A prescription for growth
Medical school, clinic could change the face of Southwest Virginia

by Rod Belcher
for Virginia Business
September 2007

In the 1880s, the Norfolk and Western Railway made Roanoke the “Star City,” quickly turning a small village into a thriving industrial hub that built locomotives and shipped coal around the world. Today, area leaders are planning a second transformation, turning the Roanoke region into a medical and R&D destination.

The driving forces behind this change are two plans involving Carilion Health System, a nonprofit health-care network that employs 10,000 workers at 75 locations in Southwest Virginia. Carilion is converting to a multispecialty physician clinic similar to the Minnesota’s famed Mayo Clinic. Carilion also is partnering with nearby Virginia Tech in the creation of a medical school in Roanoke that will place a heavy emph

asis on research. The first 40-member class is expected to enroll in 2010. “We had been promoting bio-medicine and medical technology industries for quite a while,” says Wayne Strickland, executive director of the Roanoke Valley-Alleghany Regional Commission. “The medical school, with its emphasis on research, will anchor us on the map as a life-sciences center and a site for emerging technologies.”

Plans for the clinic and medical school dovetail nicely with a recent shift in strategy by economic development leaders in Southwest Virginia. Instead of courting large companies that might employ hundreds or thousands, officials are trying their hands at “economic gardening.” That’s a concept that encourages the creation of new businesses and the growth of existing companies. “Eighty percent of [new] jobs come from small businesses,” says Strickland. “Small businesses also tend to stay in the same region. If they are successful, they are usually more stable. We’re taking on more of an advocacy role for existing businesses.”

In preparing a fertile ground for business growth, local officials are trying to create a larger work force (the area’s population is currently growing at only 0.5 percent) and to attract more young professionals. The medical school is expected to be a great help in those causes as it trains new doctors and spurs the creation of research-related businesses. “It’s been hard to attract medical professionals to southwestern Virginia,” says Strickland. “This might be a way to do it for the entire southwestern and western regions.”

Despite resistance from some local independent physicians, Carilion already has recruited 90 doctors for the clinic, creating a team of 400 physicians so far. “We’ve had good response to recruiting many national leaders in our field,” says Dr. Edward Murphy, Carilion’s CEO. “A lot of people are looking at what we are doing here.”

Carilion’s transformation, in fact, was the subject of the June 2006 cover story in Modern Healthcare magazine. In May, the same magazine ranked Murphy as the fourth most powerful physician executive in the country in a national poll of health-care and physician executives. The head of the Mayo Clinic was ranked fifth.

The changeover, however, is not a ploy for publicity but a necessary strategy for Carilion’s future viability, says Murphy. Carilion’s expenses are growing faster than its revenues. Although its hospitals operate as part of an “integrated delivery system,” they largely have functioned as independent businesses. Under the clinic model, salaried Carilion physicians and other health-care workers will pursue a team approach to patient care. Hospitals would stop being independent businesses and instead become ancillary services to physician practices.

When Carilion announced its plans last year, they included establishing a clinical research institute with Virginia Tech. That partnership took on extra meaning in January with the announcement of plans for the medical school.
The focus of the five-year school will be to train research physicians — doctors who will make research a significant part of their career. All students will be required to write a thesis based on original research. Having Virginia Tech nearby will be a plus as they draw upon its extensive resources in areas such as computer science, engineering, epidemiology, health services and bioinformatics. “A research medical center in Roanoke will most likely produce spinoff research-based businesses and industries that feed into the new school and the existing Jefferson College of Health Sciences,” says Strickland.

The medical school also could help catapult Virginia Tech into the prestigious top 30 of research universities in the nation by creating additional avenues of research funding. Tech currently is ranked 52nd. Reaching the top-30 tier could produce an additional $1.7 billion annually for the region’s economy.

“The joint venture of the medical school with Carilion will enable Virginia Tech to enhance its life science capabilities and provide a much more robust research profile,” says Mark McNamee, Tech’s provost and vice president for academic affairs.

The medical school’s curriculum is under development. “Not many new medical schools get created. And the process for each one is different,” explains McNamee. “You can’t just pull someone’s model off the shelf and use it. Each school, each community is unique.”

Meanwhile, the search for the school’s dean has been narrowed to a half dozen candidates. “We have had a very strong response,” says Murphy.

“Between Virginia Tech and the health-care industry I believe we are going to see an evolution in the economy of Roanoke toward a health-care and research-based economy. I think the medical school will have a dramatic impact on that.”

Research-related companies already are major factors in the economy of the New River Valley area surrounding Tech. The Virginia Tech Corporate Research Center now has 23 buildings housing 140 private companies and researchers. “We definitely have tenants who want in,” says Joe Meredith, the center’s president. “We have three additional buildings in the design or construction stages currently. We’ve completed an additional 750,000 square feet already, and we have 167,000 square feet under construction.”

This expansion, the final stage of the center’s first phase, should be finished in the next year, adds Meredith. The second phase of the project, planned to begin next year or in 2009, will add another 95 acres to the park, creating 900,000 square feet of additional office space. “SAIC, which is a national technology, engineering and systems solutions company, is ready to move in now,” says Meredith. “They should be in by late September. There are lots of interesting things happening here right now, lots of future expansions and products potential.”

The high-paying jobs created by the companies have helped stimulate demand for retail development. “The main activity in the New River Valley has been retail,” says Aric Bopp, executive director of the New River Valley Economic Development Alliance. “There has been over $100 million in new retail development announced this last year in Montgomery County alone.”

All the developments suggest that the clinic/medical school plans could be a tipping point for the Roanoke area. “The medical school is going to transform the region,” says Phil Sparks, executive director of the Roanoke Valley Economic Development Partnership. “Like the railroad did.”