattle Mariners Note: Eaton-owned Ephesus Lighting is the vendor for four of the clubs — the Indians, Angels, Rangers and Twins.

Upcoming Editorial Feature

meeting and event planner Cleveland is on the rise, quickly causing it to become a competitive market for venues and conference centers. Spotlight your organization through this unique marketing opportunity - in print, online and with Google Maps and Google Search. ISSUE DATE: MARCH 20 AD CLOSE: MARCH 9 BOOK YOUR AD TODAY, CONTACT: Nicole Mastrangelo • 216.771.5158 • nmastrangelo@crain.com

PA G E 8

|

J A N U A RY 3 0 - F E B R U A RY 5 , 2 017 |

CRAIN’S CLEVELAND BUSINESS

Opinion From the Editor

Maverick judge’s work must continue

Editorial

Take Ohio’s lead The Affordable Care Act has its faults. With some exceptions, Barack Obama’s defining legislative achievement didn’t do enough to control the rising cost of health care and for many individuals monthly premiums continue to rise at unsustainable rates. Still, it would be difficult to argue the success of the Medicaid expansion, particularly in Ohio. With Donald Trump now in the Oval Office, there is considerable talk about unraveling Obama’s health legacy in swift order. The president has pledged, though misguided, that everyone will remain covered — “beautifully covered,” as he described it to The Washington Post — and congressional Republicans appear adamant about repealing the individual and employer mandates. Unfortunately, the economics are much more complicated than that. Rather than scrapping the law entirely, the focus should be on how to improve the current system, particularly the Medicaid program. In fact, the feds should look no further than Ohio, where the Medicaid expansion made possible by the ACA has had a tremendous impact and even helped prop up the state’s struggling finances. Much of that can be attributed to Republican Gov. John Kasich, who has proven to be an unlikely champion for the Medicaid expansion. In fact, Ohio could prove to play an important role as the federal government under Republican control looks to remake the health care system. House Speaker Paul Ryan has tapped Ohio Congressman Pat Tiberi to “quarterback” House Republicans’ efforts to replace Obamacare. Plus, Cleveland Clinic CEO Dr. Toby Cosgrove, one of the most respected corporate executives in the country, seemingly has the ear of the president. And, of course, there’s Kasich, who sparred repeatedly with the president during the campaign but has quite the narrative to share as Congress and Trump tackle the health care question. Just recently, the Ohio Department of Medicaid surveyed more than 7,500 Medicaid recipients to measure the impact of the expansion. Some of the statistics are quite telling.

Uninsured rates for low-income Ohioans, for one, are at the lowest rate recorded, with a majority benefiting white, unmarried, childless men with high school degrees or less (who, if the demographic breakdowns were accurate, tended to be a type of voter who supported Trump). Also, 64.3% of enrollees reported an increase in access, and 52.1% said getting coverage made it easier to secure and maintain employment. Plus, 74.8% of those currently unemployed said having coverage made it easier to find work. Simply put, how can we afford — both morally and financially — to do something that could threaten those statistics or, more importantly, the people they represent? Kasich visited Capitol Hill last week to advocate for retaining the Medicaid expansion, which expanded coverage to 700,000 Ohioans. If the expansion must be rolled back as a way to cut costs, which we caution strongly against, the governor argues it should at least cover those at 100% of the federal poverty level, rather than 138% as outlined in the current law. Yes, health care costs are rising at an unsustainable rate. It’s been felt by those with commercial insurance, particularly employer-sponsored plans, where it can cost thousands out of pocket before coverage kicks in. However, scaling back Medicaid doesn’t solve the health care cost problem. It worsens it. Denying or scaling back coverage, after all, doesn’t cure medical problems, and those folks will still seek care. Also, shifting Medicaid toward a block grant program, which seems to be the path Republicans are pursuing, could threaten the amount of Medicaid dollars flowing into the state of Ohio. The Medicaid expansion hasn’t just allowed hospitals to get a few bucks for the care they were already providing. It steered low-income individuals away from emergency rooms and toward primary care. It’s helped people get treatment for addiction or mental health issues. It’s helped people find and secure work. How are those things not worth supporting?

Publisher and Editor: Elizabeth McIntyre (emcintyre@crain.com)

CLEVELAND BUSINESS

CLEVELAND BUSINESS

Managing Editor:

Scott Suttell (ssuttell@crain.com)

Sections Editor:

Timothy Magaw (tmagaw@crain.com)

Contact Crain’s:

216-522-1383

Sometimes, what is just is not what is easy. It takes courage and creativity. It takes compassion. And it takes, above all, vigilance. Judge Ray Pianka not only knew that, he embodied it. Faced with a foreclosure crisis that was devastating Cleveland’s housing stock, destroying neighborhoods and bankrupting residents, the Cleveland Housing Court jurist earned a national reputation as a judicial innovator. Banks and absentee property owners also were finding ways to shirk their responsibilities. And he found ways to hold them accountable. A landlord failed to appear in his court to address housing code violations? Pianka would hold a trial without them and slap them with fines. Many of those landowners during the subprime lending crisis were Elizabeth corporations or banks that held a vast McIntyre number of foreclosed properties. Pianka fined them if the properties fell into disrepair. When the Ohio Supreme Court ruled that these “trials in absentia” were not allowed under Ohio law, Pianka came up with another solution. After negligent landowners failed to show up in court twice, he found them in contempt and began fining them daily for housing code violations. Pianka’s passion for his hometown and his willingness to fight for its neighborhoods were on the minds of many last week after his unexpected death at age 65. Cleveland Councilman Tony Brancatelli, whose Slavic Village ward was widely considered to be ground zero of the national foreclosure crisis a decade ago, said Pianka’s death had left “a big hole in the heart of the city.” Perhaps no one knows that better than Brancatelli’s city council colleague Matt Zone, who grew up in the same West Side neighborhood as Pianka and described him as “like a big brother to me.” Zone reminisced about his mentor’s early civic career leading the Detroit-Shoreway Community Development Organization. Pianka’s goal was to help stabilize the area, and he was willing to do whatever it took to make that happen. “He’d scrubbed graffiti off of buildings. He cleaned out the basement of the Capitol Theatre,” recalled Zone. “There was nothing beneath him. He’d put on jeans to work beside you if that was needed.” Zone now serves the same neighborhood Pianka represented for a decade before being elected judge. In two-plus decades on the bench, he helped renters and tenants, property owners and neighbors, residents and businesses. Jim Rokakis was one of the founders of the housing court and, as Cuyahoga County treasurer, worked closely with Pianka. He said the judge’s work had an impact on the whole region, not just those neighborhoods in the heart of the housing crisis. “Vacant properties aren’t just the problem of people living in Cleveland,” said Rokakis, now the director of Thriving Communities and vice president of the Western Reserve Land Conservancy. “Having a stable housing stock with stable values and property taxes helps everybody. If the residential property tax base isn’t strong, it creates more of a burden for businesses.” Pianka knew that, of course. But he also knew the human toll, the value of strong neighborhoods, and the notion that fairness should apply to the well-heeled and the poor alike. Pianka, said Rokakis, was perfect for the job. “Someone like Ray was who we designed the court for. He had housing law, he knew about the issues at 10,000 feet and at the ground level,” Rokakis said. “He had so many amazing traits. He knew every little nuance.” The best way to honor the judge is to continue the work he did by assuring the court remains a strong advocate for fairness.

Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited. Send letters to Crain’s Cleveland Business, 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113, or by emailing letters@crain.com. Please include your complete name and city from which you are writing, and a telephone number for fact-checking purposes. Sound off: Send a Personal View for the opinion page to emcintyre@crain.com. Please include a telephone number for verification purposes.

CRAIN’S CLEVELAND BUSINESS

|

J A N U A RY 3 0 - F E B R U A RY 5 , 2 017

|

PA G E 9

Help us

Letters to the Editor

CAC strives to meet needs of artists and residents The Jan. 16, 2017 Crain’s Cleveland Business editorial “Two thumbs down” about Cuyahoga Arts and Culture’s proposed new direction for funding artists, contained several inaccurate statements. The editorial implies that there is a question as to whether Cuyahoga Arts and Culture will continue to support individual artists. This implication is false. At its Dec. 12, 2016, meeting, we, the members of CAC’s Board of Trustees, clearly and unanimously voiced support for continuing to use public funds to support Cuyahoga County artists. To this end, the 2017 budget approved at that meeting includes $400,000 to provide continued support for artists. This represents a consistent, annual investment in artists and demonstrates a commitment to developing a high-quality program. The editorial also states that CAC wants to change its support for artists in a way that “overly defines what art is and isn’t.” This is also not true. CAC has said many times during the last three months of discussion that it wants to expand the pool of applicants to give more Cuyahoga County residents an opportunity to be part of the program. Because CAC is a political subdivision of the state of Ohio, we use the broad definition of “arts or cultural heritage” outlined by the Ohio Revised Code in all of our programs. That definition “includes, but is not limited to, literature, theater, music, dance, ballet, painting, sculpture, photography, motion pictures, architecture, archaeology, history, natural history, or the natural sciences.” CAC’s project support grants and operating support grants are open to organizations working in these fields, and individuals from these areas of expertise should have a chance to receive public funding, too. As a public agency, we are also concerned about issues of racial equity, and, going forward, we want the program to connect with a more diverse group of artists and creative people. This is a change CAC has tried to make in the administration of the program in the past. In a future program for artists, we look forward to expanding access to make public dollars available for more artists and different types of art. We acknowledge that not everyone is supportive of the decision to shift the management of the individual artists program away from our original intermediary. By law, we cannot fund artists directly and will continue to contract with an intermediary organization to administer the program. However, the decision to end a contractual relationship with a vendor does not change our commitment to providing flexible funding to artists. We recognize the undeniable

impact that many of the past fellows’ work has had on our neighborhoods, and we celebrate their achievements. Because CAC makes grants with public dollars, we believe it is imperative that all of our grantmaking provides a demonstrable public impact. Our project support and general operating support grants have had this requirement since 2011; it is the individual artists funding program that has lagged behind, and so it is time for us to rework the program. The issues of equity, meeting our mission, and opening the doors to new artists are at the top of our minds as we continue to provide meaningful support for artists. In 2017, we will continue to actively seek public input to ensure that our new program for providing funding for artists meets the needs of both artists and residents in our county. We are committed to listening – and to making sure every resident of Cuyahoga County can benefit from the amazing arts and culture offerings that define our community. Joseph P. Gibbons, President, Cuyahoga Arts & Culture Board of Trustees Mark Avsec, Gwendolyn Garth, Steven Minter and Charna Sherman, Trustees

This plan to turn the building from offices to mixed-use with apartments, a hotel and updated offices is going to help restore East Ninth Street and Euclid Avenue to some of its former glory. There are great public spaces, including the banking center and vault, that should offer great opportunity. My only question relates to this: Do we need another hotel in downtown Cleveland? Housing, yes, but a hotel? I guess the experts know what they are doing. — Neil Dick

Re: Making a list Thanks to Crain's publisher/editor Elizabeth McIntyre for a great Jan. 22 column, "Listing toward buying local." Buying locally can be a challenge,

AND SUPPORT

CLEVELAND CLINIC CHILDREN’S

UOT ZNK cMNZ elkandelk.com/weakstuff

Your Complete News Coverage Tune in to 89.7 or download the WKSU app for in-depth local, national and world news.

Health insurers knew ACA risks In his Jan. 16 Personal View column, “As GOP prepares to dismantle ACA, insurers are likely to bolt,” J.B. Silvers stated, “But when the time came to pay up for risk reductions in the Obamacare [ACA] exchanges, Congress reneged and paid only 12% of what was owed to the insurers [via so-called “risk corridors”]. Silvers went on to complain that “insurers had to absorb legislative uncertainty of whether the rules would be rewritten.” Correction: The rules were not rewritten and Congress did not renege. According to the Obama administration Department of Justice, insurers were NOT entitled to guaranteed risk-corridor payments, with the Department of Justice saying, “Congress did not include in the ACA either an appropriation or an authorization of funding for risk corridors” (as per Modern Healthcare, Oct. 4, 2016). The health insurers willingly took on the risks included in the ACA, including that risk-corridor payments were hoped for, but not guaranteed. In this case, the health insurers lost billions by being really bad at what they needed to be really good at, i.e., assessing risk. Jim Schaefer, Shaker Heights

Web Talk Re: Conversion of former Huntington Building

Block Pediatric Cancer

because small companies may make it harder to purchase, due to challenges setting up a shopping cart online and shipping expense, for a small item. I suggest meeting the seller at their studio, store or even their home can enhance the buying experience. I enjoyed meeting dozens of new friends over the holiday. Most were reaching out to me as a result of a Facebook post. Buy local art Cleveland! — Dan Morgan

Re: Growth of Cleveland Clinic's holistic center I wish they would open a facility in Akron. I would be the first one in line. Working people can't afford to take a day off every time they have to go to the doctor. Functional medicine doctors need to be placed in local communities. But it is great to see the popularity of the Cleveland facility. — CS

WKSU, an equal opportunity, affirmative action employer, is committed to attaining excellence through the recruitment and retention of a diverse workforce. 16-UR-00310-118

PA G E 10

|

J A N U A RY 3 0 - F E B R U A RY 5 , 2 017 |

CRAIN’S CLEVELAND BUSINESS

The ACE Report AHOLA CRA N S EMPLOYMENT Cra n s C eve and Bus ness has partnered w th The Aho a Corp a payro and human cap ta management firm n Brecksv e and oca econom st Jack K e nhenz to prov de month y data — and c ar ty — about a key factor n bus ness dec s onmak ng the s ze of Northeast Oh o s workforce Seasona y ad usted emp oyment numbers Northeast Oh o AUGUST 1 171 211 SEPTEMBER 1 169 702 OCTOBER 1 172 614 NOVEMBER 1 172 864 DECEMBER 1 170 985

WINNING IS A SWEET EMOTION!

1 150 000

And your next big win could start with a chocolate surprise! Every Saturday in February, Rock Star Rewards members will receive a different flavor of Malley’s chocolate bars for FREE between 2PM and 10PM.

NE Ohio job-creation engine sputtered at the end of 2016

• Rock Star members receive 1 bar per week • Hall of Fame members receive 2 bars per week • Legend members receive 3 bars per week There will be 1,000 winning GOLDEN TICKETS placed inside random candy bars. GOLDEN TICKET prizes are worth up to $10,000 in jewelry, $5,000 in cash or $1,000 in Free Play. With over $50,000 in prizes each week, winning has never tasted so sweet!

VEGAS EXPERIENCE. OHIO ADDRESS.

HRRNP.COM • 330.908.7625

Must be 21 years of age or older. Non-transferable and non-negotiable. Hard Rock Rocksino Northfield Park Management reserves the right to void any entry, and/or alter, cancel or modify this promotion at any time with prior notice and Ohio Lottery Approval. Other restrictions may apply. See Players Club for details. For free, confidential help 24/7, call the Ohio Responsible Gaming Helpline at 1.800.589.9966. ©2016 Hard Rock International (USA), Inc. All rights reserved.

35th Anniversary

PROMOTE.

35th Anniversary

CLEVELAND BUSINESS VOL. 36, NO. 47

NOVEMBER 23 - NOVEMBER 29, 2015

35th Anniversary ALLYSON O’KEEFE, 37 Partner; Porter Wright

CLEVELAND BUSINESS

VOL. 36, NO. 47

NOVEMBER 23 - NOVEMBER 29, 2015 Allyson O’Keefe started her legal career at Porter Wright in 2004 after completing a summer internship there as a Case Western Reserve University law student. Since then, she has worked on many significant deals across Cleveland, including Flats East Bank, The Metropolitan at the 9, Uptown in University Circle and Steelyard Commons, and has been promoted to real estateALLYSON partner. O’KEEFE, 37 “Young professionals who live downtown are so excited about the city,” said O’Keefe, a Partner; Porter forWright 10 years before moving to Rocky River. “The ones Columbus native who lived downtown who aren’t from here are often more excited about it. When you move here from somewhere you don’t for granted.” else, VOL. 36, NO. take 47 it Allyson NOVEMBER 23 - NOVEMBER 29, 2015 O’Keefe started her legal career at Porter Wright in 2004 after completing a sumWhen O’Keefe is not working or spending time with her husband and two children, she can mer internship there as a Case Western Reserve University law student. Since then, she has be found volunteering on the boards of nonprofit organizations and watching college football. worked on many significant deals across Cleveland, including Flats East Bank, The Metropolitan at the 9, Uptown in University Circle and Steelyard Commons, and has been proWHAT INSPIRES YOU U ABOUT ABO AB OU UT T YOUR YOU YO UR R WO WORK? W OR RK K? K ? moted to real estateALLYSON partner. O’KEEFE, Just seeing what Cleveland has gone through in the time that I’ve 37 been here, there’s obvious“Young professionals who live downtown are so excited about the city,” said O’Keefe, a development. I started in 2004 when we were crazy ly a lot of excitement around real estatePartner; Porter Columbus native who lived downtown for Wright 10 years before moving to Rocky River. “The ones busy with development. That was sort of the boom from ’04 through ’08. I saw it go through who aren’t from here are often more excited about it. When you move here from somewhere the downturn, then I saw it rise again, even stronger than before locally. else, you don’t take it for granted.” Allyson O’Keefe started her legal career at Porter Wright in 2004 after completing a sumWhen O’Keefe is not working or spending time with her husband and two children, she can internship as a Case Western Reserve University law student. Since then, she has WORKED ON there ARE MIXED-USE URBAN PROJECTS. IS MANY OF OF TH THE T HE E PR PROJECTS P RO OJJE EC CT TS S YOU YOmer YO be found volunteering on the boards of nonprofit organizations and watching college football. on many significant deals across Cleveland, including Flats East Bank, The AN AR AREA A RE EA A OF OF EX EXPERTIS E XP PE ER RT TIIS Sworked ? THAT AN EXPERTISE? Metropolitan at the 9, Uptown in every University and Steelyard Commons, and has been proYes, definitely. Real estate is extremely interesting because deal Circle is differWHAT YOU WORK? W HAT IINSPIRES NSPIRES Y OU ABOUT ABOUT YOUR YOUR W ORK? moted to real estate ent. You can never get bored because there’s so partner. much variety there, from tax Just seeing what Cleveland has gone through in the time that I’ve been here, there’s obvious“Young who live downtown so excited about the city,” said O’Keefe, a credits to historic renovations, from professionals ground-up development to rehab, are from ly a lot of excitement around real estate development. I started in 2004 when we were crazy mixed-use to residential. Columbus native who lived downtown for 10 years before moving to Rocky River. “The ones busy with development. That was sort of the boom from ’04 through ’08. I saw it go through who aren’t from here are often more excited about it. When you move here from somewhere the downturn, then I saw it rise again, even stronger than before locally. you LEADERSHIP don’t take it for granted.” HOW WO WOULD W OU UL LD D YOU YOU YO U DESCRIBE DESCRI D DE ES SC CR RIIelse, YOUR STYLE? ?

CLEVELAND BUSINESS

Why not?

Le he Cus om Rep n Depa men he p you eve age h s g ea p ess

For more information contact Krista Bora, Reprint Account Executive kbora@crain.com • tel 212.210.0750

O’KeefeI expect is not working or spending timeI work, with her husband and two children, she can I definitely believe in leadingWhen by example. the people with whom work,RBAN M ANY O FT HE P ROJECTS YOU YOU W ORKED O NA RE M IXED-U USE U MANY OF THE PROJECTS WORKED ON ARE MIXED-USE URBAN PROJECTS PROJECTS. IS be found volunteering on the very boards of nonprofit and watching college football. my associates, to work hard, and they see me working hard. For me, it’sorganizations all T HAT A N AREA AREA O F EXPERTISE? EXPERTISE? THAT AN OF about working hard and doing good work. Yes, definitely. Real estate is extremely interesting because every deal is differWHAT INSPIRES YOU ABOUT YOUR WORK? ent. You can never get bored because there’s so much variety there, from tax seeingWAS whatITCleveland has gone the time that I’ve been here, there’s obviousRE SA RE SAY S AY Y Just WHAT WHAT OTHERS ARE SAYING: LIKE TO WORK WITHthrough O’KEEFEinON credits to historic renovations, from ground-up development to rehab, from ly a lot of THE FLATS EAST BA PROJECT? BANK B AN NK KP ? excitement around real estate development. I started in 2004 when we were crazy mixed-use to residential. busy with development. of the boom from ’04 through ’08. I saw it go through “Allyson is extremely bright and quick witted, butThat whatwas trulysort distinguishes her the downturn, then I saw itpeople rise again, even from most successful attorneys is her exceptional skills. Shestronger has an than before locally. H HOW OW W WOULD OULD YOU YOU D DESCRIBE YOUR LEADERSHIP STYLE? uncanny ability to encourage the ‘adversaries’ in her negotiations to work in I definitely believe in leading by example. I expect the people with whom I work, OF THE PROJECTS YOU WORKED concert with her to achieve win/win MANY solutions to difficult problems,” said ON ARE MIXED-USE UR my associates, to work hard, and they see me working very hard. For me, it’s all THAT AN AREA EXPERTISE?of the Scott Wolstein, CEO of Starwood Retail Partners andOF co-developer about working hard and doing good work. Yes, definitely. Real estate is extremely interesting because every deal is differFlats East Bank project. ent. You can never get bored because there’s so much variety there, from tax — Lee Chilcote WHAT OTHERS ARE SAYING: WHAT WAS IT LIKE TO WORK WITH O’KEEFE ON credits to historic renovations, from ground-up development to rehab, from THE FLATS EAST BANK PROJECT? mixed-use to residential. “Allyson is extremely bright and quick witted, but what truly distinguishes her successfulInc. attorneys is reserved. her exceptional people skills. She has an Reprinted with permission from the Crain's Cleveland Business. © 2015from Crainmost Communications All Rights HOW WOULD YOU DESCRIBE YOUR LEADERSHIP STYLE? ability to encourage the ‘adversaries’ in her negotiations to work in Further duplication without permission is prohibited. Visituncanny www.crainscleveland.com. #CC15040

I definitely believe in leading by example. I expect the people with whom I work, concert with her to achieve win/win solutions to difficult problems,” said my associates, to work hard, and they see me working very hard. For me, it’s all Scott Wolstein, CEO of Starwood Retail Partners and co-developer of the about working hard and doing good work. Flats East Bank project.

— Lee Chilcote WHAT OTHERS ARE SAYING: WHAT WAS IT LIKE TO WORK W THE FLATS EAST BANK PROJECT? “Allyson is extremely bright and quick witted, but what truly distinguishes her successfulInc. attorneys her exceptional people skills. She has an Reprinted with permission from the Crain's Cleveland Business. © 2015from Crainmost Communications All Rightsisreserved. ability to encourage the ‘adversaries’ in her negotiations to work in Further duplication without permission is prohibited. Visituncanny www.crainscleveland.com. #CC15040 concert with her to achieve win/win solutions to difficult problems,” said Scott Wolstein, CEO of Starwood Retail Partners and co-developer of the Flats East Bank project.

Reprinted with permission from the Crain's Cleveland Business. © 2015 Crain Communications Inc. All Rights reserved. Further duplication without permission is prohibited. Visit www.crainscleveland.com. #CC15040

JA® alumni are 143% more likely to start a business than the general public.

1 155 000

1 160 000

By SCOTT SUTTELL ssutte @c a n com @ssutte

The end o 2016 was no k nd o Nor heas Oh o s ob marke accordng o he a es Aho a Cra n s Emp oymen (ACE) Repor Seasona y ad us ed emp oymen n December or he seven-coun y area o C eve and and Akron measured by he repor was 1 170 985 a dec ne o 1 879 obs rom 1 172 864 n November And November was no grea shakes e her s o a ob number was us 286 h gher han he Oc ober figure ca cu a ed n he ACE Repor ack K e nhenz he C eve and He gh s econom s who crea ed he ACE Repor mode no ed n an ana ys s o he December da a ha he seasona y ad us ed obs figure or as mon h “ s be ow s hree-mon h and s x-mon h average and sugges s econom c ac v y and ob grow h has os some momen um rom he as er pace ha was ev den n pr or mon hs” Bu s mposs b e o draw firm conc us ons rom one subpar mon h n one s a s ca ca egory K e nhenz wro e n h s ana ys s “We are no sure ha he reg ona economy has made a undamen a change nor has he na ona economy s nce emp oymen s on y one gauge ha measures econom c ac vy ” He no ed or ns ance ha a gauge o econom c ac v y crea ed by he Federa Reserve Bank o Ph ade ph a rose n Oh o by 2 2% on a year-over-year bas s and recen cons ruc on and re a sa es da a “a so show ga ns” K e nhenz added ha “choppy

1 165 000

1 170 000

emp oymen ” around he end o a ca endar year “ s no unusua g ven sh ng seasona h r ng pa erns s yp ca or he ra ec ory o mon h y emp oymen o be pared s gn fican y back We expec a s m ar pa ern o ake p ace and recogn ze ha some dampen ng o he pace o emp oymen ga ns s pro ec ed ” K e nhenz wro e n h s ana ys s ha reg ona n a unemp oymen c a ms a ac or n he ACE Repor mode had been a “h s or ca y ow eve s” bu hen “k cked up n he m dd e o December” Such c a ms “are usua y var ab e around he ho days because o w n er wea her schoo c osures and sh ng seasona h r ng pa erns” accord ng o K e nhenz Meanwh e he wro e anuary emp oymen “ ooks o be a be er mon h based upon a reduc on n n a unemp oymen c a ms” A so he no ed ha “mos measures” o consumer and bus ness sen men “have shown no ab e mprovemen s nce he November e ec on ra s ng expec a on ha econom c ac v y w acce era e a he na ona and reg ona eve s” The na ona economy “ s expec ed o ga n ur her rac on n 2017 ” accord ng o K e nhenz “Reg ona grow h dur ng 2016 m gh have been s ronger had no been or weakness n me a s produc on and he energy ndus ry n add on he weak g oba economy and a s rong do ar hur expor re a ed firms ou pu and assoc a ed emp oymen ” Desp e hese deve opmen s he wro e “ he reg ona ou ook ( s) prom s ng as na ona ndexes rackng produc on and new orders n he mos recen SM ( ns u e or Supp y Managemen ) survey rose o eve s pos ed n a e-2014 ”

Do you work with someone who has a story we should tell?

JACLEVELAND.ORG

Know an up-and-comer n echno ogy ega rea es a e nonprofi finance or marke ng fie ds? Cra n s s ook ng or nd v dua s o profi e as par o s ongo ng effor s o nc ude more vo ces n s week y spec a sec ons you know someone wor h profi ng shoo an ema o Sec ons Ed or T mo hy Magaw a magaw@cra n com w h “Peop e o Wa ch” n he sub ec ne

For an examp e o wha we re ookng or ake a ook a he “F ve o Wa ch” ea ure n h s week s Hea h Care sec on (Page 12) To see wh ch sec ons we have p anned or he res o he year check ou our 2017 ed or a ca endar on Cra nsC eve and com A so we re a ways ook ng or neres ng bus nesses o profi e so you h nk you have a s ory e us know

CRAIN’S CLEVELAND BUSINESS

Focus

|

J A N U A RY 3 0 - F E B R U A RY 5 , 2 017

|

PA G E 11

Illustration by James Steinberg c/o theispot

INDUSTRY OUTLOOK: HEALTH CARE

Nursing in NEO is in critical condition Regional health care staffing remains a challenge as baby boomers sunset into retirement By LYDIA COUTRÉ

Nursing shortage epidemic

lcoutre@crain.com @LydiaCoutre

According to the Center for Health Affairs, the shortage of nurses in 17 counties* of Northeast Ohio is projected to reach 3,500 by 2020. Numbers do not include advanced practice registered nurses.

Although health systems in Northeast Ohio are looking for skilled workers in nearly every position, the top priority for all of them is finding a nurse. “Every RN is the golden goose,” said Tony Montville, the Cleveland branch manager for Medical Staffing Network, a national health care staffing company. “The nirvana of recruiting success is being able to get a good, solid RN.” Northeast Ohio faces a projected shortage of 3,500 nurses by 2020 — a fate that hospital officials throughout the region are working to address. While nurses are the No. 1 need, nurse practitioners, medical assistants and other health care extenders are all top of mind — as well as entry-level positions across the board. Health care is facing the same challenge as many industries: The baby boomers are sunsetting into retirement, setting many employers up for a frantic search of experienced workers. But for health care, the hit is two fold: As their providers retire, the aging population of Northeast Ohio will continue to demand more care. The problem becomes exponential, said Pat Cirillo, vice president of initiatives and analytics for the Center for Health Affairs,

3,500

3,500 3,000

**Originally published as 750 in September 2016. CHA increased it based on additional data from the end of 2016.

2,500 2,000 1,500 1,000

900**

500

2015

2016

2017

2018

2019

2020

* Ashtabula, Ashland, Cuyahoga, Erie, Geauga, Huron, Lake, Lorain, Mahoning, Medina, Portage, Sandusky, Stark, Summit, Trumbull, Tuscarawas, Wayne Source: Center for Health Affairs

an advocacy group for Northeast Ohio hospitals. The average 75 or 80 year old uses five to six times more health care than an average 55 year old, she said. “As we talk about shortages in workforce, you have to get beyond just, ‘Oh, they’re not out there’ to ‘How do you go find them?’ and ‘How do you partner with the right organizations?’ and in some cases, ‘How do you build your own?’” said Maria Miller, system director for talent acquisition for Summa Health. A registered nurse is by far the most common job posting on OhioMeansJobs.com, a state-sponsored job posting portal, with roughly 4,200 annual job openings, according to a November 2016 report from the Ohio Department of Job and Family Services. Nationwide, registered nurses are projected to add the second highest number of jobs between 2014 and 2024, according to the U.S. Bureau of Labor Statistics. The annual mean wage for registered nurses in Ohio is $62,800, according to 2015 data from the U.S. Bureau of Labor Statistics. “There’s just not enough RNs, so we have to pull together as a region and tackle that,” said Kim Shelnick, vice president of talent acquisition for University Hospitals. “And there’s other areas where there’s shortages too — it’s just not in RNs. But the need is so large for RNs, that’s where we put a lot of our effort.” SEE NURSING, PAGE 16

WHO TO WATCH - Page 12 | ADVISER - Page 17 | Q&A - Page 18

PA G E 12

|

J A N U A RY 3 0 - F E B R U A RY 5 , 2 017 |

CRAIN’S CLEVELAND BUSINESS

INDUSTRY OUTLOOK: HEALTH CARE

Five to watch in health care It’s no secret health care anchors Northeast Ohio’s economy, and some of the region’s brightest minds make that possible. In this feature, we’re highlighting just a few of those up-and-comers and innovators who are helping shape the region’s health care landscape. Know someone in health care or any other industry who has a story worth telling? Let Sections Editor Timothy Magaw know at tmagaw@crain.com.

Dr. Michael Canales

Dr. Alex Y. Huang

Justin Lathia

Sonja Rajki

Dr. Jennifer Savitski

Foot and ankle surgeon St. Vincent Charity Medical Center

Pediatric oncologist UH Rainbow Babies and Children’s

Researcher Cleveland Clinic

Senior associate general counsel The MetroHealth System

Medical director, SANE program Cleveland Clinic Akron General

Details: It would be easy for Michael Canales to characterize winning a national championship with Ohio State University’s gymnastics team as the pinnacle of his career, but it was simply part of his journey to becoming a top-notch foot and ankle surgeon. A gymnast himself, his interest in the study of podiatry was piqued by his own injuries. In fact, gymnastics and surgery aren’t all that dissimilar, Canales said. “Gymnastics is known as a sport, but there’s also an artistic component to it that I’ve always been drawn to, always seeking perfection. Surgery is the same way with that attention to detail,” he said. Canales describes health care as “the great equalizer,” noting he serves everyone from the poor to CEOs. “It offers you a glimpse into the human experience sports can’t provide.”

Details: Having been close with people who died of cancer at a young age, Alex Huang knew he’d likely gravitate toward medicine. At first, he had considered a career as a researcher, but a mentor told him he “shouldn’t be hiding in a lab somewhere.” Today, in addition to his research, Huang, who moved to the U.S. at age 14 from Taiwan, cares for patients at Rainbow’s Angie Fowler Adolescent & Young Adult Cancer Institute. “There’s a sense of injustice when dealing with pediatric cancer. The reality is there is no answer why it happens,” Huang said. “There’s just a sense you want to do something for them.” Last year, Huang published a study in Science Magazine that opens the door for therapies that target a key protein in pediatric brain tumors without severe side effects.

Details: Justin Lathia is one of the youngest independent investigators — of which there are nearly 200 — at the Cleveland Clinic’s Lerner Research Institute. And it is in the lab where Lathia found his calling. “I love the ability to discover new things,” he said. “I love the inquisitive nature. I often tell people in the lab that we’re in a unique position because we may be the first people in the history of humanity to learn or discover something.” Lathia, who said he is captivated by the power of stem cells, is now involved in a clinical trial that explores how to alter the immune system in deadly brain tumors. “We have the capacity to provide these patients a longer survival and higher quality of life, and that is what drives us,” he said.

Details: Sonja Rajki isn’t treating patients at the bedside, but her role in the legal department at MetroHealth is critically important to the health system’s mission. For Rajki, a Cleveland Heights native, the work marries her interest in public health and law. “This is my way of affecting people’s health by promoting the projects we’re doing here and those of our community partners without being a doctor or nurse,” Rajki said. Today, she is responsible for supervising and mentoring the team of paralegals and handles the system’s real estate matters — something that is crucial to MetroHealth as it looks to revitalize the area surrounding its main campus on West 25th Street in Cleveland. “Here, I feel like I am contributing to the mission every day,” she said.

Details: Jennifer Savitski, among her many roles, was critical to the launch of the Sexual Assault Nurse Examiner, or SANE, program at Cleveland Clinic Akron General, which its organizers say filled a void in the Akron area. It’s designed to provide specialized services to patients who have experienced sexual assault, domestic violence or elder abuse. “I thought I was going to be a researcher in a lab developing the cure for cervical cancer,” said the Youngstown native. “This journey had twists and turns, but I feel I’m exactly where I should be.” While many of the patients who have gone through the program have had their cases successfully prosecuted, the ultimate goal, Savitski said, is to care for patients and connect them with the proper community resources.

Overdose takes more lives than traffic accidents, suicide, and HIV combined.

Corporate Training and Performance Solutions

OVERDOSE IS IMMINENT UNLESS YOU STOP “Luna Living’s treatment program for addiction combines evidence based standards of care with the added novel approach of NAD infusion therapy, which effectively neutralizes withdrawal symptoms to such a dramatic extent that most clients can be successfully managed as outpatients from Day 1 of their enrollment in the program.” Dariush Saghafi, MD Chief Neurologist - Parma Neurology Director - Headache Clinic - VA Medical Center

Corporate College® provides professional training and development customized for your organization. A Comforting Ambience Non-judgmental Acceptance A Sustainable Lifestyle

QUALITY AND BUSINESS PROCESS MANAGEMENT TRAINING SOLUTIONS • Business Process Improvement • ISO Standards and Quality Management

• Lean and Lean Six Sigma • Professional Services and Consulting

• Safety and Environmental Compliance (OSHA/EPA)

/XQD/LYLQJ Alcohol and Drug Recovery Center

corporatecollege.com 216-987-0234 17-0035

440-703-0940 www.lunaliving.org

WE LIGHT THE WAY To health and wellness for individuals, families and communities.

HEALTH CARE MINISTRIES

OUTREACH MINISTRIES

Mercy Medical Center

Building Healthy Communities

St. Vincent Charity Medical Center

Catholic Community Connection*

Light of Hearts Villa

Early Childhood Resource Center

Regina Health Center

Healthy Learners

Independent Physician Solutions

Joseph’s Home South Carolina Center for Fathers and Families

FOUNDATION MINISTRIES

*Joint venture with partners

Sisters of Charity Foundation of Canton Sisters of Charity Foundation of Cleveland Sisters of Charity Foundation of South Carolina

A Ministry of the Sisters of Charity of St. Augustine sistersofcharityhealth.org

PA G E 14

|

J A N U A RY 3 0 - F E B R U A RY 5 , 2 017 |

CRAIN’S CLEVELAND BUSINESS

OUTLOOK: HEALTH CARE

& / 3 3 % . ) 3 5 %' ("%!,4(#!2% ,%!$%23 ). 4.( #). !$6!

)&"-5)$"3& &9&$65*7& .#" 130(3". */'03."5*0/ 4&44*0/4

.JDIBFM "OEFSTPO .% .#" '""1 /QDRHCDMS !DMHN "GHKCQDMĂ&#x;R 'NROHS@K 2DMHNQ 5HBD /QDRHCDMS "GHKCQDMĂ&#x;R 2DQUHBDR 4MHUDQRHSX NE "@KHENQMH@ 2@M %Q@MBHRBN

3&(*45&3 /08 CJU MZ LFOU&.#"

AT HOME. IN THE OFFICE. AT THE GYM. ON THE GO.

Facebook.com/CrainsCleveland Twitter.com/CrainsCleveland Instagram.com/CrainsCleveland

STAY CONNECTED.

What’s Your Competitive Advantage? In business today, often the only advantage over your competition is the talented people who work for you. At Nesco Resource, we put over 60 years of experience into our work with companies to understand their needs and find the right talent to meet their goals. From tech startups to industrial giants, we’re matching talent with opportunity to grow business. And with some of the highest satisfaction ratings in the industry, Nesco Resource is working for both the companies and talent we serve.

Let Nesco Work For You www.nescoresource.com/works

A Nesco, Inc. Company

Nesco Resource is a wholly owned subsidiary of Nesco Inc., a privately held diversified holding company focused on sectors including manufacturing, human resource services, and real estate.

Ratings agencies ding Lake Health By LYDIA COUTRÉ lcoutre@crain.com @LydiaCoutre

Moody’s Investor Service and Fitch Ratings reaffirmed their ratings for Lake Health, but revised the system’s outlook to negative following the $30 million loss it recorded for 2015 and 2016. Moody’s affirmed its A3 rating for Lake Health and Fitch reaffirmed its A- rating. Lake Health officials attribute the $30 million loss to problems from an IT system conversion, which both ratings agencies cited in their negative outlook rating. “The revision of their outlook didn’t come as a surprise to us given the challenges we dealt with last year from our accounts receivable software conversion,� said Jonathan Archey, spokesman for Lake Health. Moody’s based its rating on the system’s leveraged balance sheet, broader competitive market, “long track record of consistent margins� and the expected rebound in fiscal

year 2017, according to a release. The negative outlook is a reflection of the challenges to improving operations following the $30 million write off. Fitch believes Lake Health is “positioned for future stable profitability,� with its leading market position, physician network and increasing utilization trend and expense management, according to a news release. Fitch cited the “significant� decline in profitability and the revenue cycle remediation as the key drivers of its negative outlook. According to the release, Fitch expects the IT conversion’s non-recurring expenses and issues to be resolved by 2017. Archey said Lake Health sees the reaffirmed ratings as a recognition of the system’s “solid track record and a strong market position in our service area.� “We’re confident that we’ve moved past the issue that we had with our transition to the new software and the procedures that we have implemented to address some of those concerns,� he said. “We anticipate a great year in 2017, and the rating agencies agree with us.�

KPMG: Value-based payments take hold By DAVID BARKHOLZ dbarkholz@modernhealthcare.com @BarkholzR

Half of health care systems are getting some or most of their reimbursement as part of value-based payments that put providers at risk for the cost and quality of care, KPMG reports in a new survey. Based on the response of 86 participants, 36% said they receive some reimbursement from value-based contracts, while 14% said they get most of their reimbursement that way, the survey found. Another 26% said they are planning to enter value-based payment arrangements in the next one to three years with only 7% of the organizations saying they would not. The remaining 17% of health care organizations said they don’t require value-based payments as they remain rooted in fee-for-service, said KPMG partner Joe Kuehn. “Various parts of the country are transitioning at a slower pace,� Kuehn said. He added, “The vast majority of health plans and providers, however, are moving this way, particularly after the CMS had set some aggressive targets in January 2015, followed by some of the national health plans, to shift their reimbursement in this direction.� The KPMG results are mildly more upbeat than the Modern Healthcare Hospital Systems Survey results published in June 2016 that found just 13 hospital systems out of 80 respondents said they derived 10% or more of their net patient revenue in 2015 from riskbased contracts. Two-thirds of the respondents estimated that risk-based contracts

generated 1% to none of their net patient revenue. Hospitals are either not eager to bear downside risk because they are afraid to, or they cannot find health plans willing to share the data needed to negotiate contracts perceived as fair to both parties, health care experts said. KPMG also found that population-health programs are gaining traction among health systems and insurers. The survey, which was conducted as part of a December webcast, found that 44% of participants had a population-health platform in place that is being “utilized efficiently and effectively.� Another 24% are in the process of implementing a population-health program within the next three years. And only 10% said they have no plans to implement a platform to support the program, and another 21% of respondents said their organization doesn’t require such a platform. Population-health management programs are the foundation of a shift to value-based care from feefor-service, said Todd Ellis, a KPMG principal who specializes in advising health care providers. The programs are achieved by using data and software to help make sure the patients, including the chronically ill, are getting preventive care, taking their medications, keeping appointments and being matched with other agencies to improve their lifestyles. The information technology, data and clinical workflows for achieving population-health management provide hospitals and clinicians with the visibility to take on risk in reimbursement, Ellis said. “It’s crucial to doing value-based care successfully,� he said.

CRAIN’S CLEVELAND BUSINESS

|

J A N U A RY 3 0 - F E B R U A RY 5 , 2 017

|

PA G E 15

INDUSTRY OUTLOOK: HEALTH CARE

Health centers fear cuts amid ACA repeal By DOUGLAS J. GUTH clbfreelancer@crain.com

It wasn’t long before President Donald Trump took office that he and Congressional Republicans began plotting how to repeal Barack Obama’s hallmark health care initiative. Replacing the Affordable Care Act would have an untold impact on the American public, while the region’s federally qualified health centers face similar questions about the future of their critical services. Community health center leaders interviewed by Crain’s said repealing the act without a clear replacement plan would jeopardize coverage of patients who rely on neighborhood facilities as their primary care source. Also, because the ACA boosted the number of Americans with insurance, a swift repeal could cut off critical revenue streams that have allowed these centers to expand services in the communities. “The word I’d use about the situation is uncertainty,” said Jean Polster, president and CEO of Neighborhood Family Practice, a community health provider for 12 communities across Cleveland’s West Side. NFP, with five full-time and two part-time locations, gives residents access to primary medical care along with dental and behavioral services. In 2016, the provider saw 18,500 unique patients, an uptick of 1,000 from the year before. Like its other

federally funded brethren, NFP tailors its offerings based on the needs of the surrounding region. “We know who lives in our neighborhoods and understand what they need,” Polster said. She added, “Having all of those services under one roof provides a strong foundation for keeping people healthy.” The ACA, known informally as Obamacare, expanded access to both insurance and sites of care, with a ripple effect of reducing exorbitant health care costs for federal and state governments, Polster said. More than 900,000 additional Ohioans currently have health coverage due to ACA provisions, according to a Jan. 11 study from nonprofit research group Policy Matters Ohio. The expansions were made possible, for example, by broadening eligibility of the Medicaid program and offering subsidies to reduce the cost of purchasing commercial insurance. NFP’s poorest patients would be those most hurt by a repeal, Polster noted, as ACA’s Medicaid expansion covered people earning up to 138% of the federal poverty level, or a yearly income of about $16,400 for an individual and $27,800 for a single parent with two children. Individuals already struggling to pay for basic expenses such as food and rent would land back on uninsured rolls should they lose Medicaid as well. “We had 23% uninsured before ACA, now that number is at 10%,”

Polster said. “(A repeal) may roll coverage back to pre-ACA levels.”

Going without With Congressional Republicans moving ahead on legislation aimed at dismantling the controversial health reform law, officials at Care Alliance Health Center foresee a “significant impact” in how they would treat their patients, many of them homeless or living in public housing. Care Alliance, which treats about 13,500 patients annually, employs 80 clinicians on a budget of $10 million. Already relying on government grants, local foundations and individual donations, the nonprofit would seek further funding from the foundation level should Congress continue on its path, said center president and CEO Francis AframGyening. The nonprofit’s primary and preventative care services would remain under a repeal, but specialty offerings including pediatrics, dental and women’s health would likely undergo cuts. “Maintaining that level of service would be a stretch,” Afram-Gyening said. “If there’s no mechanism to pay for these services, people are going to go without them.” Out-of-house providers like the Cleveland Clinic are potential partners for specialty services, although that possibility presents its own set of challenges, Afram-Gyening said.

“Those big health systems are struggling themselves because of payment reforms,” he said. “To overload them with additional patients would be difficult.” Non-native English speakers formerly on ACA’s rolls may be left behind two-fold, noted Michael Byun, CEO of Asia Services in Action Inc. (ASIA), a nonprofit providing medical services to the area’s Asian-American population. Not only will these patients be kicked from Medicaid and the Healthcare.gov marketplace following a repeal, a lag on language access previously provided by ACA may keep them out of whatever health care model comes next. “All that infrastructure set up for them may be completely dismantled by getting rid of ACA,” Byun said. “That’s something we’re very concerned about.”

Preparing for change Without a plan similar to Obamacare, working-age adults age 20-65, who don’t normally qualify for Medicaid due to income restrictions, are most at risk of losing their coverage entirely, said Polster of Neighborhood Family Practice. NFP’s patients are taking a waitand-see attitude, but that hasn’t stopped queries regarding the inevitable changes on the horizon. “There’s talk of ‘repeal and replace’ in the press, but we’re hearing about

‘repeal and wait’ from our national advocacy organization,” Polster said. “People are nervous.” Leadership at the Ohio Association of Community Health Centers (OACHC), a Columbus trade group overseeing 49 facilities throughout the state, have no worries about patients’ voices being heard. Community health centers are designated as 501(c)(3) nonprofits, meaning there’s a 51% patient majority on each individual center’s board of directors, said Julie DiRossi-King, OACHC’s chief operations officer. Meanwhile, DiRossi-King and her fellow association officials are pushing policymakers for equal or improved health care coverage postACA. “We’ve been talking to everyone at the state and federal level, including Gov. Kasich, who’s been a staunch ally in making sure Ohio’s most vulnerable populations have access to coverage,” DiRossi-King said. “We’re talking about the need to be thoughtful and not repeal (the ACA) without an adequate and sustainable replacement.” Any potential change portends a cloudy future for health care, but area care facility leaders promise to continue to provide services regardless of a patient’s ability to pay. “We’re assuring people that we’ll be open to help them get on Medicaid until the plan changes,” Polster said. “We’re here and we’ll keep doing the good work we’ve been doing.”

“Without Everstream, we would not have access to the level of personal support that a retail business like ours requires.” Dave Bauer, Bernie Moreno Companies Corporate Manager of Information Technology Customer since 2014

Faster Fiber. Better Business. Small business to large business. Networking to high-speed internet. Everstream is your Business Fiber Network.

everstream.net

PA G E 16

|

J A N U A RY 3 0 - F E B R U A RY 5 , 2 017 |

CRAIN’S CLEVELAND BUSINESS

INDUSTRY OUTLOOK: HEALTH CARE

NURSING

Nursing in Northeast Ohio

CONTINUED FROM PAGE 11

RNs in the region*

Education

Shifting inward

According to the Center for Health Affairs, the number of registered nurses in Northeast Ohio continues to grow, but not fast enough to satisfy the need.

For half of nurses ages 35 and younger, the initial degree earned was a baccalaureate degree in nursing.

In addition to nurses and other health care professionals heading into retirement, several hundred registered nurses in Northeast Ohio have shifted to roles as care navigators or care managers to help guide and assist patients, especially during the Medicaid expansion. “Those are folks who were working in a traditional health care setting, (and) now suddenly, they’re pulled into the community to work with a specific set of patients, chronically ill folks,” Cirillo said. The ongoing growth of a nurse’s role is dynamic enough that “we’re going to constantly have a need for new nurses in the future,” said Chris Reardon, Cleveland Clinic’s executive director of talent acquisition. For example, MetroHealth has nurses in various non-clinical roles in departments where their direct clinical experience can help, including the quality, informatics, purchasing and research departments. While these other roles can help attract more people to nursing, it also pulls more nurses from bedside care. Nurse staffing is “always a big risk for us,” said Cheryl VanHorn, MetroHealth’s director of talent acquisition. Compounding the need for nurses, she said, is the system’s recent growth and efforts to expand patient access. Miller said that Summa’s need for nurses — and any way the system addresses that need — must go handin-hand with the search for more medical assistants and other clinical roles that help physicians.

65,000 60,675

62,013

60,000 55,000 50,000 45,000

RNs APRNs

The most common initial nursing degree by age is ... Ages 36-55

Associate degree

Ages 56-65

Evenly split between associate degree and diploma RN

Ages 66 and up

Diploma

The most common highest nursing degree by age is ... Ages 36-55

Baccalaureate degree

Ages 56-65

Evenly split between associate degree and baccalaureate

Ages 66 and up

Diploma

said. Organizations often make additional training opportunities clear, accessible and possible, she said. This could be key in addressing current shortages, as well as any that could be coming down the road, which officials are keeping a close eye on. Many agree that data analytics and health information positions will be in high demand going forward and getting ahead of that will be important. The infrastructure for electronic medical records is built. Now, Cirillo said, everybody needs to figure out how to use it to their advantage – how to gain intelligence from it and sort out the information that can improve care and help patients.

Special circumstances

The highest nursing degree obtained by NEO nurses is ...

Many of the shortages and challenges in Northeast Ohio reflect the same issues facing the entire coun35,000 try: aging populations, increasing retirements, fewer people entering the Diploma RN 12.3% 30,000 36.3% Baccalaureate degree workforce and a shift toward population health and keeping communi25,000 Advanced ties well that takes a whole new skill practice set. However, the reputation and registered Associate degree 26.6% 20,000 nurses growth of Northeast Ohio’s medical (APRNs) are institutions presents some unique growing by 15,000 Age challenges and opportunities. more than 10% per For one, the region is a good sell year in NEO 10,000 Median age of RNs 25% of all NEO nurses were 35 or younger in 2015. for someone who wants to enter 4,988 and APRNs in NEO, health care — and Cleveland’s rising 4,033 67% of APRNs and 70% of RNs were 36 to 65. 5,000 down from a median national reputation boosts that draw. 6% of APRNs and 7.7% of RNs were 66 or older. age of 49 in 2013. But as a major health care region, 0 Northeast Ohio needs more high2013 2015 2013 2015 * The 17 counties that were used for this data on Northeast Ohio nursing are Ashtabula, skilled workers than other parts of Ashland, Cuyahoga, Erie, Geauga, Huron, Lake, Lorain, Mahoning, Medina, Portage, Sandusky, the country, Cirillo said, noting that Over one-third of the state’s nurses Stark, Summit, Trumbull, Tuscarawas, Wayne only a few other areas can claim a Source: Center for Health Affairs practiced in Northeast Ohio in 2015. similar level of international attractiveness for health care services. “I think for us, it really is about Drumming up interest RNs APRNs “A shortage in health care workers connecting the individuals out in the The shift toward population community with the opportunities not only impacts our ability to take health, keeping patients well and that we have at Summa,” she said. care of our own citizens; it also im34.9% 36.9% preventing, rather than treating, ill- “And doing that in multiple ways that pacts our economy, because those are outside dollars ness means a need across the board really position us to coming in,” she said. for different skills and more employ- attract candidates.” “A shortage in In an effort to adSumma, and othees, Miller said. dress the region’s ers, are doing this health care strong need for phythrough various sicians, especially in partnerships with workers not only rural and undeeducational and impacts our served urban areas, other organizations Northeast Ohio to create and sup- ability to take Medical University port a pipeline to partnered with health care careers care of our own Cleveland State Uni— from getting chilcitizens; it also versity to create the dren interested to Partnership for Urensuring clinical opimpacts our Do you know a medical student from the Cleveland area attending school ban Health, which portunities for stuelsewhere? We are looking for medical students who plan to spend the recruits and trains dents to making sure economy.” summer in Cleveland and would like to work in a state-of-the art research medical students there’s awareness — Pat Cirillo, Center with an expressed around the non-clinlaboratory at Case Western Reserve University performing research in: interest in serving ical careers in health for Health Affairs Northeast Ohio. care organizations. • Digestive and Liver Diseases The community needs to supportPortraying the non-clinical career • Metabolism and Nutrition paths within health care is a big chal- ing young adults pursue careers in lenge the Clinic is working on, Rear- health professions, said Dr. John M. • Nephrology Boltri, professor and chair of don said • Diabetes “I don’t know that we’ve necessar- NEOMED’s Department of Family • Endocrinology ily done that as well as we could have and Community Medicine. “Because these communities lack done recently,” he said. “I think the • Novel Imaging Techniques challenge is helping people under- enough health care professionals, stand how these components of a they therefore lack the role models corporate entity like marketing and for the students,” he said. “And if stuAbout the Program: finance and accounting, how those dents aren’t exposed to a possibility, play a part in us being so good at the it’s sometimes hard for them to imag• Supported by the NIH/NIDDK T35: The Case Medical Student ine a possibility.” clinical services that we provide.” Summer Research Program (MSSRP) The number of health care emAnd once people are working in • 8 weeks between May and August 2017 health care in any capacity, organiza- ployers in the region makes for a tions look for ways to retain them and highly competitive market for talent, • Provides an appropriate stipend according to NIH guidelines help them advance or even shift to but it also means a lot of ideas and other careers they’re interested in opportunities for collaboration. The collaboration and passion around within that system. For instance, Summa is partnering workforce development makes the with Stark State to help current Sum- region stand out, Shelnick said. Contact Alicia DePlatchett “There’s a really good foundation, ma employees interested in pursuing 216-368-1674 a clinical career get that education. a good bedrock and a good story here Alicia.DePlatchett@case.edu Other hospitals have similar pro- to draw people to the area,” Montville grams to create a career ladder for said. “But you either have to grow them organically through school or those in entry-level positions. The health care industry as a whole you have to draw them to the area. is excellent at career ladders, Cirillo One or the other, or both.” 40,000

Master’s degree 10.4%

47

DO YOU KNOW SOMEONE ATTENDING A U.S. MEDICAL SCHOOL OUTSIDE OF CLEVELAND?

APPLY TODAY!

CRAIN’S CLEVELAND BUSINESS

|

J A N U A RY 3 0 - F E B R U A RY 5 , 2 017

|

PA G E 17

INDUSTRY OUTLOOK: HEALTH CARE Adviser: Eric Krieg

Health care pricing — there is a better way While there is much debate and uncertainty about the future of how health care and health insurance will be structured going forward, what we do know is that the United States spends $3 trillion on health care annually, which makes up 17% of the U.S. gross domestic product (GDP). Additionally, health care cost inflation is trending at 5.8%, which is 45% more than projected GDP growth. Shockingly, this is almost 50% more than the next highest spending country and, unfortunately, overall health outcome measures are not positively correlated to the amount the U.S. spends on health care. The current U.S. health care system is flawed in a world where increased cost doesn’t necessarily mean increased quality. Costs are spiraling out of control. The current fee-for-service model has inherent challenges around motivation, competition and misaligned incentives. Additionally, for the most part, there remains a “black box” around how services are priced and paid for. Medical providers don’t know the amounts billed or reimbursed for a service provided to a patient. Even with a push to consumer pricing transparency tools, patients are still woefully uninformed. What the providers do know is that more volume yields more revenue. Industry solution: There is a slow-motion change in the making — volume to value. This transformation to a shared savings and cost-containment approach uses population health modeling inclusive of attributed population and risk-scoring algorithms built on price transparency, bundled payment approaches and management by accountable care organizations. Translation: There is much confusion, uncertainty and apprehension surrounding the complexity of this approach. In order for these new models to truly transform health care, it will take years of implementation and coordination in an industry that already is complex and resistant to change. Finally, when it’s all said and done, still no one understands how much anything costs. Let’s focus on the root of the problem: the disjointed economics of medical care. The problem stems from the traditional system of insurance companies and the large influence of Medicare establishing cost of care. The current value stream is rooted in insurance companies negotiating and beholding customers to pre-determined rates via proprietary networks. This use of a payer-based, closed system stifles open market price competition. The current system is structured where the provider sets an astronomical fee for the service, and subsequently, the fee is heavily discounted due to the partnership with each provider network. This model bastardizes the fundamental economic models of supply and demand by creating an artificial pricing structure. While we aspire for wide-scale change, innovation is slow to catch on. That’s because organizations that have the resources to revolutionize health care on a mass scale, e.g. Walmart or Amazon, are apprehensive due to the embedded infrastructure. We’ve seen some new entrants become more commonplace, such as independent labs and imaging centers. The traditional medical care delivery centers should critically look to find ways to deliver care more cost effectively to balance expense with

Eric Krieg is president of Risk International Benefits Advisors, which helps companies optimize their employee benefits plans.

changing revenue streams. The future state should include mandatory price disclosures for patients to see upon entering the facility. Imagine a

menu of service offerings and associated prices. This streamlined pricing would lead to the elimination of networks and insurance price setting as providers will set market pricing. This approach promotes capitalism and consumer choice, allowing providers to compete on the basics of price and quality. This will increase consumer knowledge and openness to new forms of medical delivery that do not compromise medical care. Do we need a massive brick and mortar building for everything? Ask the mall owners how that’s working for them right now. And like other services we pay for, we

need information on quality of the goods received. A future state, based on true economic principles, will lead to quality measurement, monitoring and communication. Through media, e.g. Consumer Reports and social media platforms, consumers will have the wherewithal to be informed and educated. Providers will benefit from corresponding rewards and increased business or, alternatively, be affected by penalties resulting in decreased business. The key to making health care more affordable does not lie with political recommendations around policy. Without really looking under the

hood at the cost mechanisms of U.S. health care, the fundamental costs don’t change from pre-Affordable Care Act times, Obamacare, or proposed changes under Trumpcare. As we push toward industry changes, the solution lies in evolving the economic model to promote free market pricing and innovation. Additionally, alternative care delivery platforms, such as telemedicine and on-site employer clinics, are changing the way the traditional model works. We need to explore ways to unravel the system that lets the entrenched industry players dictate pricing from behind the curtain.

With change comes opportunity.

Kathryn Hickner

Jennifer Lawry Adams

Anne Strassfeld

It takes a proactive, strategic approach to identify and capitalize on opportunities while minimizing risk in a changing regulatory environment. Ulmer’s team of health care attorneys partners closely with clinics, health systems, hospitals, physician groups, and more, providing practical guidance anchored in deep industry knowledge and decades of experience. <STLY PZ WYV\K [V L_WHUK [OL YLZV\YJLZ H]HPSHISL [V [OL ÄYT»Z OLHS[O JHYL JSPLU[Z I` HKKPUN ]L[LYHU H[[VYUL` (UUL :[YHZZMLSK ^OV YL[\YUZ [V [OL ÄYT after more than a decade serving in senior in-house counsel and executive leadership roles for large health systems. Anne joins a team of experienced health care attorneys representing clients across a range of complex issues, including corporate compliance and governance, managed care, strategic business transactions, and much more.

CLEVELAND

COLUMBUS

CINCINNATI

CHICAGO

BOCA RATON

ULMER.COM

PA G E 18

|

J A N U A RY 3 0 - F E B R U A RY 5 , 2 017 |

CRAIN’S CLEVELAND BUSINESS

INDUSTRY OUTLOOK: HEALTH CARE

Q&A: John Corlett

President and executive director, The Center for Community Solutions As the former director of Ohio’s Medicaid program and the top government relations official at The MetroHealth System, John Corlett is all too familiar with the intricacies of health care policy. Still, even he isn’t sure what to expect now that Donald Trump is the president and has pledged to work with Congress to swiftly repeal the Affordable Care Act, which was President Barack Obama’s defining legislative effort. So, Crain’s sat down with Corlett, who now leads the nonprofit Center for Community Solutions, to talk about what challenges the new president faces and what the unraveling of Obamacare could mean for Northeast Ohio. — Timothy Magaw Do you really think the ACA will be pulled back as quickly as some people think? I would not be surprised to see it stretch out a bit longer. I think all the earlier votes by Congress were symbolic in a lot of ways, and now it could be real. As it gets real, I think it gets more difficult. I read an article from Robert Pear in The New York Times that made a great point with its opening line that mentioned how Donald Trump was able to do something President Obama and the Democrats never could — make the ACA more popular. It seems people are finally understanding, to some extent, what’s in the law. I’ve talked to people recently — and

If the feds would undo the Medicaid expansion and take away the funding, that would have an immediate impact on the state budget. That’s 700,000 people. The state would have to decide whether it would want to finance the whole amount, which seems unlikely to me. The state was also able to take things they had paid for previously and use Medicaid funds for them under the expansion. Prior to the ACA, most people in state prisons were not Medicaid eligible. When they were hospitalized, the state had to pay for that out of general revenue funds. Now they’re all Medicaid eligible. The ACA was also the biggest influx of money into the mental health system in modern times, and the state would have to step in and finance that treatment.

these aren’t Medicaid recipients — who have private insurance but weren’t able to be covered before. The thing about it is each of these people has a story. They couldn’t before because of some personal circumstance or situation. That might be one person, but when you put them all together that’s a pretty compelling story. Just look at the governor of Kentucky Matt Bevin who ran on repealing the Medicaid expansion, then he got in and backed off. Now they’re looking at putting more constraints or controls around it. Now that the Ohio lawmakers are in the midst of budget negotiations, at what point could the ACA talk on the federal level impact those talks?

If Medicaid expansion gets unwound, what would that mean for Cuyahoga County, which has an economy heavily reliant on health care? Cuyahoga County got more Medicaid revenue than any other county in the state. That’s a big part of the economy. It wouldn’t have an impact on just the hospitals, but all the other health care providers, too. For the city of Cleveland, what would that mean for the city’s EMS system when they can’t bill Medicaid? I think it would take a bit to figure out where it all touches in terms of the system, but I think it’s fair to say it would reduce employment in the health care system. They’ve got such thin margins right now. What are some of the main pillars you could see coming out

in terms of a replacement? They’ve discussed reducing some of the required benefits in the plans as a way to bring down costs, but a lot of those things don’t cost that much. The big stuff is in hospitals and pharmaceuticals. President Trump has been banging the pharmacy industry a lot, which has been interesting. There’s potential there to capture savings if you gave the government the ability to negotiate prices, but that’s not something Republicans in Congress have ever embraced. That’s more Bernie Sanders than Mitch McConnell. What are some of the big things to focus on at the state level? The biggest thing for us is for people to understand how successful the Medicaid expansion has been for Ohio. The governor and the administration have done an excellent job of managing that program. They’ve been under budget since the beginning. The only reason the state is in the black right now is because Medicaid spending is under budget. Otherwise, they’d be in the red. It seems the feds, and even state officials, are interested in putting more responsibilities, financial or otherwise, on Medicaid beneficiaries, too. I think if we’re going to do that the responsibility has to be two ways. The providers and the payers have to have some stake in this, too. What are they doing to engage patients? How accessible are their services? I’d love the program to focus more on reducing the rate of smoking among Medicaid beneficiaries. They smoke at twice the rate nationally as the commercially insured do. The amount of money we would save would be significant because smoking drives so many other health problems. Limiting eligibility doesn’t seem to be a path you’re interested in. I tend to think that carrots work

We work with you to provide the right technology for your business. That type of service has earned us high marks from our customers. Choose from several voice solutions that scale as your business grows. It’s all backed by our responsive, 24/7 business-class customer support.

Ranked “Highest in Customer Satisfaction with Very Small Business Wireline Service”

Cox Business VoiceManager SM Essential

25

$

/mo*

with a 2 or 3-year agreement

CALL (877) 903 -7884 OR VISIT COXBUSINESS.COM TO SWITCH TODAY *Offer ends 4/30/2017. Minimum service term, equipment, installation, fees, taxes, and other restrictions may apply. See coxbusiness.com. For J.D. Power award information visit jdpower.com. © 2017 Cox Communications, Inc. All rights reserved.

better than sticks. If we do a stick, we may knock them off the program but they still show up for care, and we have to pay for it. It’s not like they go away. They just show up at the emergency room at some point and we have to provide care in the most expensive, least coordinated way. Old school Medicaid cost control was focused on creating obstacles or barriers to make people fall off the program. When I was Medicaid director, we still made the aged, blind and disabled come in every few months, but those aren’t usually conditions that reverse themselves. We eliminated it, but I had to make the case it wouldn’t cost us any more money. But to the state’s credit, they’ve looked at things that cost the most money and focused on improving quality, which usually results in lowering costs. That’s the more sophisticated way of dealing with this. Is there anything else the governor can be doing in terms of the Medicaid piece? He’s been really strong about it. The key person is Rob Portman and where he’s going to be on this. I think they have a pretty good relationship, and he’s been very complimentary of the governor in terms of what he’s done. Sen. Portman has done a lot around the opiate crisis and, in the middle of this, you don’t want to take away the money that pays for the treatment. It doesn’t make any sense. The governor is also very close to Congressman Pat Tiberi, who Paul Ryan has tabbed as the lead guy for the House Republicans on this. And when you hear the governor talk about it, it’s genuine. I don’t think it’s political B.S. It’s how he genuinely feels about it. I take him at his word for it. He hasn’t shied away from it either. If you had President Trump’s attention for 15 seconds, what would be your tweet to him? Don’t repeal without replacement. If you break it, you own it.

CRAIN’S CLEVELAND BUSINESS

|

J A N U A RY 3 0 - F E B R U A RY 5 , 2 017

|

PA G E 19

Weatherhead Executive MBA Develop transformational leadership skills for immediate growth in your career and life. Now offering a healthcare track in affiliation with the Cleveland Clinic.

The space you need to learn.

The power you need to lead. Learn more at weatherhead.case.edu/emba.

ENGINEERING & CONSULTING

ACCOUNTING

Nick Walters

Rob Medlock

Vice President of Safety Engineering Services

Senior Vice President

Safety Controls Technology, Inc. (SCT)

Dennis M. Dlugosz, CPA

Henry F. Gingerich, CPA, MT

Equity Director Equity Director Corrigan Krause CPAs Dlugosz, formerly a director in Corrigan Krause’s assurance services department, leads the construction and real estate services niche focus groups. A graduate of Youngstown State University, he has an expertise in servicing clients with closely-held businesses, both with consulting and tax needs. Dlugosz has been an invaluable generator of innovation for Corrigan Krause’s internal systems and processes.

Gingerich served most recently as a director in the tax department at Corrigan Krause and has more than 20 years of experience specializing in tax compliance for closely-held businesses and individuals, tax research, and succession planning. A graduate of The Ohio State University, he has experience working with manufacturing companies, auto dealerships, and clients in the retail and real estate industries.

HEALTH CARE

LAW

Richard Spech, MD

George J. Asimou

Chief Medical Officer

Associate

Centers for Dialysis Care

Walter & Haverfield LLP

Richard Spech, MD, has been named the Chief Medical Officer for the Centers for Dialysis Care, CDC. He has practiced medicine for 25+ yrs in NE Ohio and has been the Medical Director for CDC Shaker Hts for the past 20 yrs. He graduated summa cum laude from OSU College of Medicine. He did his nephrology fellowship at Mass General Hospital. As CMO he will provide clinical leadership to CDC which is an independent non-profit healthcare organization with 16 outpatient dialysis facilities in NE OH.

Walter & Haverfield LLP is pleased to announce that George J. Asimou has joined the firm as an associate in its Labor & Employment Group. He focuses his practice on human capital planning and workplace law, advising and representing private and public sector employers on a broad range of issues arising under federal and state labor and employment laws, including collective bargaining, equal employment opportunity, leave, and workplace investigations. For more information, visit www.walterhav.com

LAW Caitlin E. Hill

Ellen R. Kirtner

Associate

Associate

KJK

Walter & Haverfield LLP

As part of KJK’s litigation practice team, Caitlin puts her skills in research, writing and legal analysis to serve clients in oil and gas, construction, healthcare, and real estate cases. Prior to joining KJK, Caitlin served as a law clerk for the Honorable Melody J. Stewart at the Ohio Court of Appeals Eighth Appellate District. While there she researched and drafted opinions on various matters including complex commercial litigation cases related to construction and contract disputes.

Walter & Haverfield LLP is pleased to announce that Ellen R. Kirtner has joined the firm as an associate in its Real Estate Group. Ellen focuses her practice on a range of commercial real estate matters, including the acquisition and disposition of commercial properties, retail leasing, and real estate finance. She earned her law degree, summa cum laude, from Case Western Reserve University School of Law. For more information, visit www.walterhav.com

ENGINEERING & CONSULTING

Safety Controls Technology (SCT) proudly announces the hiring of Nick Walters as Vice President of Safety Engineering Services. Walters will be responsible for operations from SCT’s Chicago office. Walters served OSHA for 25 years, most recently as Midwest Regional Administrator which is the largest OSHA region. He is respected throughout the country as a leading expert in OSHA regulatory matters. Walters will expand SCT’s services across the country with the opening of its Chicago field office.

LAW

Safety Controls Technology, Inc. (SCT) Safety Controls Technology (SCT) is pleased to announce that Rob Medlock has been named Senior Vice President. Medlock, a former Cleveland OSHA Area Director joined SCT in 2011 after 30 years with the Occupational Safety & Health Administration (OSHA). In his new role, Medlock will be responsible for SCT’s Occupational Safety & Health Operations in Cleveland, Florida and Chicago offices, and provide strategic leadership on Safety and Health Consulting and Engineering services throughout the U.S.

LAW

Amy Ryder Wentz

Jackie Staple

Shareholder

Associate

Littler Mendelson P.C.

Benesch

Amy Ryder Wentz, an attorney in the Cleveland office of Littler, the world’s largest employment and labor law practice representing management, has been elevated from associate to shareholder. Wentz focuses her practice across the employment law spectrum, advising and representing clients on matters related to discrimination and harassment, leaves of absence and disability accommodation, workplace privacy and data security, and wrongful termination.

Jackie Staple has joined Benesch as an associate in the Labor & Employment Practice Group. She has handled discrimination charges before the Equal Employment Opportunity Commission (EEOC) and state administrative agencies. She has experience conducting investigations, and has handled numerous discrimination lawsuits based on race, gender, age, disability, and military status. Jackie has briefed appeals in state and federal court, including the Ohio Supreme Court.

Gennifer Gibbs

Adam Primm

Associate

Associate

Benesch

Benesch

Gennifer Gibbs has joined Benesch as an associate in the Health Care & Life Sciences Practice Group. She provides general counsel services for health systems and advises clients with regards to regulatory compliance, HIPAA/HITECH compliance and breach reporting. She also has general corporate experience in the health care sector.

Crain’s People on the Move promotional feature showcases Northeast Ohio job changes, promotions and board appointments. Guaranteed placement in print, online and in a weekly e-newsletter can be purchased at www.crainscleveland.com/peopleonthemove.

For more information or questions regarding advertising in this section, please call Lynn Calcaterra at 216-771-5276 or email: lcalcaterra@crain.com

Adam Primm has joined Benesch as an associate in the Labor & Employment Practice Group. He represents employers in state and federal civil litigation involving discrimination, harassment, benefits, wage and hour law, and wrongful termination. Adam also represents employers before the National Labor Relations Board regarding unfair labor practice charges and representation matters and before the Equal Employment Opportunity Commission and the Ohio Civil Rights Commission.

Igor Ozeruga Associate Benesch Igor Ozeruga has joined Benesch as an associate in the Intellectual Property/3iP Practice Group. He has experience preparing and prosecuting patent applications in areas of electrical engineering and applied physics technologies, including preparation of and prosecution of patent applications in areas including analog and digital circuitry, software, databases, wireless and satellite communications, network topology, sensors, semiconductor device fabrication, RADAR/LADAR, to name a few.

PA G E 2 0

|

J A N U A RY 3 0 - F E B R U A RY 5 , 2 017 |

CRAIN’S CLEVELAND BUSINESS

AKRON

Falls gears up for Front Street makeover By JUDY STRINGER clbfreelancer@crain.com

When Ali Hovan and her husband, Jon, set their sights on opening a craft brewery in Cuyahoga Falls last summer, they, too, heard the buzz around proposals to restore automobile traffic to the city’s Front Street pedestrian mall. Now that HiHo Brewing Co. is up and running at 1707 Front Street, just a few blocks south of the beleaguered pedestrian mall, and the plans to reopen the entire road to through traffic are more of a drumbeat than a buzz, Hovan is allowing herself to get excited about the prospect — both for her new business and for Cuyahoga Falls itself. “I think it will get people off of (state) Route 8 and into Cuyahoga Falls’ downtown district, where they will see the restaurants, shops and other new small businesses,” she said. That’s precisely the $10 million wager Mayor Don Walters will ask Cuyahoga Falls City Council to make this spring, most likely in early April, when he comes to them for approval of a design-build contract to tear down the 40-year-old pedestrian mall, replace utilities underneath, put a two-way road in and make major upgrades to existing store fronts. “The retail environment requires two things, and that is visibility and accessibility. And a pedestrian mall, unfortunately, offers neither,” Walters said. After years of market research and meetings with retailers, business owners and the public, the Front Street makeover began in earnest this summer when Cuyahoga Falls City Council, whose members are in favor of the project, voted unanimously to allocate the first $645,000.

An artist’s rendering shows downtown Cuyahoga Falls with Front Street open to vehicle traffic. (Courtesy of Cuyahoga Falls)

That investment, Walters said, covered 40% of the project’s engineering, including underground utility work. Plans are to pick up from there, as early as May, with the design-build delivery approach in which a contractor and an engineering firm partner to complete the design work as the construction takes place. “The reason that it is quicker and cheaper is that normally you have to complete all engineering plans, which would take probably a year, before anyone even moves dirt,” Walters said. A request for bids went out in December, according to city planning director Fred Guerra, and businesses have until March 1 to submit their designs and project costs. Estimates based on the amount of work needed peg the total cost around $10 million to $11 million, Guerra said, although

“I think it will get people off of (state) Route 8 and into Cuyahoga Falls’ downtown district, where they will see the restaurants, shops and other new small businesses.” — Ali Hovan, owner of HiHo Brewing Co. in Cuyahoga Falls, about opening up Front Street to traffic

a final project budget will not be set until the city selects the winning bid and council gives its final blessing. Walters said once approved, construction will start on the north block of the pedestrian mall with underground utilities. “Once that is completed, they would move to the south block. By

that point, the (summer) festivals and Friday night events would be done … so that is when the road would start,” he said. The new Front Street, planned for reopening by the end of 2017 or early 2018, would incorporate street parking, Waters said, so customers can park right in front of restaurants and

shops during weekdays with “a lot of open public space to where you could have a sidewalk sale or street performers or for the festivals we have throughout the year already.” In the meantime, Walters and his team boarded a bus on Jan. 20 to visit three Midwestern towns that have faced challenges similar to that of Cuyahoga Falls. The first stop, Oak Park, Ill., had a former pedestrian mall that was converted back to a more traditional street. Valparaiso, Ind., is of interest because the city has done a “nice job” of preserving historical architecture, Walters said. He was particularly excited, however, about a visit to South Bend, Ind., which like Cuyahoga Falls has a river that runs through the downtown district. Even more similarly, the St. Joseph River — much like the Cuyahoga River that bends in the Falls and heads north to Lake Erie — curves in South Bend and begins flowing north to Lake Michigan. South Bend’s redevelopment efforts have focused on using the river as an attraction, which is something that Cuyahoga Falls would like to do as well. Walters planned to “pick up different aspects of what is working” in each community and bring back ideas, photos and videos to share with council and the community. Those artifacts will be icing on the cake for Cuyahoga Falls’ plans, which, he said, are already getting a gentle boost from the burgeoning development south of the pedestrian mall where HiHo Brewery and a number of new restaurants and businesses have opened. “There is a lot of interest from the retail community. We have 8,500 cars a day that drive through our town on the Route 8 expressway with nine exits to get off,” Walters said. “We are the perfect location.”

Wastebits bringing tech to the trash industry By DAN SHINGLER dshinger@crain.com @DanShingler

Dan Collins has built a national waste-management business right in the middle of downtown Akron — without a bit of mess, smell or even truck traffic. He and his team of software engineers help to move and document industrial waste that requires special handling at landfills across the U.S. Collins, who spent more than 20 years managing landfills and waste services, started Akron-based Wastebits in 2013. He saw a need on the part of industrial waste generators, their service providers and landfills around the country to connect with each other and to share the documentation required for “special” waste, which is generated by industry and can include anything from asbestos to plastic scrap or sludge. So Collins found some software engineers and a little help from folks in similar industries — including Rob Heiser, CEO of the Akron-based data firm Segmint — and designed an online tool to generate, track and manage all of the documentation needed to manage special waste. “We’re the guy who sits in the mid-

dle of the entire transaction,” Collins said. The service is part Match.com and partly a suite of business documentation software. If a waste generator or service provider needs to find a place to handle a specific type of waste, the system shows them which landfills or other service providers will take it. You can’t just show up at a landfill with a truckload of industrial sludge or old plastic resins, Collins explained. You have to take certain types of waste to specific landfills equipped and approved to handle it safely. With a keyword search, Wastebits can show users a list of landfills that can handle their needs. But what Wastebits does that might be even more important is generate the documentation necessary to take the waste to the landfill. Every time a generator produces special waste, a “profile” of that waste must be created and retained by the landfill so that it knows what it has taken in. That paperwork can be mountainous, and it must be shared and co-managed among several parties as generators, brokers, haulers and landfills all work together, Collins said. He seems to be on to something. Collins won’t say what the company’s

revenues are, but he points to the top of his computer screen while giving a demonstration of his product. It read 40,479. “That’s how many subscribers we have right now,” Collins explained. The system’s facility locator is currently getting more than a million hits per month, he added. Each subscriber pays between $50 and $250 a month to use the service, depending upon their subscription, Collins said. Not bad market penetration for three years of work, and Collins said the number is still growing quickly. He’s had to constantly staff up to maintain and expand his product and now employs 28 people. Eighteen of them work at Wastebit’s downtown headquarters. The rest work remotely. “I’m constantly looking for software developers,” Collins said. “We’re trying to hire as we speak.” Customers apparently like what they’ve seen in Wastebits so far. “It works great for things like remediation projects where you have multiple pieces of information you have to manage,” said Bruce Schmucker, vice president of engineering and environmental affairs for Clark Ford Landfill in Jeffersonville, Ind. Schmucker, who until recently

Wastebits founder and CEO Dan Collins (Dan Shingler)

worked for small, independent landfills and waste haulers, said Wastbit’s documentation system provides a level of sophistication that most small companies don’t have on their own. “It provides a system that allows these smaller companies to manage their special waste information, with their clients, and provides a repository for everything to be stored and managed … It’s a slick system,” Schmucker said.

Mike Templin, a special waste accounts manager for Fort Worth, Texas-based Waste Connections, said he also relies on Wastebits’ documentation system. “Once the waste generator submits the profile, all notifications are electronic and they go to me, my assistant at the landfill that manages paperwork, my engineering group that does the profiles — and it’s all automated,” Templin said. “I can tell you there’s not another system that’s currently in use that has the functionality of Wastebit’s or is as user-friendly,” Templin said, swearing to have no stake in the company or Collins personally, with a laugh. Such reactions likely mean more growth for Collins, whose challenge now might be finding enough technical help to keep up. He said being downtown makes that a bit easier, as most of his workers are young and enjoy the amenities of the city’s center. His offices are in the city-owned Hamlin Building, on Water Street and a stone’s through from the Towpath Trail, Akron’s canal locks and the Canal Park baseball stadium. “We get plenty of opportunities to move out of state. But I love Northeast Ohio, and our team is committed to supporting downtown Akron,” Collins said

CRAIN’S CLEVELAND BUSINESS

|

J A N U A RY 3 0 - F E B R U A RY 5 , 2 017

|

PA G E 21

AKRON

Good things are bubbling up for Norka By JENNIFER KARPUS-ROMAIN clbfreelancer@crain.com

Akronites have been familiar with the Norka brand for generations, but now the nostalgic line of soft drinks is making real headway into putting its name out nationwide. Norka Food & Beverage LLC recently reached a contract that makes its signature soft drink flavor, cherry-strawberry, available at Cracker Barrel restaurants across the country. “Cracker Barrel has a wonderful soda display. … They really like individual flavors, the signature flavor from different manufacturers. And for us, that’s our cherry-strawberry,” said Michael Considine, founder and president of Norka (which is Akron spelled backward, if you didn’t catch that already). In November, Norka’s cherry-strawberry soda began appearing in nearly 700 Cracker Barrel stores nationwide. Under the agreement, the chain restaurant, which features retail areas much like general stores of days gone by, has the option to add any of Norka’s other “flagship” flavors: root beer, ginger ale and orange. If Cracker Barrel chooses to add another flavor, Considine guesses it will be root beer. He bases that on Norka’s sales numbers of flavors: 30% cherry-strawberry, 30% root beer, 20% ginger ale and 20% orange. Considine declined to say how long the contract with Cracker Barrel runs or discuss specific revenue but said the deal is opening doors for Norka. “We are still in growth mode,” he said. “When you go national, it certainly moves the needle into a six-figure realm that creates more opportunity for us to develop more products.” Norka produced 12,000 cases in 2016 and expects production to increase significantly in the coming year. “We anticipate at least 30% growth

RPM CONTINUED FROM PAGE 1 Those deals piled up at the end of the year partly because of the election, Sullivan said, as sellers tried to time their sale to close in the year they thought would have the lowest tax rate on capital gains. “The deals we announced in January were all deals set to close at the end of November,” Sullivan said. “In each case, they had wanted to be sure it got closed before Dec. 31, because ... they were sure Hillary Clinton was going to elected and raise taxes for 2017.” Like a lot of folks, Sullivan’s sellers were surprised when Donald Trump won instead. “Then they all wanted to push their deals into 2017 because now they were convinced the capital gains they would pay in 2017 would go down,” Sullivan said with a chuckle. “Donald Trump gets elected and each one of the three sellers says, ‘Stop. We’re closing in 2017, not 2016.’ ” But while those deals might have gotten packed into a short time span because of the election, they are not out of character for RPM. They're also an indication of its future plans. For a company like RPM, with

in its restaurants,” he said. “Without promotion, it stands a chance of just being another product on the menu or shelves. Assuming the taste is preferred by Cracker Barrel customers, volume will increase in the Cracker Barrel restaurants and then spread by the customers via word of mouth. Either way, this will require promotion/marketing by the restaurant chain and Norka.”

over 2016 with Cracker Barrel and other main accounts purchasing higher volumes,” he said. “For us, it’s making sure we stay in tune with forecasting our glass bottle requirements to cover increased production.” The original Norka brand debuted in 1924 and was popular around the Rubber City until in 1962. It disappeared from shelves for 53 years. Then Considine, after acquiring the available trademark, relaunched it in January 2015. Its second year saw considerable growth. Considine said that revenue in 2016 was up 76% over 2015. In total, Norka has more than 100 local accounts in Ohio. He credits local contracts — with Giant Eagle, Acme Fresh Market and Heinen’s Grocery Store — and national deals — with Cracker Barrel and Micro Center (about 40 stores) — with the significant revenue increase.

Steep competition U.S. carbonated soft drinks is a competitive market. According to Duane Stanford, executive editor at trade publication Beverage Digest, the industry had $79 billion in retail sales in 2015 in all channels, including fountain soda. While independent soft drink companies cannot compete on the same level as the big players, they have their own appeal for consumers. “While they remain a very small slice of the overall U.S. soft drink market, the emerging, and sometimes re-emerging crop, of independent soda brands are becoming a more attractive growth area,” said Stanford. “In aggregate, they are capturing the attention of the largest soda makers, like Coke and Pepsi. Stressing simple labels and local provenance, small soda makers are generating renewed interest among millennial and ingredient-conscious consumers who had walked away from the category.” nearly $5 billion in annual sales, these deals are small. But they dovetail with existing products and allow the company to cross-sell new products and gain a presence in new markets and geographies. They lower the cost of sales, and provide savings, because RPM does more integration than it used to, Sullivan said. As a result, the deals impact earnings even more than sales. Sullivan, the third generation of his family to take the helm of RPM, said he’s continuing a strategy begun by his father, who vowed when he took over in 1971 that he “would either grow the business or sell it.” His strategy was to grow both organically and by acquisition, and, as a result, RPM has acquired 150 companies over the last 30 years. Frank Sullivan has only amped up that policy. In the last 10 years, under his leadership, RPM has closed on more than 70 transactions. The only reason it was even able to close a flurry of deals at the change of the year was because those deals already were in the pipeline, Sullivan said. That pipeline’s still full, and it likely will remain so, because of the company’s aggressive acquisition strategy. “We probably look at 50 to 60 opportunities a year,” Sullivan said.

New flavors, products

rector of graduate programs in business and an associate professor of marketing at the University of Akron, agrees that craft soda is a growing segment, but the overall market is in decline due to dietary restrictions on soft drinks, especially those with high fructose corn syrup. “However, while the craft soda pop segment is evolving, it is already facing competition,” said Hauser. “The industry leaders, such as PepsiCo, are already creating products that they are calling craft soda pop. Interesting coffee/tea brewers, such as Keurig, are in the process of developing products that will permit people to brew their own craft soda at home.” Plus, so much of it comes down to marketing, and much of that will dictate the success of Norka’s deal with Cracker Barrel, Hauser said. “The impact will depend on if and how Cracker Barrel promotes Norka

Considine, for now, is focusing on the product, which is manufactured at facilities in Akron and Scranton, Pa. To continue to grow its brand, Norka is considering a variety of new flavors and products. A nostalgic subset to the original four flavors includes cream soda, lemon-lime and grape. Beyond the nostalgic flavors, Norka is testing raspberry, pink lemonade and ginger beer. “For us, it’s looking at focus groups and responses, fine-tuning those recipes to get ready to launch here in 2017,” Considine said. Considine was still undecided about which flavor will launch next, but he thought lemon-lime just might win out. When it does hit shelves, that beverage will land in Norka Natural line of products, which will include all-natural sodas with zero calories and zero sugars. Beyond soda, Considine said, the company is expanding its product line by adding frozen treats, which he aims to launch by the summer. No matter how the brand grows, maintaining its craft status remains important to Considine. “While increased production has certainly been exciting, we are still very focused on maintaining small batch quality and exceptional taste in each bottle,” he said. “Growing national interest just means we need to produce small batches more often, which is a great problem to have.”

boil it down to 10 that are a good strategic fit.” There is, of course, competition to buy the best companies. RPM might have a leg up on some of its rivals, aside from its ability to outspend many of them. The company has a reputation of allowing business owners to remain active in their businesses, even after they sell them to RPM. Many of the company’s top executives are former owners of acquired companies, Sullivan said. “You can sell your business to us on Friday and go back to work on Monday,” Sullivan said. While some owners do want to retire, the ability to remain involved is a very big deal and an attractant to many potential sellers, say investment bankers who work on industrial mergers and acquisitions. “Their approach is more stand-offish, and they’re not going to fully integrate the acquired business,” said Kevin Mayer, a managing director at Western Reserve Partners in Cleveland. “For many of our clients, they have middle-market companies that are family owned and that can be attractive. They don’t want to see what they’ve created over a lifetime kind of assumed into a larger organization on day one.” Bill Ridenour, CEO of the boutique M&A firm Polymer Transactions,

agreed. He thinks RPM probably gets to talk to more people than most other acquirers because of its reputation for gentle integration, and for doing deals quickly with a team of well-seasoned people to do due diligence and handle transactions. “RPM has a very fine reputation as an acquirer because their reputation is they buy businesses, keep the management team in place and turn them into associates,” Ridenour said. “When they call someone and say they’re interested, most people want to hear what they have to say. They are their own best door opener.” RPM has another tool it can use to further capitalize on its reputation with past sellers, says Russell Warren, managing director of Edgepoint Capital Advisors in Beachwood. “Active acquirers (like RPM) can also offer the seller a chance to talk to others whose businesses have joined the acquirer’s,” Warren said in an email correspondence. RPM stock also has been rising in value. (In the last 12 months, RPM’s stock price has risen from $38 per share to more than $53 per share.) That doesn’t come into play as often as it used to, when companies more routinely paid for transactions with their own stock, Ridenour said, but would still be useful for larger transactions.

Norka’s signature flavors are orange, root beer, cherry-strawberry and ginger ale. (Contributed photo)

Many of these consumers prefer the use of real sugar or avoid artificial sweeteners, which is a focus for Norka. From the beginning, Considine knew he wanted the new Norka to be a healthier soft drink, free of high-fructose corn syrup. It instead uses real cane sugar and all natural flavors. Additionally, Norka drinks are low in sodium and free of caffeine and gluten. “We were able to get a hold of the old packaging that told us what type of ingredients they were using,” Considine said. “While we were cognizant of the old flavor profiles, we knew we wanted to create a better and healthier tasting flavor for today’s market. “And two years in, I’m very happy to say that seems to have been a great idea and has really worked for us.” Bill Hauser, assistant dean and di-

“We probably look at 50 to 60 opportunities a year. When you boil that down, you get the six, seven or eight (deals a year) — or it might be more like 10, but you boil it down to 10 that are a good strategic fit.” — RPM Inc. CEO Frank Sullivan

“When you boil that down, you get the six, seven or eight (deals a year) — or it might be more like 10, but you

PA G E 2 2

|

J A N U A RY 3 0 - F E B R U A RY 5 , 2 017 |

HOTELS CONTINUED FROM PAGE 1

CRAIN’S CLEVELAND BUSINESS

CRAIN’S CLEVELAND BUSINESS

The downtown Cleveland hotel market finished with a 66% occupancy rate in 2016 compared to 58% in 2010, according to STR Global Inc. data. New hotels pushed the room count up 20% to more than 7,000 from almost 6,000 in 2010. STR data covers both downtown and the Independence market.

REAL ESTATE

Phone: (216) 771-5276 Contact: Lynn Calcaterra E-mail: CLBClassified@crain.com

RIVEREDGE MEDICAL BUILDING Cleveland For Sale ~ $890,000

List your commercial, executive property, industrial or retail space here! Crain’s Cleveland Business’ classifieds will help you fill that space. Call 216-771-5276

2016

S

O

Construction • Acquisitions Exporting • Financing (855) 707-1944

216-641-7897 sales@stysinc.com

FLYNN

ENVIRONMENTAL UST REMOVALS • REMEDIATION DUE DILIGENCE INVESTIGATIONS (800) 690-9409

BUSINESS SERVICE OWNERS! Submit your business card to promote your service.

Call 216.771.5276 Lakefront Condos Willowick Open Sun. Feb 5, 1-3 p.m.

9420 Larimar - $399,900 9628 Larimar - $649,900 Exquisite condos with amazing Panoramic views Kathleen Cislo 216-258-5886 Howard Hanna

PA G E 9 9

Pace concluded. That means he and Trammell will refine the size and concept for a hotel at the site on the downtown waterfront at the foot of East 9th Street that was envisioned as 175 rooms a few years ago. Moreover, it will be designed to cater to the 1.5 million visitors the lakefront has yearly — not growth in the market as a whole. The Clevelander’s wariness about the future is evident in the outlook of Scott Schmelzer, general manager of the new Drury Plaza Hotel downtown, who has worked in the region for more than 20 years. “Cautiously optimistic,” Schmelzer said of his outlook for this year and beyond. He said a lot of how things go depends on how many meetings the convention center lands, and what kind of book of local business new hotels like his can begin to develop. Just how competitive the market will be is reflected in talking with Schmelzer about the price the Drury charges for parking: $20 a day in a garage it bought, compared with $10 more charged by his competitors. However, Teri Agosta, the Hilton general manager, believes that with the addition of the county-owned hotel she operates and the convention center, past Cleveland experience should be kept in the rear view mirror. “We’re not a drive-through town anymore. We’re a come-and-hangout town,” Agosta said. The recent American Bus Association convention and other meetings already made January 2017 a better one than any other. She said it will be impossible to find a hotel room in town in March. She underlines the message of average daily rates. “The good news is that prices are going up,” she said. “That shows more people are interested in the city. A lot of local companies are reconsidering where they take business and bringing it back locally or to downtown. “Cleveland has made the turn to become a full-throttle convention town,” Agosta said. “I am very optimistic and believe there is room for more hotels here.”

Copy Deadline: Wednesdays @ 2:00 p.m. All Ads Pre-Paid: Check or Credit Card

C.W. JENNINGS INDUSTRIAL EXCHANGE Global Industrial Consulting

WATERFRONT PROPERTY

|

CLASSIFIED

Land for Sale, Chardon

Used Model 5700, Tenant Walk-behind Scrubbers, Also 8 Rider Tenant Srubbers and 36V Battery Chargers for Forklift Trucks

D

many markets, this kind of expansion in supply is not accompanied by a rise in revenues per room. However, those increases will continue to fuel additional hotel development in the region. For example, Dick Pace, president of Cumberland Development and a partner with Dallas-based Trammell Crow in developing the city’s lakefront, is reassured by the figures. “The decrease in occupancy in 2016 is no surprise when we added so much supply,” Pace said. “Everyone feels the convention center will continue to increase the number of bookings it has, which will be good for everyone.” Conversely, three years ago, Pace said he was more worried about planning a hotel than today. “All the trends are working together,”

BUSINESS SERVICES

40.5 Acres for Development. Beautiful wooded rolling acres with a small river next to the Geauga Park District, within walking distance to Home Depot, Walmart and the commercial district. Zoned R3 up to 3.5 homes per acre or apartments, city water/sewer available 2018.

N

Crain’s Cleveland Business graphic

VACANT LAND

(216) 798-2633 Off Street, 25 Sp. Pkg, on Prime Corner across from Fairview Hosp. 6K Sq. ft. Lease Options + Creative Financing Exists. Owner will upgrade as needed. Call Joseph Dill - 440-821-1162 Berkshire Hathaway

% D AY_ O F_ W E E K _ D AT E %

A growing market

Against that backdrop, David San100% gree, president of Lakewood-based Hotel and Leisure Advisors, said, 2010 2011 2012 2013 2014 2015 “I’m confident occupancy will be a downward trend this year.” He refused to put a figure on the 80 continued occupancy dip. CBRE’s Hotel consultancy estimates occupancy will be 62.7% in 2017 and 2018, and then just 61.8% in 2019 and 2020. STR, the Hendersonville, Tenn.60 based hospitality analytics firm, reports Cleveland-area occupancy fell to 61.3% in 2016 from 63% the prior year. Meantime, downtown Cleveland ended 2016 at 66%, down from 40 67.9% in 2015. Those figures reflect the challenge of the situation for hoteliers on a dayto-day basis when there is no big con20 vention or event to liven things up. “It’s going to be a price fight,” said George Kimson, chief operating officer of Heritage Development Co., the Moreland Hills-based owner of the 0 Aloft hotel in downtown Cleveland J F M A M J J A and the Bertram in Aurora. Source: STR Trend Report “The new supply has outpaced demand and we will be in a downturn for a few years,” he said. “Cleveland has to face where it’s at in terms of a new convention center and a lot of new hotel product.” The amount of customers in the business travel segment is not enough to counter the rise in all the hotel rooms, he said. However, there is a bright spot that will sustain hotelier hopes now and in the future. The amount of revenue per available room downtown climbed 7% to $135.81 in 2016 from $126.89 in 2015. Meantime, in the Cleveland market as a whole, such revenue climbed to $109.24 in 2016 from $102.37 in 2015. “This shows there is room in the market to grow, in the convention and22meeting market with the newCLEVELAND The Drury Plaza Hotel is “cautiously optimistic” about the future of the PAGE μ JANUARY 30, 2017 μ CRAIN'S BUSINESS convention center,” Sangree said. “In Cleveland hotel market, GM Scott Schmelzer said. (David Kordalski)

COMMERCIAL PROPERTY

|

Looking to fill a position on your staff? Place an Executive Recruiter ad in Crain’s

Call 216-771-5276

BUSINESSES FOR SALE

AUCTIONS

Restaurant and Entertainment Complex Cleveland Flats on the Cuyahoga River. In business for 30 years. Owner looking to retire.

Serious inquiries only. (216) 798-2633

THINKING OF SELLING? FREE MARKET ANALYSIS No Upfront Fees See our listings at: www.empirebusinesses.com mike@empirebusinesses.com 440-461-2202

OFFICE FURNITURE OFFICE FURNITURE LIQUIDATION SALE Desks, Partitions, Work Stations, File Cabinets & Chairs MUST SELL ~ 216-214-4504

MISCELLANEOUS COPY/SCAN Machines Due to purchase of our Westlake Business, up to three current model Xerox network copy/scan machines (2 - 5875, 1 - 5855) with sorters and high capacity paper trays available for lease assumption. Up to 20k in incentives available. Contact - 440-221-1424 or mrichardson@psas.org

CRAIN’S CLEVELAND BUSINESS

|

J A N U A RY 3 0 - F E B R U A RY 5 , 2 017

|

PA G E 2 3

BUSINESS OF LIFE

Source Lunch John Parry has spent 33 years as an athletic director, the last six of which have been at Cleveland State University. He will retire from that post in June, which will give him a lot more time to fulfill one of his biggest passions, but more on that later. During the 73-yearold Parry’s first stint as an AD — an 11-year run from 1979-90 at Brown University, his alma mater — he oversaw a department that had 30 men’s and women’s teams. He moved on to Butler for 16 years, a time in which the school served as the co-host for two NCAA men’s basketball Final Fours and Parry spent seven years as a member of the NCAA Division I Management Council. The job has never been easy, but the financial pressures probably have never been greater, as midmajor schools such as Cleveland State are forced to get by on budgets that are almost entirely dependent on student fees and other school funding. As Parry departs, the Vikings are embarking on their first seasons in men’s lacrosse and women’s track and field, while saying goodbye to a 52-year-old wrestling program. Before he goes, though, Parry still has quite a bit on his plate, which includes the future of CSU’s 25-year-old arena. — Kevin Kleps

What’s the reason for stepping down now? I think I’ve been blessed to be at three institutions (Brown, Butler and CSU) and have this opportunity. I think it’s really time for someone else. There are a lot of challenges at the midmajor level, which I’ve enjoyed fighting. I think Cleveland State is a wonderful institution, and athletics is just a piece of that. It’s just time for someone to take a fresh look at it. Some of the state funding models are of concern. I happen to work for a guy (university president Ronald Berkman) who’s very dynamic and a good fundraiser, very progressive in what he wants to accomplish not only in athletics, but the whole institution. The transformation of Cleveland State over the last 10 years has been unbelievable. You mentioned the midmajor challenges. How do you look at the future of midmajor athletics? I think you have to be committed to the student-athlete experience — that they’ll take academics seriously, that they’ll graduate. It can’t be just about selling tickets and developing professional athletes. Can that happen? Absolutely. (Former CSU basketball player) Norris Cole is a great example. Financially, is there a way to make all that work, when selling tickets is often a problem for these institutions? I think the issue becomes what’s the funding mechanism? A number of schools in Ohio, including Cleveland State, are driven by student fees. I’m not sure that’s a long-term, viable

plan, particularly at a significantly sized state institution, where you have 360 athletes out of a population of 18,000 students. So the issue becomes how committed is the institution to the role of athletics? Should we be budgeted like we’re the library, which some schools in the state do? I don’t think Youngstown and Wright State run on fees. That’s a sea change for an institution to think about. What is the most difficult part about being an athletic director these days? Finding enough resources to fulfill a program in a way that you want. And that’s why the trend is more to corporate, to sponsorships, to fundraising, whether it’s done by the athletic director or his staff. That also has been a challenge at a longtime, low-cost state institution that doesn’t have a history of that, doesn’t have a culture of giving. That’s changing under the current administration, but it’s a hard change. The thought is, “Well, the state is paying for it.” But the state is down to, I think, less than 30% of the cost of education is being paid by the state. What’s your proudest accomplishment at CSU? Well, probably getting lacrosse off the ground. And it’s not heavily reported, but we’re expanding women’s cross country into women’s indoor and outdoor track. That will provide additional opportunities for women. We hired that coach and we will field a team this indoor and outdoor season.

How do you look at the future of the Wolstein Center? I think it’s a great collegiate building. It’s a great home court. It needs to be updated, and we don’t have a sin tax, and we don’t have the support of the county to put a $70 million, $140 million improvement. The last appraisal said it needed $30 million (in improvements), $5 million of which has been put in for fire control and things like that that you can’t see, but it had to be done for safety. It needs a new roof, the lower seats need to be replaced, it needs a center-hung scoreboard … so how do you come up with what now looks like $25 million to do it? That’s the president’s frustration. They built it debt-free, but they never were able to set aside any money to maintain it. When you walk in and play a game there, it looks fine. Some of the issues when you’re inside, walking and playing, you don’t see it. Are CSU athletics a difficult sell here because of the pro teams getting so much attention? Yeah, I think it’s a tough sell. I understand the frustration of the Indians. They can do better on weekends, but midweek, people just don’t go downtown. A lot of it still is the perception of traffic, the bridge and coming back into town. We tried to run family friendly games on weekends where you can bring the kids and happy hour before the weeknight games — “Don’t go home. You can come over here and have a beer.” — but it’s the idea that I have to leave work at 5, drive home, maybe have dinner and then come back in for a 7 o’clock game.

John Parry ATHLETICS

Five Things: COMFORTS OF HOME Parry has a simple plan for the next chapter of his life. “As I told my wife, what I need in retirement is a good light so I can read, my Kindle, cable TV, internet, and I’m content,” he said.

RECENT BOOKS HE’S READ “Paul Newman: A Life,” by Shawn Levy “On His Own Terms: A Life of Nelson Rockefeller,” by Richard Norton Smith “Alaska: A Novel,” by James A. Michener

NEW ENGLAND-BOUND

Lunch Spot Sokolowski’s University Inn 1201 University Road Cleveland

After he leaves CSU, Parry and his wife, Candi, will head to their condo near the ocean in Plymouth, Mass. “I like walking beaches,” Parry said. His wife is an assistant women’s lacrosse coach at Baldwin Wallace University.

The meal

THEY’LL KEEP HIM BUSY

The vibe

Parry has four children and six grandchildren.

’CUSE IS IN THE HOUSE Parry grew up in upstate New York watching Syracuse football and future Cleveland Browns running backs Jim Brown and Ernie Davis. Parry played football, basketball and lacrosse at Brown University.

Both chose the Salisbury steak and mashed potatoes from the buffet-style lineup; one had water and the other soda

Cleveland’s oldest family owned and operated restaurant truly is a classic, from its oldschool lunch lineup to the hundreds of photos that line the walls and pay tribute to the city’s history.

The bill

$21.76, plus tip

“Massive amounts of highly sensitive client data traveling online, 24 hours a day. And I sleep like a baby at night.” David Wilner / COO FRONTEO USA, Inc. Client since 2012

Meet Spectrum Enterprise. Our thing? Delivering the right data, voice, video and cloud solutions via our nationwide fiber-based network. And all the support you need to succeed. With our superior network and IT infrastructure, you’re free to do your thing.

Visit enterprise.spectrum.com/hello or call 866-679-0476 ©2017 Charter Communications. All Rights Reserved. Not all products, pricing and services are available in all areas. Pricing and actual speeds may vary. Restrictions may apply. Subject to change without notice. All trademarks remain property of their respective owners.

ent-JAN17-Brand-10-2x14-CrainsClevelandBiz-8666790476.indd 1

12/12/16 3:23 PM