A rendering of the Cleveland medical mart

The Cleveland Medical Mart & Convention Center isn’t required to generate more hotel room nights than the city’s old, outdated convention center did as it was staggering toward death just a few years ago, per the project’s operating agreement with Cuyahoga County.

Hotel room nights is an important metric for the medical mart and convention center project because it’ll be a key illustration of the project’s true value (or lack thereof) to the region. In addition to hotel rooms, overnight travelers figure to spend their cash in Cleveland on meals, bar tabs, cab rides, entertainment and the like, though probably not Browns games.

But the operating agreement between the county and MMPI, the Chicago-based property developer behind the project, never calls for the project to generate more than 33,278 hotel room nights in a year. Cleveland’s old convention center generated 64,812 hotel room nights in 2006, and 36,954 the following year, before plummeting in subsequent years, according to Positively Cleveland, the local conventions and tourism group.

As Jeff Appelbaum, an attorney who’s the county’s point man for the project, correctly told Scene, it’s important to distinguish between the project’s minimum performance requirements (what MMPI must do to avoid penalties) from its “projections” (the numbers MMPI and local leaders anticipate the project will achieve). For example, the medical mart and convention center is “projected” to lure about 300,000 visitors a year, but it’s never required to bring in more than 214,500.

The problem with that distinction, though, is that there is no “projection” number attached to hotel room nights. An MMPI spokesman said he wasn’t aware of any such number. Appelbaum didn’t immediately return a call.

Furthermore, a 2005 PricewaterhouseCoopers study projected that a new convention center — which wouldn’t have even included a medical mart — would generate 125,000 hotel room nights per year, Scene reported. Whatever the projections for the medical mart and convention center might be if they existed, surely they’d be lower than that.

So where does that leave us?

Apparently with a bunch of numbers MMPI should have little trouble hitting, and a county government that’s essentially powerless to exact any toll on MMPI for performance that’s merely mediocre, but not terrible. And also maybe with a new-found respect for MMPI’s negotiating prowess.

A rendering of the Cleveland medical mart

Cleveland Medical Mart & Convention Center property developer MMPI must hit several minimum performance benchmarks as part of its agreement with Cuyahoga County to continue operating the facility once it opens.

Those benchmarks pertain to the number of events, attendees, hotel room nights and occupancy of the medical mart, which is conceived as a collection of product showrooms for medical technology companies.

And if Chicago-based MMPI doesn’t hit those benchmarks? The county has several “remedies” that it can invoke, including diverting up to $1 million in payments every two years from MMPI to an escrow account that could be tapped to enhance the project’s sales and marketing. The county could first use that option at the end of year three.

More extreme is the “termination remedy,” which means exactly what it sounds like and would be available to the county five years after the medical mart and convention center opens. If MMPI fails to achieve a certain level of its benchmarks, the county could sever the agreement granting MMPI the right to operate the facility.

It’s important to note that the minimum benchmarks aren’t the same as MMPI’s performance projections. For example, the company has said many times it expects the medical mart and convention center to eventually draw 300,000 annual visitors, but for MMPI to stay on the right side of the agreement with the county, it’s never required to draw more than 214,500 visitors per year.

Following are the benchmarks MMPI must hit in the first few years after the project opens. Benchmarks for subsequent years can be found here.

Years 1-2 combined
Exhibit hall events (trade shows, consumer shows, conventions and other shows that use the convention center’s exhibit hall): 45
Other events (conferences, meetings, banquets and other events that don’t use space in the exhibit hall): 100
Number of attendees at all facility events: 252,500
Convention center occupancy: 20 percent
Hotel room nights: 58,523
Medical mart occupancy: 82.9 percent

Year 3
Exhibit hall events: 26
Other events: 61
Number of attendees at all facility events: 151,250
Convention center occupancy: 25 percent
Hotel room nights: 30,983
Medical mart occupancy: 82.9 percent

Year 4
Exhibit hall events: 30
Other events: 67
Number of attendees at all facility events: 172,000
Convention center occupancy: 28 percent
Hotel room nights: 32,130
Medical mart occupancy: 82.9 percent

The candidates were listed as part of a presentation on the project’s status by the president of the Chicago-based property developer, MMPI, to the Cuyahoga County Council.

“The biggest challenge in attracting the top-tier companies is that they have showrooms in their own facilities and are having difficulty justifying the investment in another showroom before the concept is proven,” said MMPI president Mark Falanga.

That may be another way of saying: “Don’t expect too many of these companies to be in the medical mart when it opens in 2013, but maybe we can land some of them a few years later.”

Regardless, it’ll be interesting to see how many of these names occupy space in the medical mart on its first day of operations — or ever.

Here’s the list:

3M
Abbott Laboratories
Advanced Surgical Products
Agfa
Airgas
Aloka
Allscrips
Baxa
Baxter
Beckman Coulter
Berchtold
Boston Scientific
Carestream Health
Carl Zeiss
Cerner
Cordis
Covidien
Datex
DePuy
Ethicon
Getinge
Healthcare Information Systems Management Society (Note:  HIMSS has signed on for space in Nashville’s medical mart.)
Hewlett-Packard
Hill-Rom
Hitachi
Honeywell
Intuitive Surgical
McKesson
Medline
Medtronic
Olympus
Ortho Clinical Diagnostics
Philips
Stryker
Thermo-Fisher Scientific
Toshiba

A rendering of the Cleveland medical mart

The property developer behind the Cleveland medical mart says it has secured leases with two tenants, but declined to identify them.

That was the highlight of a largely uneventful business plan update presentation to the Cuyahoga County Council from Mark Falanga, president of Chicago-based MMPI, which is developing the Cleveland Medical Mart & Convention Center.

Council members took it easy on Falanga during the question-and-answer session after his presentation, asking no difficult or uncomfortable questions. None inquired about the signed leases or the identities of the companies that signed them. None inquired about the reasons behind public statements from the project’s general manager that gave the impression MMPI was shifting its business model from a collection of medical products showrooms to that of a medical education center.

On the talk of a shifting focus, Falanga was clear: “The business plan at inception is the same business plan today,” he said,while acknowledging that education is a “critical component” of that plan.

MMPI has nonbinding letters of intent with 66 prospective tenants and is working with a group of 36 of them to finalize leases. One or two of those 36 are “shaky,” but most are “rock solid,” Falanga said. Others will follow as they see evidence of a successful project, he said.

“The larger manufacturers are taking more of a wait-and-see attitude,” he said.

Regarding conventions and trade shows, MMPI has 27 letters of intent and two signed contracts. “Show managers, in particular, are risk-averse and hesitant to commit to a facility that is not yet completed,” Falanga said.

MMPI is also pursuing nonmedical trade shows for the $465 million medical mart and convention center, which is scheduled to open on Aug. 31, 2013.

A rendering of the Cleveland medical mart.

A Nov. 9 meeting of the Cuyahoga County Council will give MMPI, the property developer behind Cleveland’s medical mart project, its first opportunity in several months to give a public update on the project’s business plan.

It’ll also provide an opportunity for council members to subject officials with Chicago-based MMPI to some much-needed scrutiny. Confusion over the $465 million project’s future has reigned in recent weeks, thanks largely to seemingly contradictory statements in two media interviews by Brian Casey, general manager of the Cleveland Medical Mart & Convention Center.

In case council members haven’t been paying attention (or if they just want to score some political points with constituents frustrated with the taxpayer-funded medical mart project), here are four suggested lines of questioning:

Has the business model changed? We know the likely answer to this: No. Here’s what County Executive Ed FitzGerald told The Plain Dealer: “There is not a new business plan or a new strategy. But communication on the implementation of the business plan has been poor.”

But the question persists simply because Casey seemed to indicate the mart was shifting focus to a medical education center, away from its original plan for a collection of medical technology products showrooms. So, even though we probably know the answer, we need to hear it from MMPI. And that brings us to our next question.

What was Casey talking about? From the beginning of the medical mart discussion, one of MMPI’s big selling points was that it could simply replicate in healthcare what it had done with other marts for the furniture and design industries. That’s why the following statement Casey made to Scene was so confusing: “The key part is that this is not intended to be modeled after marts that show furniture or marts that are design centers. It’s a mistake to take a model that works well in one area and try to plug it into an industry that doesn’t work that way.”

Contrast that with a 2007 statement from MMPI’s former president Chris Kennedy. He sold the medical mart concept — and the idea that MMPI was the right one to implement it — by calling the collection-of-product-showrooms approach “a successful formula we’ve proven time and again.”

So, is the medical mart based on that “successful formula” or not? MMPI is going to have a tough time reconciling Casey’s recent statements with what other company officials have been publicly saying for years.

Why not change the model — and just admit it? There’s no shame in trying one idea, acknowledging it’s not working out as planned, scrapping it and going with another approach. Simply put: The medical product showrooms concept isn’t working. Few prospective tenants have shown interest, most that have were small Ohio firms, and the concept doesn’t even fit with how most hospitals make their purchasing decisions. For a project that was supposed to be all about attracting hospital customers, that’s not good.

So, why not forget about trying to sell medical technology and become a center for medical education? Maybe it’s just the pivot the medical mart and convention center need to succeed. Medical education seems like a stronger bet to draw a number closer to the long-promised 300,000 visitors per year, though that number has always been very much in doubt (but that’s another story).

The bigger problem for MMPI may be that it’s essentially painted itself into a corner. Subtly place more of an emphasis on education without publicly and unequivocally embracing the identity as a medical education center and the medical mart’s marketing message to potential educational customers and tenants becomes muddled. Announce a wholesale change to the approach and MMPI will be accused by taxpayers of a bait and switch — even if the switch ends up being better than the bait.

Why can’t you publicly identify even one committed tenant? In MMPI’s defense, there may be an easy explanation for this one — there are no committed tenants. But that isn’t clear. Casey said in September that MMPI had sent leases — not nonbinding letters of intent — to 37 prospective tenants. Have any signed? If so, what’s stopping MMPI from publicly naming them? Don’t say it’s for competitive reasons because top competitor Nashville has already announced several tenants with signed leases. If no tenants have signed yet, will MMPI commit to publicly identifying them once they do? Revealing some names would go a long way toward building back a little taxpayer trust that MMPI has squandered with its “poor” communication, as FitzGerald called it.

A rendering of Nashville's medical mart

The property developers behind Nashville’s medical mart have finally publicly admitted what’s been obvious for awhile — the project isn’t going to hit its slated opening date of 2013.

The CEO of property developer Market Center Management said construction wouldn’t begin this year on the Nashville Medical Trade Center, as originally projected, meaning the project won’t open in 2013. He wouldn’t provide a revised opening date, the Nashville Business Journal reported.

“It’s really an ever-changing situation,” said Bill Winsor, CEO of Market Center. “I would be remiss if we just threw out another date.”

Unlike rival Cleveland, Nashville doesn’t have public funding for its project — and is largely free of the extra scrutiny that comes with getting public funding. That means Nashville needs to sign leases for roughly 60 percent of the mart’s estimated 750,000 leasable square feet before it can obtain the private financing to begin construction, Nashville Medical Trade Center officials have said.

Ironing out deals with tenants has been a tough slog for the Nashville project, which has thus far named six tenants. The project has scored a couple wins in recent months, announcing as tenants furniture maker Steelcase and clinical services provider SpecialtyCare.

Nashville Medical Trade Center officials say they’ve signed deals they’ve yet to announce and are in late-stage talks with other prospective tenants that would push the square footage commitments closer to the magic 60 percent figure — though we’ve heard similar promises of impending deals before.

Cleveland’s medical mart is still projecting a 2013 opening date, and since construction has been going on for nearly a year, that seems reasonable.

MMPI, the property developer behind Cleveland’s medical mart, hasn’t publicly announced signed leases with any tenants.

Cleveland politicians are currently in damage control mode as they scramble to try to reconcile (or just ignore) seemingly contradictory statements about the Cleveland project’s business model from MMPI’s top local official. With a public MMPI presentation to the County Council scheduled for Nov. 9, we’ll learn soon whether MMPI will have any success in putting that toothpaste back in the tube.

A rendering of the Cleveland medical mart

Stung in recent weeks by back-and-forth talk of a changing business focus and free space giveaways, the property developer behind the Cleveland Medical Mart & Convention Center project now has a new oversight panel.

Cuyahoga County Executive Ed FitzGerald appointed the panel to “ensure the best possible outcome” for the project, which may or may not be changing its business model to a center for medical education rather than a collection of medical equipment showrooms.

The panel includes several local healthcare luminaries, including the chief executives of Cleveland Clinic, University Hospitals and MetroHealth System. It also includes politicians such as FitzGerald and Cleveland Mayor Frank Jackson.

Chicago-based MMPI, the project’s developer, is welcoming the appointment of the panel, at least publicly. “MMPI is looking forward to working with the panel and others to ensure that the integrated facility reaches its full vision as a destination for the medical industry, conventions and trade show customers,” CEO Mark Falanga said in a prepared statement from the County.

The statement, however, did nothing to clear up confusion about the (possibly) changing direction of the medical mart. The confusion stems from seemingly contradictory statements project General Manager Brian Casey made in two separate interviews over the last month or so.

In a Plain Dealer interview, Casey sought to tamp down comments he’d made in a prior interview to Scene about a shifting focus for the medical mart. An MMPI spokesman hasn’t responded to several inquiries in recent weeks seeking clarification on future plans for the medical mart.

Following are members of the new oversight panel:

C. Ellen Connally, president, Cuyahoga County Council

Dr. Toby Cosgrove, CEO, Cleveland Clinic Foundation

Ed FitzGerald, Cuyahoga County executive

David Gilbert, president, Positively Cleveland

Mayor Frank Jackson, City of Cleveland

Sr. Judith Ann Karam, CSA, president and CEO, Sisters of Charity Health System

Mark Moran, CEO, MetroHealth Medical Center

Baiju Shah, CEO, BioEnterprise, Inc.

Tom Zenty, CEO, University Hospitals

Joseph Roman, CEO, Greater Cleveland Partnership

A rendering of the Cleveland medical mart

MMPI’s got some explaining to do.

The Chicago-based property developer behind the Cleveland Medical Mart & Convention Center may or may not be changing its strategy on the project, and that (possibly) new strategy may or may not bring to the city the long-promised 300,000 visitors per year that the mart and convention center were projected to draw. Luring out-of-town visitors — and their expense accounts — was of course the whole premise on which the medical mart was sold to the taxpayers of Cuyahoga County, who never voted on it anyway.

So it’s fair to wonder: If MMPI was wrong about the viability of its initial strategy, is it wrong about the number of visitors a (possibly modified) medical mart and convention center could bring to Cleveland?

That’s why it’s important that MMPI lay out exactly what that strategy is — and be honest about the change in emphasis, if there is in fact a change. Right now it’s not clear, and MMPI wouldn’t make General Manager Brian Casey available for an interview this week. So we can only go on what he’s said in previous interviews. In a Plain Dealer interview last week, Casey sought to tamp down comments he’d made in a prior interview to Scene about a shifting focus for the medical mart, raising questions about how forthcoming MMPI will be about any strategic shift.

Casey told the Plain Dealer that MMPI is not changing the strategy behind the medical mart to emphasize medical education, instead of the mall-of-medical-equipment-manufacturers approach that MMPI officials had long discussed. But that claim doesn’t exactly mesh with this quote he gave to Scene:

The key part is that this is not intended to be modeled after marts that show furniture or marts that are design centers. It’s a mistake to take a model that works well in one area and try to plug it into an industry that doesn’t work that way.

Wait a second — not modeled after MMPI’s other furniture and design marts?

That’s not how the medical mart was sold to the public. In fact, the idea of MMPI leveraging its admirably successful history with other marts — simply applying best practices it had no doubt picked up over the years — into the healthcare arena was perceived as a huge plus for the project.

That’s how former MMPI president Chris Kennedy characterized it to the PD in 2007.

“It’s a successful formula we’ve proven time and again,” he said.

Exactly: We’ve done it before, we can do it again. We’ve applied it to industries A and B, now it’s as simple as applying it to industry C.

So is Casey now backing away from that approach and instead planning to make the mart a center that emphasizes medical education over medical equipment sellers?

Maybe not. He told the PD that there is “a bit more of an accentuation on the education and training aspect” but that’s always been the plan. Casey said that he’d overstated the role education would play in the medical mart in his earlier interview with Scene.

Jeff Appelbaum, a Cleveland attorney who’s helping the county manage the medical mart’s construction and design process, essentially reiterated Casey’s “nothing-to-see-here” claims (and deserves praise for at least fielding questions on the project).

“I don’t believe there’s been a wholesale change of strategy,” Appelbaum said. “This is a communication issue. Education was always a piece of the plan.”

A representative of Cuyahoga County Executive Ed Fitzgerald didn’t return a call, but Fitzgerald expressed concern to the Plain Dealer about MMPI’s lack of communication on a possible strategic shift. “They’ve got to do a better job explaining the benchmarks they want to hit,” he said.

To be clear, there’s nothing wrong with a business reworking its plans to better respond to market needs. In fact, an education emphasis — if that’s where the medical mart is headed — is likely a better approach than a focus on medical equipment sellers, the largest and best-known of which didn’t seem all that interested in the medical mart concept in the first place.

But it’s important that MMPI explain its vision for the medical mart exactly as it is today to the taxpayers who’ll largely foot the project’s bill — not to mention potential customers. If the emphasis is changing, then why wasn’t education the focus all along? If it isn’t, then exactly what did Casey mean when he said, “It’s a mistake to take a model that works well in one area and try to plug it into an industry that doesn’t work that way”?

How does that not signal a shift in strategy when MMPI previously said it would merely leverage its existing model and apply it to healthcare? So what’s the model that MMPI is pursuing for the medical mart? And why was the project sold as essentially a carbon copy of MMPI’s other marts?

And, for good measure, how would a change in strategy affect MMPI’s projection of 300,000 visitors per year? It’s difficult to believe it wouldn’t impact that number at all.

Noted convention center skeptic Heywood Sanders, a professor at the University of Texas at San Antonio who the Dallas Observer called “the leading independent authority when it comes to convention centers,” seemed to snarl his disdain for MMPI’s projections through clenched teeth during a phone interview.

When asked whether a medical mart with a greater concentration of equipment sellers or medical education providers would be more likely to hit MMPI’s projection of 300,000 visitors per year, he brusquely rejected the premise of the question.

“It was never realistic and it never made any sense,” he said of the projection.

A rendering of the Cleveland medical mart

There are solid reasons to doubt the long-term viability of the Cleveland medical mart — or any medical mart, for that matter — but the fact that its developers are giving away free space to educational institutions isn’t one of them.

MMPI, the Chicago-based property developer behind the Cleveland medical mart, has offered rent-free space to Cleveland State University and Cuyahoga Community College, The Plain Dealer reported. MMPI will even go so far as to pay Cleveland State $50,000 to construct a display for the university’s space in the mart.

For medical mart skeptics, this sounds like red meat.

But it’s important to note that MMPI has been talking about subsidizing space all along. Mark Falanga, a vice president with the company, told the Cleveland City Council exactly that, according to an excellent, but sadly undated article from Inside Business.

“We believe we will need to subsidize those showrooms heavily to get [potential tenants] to try something new,” Falanga told council. “It’s going to take many years for this to ramp up.”

(Slightly more concerning is MMPI’s plan to give away free space and pay a $20,000 subsidy to a Michigan furniture company, but even that move fits with Falanga’s prediction.)

Plus, Cleveland’s competition in the medical mart race — a project in Nashville — has also agreed to give away space to two educational tenants, Vanderbilt University and Lipscomb University, a Nashville project spokesman told The Plain Dealer.

Admittedly, these developments don’t do much to inspire confidence in the medical mart concept, but at the same time, they really shouldn’t be cause for hand-wringing.

If you want to choose reasons to doubt the medical mart concept, you have better options — like the lack of many big-name tenants in the Cleveland project and the fact that nearly 65 percent of the companies that have shown interest are based in Ohio.

A rendering of Nashville's medical mart

Nashville’s medical mart has secured a commitment from Nashville-based clinical services provider SpecialtyCare to lease 8,500 square feet.

SpecialtyCare, which has signed a lease for the space, marks the fifth tenant signed by the Nashville Medical Trade Center, with those leases set to cover about 70,000 square feet, a spokesman said.

The property developers behind Nashville’s project are competing with developers in Cleveland to open the nation’s first collection of medical products showrooms, commonly referred to as a medical mart.

SpecialtyCare works with hospital clients and bills itself as the largest provider of outsourced clinical services in the nation. It provides services to 545 hospitals in 40 states. Those services include transfusion, minimally invasive surgical support, sterile processing department management, and anesthesia support.

The company will use its space in the Nashville medical mart to meet with clients, as well as establish its education and training center there, including a simulated operating room, according to a statement. SpecialtyCare employs 900 clinicians and seeks to keep them current on procedures, equipment and industry issues.

Bill Elliott, executive vice president of business development for SpecialtyCare, said the Nashville-based company didn’t have “any direct dialogue” with representatives of Cleveland’s medical mart. He said he liked the “methodical, disciplined approach” the developers behind the Nashville project have taken, and feels encouraged by the commitments Nashville has secured from “significant players.” And it doesn’t hurt that his company is already headquartered in the city.

“Under the assumption that this is successful, we think this will be a big draw for the healthcare industry,” he said.

In contrast to Nashville, the developers behind Cleveland’s medical mart have signed more than 60 prospective tenants to letters of intent (LOIs). The Nashville project’s backers delight in pointing out that those LOIs aren’t legally binding and impose no penalties on companies that back out of them, as two prospective tenants have already indicated they’re likely to do.

Nonetheless, Cleveland looks far likelier to hit its projected opening date — Aug. 31, 2013 — than Nashville. Officials behind both medical mart projects have said the healthcare market is likely sizable enough to only support one of them.

Nashville also projects an opening date in 2013, but that may be a long shot. Cleveland has already started construction and Nashville appears nowhere close to leasing the amount of space required to begin construction of its privately financed project.

Executives with Dallas-based Market Center Management Company, the property developer behind the Nashville medical mart, have said that they need to lease 60 percent of the project’s 1 million square feet of showroom space before they can get the financing to begin construction. By signing a lease with SpecialtyCare, Nashville has drawn a little closer to that goal, but still has a long way to go.

The giant drug distributor – and Ohio’s largest company – does not plan to lease space in the planned Cleveland medical mart or its counterpart in Nashville, spokeswoman Corey Kerr said. So don’t expect to see Cardinal Health products in any medical convention center — an untested concept that would house under one roof product showrooms from numerous companies that sell to the healthcare industry.

Two years ago, Cardinal was one of 11 tenants announced by a New York medical mart project that fizzled out shortly afterwards. Cardinal seemed enthused by the New York project, which was to be called the World Product Centre, at the time.

“The development of World Product Centre provides a transparent, neutral location for healthcare providers to evaluate products and services from a variety of manufacturers and distributors,” Mark Rosenbaum, Cardinal’s chief customer officer, said at the time.

But now, Cardinal Health is singing a different tune. Kerr reiterated a quote she gave to The Tennessean for an article on the Nashville Medical Trade Center’s progress.

“Our customers have made it clear to us that they prefer our continued participation in industry trade shows and events that they’ve come to know and respect,” she said. “It’s important to maintain personal interaction with our customers in locations that are convenient to them.”

Not having Cardinal Health products  in its showrooms – let alone the Cardinal Health company endorsement – is an early setback for the convention centers. But property developers behind the Cleveland and Nashville medical marts have to hope that Cardinal’s change of heart isn’t indicative of a general disinterest in the medical mart concept on the part of big healthcare firms.

To counter that notion, Nashville would almost certainly point to a recently signed big-name tenant: furniture maker Steelcase. Cleveland, meanwhile, would argue that more than 60 companies have shown interest in signing leases for its medical mart, including publicly traded Northeast Ohio medical device manufacturers Invacare (NYSE:IVC) and Steris (NYSE:STE).

A rendering of Nashville's medical mart

The Nashville medical mart has a signed five-year lease with another anchor tenant, publicly traded furniture maker Steelcase (NYSE:SCS).

Nurture, the healthcare-focused brand of Grand Rapids, Michigan-based Steelcase, plans to occupy up to 4,000 square feet of space in the Nashville Medical Trade Center, which is slated for a 2013 opening, according to a report in The Tennessean.

Steelcase, which posted revenue of $2.4 billion in its most recent fiscal year, is a solid pickup for Nashville, which has struggled to sign tenants in the two years since it announced plans to enter the medical mart competition.

Nonetheless, the property developer behind the Nashville medical mart, Dallas-based Market Center Management, has a long way to go. Market Center has said it needs to lease 60 percent of the approximately 1 million square feet of showroom space before it can secure the financing to begin construction of the 11-story mart, and it’s nowhere near close to that number, which raises doubts as to whether the projected 2013 opening date is still realistic.

Nashville has announced five tenants, but Steelcase is the first medical products or technology company that Market Center has landed. The other tenants are a healthcare trade group, a regulatory consulting firm, a Chinese business development group and a local university. The trade group, health IT advocate HIMSS, is another Nashville anchor tenant.

Steelcase’s Nurture brand sells a wide variety of furniture for use in health settings, including cabinets, chairs, carts and workstations. Steelcase launched the brand in 2006. In 2009, Nurture partnered with Mayo Clinic on a research study into how the design of a consultation room can improve the quality of an outpatient visit.

The HCA hospital chain and Vanderbilt University Medical Center are among the company’s local customers, according to The Tennessean.

“This permanent showroom in Nashville will help us reach an even wider audience with our vision to shape and improve the future of healthcare delivery,” said Kyle Williams, Nurture’s general manager, in a statement.

In contrast to Nashville, the developers behind Cleveland’s medical mart have signed more than 60 prospective tenants to letters of intent (LOIs). The Nashville project’s backers delight in pointing out that those LOIs aren’t legally binding and impose no penalties on companies that back out of them, as two prospective tenants have already indicated they’re likely to do.

Nonetheless, Cleveland looks far likelier to hit its projected opening date — Aug. 31, 2013 — than Nashville. Officials behind both medical mart projects have said the healthcare market is likely sizable enough to only support one of them.

A rendering of the Cleveland medical mart

The Chicago-based property developer behind Cleveland’s medical mart still hasn’t signed any of its 63 prospective tenants to binding leases.

However, it’s a common practice to sign prospective tenants to nonbinding letters of intent (LOIs) in the early stages of projects, various industry experts told The Plain Dealer.

“I think everybody is aware that we are just getting started,” MMPI sales chief Greg Sanker told the PD. “We have two-and-a-half more years to fill the center.”

At the January groundbreaking for the medical mart, property developer MMPI announced 58 tenants that intend to take space in the four-story building, which is to be a collection of medical products showrooms. MMPI has since signed another five prospective tenants to LOIs, but wouldn’t reveal their identities to The Plain Dealer.

At least two of the 58 announced tenants told the newspaper that they were wavering on their LOI commitments and two others said they had a long way to go before singing contracts. Companies that back out of their LOIs face few, if any, negative or financial consequences.

The LOIs-instead-of-leases debate has been one that Cleveland’s top competitor to open the world’s first medical mart, Nashville, has thoroughly enjoyed highlighting. Nashville is eschewing the LOI route and signing tenants to leases, though it’s signed just four tenants thus far and is a long way off from beginning construction — if it ever gets there.

The property developers behind the Nashville project blasted MMPI’s LOI approach after the January groundbreaking in Cleveland.

“The emperor in Cleveland has no clothes,” Cole Daugherty, a spokesman for the Nashville project, said at the time. “Today our suspicions were confirmed that the announcement from Cleveland is not a list of tenants with leases, but rather a list of companies from the region with nonbinding letters of intent.”

“Our facility design and our business practices couldn’t be more different than the folks in Cleveland,” Daugherty continued. “We will hold no ceremonies, nor release any lists without binding commitments from our partners.”

It’s an open question as to how relevant the LOIs vs. leases contrast is when the medical mart isn’t scheduled to open until late 2013. Eventually, MMPI will sign tenants and likely fill all the mart’s showroom space — though the quality of those tenants that’ll take that space also is open to question.

But, until the developer is able to tout signed leases, skeptics of the medical mart have one more piece of ammunition to cast doubt on the project’s viability — and that’s not making it any easier for MMPI to sell the untested medical mart concept to customers.

A rendering of the Cleveland medical mart

Going back to those innocent and optimistic days of 2009 when the three-city medical mart competition was just taking shape, one thing has always been clear: For any of the projects to succeed, the healthcare industry would have to buy into the untested medical mart concept.

That is to say, the success of any medical mart would clearly be dependent on hospital purchasing managers seeing value in visiting a single location with a wide array of vendors peddling their wares to the hospital industry.

And it’s likely those hospital purchasing managers wouldn’t feel compelled to visit any medical mart unless the building was stacked with tenants that are at the top of the various sectors of the healthcare industry. To use an always-popular sports analogy: LeBron James and Alonzo Gee are both professional basketball players, but which one do you think is motivating America’s sports fans to part with their hard-earned, noncollective-bargained dollars to buy tickets?

The challenge, then,  to the property developers behind the medical mart projects in Cleveland, Nashville and (once upon a time) New York was clear: simply attract high-quality tenants whose products are in high demand, then sit back and watch the hospital buyers roll in. Those products could include anything from electronic medical records systems to exam tables to orthopedic implants to wheelchairs — any of the thousands of items you’d find in a hospital.

So it would stand to reason that if a medical mart could lure tenants at the top of the health industry, success would likely follow. Sure, the health trade shows held at nearby convention centers will drive some traffic to the medical mart tenants, but certainly trade shows alone won’t be enough to provide a large amount of hospital buyers walking through a medical mart’s halls.

In theory, the medical mart concept makes plenty of sense. Why wouldn’t hospital buyers want to save time and money by viewing lots of products in one location on one trip, instead of flying around the country to visit individual vendors in disparate locations? And the medical mart concept has always had a powerful and persuasive proponent — Cleveland Clinic CEO Toby Cosgrove, one of the nation’s foremost physician-executives.

But when viewed together, the track records of the three cities in attracting (or not attracting) the leading companies in the health industry suggest getting that industry buy-in isn’t so easy. And more pointedly, it raises the question of whether the healthcare industry really does place much value on the medical mart concept — and whether the concept of a medical mart was ever that great of an idea in the first place.

Let’s start with New York. The Manhattan-based project started with a bang, becoming the first of the three cities to announce that it had tenants — 11 companies including big names Cardinal Health and orthopedics manufacturer Zimmer. Shortly after that, the New York medical mart fizzled, never to be heard from again. Certainly, the exorbitant cost of Manhattan real estate played a huge role, and one could argue the project was doomed from the beginning. But one could also argue that if enough prospective tenants bought into the vision of what the New York medical mart was selling, it’d still be around today.

On to Nashville, which, quite frankly, has posted an abysmal record in attracting tenants. Despite repeated promises that big deals were in the works, Nashville has thus far signed just four tenants, and none of the big, international variety the project’s backers have said they’re targeting. At least one local media outlet has begun a death watch of sorts, as far back as January, wondering if the city should come up with a Plan B for its old convention center, which was to be part of the medical mart project.

Nashville’s last announcement — that Vanderbilt University “envisions” hosting events at the medical mart — was met with thinly veiled derision from the Nashville Business Journal. Again, if the health industry saw real value in setting up shop in a medical mart, would Nashville be struggling so mightily to sign up even one (one!) large multinational corporation in the health space?

So Nashville may have lured away Northeast Ohio’s greatest contribution to indie rock, the Black Keys, but it isn’t likely to win the medical mart competition over Cleveland, which is nearly certain to open its mart first.

But Northeast Ohio taxpayers who’ll eventually pony up about $840 million to subsidize the project have to wonder exactly what “winning” means, and the word isn’t quite as easy to define in the medical mart context as it is in the Charlie Sheen context.

MMPI, the Chicago-based property developer behind the Cleveland project, deserves credit for signing up 63 tenants. But a detailed look at exactly who those tenants are makes you wonder if they have the name recognition and firepower to bring hospital buyers from around the country to Cleveland.  (Now’s probably a good time to mention that MedCity News’ parent company, MedCity Media, intends to take space in the medical mart.)

For example, 62 percent of the tenants announced in January are either based in or have significant operations in Ohio. Certainly, Ohio has experienced impressive growth in its biomedical sector over the last decade. But can anyone really be so provincial and blinded by civic pride to think that a medical mart could be considered world-class with such a heavy percentage of Ohio tenants?

Further, just three of the 58 charter tenants are traded publicly on the Nasdaq or New York Stock Exchange, so we’re hardly talking about a collection of the titans of industry here. And two of those large public companies — home health equipment maker Invacare and sterilization products firm Steris — call Northeast Ohio home. It’s hard to believe that Invacare and Steris didn’t feel at least a small sense of civic obligation to help out the local project by lending their names. Each company is to be commended for that, but again, it doesn’t exactly build confidence that top healthcare companies see a ton of value in the medical mart concept.

Curiously, there’s one Ohio healthcare company that’s noticeably absent from the medical mart — $100 billion pharmaceuticals distribution firm Cardinal Health, the state’s largest company by sales. And let’s not forget that Cardinal did commit to New York before that project went belly-up.

Cardinal spokesman Troy Kirkpatrick said the company still sees “merit” in the medical mart concept, but Cardinal is “waiting to determine the demand for this concept before we would invest in any new projects.”

The single-most revealing piece of information about the small stature of the medical mart tenants came from Cleveland Magazine. The magazine reported that MMPI had signed just five of the 100 national medical manufacturers the Chicago company named as showroom prospects in a list it shared with sister publication Inside Business in 2009 (and MMPI is likely now regretting having shared that list with the magazine.)

As I asked nearly immediately after MMPI released its list of tenants in January, where are the Philips Medical Systems, the Siemens Medical Solutions, the GE Healthcares of the world?

In short, the medical mart simply has too many MedCity Medias and too few Medtronics to think that it’s going to be a huge draw for hospital purchasing managers — at least with its list of current tenants.

MMPI obviously doesn’t see things that way.

“The Cleveland Medical Mart & Convention Center has resonated strongly within the healthcare industry across multiple disciplines and our current list of 63 tenants reflects the widespread interest in this concept,” company spokesman Dave Johnson said. “Interest in this facility continues to grow within the healthcare community.”

Of course, I’d be remiss to omit the No. 1 factor the Cleveland medical mart has in its favor: time.

MMPI rightly pointed out after the tenant announcement in January that it has more than two years to sign up more tenants before the medical mart’s scheduled opening. (Though that raises the question of whether there’s all that much room available for those tenants given that MMPI President Chris Kennedy told Crain’s in January that MMPI had letters of intent covering 100 percent of the mart’s available space. Yes, a few of the companies probably won’t end up signing leases and others will reduce their space, but will that open up very many slots? )

And in fairness to MMPI, company executive Mark Falanga told Inside Business a couple years ago that “it’s going to take many years for this to ramp up.” Plus, I do seem to recall a little something about a recession plaguing the U.S. economy over the past few years, meaning that MMPI wasn’t exactly operating in an ideal sales environment.

So maybe the problem is simply that there’s not much awareness of the medical mart at a national level, and that awareness could rise as its 2013 opening date draws nearer, helping MMPI bring in some high-profile tenants. “Have a little patience,” MMPI would no doubt say to skeptics.

But the early results from Cleveland, Nashville and New York suggest an industry uncertain of the benefits that the untested medical mart concept could hold. And Northeast Ohioans need to begin thinking about what happens next if you build it, but not very many people come.

A rendering of the Cleveland medical mart.

The property development group behind Cleveland’s medical mart has hired a 30-year trade show and meetings industry veteran to be general manager of the Cleveland Medical Mart & Convention Center.

Brian Casey’s duties will include attracting trade shows, clients and events to the medical mart and convention center, which is scheduled to open in 2013, according to a statement from MMPI, the medical mart’s Chicago-based developer.

Casey previously was CEO of the High Point Market Authority, which oversees permanent showroom space in High Point, North Carolina, home of the largest trade show in the world for the home furnishings industry. High Point hosts about 85,000 people for the show every six months.

Casey has held the CEO role with High Point since 2006. In that role, he was responsible for the marketing and operations of about 12 million square feet of showroom and exhibition space.

He’ll begin his job with MMPI on May 2. MMPI manages several buildings at High Point.

Casey said the job with MMPI was “a career move and a unique opportunity for me,” the Raleigh-Durham Business Journal reported. Casey leaves High Point at a time of uncertainty for the market, as the three largest showroom complexes undergo ownership changes that could bring them together with the rival World Market Center in Las Vegas, according to the Business Journal.

The Greensboro News & Record credited Casey with leading a number of improvements at High Point Market during his tenure, including better transportation services, more entertainment, more amenities and unified registration.

“MMPI has worked with Brian Casey for years and knows firsthand his vast array of knowledge and experience in attracting and producing trade shows, while providing the highest level of customer service possible to his tenants,” said Mark Falanga, a senior vice president with MMPI.

MMPI appears to be making solid progress on the medical mart, having begun construction in January. Later that month, the Chicago company announced 57 planned tenants and 31 trade shows for the mart and convention center.

The video highlights the Nashville Medical Trade Center‘s showrooms, exhibition hall, health information technology innovation center and training and education facilities. It was originally unveiled at last week’s annual Healthcare Information and Management Systems Society (HIMSS) conference in Orlando.

Nashville has so far announced just four tenants for its proposed $250 million mart, which is designed to feature 1 million square feet of showroom space.

In contrast, Cleveland — Nashville’s counterpart in the medical mart competition — last month publicly identified 58 tenants for its project, which is to include 100,000 square feet of showroom space. Those tenant deals give Cleveland a significant leg up on Nashville, which must pre-lease about 60 percent of its space to secure the private financing necessary to begin construction. Cleveland, on the other hand, is publicly financing its $465 million medical mart and began construction in January.

Here’s the video:

A rendering of Nashville's medical mart

Nashville’s medical mart project has announced its fourth tenant, which it’s calling the “China Pavilion” — a showroom that will feature products and services from yet-to-be-determined Chinese medical technology companies.

Beijing-based Huida Investment Management Company will be responsible for developing the pavilion and initially plans on leasing 10,000 square feet in Nashville’s planned 1 million-square-foot medical mart, according to a statement from property developer Market Center Management Co.

Huida is working with two of the largest medical associations in China to recruit companies for the space.

Market Center said the China space would be “the first in a series” of international showrooms designed to showcase products from individual countries.

The China Pavilion is just the fourth announcement in what’s been a slow trickle of tenant deals for Nashville’s medical mart, which appears to be struggling mightily to close deals. In September, developers said they were in the final stages of negotiations with 15 tenants, but with today’s announcement, the number since that proclamation has reached just two.

(In December, Nashville identified New York-based regulatory consulting firm mdi Consultants as tenant No. 3. The other two announced tentants are Lipscomb University and trade group the Healthcare Information and Management Systems Society.)

That slow progress has prompted some business and community leaders in Nashville to wonder whether they should begin exploring other options for the city’s convention center, which is slated be part of the medical mart complex.

In contrast, Cleveland, Nashville’s counterpart in the medical mart competition, last month publicly identified 58 tenants for its 100,000-square-foot mart. That development gives Cleveland a significant leg up on Nashville, which must prelease about 60 percent of its space to secure the private financing necessary to begin construction. Cleveland, on the other hand, is publicly financing its $465 million medical mart and broke ground on its construction site earlier this year.

Both Cleveland and Nashville say they plan to open their medical marts in 2013, but at this point, Cleveland appears to be the only one with a realistic shot at hitting that target.

A rendering of the Cleveland medical mart

The initial list of tenants for Cleveland’s medical mart includes organizations from a wide variety of industries, with the heaviest concentration in furniture, design, information technology and nonprofits.

Furniture makers lead the way, numbering 11 of the mart’s 58 announced tenants, according to an analysis by MedCity News. The tenants list includes eight designers, whose specialties include graphic design, corporate showrooms and storage cabinets. (Disclosure: MedCity Media is one of the medical mart’s announced tenants.)

The high concentration of furniture makers and designers shouldn’t come as a surprise. After all, that’s what Chicago-based property developer MMPI knows best. Many of the 10 or so other properties that MMPI manages are largely dedicated to furnishings and design, such as its flagship Merchandise Mart in Chicago. As far back as March 2009, MMPI was saying that the first phase of tenants was likely to consist of a heavy dose of furniture companies.

Information technology is another area of strength, with nine IT companies on the initial tenants list. Three of them sell software that’s used by medical professionals.

Shortly after the initial tenants were announced, MMPI caught some flack (from MedCity News, the Plain Dealer and numerous Cleveland.com commenters) for the list’s lack of many big-name medical industry leaders with national stature.  Cleveland Magazine poured gas on that fire, reporting that MMPI had signed just five of the 100 national medical manufacturers it named as showroom prospects in a list it shared with sister publication Inside Business in 2009. With just six companies that market medical devices appearing on the initial tenants list, readers can make up their own minds whether those observations have any legitimacy. (MMPI was invited to comment for this article, but declined.)

Following is a breakdown of the major non-furniture and design industries represented by medical mart tenants:

Medical devices: AllTech Medical Systems America, Invacare, OrthoHelix Surgical Designs, Proxy Biomedical, Steris, Thermedx.

The list is a short one, but at least it has some big names: Northeast Ohio’s Invacare and Steris are two of the five publicly traded U.S. companies on the tenants list. The others in the device category are primarily young, up-and-coming firms: orthopedic implants maker OrthoHelix; imaging devices manufacturer AllTech; fluid management systems company Thermedx; and Proxy Biomedical, which sells biological materials used to promote tissue healing.

All six of the companies on the list have significant operations in Northeast Ohio, but Proxy (Ireland) and AllTech (China) also have overseas bases of operations.

Information technology: Black Diamond Video, BlueStar, Hyland Software, Innovative Medical Systems, MCPc, MedBed Connect, Novicast, SelectCare Connect, Zuga Medical.

A group of Northeast Ohio software makers highlights this list. Hyland, long the darling of Northeast Ohio’s tech community, sells document management software to several different types of end-users, including hospitals. MedBed Connect and SelectCare Connect seem to have the same business model, producing software that helps hospitals and families pick long-term care facilities.

Others in this category focus on hardware: Beachwood, Ohio-based Zuga Medical (which apparently has no website) and Novicast sell digital display monitors, while Kentucky-based BlueStar focuses on mobile, automatic data capture products, such as those that locate assets using radio frequency identification (RFID). Grand Rapids, Michigan-based Innovative Medical Systems sells a variety of hardware and software, and also helps hospitals set up patient security systems.

Nonprofits: ASM International, BioEnterprise, BioOhio, Case Western Reserve University, Cleveland Clinic, Cuyahoga Community College, MetroHealth System, Northeast Ohio Health, Science and Innovation Coalition, Sisters of Charity Health System, Team NEO, University Hospitals Case Medical Center, Practice GreenHealth.

The nonprofits number 12, headlined by four Northeast Ohio hospitals: Cleveland Clinic, MetroHealth, University Hospitals and Sisters of Charity. Another tenant — the (pdf) Northeast Ohio Health, Science and Innovation Coalition — is a group of Cleveland and Akron hospitals including the Clinic, UH and MetroHealth that have banded together in an effort to develop and recruit healthcare workers in the region.

Cleveland-based BioEnterprise and Columbus-based BioOhio are key advocacy groups for the state’s biomedical industry, while Team NEO is the region’s attraction and retention group. Virginia-based Practice GreenHealth is a group for eco-friendly healthcare practitioners.

Construction and manufacturing: Gleeson Construction, Johnson Controls, Norman Noble, Robin Industries.

Milwaukee-based Johnson Controls, with $34 billion in sales last year, looks to be the biggest company on the tenants list. Johnson Controls sells a wide variety of products, including car parts, batteries and electronics and industrial heating and cooling systems. However, it’s the company’s building management systems, which control heating and cooling, lighting, security and fire safety, that could hold appeal for hospitals.

Norman Noble and Robin Industries are Northeast Ohio-based contract manufacturers that specialize in medical devices.

The rest: Clariant (chemicals), Arcadia Health Care (home healthcare), Infuse Medical (education), International Sourcing Group, Brooklands Medical Supplies (infection control), MedCity Media, Vendome Group (media), Al’s Courtyard Cafe.

Chemicals company Clariant is based in Switzerland and traded on that country’s stock exchange. The company’s Masterbatches business unit makes colorants and additives for plastics used in medical devices.

Indianapolis-based Arcadia sells pharmacy services and home healthcare staffing. Its DailyMed service packages dosages of prescription medicines into individual packets labeled with the time of day they are to be taken. Parent company Arcadia Resources (AMEX: KAD) trades on the New York Stock Exchange’s AMEX market. The company’s shares have recently been hovering around 30 cents and have traded only briefly above $1 since early 2008. Last year, the company lost $31 million on revenues of $104 million. Arcadia has lost money for at least three consecutive years.

Brooklands Medical Supplies sells bacteria-killing, disposable curtains to hospitals, as well as disinfectants and face masks. The company’s headquarters is in Ireland and its U.S. base is in Plainfield, Illinois.

Utah-based Infuse Medical develops education and sales training materials for medical device manufacturers, some of which involves creating 3-D animation. Clients include Boston Scientific, Medtronic and several lesser-known device companies.

A rendering of the Cleveland medical mart

From hospitals to device manufacturers to health IT companies to furniture makers, the list of the Cleveland medical mart’s first announced tenants is impressive in breadth.

MMPI, the Chicago-based property developer behind the $465-million Cleveland Medical Mart & Convention Center, announced a list of 57 medical mart tenants and 31 conferences, conventions and trade shows at a ceremonial groundbreaking on Friday. The mart is expected to open in fall 2013.

The announcement is a big deal for MMPI and the medical mart, a sure sign of progress and an indication that the project — whose future has sometimes been clouded by tension between MMPI and the city plus doubts from the taxpayers who are footing its bill — is making its way down the long road to becoming a reality.

But the lack of many big-name, high-profile national healthcare leaders makes the list seem, at first glance, underwhelming. (Full disclosure: MedCity Media is among the tenants, and our two-year-old company would certainly have to be considered one of the small names.)

Think again, says MMPI.

While tenants like home health products manufacturer Invacare (NYSE: IVC) and sterilization products maker Steris (NYSE: STE) are familiar names that call Northeast Ohio home, they rank at the top of their fields. And Wisconsin-based Johnson Controls (NYSE: JCI), which makes everything from building management systems to car batteries to refrigeration products, posted $34 billion in revenues last year.

“We’re just getting started,” said Greg Sanker, MMPI’s vice president of leasing. “We’ve got two-and-a-half years to add to an already impressive roster.”

Plus, bigger isn’t necessarily better, Sanker said, pointing to another tenant, Medina, Ohio-based orthopedics developer OrthoHelix Surgical Design. The company offers technology many of the big players in the market can’t match, he said.

That may be, but wouldn’t it stand to reason that the heavy hitters in the world of medical technology — like the high-profile movie stars that draw people to theaters — would stand the best chance of attracting buyers to the medical mart? So where are the Philips Medical Systems, the Siemens Medical Solutions, the GE Healthcares of the world?

Well, maybe it was to be expected that most of the tenants in the first phase are more regionally known than internationally renowned companies. It’s likely the big international firms are in the “waiting-and-watching” mode due to previous uncertainty surrounding the project, according to Baiju Shah, president of Cleveland-based economic development group BioEnterprise Corp., which is among the mart’s first tenants.

It’s possible that the momentum created by the initial announcement will compel some of the big guys to sign on the dotted line.

The overarching strategy behind the initial tenants list is not surprisingly based on the end-customers who’ll visit the mart: hospitals. “It’s driven by the hospitals and their needs,” said Sanker. “These other companies and organizations [in the medical mart] will support those needs as those needs evolve.”

Somewhat surprisingly, four hospitals have chosen to be tenants as well as (presumably) customers: Cleveland Clinic, University Hospitals Case Medical Center, MetroHealth System and Sisters of Charity Health System.

Perhaps most significant for MMPI, the 57 announced tenants have to make Cleveland the clear and overwhelming front-runner in the medical mart competition with Nashville, which has announced just three tenants so far, and only one since April. Cleveland has signed its tenants to letters of intent, which aren’t legally binding contracts. Nashville, which unlike Cleveland doesn’t have public funding for its project, is trying to scrape together private financing, and therefore is signing its tenants to leases.

The developers behind the Nashville Medical Trade Center enjoy drawing that distinction, and also boast that their plans call for 10 times the amount of Cleveland’s showroom space (1 million square feet vs. 100,000 square feet.)

“The emperor in Cleveland has no clothes,” said Cole Daugherty, a spokesman for the Nashville project.  “Today our suspicions were confirmed that the announcement from Cleveland is not a list of tenants with leases but rather a list of companies from the region with non-binding letters of intent.”

“Our facility design and our business practices couldn’t be more different than the folks in Cleveland,” Daugherty continued.  “We will hold no ceremonies nor release any lists without binding commitments from our partners.”

Note the use of the word “region,” as a shot at the lack of big-name companies in Cleveland’s tenant base. While it’s easy to dismiss those words as just the heated rhetoric of a competitor, even MMPI would have to admit that a few more big, global companies would make its tenant list all the more formidable.

Nonetheless, it’s still early. Nashville hasn’t landed any big fish either, and those fish are still out there, ready to be caught.

So it’s fair to say that MMPI is off to a good start — but still has plenty of work to do.

Here’s a video of the Cleveland medical mart groundbreaking, from regional marketing group Positively Cleveland.

A rendering of the Cleveland medical mart

The following are the tenants announced by the Cleveland Medical Mart & Convention Center at its ceremonial groundbreaking:

Medical mart tenants
9 to 5 Seating
Acme Express
Aeroscena
AllTech Medical Systmes America
Al’s Courtyard Cafe
Arcadia
ASM International
BioEnterprise
BioOhio
Black Diamond Video
BlueStar
Brookland Medical Supplies
Cabot Wrenn
Case Western Reserve University
Chromcraft
Clariant
Cleveland Clinic
Cuyahoga Community College
Gleeson Construction
Hyland Software
Industrial Woodworking
Infuse Medical
Innovative Medical Systems
Intensa
International Sourcing Group
Invacare
IOA Healthcare Furniture
Joel Berman
Johnson Controls
Karen Skunta & Company
MASS Medical Storage
MCPc
MedBed Connect
MedCity Media
MetroHealth System
Midmark
NeoCase
New Product Innovations
Norman Noble
Northeast Ohio Science and Innovation Coalition
NOViCAST
OrthoHelix Surgical Designs
Practice GreenHealth
Proxy Biomedical
RGI International
Robin Industries
Safco Products
SelectCare Connect
Sisters of Charity Health System
Smartshape Design
Spec
Steris
Team NEO
Thermedx
Trinity Furniture
University Hospitals
Vendome Group
Zuga Medical

Conferences, conventions and trade shows
American Institute of Aeronautics and Astronautics
Association for Iron & Steel Technology
Buildex Cleveland
Cleveland Clinic Center for Continuing Medical Education
Ohio Optometric Association — EastWest Eye Conference
EXCEL!NT Meetings
Greater Cleveland Sports Commission
Green Building Conference Cleveland
International Medical Meeting Professionals Association
Leasing Forum Cleveland
National Model Railroad Association
Neighborhood Housing Services of Greater Cleveland
OH Multifamily Real Estate Conference
Ohio Music Education Association
Ohio Society of Anesthesiologists
Party411.com
Pfizer
Plastics in Medical Devices
Professional Meeting Planners Network
Property Forum Cleveland
Publicis Medical Education
Real Capital Conference
Rubber Division, ACS
Stella Maris

A rendering of the Cleveland medical mart

When the backers of Cleveland’s medical mart finally announce the project’s first planned tenants Friday at a ceremonial groundbreaking, savvy observers will scan the list for the identities of  big-name “anchor tenants.”

The reason is simple: Those anchor tenants will be crucial to the success of the $465-million project by luring buyers who’ll also visit the project’s smaller, lesser-known tenants.

Without the big names (or at least a couple), buyers may be less willing to make the trek to Northeast Ohio in search of the medical products — devices, information technology, furnishings and other equipment — that will be on display in the mart. Think of the anchors as the big department stores like Macy’s or Nordstrom at the ends of a mall that help deliver shoppers to the mall’s numerous smaller vendors that lie in between.

Aside from drawing in buyers, it stands to reason that one or two big-name anchor tenants will also make it easier for the medical mart’s developer to sign smaller tenants, which will be more confident in the project’s long-term prospects if the big guys are already buying into the concept.

“Who is going to be the anchor tenants will be an interesting litmus test,” said J.B. Silvers, a professor of healthcare finance with Case Western Reserve University. “Those anchors draw people in.”

Unfortunately, the medical mart’s Chicago-based developer, MMPI, won’t make it easy to pick out any anchor tenants from the larger list. Unlike the competing Nashville project, Cleveland won’t specifically identify any tenants as being “anchors,” said Dave Johnson, a spokesman for MMPI. (Nashville has thus far labeled one of its three announced tenants as an “anchor.”)

So what’s a medical mart handicapper to do in the absence of the “anchor” label? Simply start with a list of the world’s biggest medical device companies. Here are a few: Medtronic, St. Jude Medical, Boston Scientific, Johnson & Johnson, Philips Medical Systems, Siemens Medical Solutions and Stryker.

If none of those companies — or at least comparable companies — appear on the tenants list, it could spell trouble for MMPI in terms of its ability to sell the medical mart in the future.

Of course, the absence of big names certainly doesn’t sound the death knell for the project. We’re only in the beginning chapters of a long book, and MMPI has plenty of time to continue signing tenants before the mart’s planned 2013 opening.

But a few big-name anchor tenants will go a long way in silencing critics who’ve doubted the viability of the project all along, so it’ll be hard to view a lack of those names as anything but a letdown.

It happened. And elation ensued in board rooms, investors’ offices and research laboratories.

By a nearly two-to-one margin, voters approved Third Frontier with a $700 million, four-year extension that’ll keep it alive until at least 2016 — and beyond, the industry no doubt prays. From CEOs to scientists to venture capitalists, nearly everyone in the industry will tell you that Third Frontier has been absolutely critical to the success of  Ohio’s growing biomedical industry, which now boasts more than 1,600 organizations with a combined payroll of nearly $4 billion, according to BioOhio.

From its launch in 2002 through the middle of this year, Third Frontier had granted about $1 billion to research collaborations, entrepreneur support organizations, venture capital authorities and companies. Those grants have generated a $6.6 billion economic impact on Ohio, creating nearly 50,000 jobs and more than 600 companies, according to reports by an independent consultant and the Ohio Department of Development.

But that’s not to say everything was wine and roses for the industry in 2010.

The venture capital industry continues to undergo convulsive change — not to mention far fewer exits than anyone would like. Ohio is not immune to this change, as evidenced by dismal numbers through the first three quarters of the year. Venture investing in Ohio fell 35 percent to $89 million compared to the like period last year.

Comparing 2010 to 2007 (a peak) is even worse — a whopping 66  percent decline in venture investing, according to a report from BioEnterprise. The venture industry’s woes make it harder for promising startups in Ohio and elsewhere to access the growth capital they need to get drugs, devices and other medical technology to market.

If there’s a bright side to the drop in venture investment, it’s the rise of angel investor groups that have stepped in to fill the void, or at least some of the void. The state boasts an impressive array of well-organized and professionally run angel groups — most notably Cleveland’s North Coast Angels, Columbus’ Ohio TechAngels and Cincinnati’s Queen City Angels — something that bodes well for the industry’s future in Ohio.

Following are a few other 2010 Ohio biomedical industry highlights:

Medical mart marches forward: Thanks to its public funding, Cleveland seems well-positioned to grab an early lead in what’s likely to be a years-long medical mart race with Nashville. The property developer behind the Nashville Medical Trade Center, Dallas-based Market Center Management Co., bet big by planning a medical mart with 1 million square feet of showroom space –10 times (10 times!) the size of Cleveland’s mart.

But the Dallas company may have overreached and has struggled to close deals, so far having announced only three tenants after saying in September that it was close to signing 15. But don’t fall into the trap of proclaiming Cleveland the winner too soon. This one will take a few years to play out. If the industry eventually warms up to Nashville’s concept of “critical mass,” Cleveland’s grand plans could flutter away as depressingly as so many Jake Delhomme interceptions or Mo Williams three-point bricks.

Major investments and exits: Every year brings its share of M&A activity and venture capital investment, and 2010 was no different. The significant deals are too numerous to list, but here are a few:

• Ohio University started off the year with a bang when spinoff diagnostic tests maker Diagnostic Hybrids Inc. was sold in January to San Diego’s Quidel Corp. for $130 million.
• The largest sale of an Ohio biomedical company in 2010 (that we’re aware of ) happened in July, when Twinsburg-based medical products supplier EdgePark Medical was sold to a group of private equity firms for $850 million.
• Notable venture deals of the year include $27.5 million for Beachwood-based radiology outsourcing firm Radisphere, $20 million to Oakwood-based radiation therapy company ViewRay, $18 million to Akron-based imaging company FMI Technologies, and $14.5 million to Garfield Heights-based spinal device maker AxioMed.

Philips establishes imaging R&D center: Philips Healthcare is investing more than $33 million in the first phase of a medical imaging research and development center at University Hospitals Case Medical Center in Cleveland. Business leaders hope the center will bolster Northeast Ohio’s reputation as a hub for innovation in medical imaging technology.

GCIC opens: The Global Cardiovascular Innovations Center — a Third Frontier-backed incubator designed to nurture companies developing products to treat cardiovascular disease — quietly opened in April on Cleveland Clinic’s campus. The $19 million, 50,000-square-foot building is already filling up with tenants, including data management company Explorys Medical Inc. and medical device outsourcing company Farm.

Cardinal piles on acquisitions: Ohio’s largest company by revenues, $100-billion pharmaceuticals and medical products distributor Cardinal Health Inc. (NYSE: CAH), made three major acquisitions to access new markets in 2010:

• In June, Cardinal purchased for $517 million Healthcare Solutions Holding LLC, including the company’s P4 oncology services businesses. The move was aimed at extending Cardinal’s reach in the lucrative specialty pharmaceuticals market.
• Last month, Cardinal reached a $1.3 billion deal to buy Kinray Inc., a New York-based drug distributor. The deal expanded Cardinal’s base of independent retail pharmacy customers by 40 percent to about 7,000.
• Later in November, Cardinal bought Chinese drug distributor Zuellig Pharma China, ushering in the era of the global drug distributor and giving Cardinal a foothold in the fast-growing Chinese market.

In other news involving publicly traded Ohio healthcare companies, it was the end of an era for Elyria-based Invacare Corp. (NYSE: IVC) when long-time CEO A. Malachi Mixon stepped down as CEO. Mentor-based STERIS Corp. (NYSE: STE) seems to finally be putting a year it’d rather forget behind it, after beginning to ship the replacement for its flagship System 1 sterilization system. In December 2009, federal regulators issued a safety alert saying System 1 could harm patients.

Cleveland Clinic’s breast cancer vaccine: A vaccine to prevent breast cancer being developed by Cleveland Clinic researchers has shown “overwhelmingly favorable results” in animals and could be on its way to conquering the disease that kills more than 40,000 American women each year. “If it works in humans the way it works in mice, this will be monumental,” said researcher Vincent Tuohy. Enrollment in human trials could begin next year.

A rendering of Nashville's medical mart

The property development company behind Nashville’s medical mart has reached an agreement with its third tenant, New York-based mdi Consultants Inc.

The consulting firm will be the “anchor tenant” of the 1 million-square-foot Nashville Medical Trade Center‘s just-announced Global Business Development Center, according to a statement from Market Center Management Co., the Dallas-based property developer that would operate the medical mart.

Essentially, the Global Business Development Center is designed to be a one-stop shop for foreign healthcare companies looking for help in getting products on the U.S. market. Not so coincidentally, that’s also mdi’s specialty. The center’s offerings will include regulatory and compliance assistance, product lab testing, quality system compliance, reimbursement assistance and business development aid.

Although Great Neck, New York-based mdi has reached an agreement to take space in the medical mart, the company has not yet signed a lease. “We anticipate they will be a long-term partner, but specific lease terms have yet to be worked out,” said Cole Daugherty, a spokesman for the Nashville Medical Trade Center.

As far as Cleveland is concerned, it’s unclear whether mdi ever considered taking space in its medical mart, or whether mdi even engaged in discussions with MMPI, the Chicago-based property developer that would operate Cleveland’s $465 million, 100,000-square-foot medical mart.

A representatives from mdi didn’t immediately return a call. An MMPI spokesman declined comment.

MMPI has yet to sign any tenants to leases, or at least publicly announce that it’s done so. The property developer has, however, signed letters of intent with 46 companies, though those letters of intent aren’t binding.

Nashville’s other publicly announced tenants are Lipscomb University and the Healthcare Information Management Systems Society (HIMSS). However, it’s been slow going for Nashville in reaching deals with tenants, which has to be encouraging for backers of Cleveland’s competing medical mart.

At this point, reaching deals for showroom space is far more important to Nashville than Cleveland. That’s because Nashville’s medical mart will be privately financed, and Market Center must lease 60 to 70 percent of its 1 million square feet of showroom space to secure its financing, Daugherty said.

Thanks to public funding via a quarter-cent county-wide sales tax hike, Cleveland isn’t under that obligation.

Both medical marts are scheduled to open in 2013, though Cleveland will almost certainly open first thanks to its advantage in funding.

MMPI announced last week that it’s scheduled a ceremonial groundbreaking for the Cleveland Medical Mart & Convention Center on Jan. 14.

A rendering of the Cleveland medical mart

As Cleveland’s $465 million medical mart project inches closer to a groundbreaking, critics still question whether the pricey public investment is worth the untested concept’s risk.

One notable voice joining the conversation is former Pittsburgh Mayor Tom Murphy, now a senior resident fellow at the Urban Land Institute, who spoke to Bloomberg News for a lengthy article about Cleveland’s medical mart gambit. Murphy was mayor of the Western Pennsylvania city from 1994 to 2005.

“It’s a shot in the dark in some ways, in their ability to create a new economic diversity for their economy,” Murphy said. “I would want to see some commitments before I would spend that kind of money.”

By saying “that kind of money,” Murphy is referring not only to the medical mart’s $465 million price tag, but to the $840 million the mart could end up costing Cuyahoga County taxpayers. The larger amount factors in costs such as amortization and was an estimate from the St. Louis-based investment bank that is managing a county bond offering for the project.

MMPI, the Chicago-based property developer that’s leading the project, has yet to sign any tenants for the medical mart, a planned collection of medical product showrooms that’s expected to be populated by sellers of medical devices, information technology, furnishings and other equipment. The mart will be connected to a newly renovated convention center in downtown Cleveland.

Others worry that Cuyahoga County taxpayers are footing too-large a percentage of the medical mart’s bill — much of which is covered by a quarter-cent, county-wide sales tax increase passed without a voter referendum — and that MMPI doesn’t have enough “skin in the game.”

MMPI is contributing about $20 million for tenant installations and $8.5 million through forgoing lease payments. It also is responsible for cost, repair and operating overruns, Bloomberg reported.

The Chicago property developer is “getting a convention center and the medical mart property essentially for nothing,” said Heywood Sanders, a professor of public administration at the University of Texas-San Antonio and a critic of publicly subsidized convention centers. “The question is: ‘Can it deliver on its expectations?’ ”

An MMPI spokesman declined comment on criticism of the project, Bloomberg reported.

Cleveland Clinic CEO Toby Cosgrove, who’s credited with helping pioneer the medical mart concept, argues that it wouldn’t be a huge problem if the medical mart didn’t deliver on expectations.

“What’s the worst thing that could happen if this fails?” he asked. “You have a brand new building and a new convention center. So the downside isn’t too bad.”

The taxpayers who’ve footed the bill for Cosgrove’s idea probably would be a little less understanding if the medical mart does indeed fail to deliver jobs and economic development to Northeast Ohio.

A rendering of the Cleveland medical mart

City and county officials are expected to sign several key documents related to Cleveland’s medical mart project Thursday — another milestone and a sign of progress as the $465 million project marches on.

The documents include the county’s agreement to purchase the convention center from the city and other construction-related agreements, said Jeff Applebaum, a Thompson Hine attorney who’s representing the county.

“Up until that signing, the project could still not happen,” he said. “Once it’s signed on Thursday, it’s committed.” The signing is expected to happen at Thursday’s Cuyahoga County Commissioners’ board meeting.

The signings are the next step in what’s projected to culminate in 2013 with the opening of the world’s first medical mart — a collection of showrooms featuring products from companies in medical devices, information technology and hospital furnishings, among others — competition from Nashville’s medical mart project notwithstanding, of course.

Signing the agreements paves the way for what could be the next important step in the medical mart project’s evolution — groundbreaking. After missing an earlier target for an October groundbreaking, a “ceremonial” groundbreaking could be on the schedule soon.

“Actual groundbreaking and ceremonial groundbreaking are two different things,” Applebaum said. “There will be an announcement about a ceremonial groundbreaking after closing.”

Another upcoming significant development could be an announcement about tenants that have signed up to take space in the medical mart. MMPI, the Chicago-based property developer behind the project, can begin converting the letters of intent it’s signed with prospective tenants into binding contracts after the key construction agreements are signed, Applebaum said earlier this month.

As of now, there are no plans for a tenant announcement, MMPI spokesman Dave Johnson said. But that might be a lesser strategy.

“It would be in their best interest to start announcing signed contracts as soon as they get them, because they are very close to being fully subscribed or oversubscribed,” Applebaum said earlier this month. “So if there’s so much interest in this, announcing the deals that have been done with the most desirable tenants could create more demand from other possible tenants.”

MMPI has secured letters of intent from 41 tenants for showroom space at the medical mart. Those LOIs cover about 89,000 square feet of space, Johnson said. Plans call for about 100,000 square feet of showroom space to be available.