Andrew Dick: Hello and welcome to the Healthcare Real Estate Advisor Podcast. I’m Andrew Dick, an attorney with Hall Render, the largest healthcare-focused law firm in the country. Today we are broadcasting from The Healthcare Real Estate Legal Summit in Scottsdale, Arizona. My guest today is Dr. Suzet McKinney, the CEO and executive director of the Illinois Medical District. Dr. McKinney is one of our keynote speakers at the summit and I thought this would be a good opportunity to take some time to learn more about her career in the Illinois Medical District. Dr. McKinney, thanks for joining me today.

Suzet McKinney: Thank you for having me.

Andrew Dick: So before we jump into the conversation, I thought it might be helpful to give some basic information about the Illinois Medical District or IMD for short. The IMD is located on the West side of Chicago. It is about a 560-acre area of land that is home to medical research facilities, labs, universities, a biotech business incubator, and more than 40 healthcare related facilities. The IMD is one of the largest urban medical districts in the United States. Dr. McKinney, before we jump into what you’re doing at the IMD, tell us a little bit about your background, you have a pretty impressive resume, and how you ended up at the IMD.

Suzet McKinney: Sure. Well, once again, Andrew, thank you so much for having me today. So in terms of my background, I am a public health practitioner by training. I am both masters and doctoral level trained in public health. And my area of expertise in public health is bioterrorism and disaster emergency and response. And so I have spent the vast majority of my career working in that specific area of public health as well as teaching at the University of Illinois at Chicago School of Public Health. And I have a faculty appointment at the Harvard T.H. Chan School of Public Health. I was with the city of Chicago’s Department of Public Health for a number of years, nearly 14 years. And I served as the deputy commissioner of the Bureau of Public Health Preparedness and Emergency Response there. And I loved that role. It was quite possibly, I think my dream job. And really exhilarating and rewarding to know that my responsibility was to mobilize the team that was responsible for preparing the residents of the city of Chicago for large scale emergencies and disasters.

Suzet McKinney: But I have to say in 2014, we were responding to the Ebola response and I’m not sure if your listeners are aware of this, but during the Ebola outbreak in West Africa in 2014 and 2015, the US Department of Homeland Security and the US State Department rerouted all travel from West Africa into the United States through only five cities and Chicago was one of those cities. So that really brought the Ebola response to our front door. And I think we probably spent about a day or two just really under a lot of stress and anxiety trying to figure out our response. And after those initial days, we mobilized and I just said to myself, “This is what we’ve trained for,” even though that was a condition or a disease I should say, that we always imagined was existing in some far away location and that we didn’t have to worry about it in the United States.

Suzet McKinney: Needless to say, we launched our response. It was a successful response, although it lasted a very long time. And when that response ended, I thought to myself, Ebola was the one thing that we were always afraid of. It was the one thing that was never supposed to happen. And I thought that since I had faced the one thing that was supposed to be my greatest fear and I faced it without too difficult of a challenge, perhaps it was time to find a new challenge. And coincidentally, I received a phone call regarding this role at the Illinois Medical District and decided to explore it as a new challenge and something that would place me outside of my comfort zone. And what I would say looking back is be careful what you ask for. So that’s a little bit about how I arrived at the IMD and if your listeners are just wondering what does it mean to be the CEO at the Illinois Medical District? I would tell them that my role there as the CEO is the perfect storm of public health, healthcare, real estate, finance, big business deals, and politics all rolled into one.

Andrew Dick: It sounds fascinating. Give our audience a little bit of an overview of the IMD. I gave some quick facts when we started, but tell us about the history. How did this come to being? And it’s interesting, it seems like it’s almost like a quasi-governmental district of some kind, talk about it.

Suzet McKinney: Well, you’re right, it is a quasi-governmental district. So as you said in the beginning, the Illinois Medical District is a 560-acre special-use zoning district right in the middle of the city of Chicago. We are about 10 minutes outside of downtown Chicago. The IMD was originally established in 1941 through an Act of the Illinois state legislature. And the district was established for the sole purpose of becoming a hub within the city of Chicago that was dedicated to health care, health education, biotechnology and technology innovation with an overarching goal of fostering economic growth for the city, the county of Cook as well as the state of Illinois. So back in 1941, because we were established through an act of the state legislature, we were a component of state government. We functioned just like any other state agency. But in 2012, the state statute was changed and the Illinois Medical District was made to be its own unit of local government.

Suzet McKinney: My General Council says, we are a unit of local government body politic. So all of the lawyers in the audience will understand what that means, but we are a governmental body, but we are a very unique governmental body because I am not an elected official. I am a CEO that’s hired by our board and I serve in that CEO role. But I have many of the same authorities that many mayors and town officials have, such as zoning authority and building authority. And so we function as a very small governmental entity inside the city of Chicago, which is a home rule government and also inside the county of Cook, another home rule government and within the state of Illinois.

Andrew Dick: Wow. So talk about the board of directors. How are these individuals appointed if you’re a quasi-governmental agency, so to speak?

Suzet McKinney: So as I mentioned before, we have an overarching mission of fostering economic growth for the city, the county, and the state. And because of that, our board members are all politically appointed. We have a seven-member board, four of those members are appointed by the governor of the State of Illinois, two board members are appointed by the mayor of the city of Chicago. And then one board member is appointed by the president of the Cook County Board. So it’s a very interesting mix. But I would say that all of our board members typically are appointed because of their expertise in a particular area that’s related to our work or a long-standing history of civic engagement.

Andrew Dick: Wow. Sounds like a dynamic group. How were the boundaries established? I mean, today it’s 560 acres, give or take. Was it always that big or has it evolved?

Suzet McKinney: Sure. In the beginning, it was not that large although I cannot recall how large it was in the very beginning back in 1941. What I can tell you is that in the beginning, we only had two anchor institutions, the Rush University Medical Center, which at the time was Rush Presbyterian, St Luke’s Medical Center, and then the second one was the Cook County Hospital, John H. Stroger, Hospital of Cook County. In 2006, the medical district purchased additional land and we were able to expand our boundaries through the purchase of that additional land. So we’ve been 560 acres since 2006.

Andrew Dick: Wow, that’s impressive. And today there are multiple anchors, right? Are there four or five that you would consider anchors?

Suzet McKinney: Yes. We have four anchor institutions, all of which are world-class hospitals and healthcare centers. So now joining Rush University Medical Center and the Cook County Health and Hospital System is the Jesse Brown VA Medical Center as well as the University of Illinois Hospital and Health Sciences System. Along with those anchors, Rush and the University of Illinois bring their two medical schools, which are two of the largest and most diverse medical schools in the United States. And then the University of Illinois also has within the medical district, all of its allied health schools, dentistry, nursing, pharmacy, and public health in addition to their medical school.

Andrew Dick: So talk about your current responsibilities. You said you act in many ways like a mayor, or so to speak, over the district. What is your day to day activities? What are you doing day to day?

Suzet McKinney: Well, I would say that my activities vary from day to day, but in general, a lot of those activities include governance of the district. So one of the things that we do in terms of governance is ensuring that all of the organizations, businesses and institutions that are interested in moving into the district, that their work and their mission aligns with the mission of the medical district. So we spend a lot of time, I spend a lot of time meeting with potential new residents, if you will, whether those are new hospitals, new educational institutions or other private sector businesses that may want to establish residency in the medical district. I also do a lot with real estate transactions. One of the interesting things about the medical district is that we were recently designated as a qualified opportunity zone and that brought along with it lots of meetings with investors and real estate developers who are interested in taking advantage of some of the tax incentives associated now with qualified opportunity zones.

Suzet McKinney: I also do a lot of work with our hospitals and other healthcare system partners, really looking at community health issues and some of the things that contribute to increased healthcare disparities in vulnerable communities and lower income communities. The medical district is located on the West side of Chicago, which is historically one of the most disinvested and under-resourced communities within our city. And so we do a lot of work around community health programs and trying to improve the health status of residents on the West side of Chicago. And I could just go on and on and on, but those are some of the activities that I engage in on a day to day basis.

Andrew Dick: So when you assumed the role, Dr. McKinney, talk about some of the challenges you faced stepping into that role. I’ve read a couple of articles, but I want you in your words to talk about what you’re up against and really what you’ve done since you’ve stepped into the role.

Suzet McKinney: Sure. Well, I can tell you one of the things that I always go back to when I think about challenges, when I initially stepped into the role, and I go back to a conversation that I had with our general counsel at the time, and I asked him, “What do you think the largest challenges are that the medical district is facing?” And he said to me, “Two of our largest challenges are anonymity and funding.” And with the first one, anonymity, that challenge was just the simple fact that not a lot of people knew about the medical district. They didn’t know what we were, where we were, or what we did. And so, one of the initiatives that we’ve engaged in since I started my tenure there three and a half years ago, we engaged on an aggressive rebranding campaign and marketing campaign to really raise the profile of the medical district. That included developing or solidifying our mission and vision statements, developing a new logo and marketing campaign that aligned with the mission and the vision.

Suzet McKinney: But then also really just getting out there and being more public facing, talking about the work that we were doing, the work that we want to do and establishing greater partnerships with natural partners as well as with strategic partners. On the issue of funding, we are a government entity, however, we do not obtain government funding from any other government entity. Instead, we generate our revenue through our real estate activity. So we really had to get ourselves out into the forefront of the commercial real estate market. And in order to do that, we partnered with a very large commercial real estate firm. It’s actually the largest commercial real estate firm in the world and engaged in a strategic partnership with them as well as a contractual relationship to assist us in raising our profile in the commercial real estate market. I would also say another area that posed an extreme challenge to us was just in the area of financial stability.

Suzet McKinney: I mentioned previously that we purchased a lot of land in 2006 and expanded our borders, but when that land purchased, the goal was to also develop that land. But shortly thereafter, the real estate market crashed and that new development wasn’t possible and we had borrowed $40 million to purchase new land and expand our borders. And so we were still challenged with a heavy debt load without a revenue source to sort of balance that out. And so I’m very happy to say that we doubled down on developing a strategy for repaying the debt. It took us two years, but we are currently debt-free, which I don’t think many government entities can boast that they are completely debt free. So that was really exciting for us and it represented alleviating one of the largest challenges that the medical district has ever faced. And so I’m very proud that that was accomplished under my leadership.

Andrew Dick: Well, I read a couple articles about that and I was hoping you would talk about it because you received quite a bit of public acclaim because you, I think sold off some assets or some real estate to pay down that debt or pay it off and a number of news stories just said, “Gosh, Dr. McKinney has really turned around this organization and made it so much more prominent.” So that’s just terrific.

Suzet McKinney: Thank you.

Andrew Dick: I want to talk a little bit about generating revenue through real estate. Most of our listeners are attorneys or developers that develop hospitals or healthcare facilities. When you say the medical district generates revenue through real estate, is that through developing a building and being co-owner, ground leasing land, selling land, all the above, what does that mean?

Suzet McKinney: All of the above. So of the 560 acres that make up the medical district, the Illinois Medical District owns roughly 100 of those acres and most of our anchor institutions own the land that they occupy, but they also lease additional land or building space from us. So we engage, we being the Illinois Medical District, we engage in ground leases, both short term ground leases as well as longterm ground leases. We also lease building space to entities and organizations that are interested in moving into the medical district. And now we are engaged in an aggressive plan to develop the remainder of the over 30 acres of vacant land that we still have in the medical district. And one of the things that we’ve done now that we have a level of financial stability and quite frankly liquidity that we haven’t had in the past, we’re also able to engage in some more alternative real estate transactions. So that would include things like public-private partnerships or joint ventures. And so we are exploring a number of options with a few developers currently that would get us engaged in some of those more alternative structures.

Andrew Dick: Yeah. It sounds like a pretty dynamic role that you’re in working with the developers and different healthcare providers. What I often get asked is, well, if I’m interested in developing a project at the IMD, well, how would someone do that, Dr. McKinney? If they say, “Hey, I’ve got this vision,” is it developers coming to you or are you really seeking the resident first, some academic institution or a healthcare provider or a life sciences company, is that first the most important piece, who’s going to be the resident? Or how does it work?

Suzet McKinney: Well, it works primarily the same, whether it’s the resident or the developer. And typically what happens, let’s just take the case of the resident. The potential resident may call the office or send us an email and indicate their interest in having a development in the medical district or occupying space in the medical district. And once we receive that communication, however, it comes in, we schedule a time for the resident to come in and present their project or their idea to us. One of the things that we’re very proud of is that as a unit of local government that is not a component of another unit of government, we’re able to have a little more flexibility and a more nimble structure in terms of how we engage in procurement activity and contracting activities. And so that really helps us when we are entertaining a new project.

Suzet McKinney: So once that resident comes in and presents their project to, not just me, but my senior management team as well, we have an internal discussion regarding what we’ve seen in the proposal and we make a decision as to whether or not we feel that it’s a project that would not only benefit the medical district but would also benefit that potential resident. And if our determination is positive, then we will put that resident in front of our board and we’ll bring them back and give them the opportunity to present their project to our board. Now one of the things that my board is well aware of is that I will never put a project in front of them that I don’t believe is a viable project for the medical district. Whether the viability is programmatic, financial, or any other lens that you may examine the project through.

Suzet McKinney: And once the resident presents their project to the board, the board decides whether or not to advance them forward. And if so, there is a brief review of the financials of the project and then the board authorizes me and my team to engage in the contract negotiations. So the entire process takes about three to four months, which is very fast.

Andrew Dick: I would say it’s very fast given my experience on these type of deals. So are there any projects you’re excited about that you can actually talk about at this point?

Suzet McKinney: Yes, I am very excited, one of the things that we are endeavoring to do, we’ve done a lot of work studying other innovation districts from across the country. We take our cues from a lot of work that the Brookings Institution has done around innovation districts and we’ve really tried to hone in or what factors make these districts successful because after all we’ve achieved a level of success but we want to continue that trend in the Illinois Medical District. So the vast majority of the vacant land that we have in the district currently, I would say about 35 acres is contiguous land. And so we are endeavoring to create a life sciences innovation park within the medical district that can be home to research entities, start-up companies, expanding our biotech incubator as well as infusing some residential and some retail and amenity space in the district as well.

Suzet McKinney: And so we are currently engaged in discussions with three to four developers that have well-defined projects that they’re interested in developing in that area, and we’re being very clear about this goal for life sciences. It is an area where Chicago is really lagging behind other cities. And I will tell you, I am a true Chicago in at heart and I cannot bear to see my city lagging behind others. And so we know this is an important initiative for the city, but it’s also, it’s an important economic driver as well. And we’ve seen evidence of that across the United States and we think that we can replicate it in Chicago and have a similar level of success. And so that’s what we’re doing.

Andrew Dick: So life sciences is hot right now?

Suzet McKinney: Yes.

Andrew Dick: So is it, not only because it’s used to talk about the economic drivers, is it that it’s bringing in high paying jobs? What is it that you like about the life sciences sector right now?

Suzet McKinney: Well, I like that it brings in high paying jobs, but I also like that it attracts young, new talent coming out of our country’s largest universities. And it also engages researchers. And I see that our health care partners, particularly our anchor institutions, are increasing their research efforts. There is a lot of momentum around translational research, really taking the research and translating that into clinical practice as well as engagement, greater levels of engagement with the patient. And so I think that life sciences is a great fit for those types of initiatives. And our university, the University of Illinois at Chicago also has a keen interest, not only in research and biotechnology, but attracting the best and the brightest talent both in terms of students and graduates, but also professors. And so I think you’re right, life sciences is hot and those are some of the things that I think align very well with our mission, but also with the mission of our anchor institutions and some of our other partners.

Andrew Dick: So you touched on maybe bringing in some multifamily into the mix. Talk about that a little bit. So it’s not just going to be office space or healthcare clinical space or research space, but you’re going to try to infuse maybe some more mixed use. Is that what I’m hearing?

Suzet McKinney: Absolutely. Our goal is to create and foster a vibrant ecosystem, a place within the city of Chicago where people want to be. And we see a place where people can live, work, learn and play. And so in order to foster that type of environment, we have to ensure that we are doing multiuse developments. So again, the office space, the laboratory space, but also the residential, some recreational. If your listeners go to our website, under the real estate tab there’s a great video that really shows the vision and what we foresee for the medical district. So we want to bring in some entertainment as well to really make the district a place that can be a place for everyone, whether you are traveling to the district to work, to go to school, to receive your healthcare or if you’re living there. So we’re very excited about that.

Andrew Dick: Well, one of the other topics I wanted to talk about was the strategic partnership that the IMD entered into with IGNITE Cities.

Suzet McKinney: Yes.

Andrew Dick: Talk about that just a little bit and what that means for the district.

Suzet McKinney: Sure. So IGNITE Cities came to our attention several months ago. And in our discussions with the firm, we learned that they are working with mayors from all across the country to help cities develop into smart cities. And so we started thinking what would it be like if we entered into a strategic partnership with IGNITE to create or foster the medical district into a smart district? What would that look like for us? And one of the things that we knew was that place-making and way-finding were challenges within the district. We see about 80000 people a day in the medical district, that includes 30000 employees, and 50000 patients, students, and visitors. But a lot of those visitors oftentimes and patients as well, oftentimes have difficulty figuring out where they need to go within the district, how to get there. And so this strategic partnership with IGNITE will not only incorporate some infrastructure improvements in the district, things like way-finding, whether those are kiosks or large touch screen panels that are installed at street level that will aid in that way-finding. But it will also include some fiber optic infrastructure.

Suzet McKinney: We will be able to provide free public Wifi for visitors and others who are in the district for whatever reason they might be there. But it will also enable us to connect with city services in a way that we haven’t been able to do in the district and help improve safety within the district. And also transportation, helping people understand when and where they can access the transportation assets that are in the district. So we’re really excited about it. This is an initiative that we see big cities doing. And so we think that being a small district within a big city, this is our opportunity to show that this is something that can work for other campuses, whether they are innovation districts, college and university campuses, or other large healthcare and research clusters. So we’re all about being a leader but also being a model and showing what can be done in other areas by using ourselves as a pilot.

Andrew Dick: Well, it’s fascinating. I think what you’re doing at the IMD is really interesting and as we wrap up here, talk just a few minutes about where you see the IMD going over the next five years. If you could have it your way, how do you think things will unfold over time?

Suzet McKinney: Well, if I have it my way, in five years we will no longer have the abundance of vacant land that we currently have. We are really dedicated to creating this vibrant and thriving ecosystem that I spoke about. And so what I see for the medical district is a fully developed district that is full of healthcare, science, and technology-based businesses, but businesses that also have a caring heart and a sense of social responsibility. In the private sector, the term that’s always used is corporate social responsibility. But as I mentioned earlier in our discussion, we are situated on the West side of Chicago and that’s an area of the city where we see a lot of disparity in terms of healthcare outcomes, healthcare access, but also educational access and just economic opportunity.

Suzet McKinney: And so as we attract private sector businesses to the district, we are being honest and forthcoming about some of those social challenges that we see in the area of the city that we occupy. And we are asking the new residents of the district to partner with us to really help us make a difference in the lives of others. And so I see that in the district’s future, but I also see the district as a place where the businesses and the organizations that reside in the district having understanding that while we all want to be successful individually, the real key to our individual success is our collective success. And so we are endeavoring to create a district where our partners collaborate with one another and we are all improved in our work, our businesses, and even our bottom lines are improved because of this incredible collaboration that we foster in the medical district. So we’re very excited about the work. We have achieved some success. And if I can just take a moment, I’d like to give you an example of one of our partners who is relatively new to the medical district.

Suzet McKinney: It’s a company called Superior Ambulance Company, and they are the largest private EMS provider in the Midwest. They’re headquartered just outside of the city in the western suburbs, but they were interested in establishing a presence in the district and when they came to us and we started working to negotiate a building lease for them, I spoke to the CEO about some of the challenges that we’re seeing on the Westside, and I said, “I’m trying to do everything that I can to help get people into educational programs that will put them on a pathway to employment or funnel them right into the workforce. Is there anything that you can do to help me?” And he said, “Here’s what I can do.” He said, “In my first year in the medical district, I will train 100 community residents to be emergency medical technicians or medical billing and coding specialists. And for every single one who completes their training, I will hire them to work from my company.” He’s been in the district, his company has been in the district now for eight months. They have trained and hired 103 community residents.

Suzet McKinney: So that’s a huge success. Now we are under no illusion that the next company or firm will have a hundred spaces to give us, but my outlook is if they have one or two, that’s one or two more than what we had and that’s a difference in one or two additional lives. And so that’s the type of impact that we’re looking to make. And we think and we hope that we can do it.
Andrew Dick: Well, it’s exciting. I’m grateful that you were willing to do this interview, really looking forward to your speech this afternoon.

Suzet McKinney: Thank you.

Andrew Dick: Where can our listeners find more about the IMD? More about you?

Suzet McKinney: Sure. So the listeners can always go to our website, which is medicaldistrict.org spelled just the way it sounds, medicaldistrict.org, and they can also access any of our social media platforms. We are on Facebook and LinkedIn @Illinoismedicaldistrict. Our Instagram handle is @IMDmedia, and we can also be found on Twitter @IL_MED_district.

Andrew Dick: Well, thank you again, Dr. McKinney and thanks to our listeners. On your Apple or Android device, please subscribe to the podcast and leave feedback for us. We also publish a newsletter called the Healthcare Real Estate Advisor, to be added to that newsletter, please email me at A-D-I-C-K@hallrender.com.