CHICAGOBUSINESS.COM I JANUARY 29, 2024
CRAIN’S
As burned-out doctors leave medicine, the health care system could buckle under the loss of providers | PAGE 15
Why doctors are calling it quits Dr. Andrew Carlo is a psychiatrist at Northwestern Medicine.
Will a nuclear reactor spring up on the U of I campus? No commercial projects are waiting, but here is how Illinois looks to play a role in the next generation of nuclear technology Although no one yet is stepping up to take advantage of a new state law that ends a moratorium on building new commercial nuclear reactors, the University of Illinois plans to construct the type of reactor the law envisions. If U of I wins approval and funding for the project, it would mark the return of a nuclear reactor to the Urbana-Champaign
campus for the first time in more than two decades. U of I, which has one of the nation’s top nuclear-engineering programs, operated a research reactor on campus for nearly 40 years until the late 1990s. It’s now one of a handful of universities and national labs that want to build next-generation small modular reactors — also called microreactors — for research and test purposes. If successful, their
work could create new interest in nuclear energy for the first time in decades and keep Illinois at the forefront of the industry. Traditional commercial reactors, such as the half-dozen operated in Illinois by Constellation Energy, are cooled by water that is kept under pressure. The one U of I is contemplating would use helium gas for cooling, while See U OF I on Page 27
UNIVERSITY OF ILLINOIS
By John Pletz
A rendering of the research nuclear reactor that the University of Illinois wants to build
VOL. 47, NO. 4 l COPYRIGHT 2024 CRAIN COMMUNICATIONS INC. l ALL RIGHTS RESERVED
ECONOMY World Business Chicago’s new vice chair looks to connect a divided city. PAGE 3
SPORTS Who would pay for a new White Sox stadium to be built in the South Loop? PAGE 4
Transparency ordinance stalls in City Council By Leigh Giangreco
An ordinance calling for more transparency around how federal COVID dollars are spent by the city is now languishing in a City Council committee. Last week, Ald. Bill Conway, 34th, introduced a proposal that would require the city to gain the council’s approval before spending more than $1 million in American Rescue Plan Act funds. On Jan. 25, Conway announced on the social media site X that he had the support of 27 colleagues, which would constitute a majority in the City Council. As of that date, the city clerk’s website reported 20 sponsors, including Conway. Despite that support, the ordinance now faces a tough road ahead. During the Jan. 24 council meeting, Vice Mayor and Ald. Walter Burnett, 27th, called the ordinance to the Committee on
Ald. Bill Conway, 34th | WTTW NEWS
Health & Human Relations, pushing the measure to the Rules Committee. Moving legislation to the Rules Committee often signals the kiss of death in the City Council, though Conway expressed optimism this week that it could still move forward. Conway requested that Rules Chairman Ald. Michelle Harris place the ordinance on the committee’s agenda, he said. However, the council must still vote to dislodge the ordinance from Rules
and send it to the Budget Committee, he added. “I think we have a good chance,” Conway said, adding that he hopes Harris and Budget Chairman Ald. Jason Ervin place the measure on their agendas. “I hope they will do that. . . .They're not ones to play games about something so broadly popular. But we'll find out.” The ordinance counts Ald. Ray Lopez, 15th, Ald. Anthony Beale, 9th, and Ald. Nick Sposato, 38th, among its supporters. Those council members have emerged as some of Mayor Brandon Johnson’s loudest critics, particularly when it comes to the administration’s handling of the migrant crisis. But the proposal also attracted Johnson’s own allies in the progressive caucus. On Jan. 22, Ald. Andre Vasquez, 40th, was chatting up Conway at City Hall about how much he liked his proposed ordinance. Ald. Julia
Ramirez, 12th, also signed on as a co-sponsor. In October, protesters attacked Ramirez and her staffers over the city’s plans to erect a migrant camp in her ward on California Avenue. That same day, Ramirez sent a letter to the mayor’s office calling for “more transparency, accountability and more local involvement in the decisionmaking process. Ald. Jeanette Taylor, 20th, another Johnson backer, insisted her support of Conway’s measure does not signal an attack on the mayor, but rather a call for transparency. “I didn’t support the last administration spending money without City Council approval,” she said. “I haven't changed because the administration changed. I still think it's the right thing to do to show our constituents, ‘We hear you, we're listening, and we want you to know this is how we spent the money.’ ”
During a press briefing following the City Council meeting Jan. 24, Johnson pushed back on the need for the ordinance. “There is oversight,” he said. In 2023, the City Council voted to allocate $152 million of those federal funds toward city operations and then gave authority over those funds to the city’s budget director, Johnson added. On Dec. 29, Johnson held a series of closeddoor meetings with council members to inform them that the city would use $95 million of ARPA funds to handle the influx of asylum-seekers. “We worked within the structure of the policy that the previous City Council provided,” Johnson said. “In fact, I took it one step further. I actually went to the City Council and explained to them and told them what our intentions were, even though the process didn’t require that.”
Judge blocks Sonoma-inspired Galena resort plan By Dennis Rodkin
A judge’s ruling last week shut down a developer’s plan to build a Sonoma-inspired resort on about 80 acres in Galena. All the zoning changes that city officials made in 2022 to allow the project “are void,” John Hay, an associate judge for Jo Daviess County in the 15th Judicial Circuit of Illinois, wrote in a ruling he released Jan. 22. Although the judge’s ruling is about the city’s zoning process and not about the merits of the project, called the Parker, it nevertheless blocks the project, at least for now, by taking away the zoning that made it possible. Hay signaled in his ruling that he likes the Parker itself, but not the way it was approved. As proposed, the Parker would include 120 new short-term rental cottages, three luxury suites built in a long-abandoned 19th century hospital building, a vineyard and other amenities. Wendy Clark, a Galena resident whose property is next door to the acreage where True North Quality Homes and related entities want to build the Parker, filed the suit, claiming that Galena officials waved the project through with little attention to concerns that she and others raised about noise, traffic and other problems the project might create. In public meetings during 2022 to consider the Parker, Galena officials projected the attitude that the project was sure to pass, Hay wrote in his ruling. Clark got the unspoken but clear message that “any objection (to the zoning changes) would be futile.” Clark, according to Hay’s ruling, “was an interested party whose property rights were at issue, and she was not afforded the opportunity to cross-examine adverse witnesses” at public meetings about the project in February and November 2022. 2 | CRAIN’S CHICAGO BUSINESS | JANUARY 29, 2024
The way to remedy the city’s violation of Clark’s right to due process, Hay wrote, is to undo all decisions made at or as a result of those meetings. Thus, Hay tossed out five decisions by the Galena City Council through May 2022, including ordinances that would annex the 80 acres into the city and change its zoning from agricultural to a commercial planned unit development. Crain’s could not reach Clark for comment, and her attorney, Darron Burke of the Rockford firm Barrick Switzer Long Balsley & Van Evera, did not respond to a request for comment. Joe Nack, city attorney for Galena, also did not respond. Dave Hooten, the Wheatonbased principal of True North Quality Homes, said his group is “assessing our options,” but he declined to comment further. In December, Hooten told Crain’s that his plan for the Parker was derived in part from visits to Montage Healdsburg, a 258-acre resort in California’s Sonoma County wine region. His family owns the Cranberry Inn, with 17 new-construction cottages, in Mercer, Wis., 385 miles north of Chicago near Michigan’s Upper Peninsula. About 160 miles northwest of Chicago, Galena is a historic town, home of Ulysses S. Grant and eight other generals who served the Union in the Civil War. Its downtown streets are lined with red brick buildings from the town’s heyday as a Mississippi River shipping port in the 19th century. Galena, Hooten said at the time, “is a tremendous place with a beautiful Currier & Ives feeling, so much history, and the terrain is so hilly, you can’t believe you’re three hours from Chicago. That’s what attracted us to do” the Parker. The 80-acre site is just under a mile southeast of the massive floodgates that mark the entrance to Galena’s Main Street district. While granting Clark a victory
against the Galena City Council and zoning board, Hay wrote that the concept of the Parker has merits. The project “is well-suited for the zoned purposes” of a commercial planned unit development, Hay wrote, and “there was no evidence” that if built, the Parker would create enough noise and bright light to “cause a hardship to Clark.” Hay also wrote that if Clark’s property value were to go down because of the Parker getting built, as her lawyer claimed, “the slight decrease in her property value (does) not outweigh the relative gain to the public” the Parker would provide.
BARANSKI HAMMER MORETTA & SHEEHY ARCHITECTS
The ruling threw out the city’s zoning decisions, at least for now stalling the project planned on a site of about 80 acres
A rendering of the winery and vineyard proposed for the Parker site
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How Walgreens’ Driscoll plans to turn VillageMD into a success
The company’s executives know its healthcare services division needs to deliver — and soon
CURTIS WALTZ / AERIALSCAPES.COM
By Caroline Hudson, Modern Healthcare
World Business Chicago’s new vice chair aims to unify the city The West Side native wants to connect Chicagoans to the networks he never had growing up | By Leigh Giangreco
I
f Chicago now can feel like a tale of two cities, Charles Smith is one of the few residents who has learned how to navigate both. Smith, a West Side native who grew up with his three siblings in a one-bedroom apartment, boarded the Green Line only twice a year to go downtown for the Taste of Chicago and to visit NikeTown with his friends. It wasn’t until he was a 29-year-old starting his own business that he began familiarizing himself with the rarified world of Michigan Avenue. Since then, Smith worked his way up from the mailroom at CNA Insurance and founded his own business, CS Insurance Strategies, in 2009. As a young father, he balanced his full-time job with his studies at DePaul University, where he would go on to earn his master’s in See SMITH on Page 26
Walgreens has a lot of work to do. The retail pharmacy giant has invested billions of dollars into healthcare services such as primary care provider VillageMD, specialty pharmacy Shields Health Solutions and home care company CareCentrix. But promised returns, particularly from VillageMD, have proved elusive. The healthcare segment reported a $436 million operating loss in the first quarter of Walgreens’ fiscal 2024, flat with a year ago. Under heavy scrutiny from analysts and investors, Walgreens executives know the healthcare services division needs to deliver—and soon. John Driscoll, Walgreens’ U.S. healthcare president, is tasked with making the division a success. In an interview, he said 2024 will be a rebuilding year for VillageMD, as the provider modifies its expansion plans and looks to reach profitability on a quarterly basis by 2025. The interview was edited for length and clarity. Walgreens’ healthcare services division has come under fire for lower-than-expected returns. What does a turnaround look like and what is the timeline?
Charles Smith | RAUL JUAREZ PROJECTS
Walgreens’ healthcare services
division has come under fire for lower-than-expected returns. What does a turnaround look like and what is the timeline? [VillageMD] is well behind where we expected it to be, but it’s still growing. We have to get at the profitability faster, and I think we’re on a path to do that, but we’re probably a year behind where we expected to be. It’s important to note that we are growing faster than we anticipated in every other business that we’ve engaged in, but that’s not to diminish the fact that Village, [CityMD] and [Summit Health] were big investments, and they’re behind. I would expect that Village would be profitable on a quarterly basis by next year. I think this is a year of retrenchment and refocusing at Village. I would expect that 2024 is a rebuild year, and 2025 will be solidly profitable. What has been most challenging about healthcare services?
I think the combination of growing probably too fast in too many places and the re-rating by CMS in Medicare Advantage was a bit of a one-two punch. We think Village can effectively manage through that CMS rerating, although it is a net reduction for the whole industry. We’re in the midst of refocusing See WALGREENS on Page 27
Mesirow inks big HQ lease extension, slashes office footprint The financial services company is joining the crowd of companies cutting back on office space amid the remote work movement By Danny Ecker
Mesirow is keeping its headquarters at an office tower in River North with a new long-term lease, but it’s joining the herd of companies reducing their workspace to adapt to the remote work movement. The financial services firm has signed a 10-year extension of its lease at 353 N. Clark St., where it will cut its footprint by one-third to about 110,000 square feet from the roughly 165,000 square feet it occupies in the building today, according to the company. Mesirow has been an anchor tenant in the 47-story tower since the company co-developed it in
2009, and has now extended its lease through 2036. The deal is like many others that have shaped the vacancyridden downtown office market over the past few years. Large office users in the heart of the city have been reaffirming their need for workspace, but far less of it as fewer employees work from the office on a regular basis in the wake of the COVID-19 pandemic. Companies downtown collectively moved out of more space than they occupied last year for only the second time since the Great Recession, according to data from CBRE. Mesirow is one of many companies that are cutting back on
space despite growing their local headcount. The 86-year-old firm, which has added about three dozen employees globally over the past five years and has about 300 of its 500 total workers in Chicago, has lots of unneeded storage space as well as conferencing areas at its Clark Street home that are used far less often now that so many more meetings occur virtually. “We’re just right-sizing our space,” said Mesirow CEO Natalie Brown, who took the top post at the company in mid-2022. Mesirow is offloading two of its six floors in the low-rise portion See MESIROW on Page 26
353 N. Clark St. | COSTAR GROUP
JANUARY 29, 2024 | CRAIN’S CHICAGO BUSINESS | 3
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Who would pay for a new White Sox stadium? It’s the key question that will shape negotiations between the MLB franchise, developer Related Midwest, and city and state officials about a potential new South Loop ballpark Chief of powerful union group throws support behind Sox stadium plan | PAGE 24
By Danny Ecker
News that the White Sox are in talks with developer Related Midwest about building a new ballpark in the South Loop has resurfaced the key question that will shape the negotiations: Who would pay for such a stadium? It's the same issue that ultimately led to the taxpayer funding of Guaranteed Rate Field more than three decades ago, when Sox Chairman Jerry Reinsdorf leveraged a threat to move the team for Florida to win a public subsidy. Then-Gov. Jim Thompson even flexed his political muscle to make it happen. Gov. J.B. Pritzker on Jan. 18 weighed in equivocally on what could be shaping up to be another hand of Sox stadium poker, implying his distaste for taxpayer financing for a new stadium while leaving the door open to ways that public bodies could help grease the skids for such a project. “Nobody’s made an ask yet," Pritzker said of the Sox-Related Midwest negotiations during an unrelated news conference. "I think you know my views about privately owned teams, and whether the public should be paying for private facilities that will be used for private business. Having said that, there are things that government does to support business all across the state — investing in infrastructure, making sure that we're supporting the success of business in Illinois. As with all of the other (sports teams and private businesses that seek taxpayer help), we'll be looking at whatever they may be suggesting or asking."
Political calculations Reinsdorf knows that political support for bankrolling stadium construction has only dropped since he negotiated the last stadi-
structure work that's eligible for TIF reimbursement to accommodate a new ballpark? What other pieces of such a development might be eligible for TIF reimbursement? Using TIF also would raise questions about the property taxes a new stadium would generate, and whether the stadium would be privately owned. The team also could seek TIF or other taxpayer help to build out and monetize areas around a future stadium. Retail and event space around pro sports facilities has become commonplace as venues today are part of mixeduse campuses. The Chicago Bears are making a similar overture in Arlington Heights, where the team says it would build a stadium itself but needs public help for the mixed-use portion around it. While the Cubs paid for the modernization of Wrigley Field privately after former Mayor Rahm Emanuel balked at public financing, the city helped by granting the team a highly lucrative series of concessions like more night games and signage rights. The Sox and Johnson's office say they're just beginning talks about the team's future in the city. A joint statement issued Jan. 17 by the club and the mayor referenced discussions about "the team's ideas for remaining competitive in Chicago in perpetuity" and that Johnson's team "is committed to continuing this dialogue moving forward." There's a lot to sort through in that dialogue. And if past is prologue in Chicago, the political theater will be quite a show. Crain's Justin Laurence and Greg Hinz contributed.
The 62-acre future site of The 78 in the South Loop | STEPHEN J. SERIO
um deal in the late 1980s. Yet he and Related still met with Mayor Brandon Johnson's advisers this month to gauge their appetite to help. If Reinsdorf seeks public help for a new stadium — a likely prospect, especially after two years of spiking financing costs — there's still a political calculation to be done. It's a calculation for a governor — one who perhaps has national political aspirations, no less — who will soon have national news outlets descending on his state for the Democratic National Convention that may wonder why two of the city's pro sports teams franchises (the Sox and Chicago Bears) are mulling their future in Illinois' biggest city. The same issue is likely not lost on Johnson, who leads a city with an urban core hungry for more foot traffic in the wake of the COVID-19 pandemic and could get a boost from a baseball stadium bringing 81 home games a year just south of the Loop. But what would happen to the taxpayer-owned Guaranteed Rate
Field? Johnson might wince at the optics of abandoning the facility on the disinvested South Side to benefit downtown. Could the ballpark be repurposed with a new user? And if so, who would finance that? There's a good chance that the Illinois Sports Facilities Authority would be involved in any potential public financing effort. The city-state agency, which owns and operates Guaranteed Rate Field and collects hotel tax proceeds to pay the debt tied to the 2003 renovation of Soldier Field, could have its purpose modified with legislation to support a new Sox stadium. ISFA CEO Frank Bilecki told the Chicago Sun-Times that the authority isn't involved thus far in discussions between the Sox and Related Midwest. For now, spokesmen for both Illinois House Speaker Chris Welch and Illinois Senate President Don Harmon say neither has received inquiries about Sox stadium financing. John Atkinson, the recently appointed board chairman of state-
wide economic development group Intersect Illinois, said in an interview with Crain's that "Mr. Reinsdorf and his team are important to the state. We've not heard from them, but if they want to have a conversation, I'm sure the governor's team would be happy to listen."
Other options There are also other ways that taxpayers could help shoulder the burden of building a new Sox stadium at Related Midwest's South Loop property, dubbed The 78. The 62-acre site is now in its own tax-increment financing district, which was created in 2019 to help reimburse Related Midwest for hundreds of millions of dollars worth of infrastructure projects to make the site more accessible. That TIF money is created only as the property gets developed, thereby creating new property tax revenue. As the Sox and Related get a feel for public officials' appetite to help with a stadium, could they get the Johnson administration to change the road and infra-
By Justin Laurence
Three groups of workers at the temporary Bally’s casino in River North have voted to unionize. The votes were certified this month and affect hundreds of workers at the company’s temporary casino at the Medinah Temple. Hospitality workers voted to join Unite Here Local 1, card dealers and gaming employees voted to join the United Auto Workers, and facility workers voted to join the International Union of Operating Engineers Local 399. "We are excited that Chicago's first casino saw the certification today of its first bargaining units. The labor peace agreement negotiated with Bally's creates a 4 | CRAIN’S CHICAGO BUSINESS | JANUARY 29, 2024
pathway to support good union jobs in the gaming industry here in Chicago," said Jake Berent, director of communications for the Chicago Federation of Labor. The next step is the unions reaching separate contracts with Bally’s. The support of the Chicago Federation of Labor was key to Bally’s winning the sole Chicago casino license in 2022 under former Mayor Lori Lightfoot, and the gambling company was required at the time to sign a labor peace agreement that recognized workers' right to form unions without interference from the company. “Bally’s continues to build our relationships with the unions to deliver Chicago’s first and only
JACK GRIEVE
Bally’s city casino workers vote to unionize
world-class casino,” a Bally’s spokesperson said in a written statement. “Today, we are excited to share that each union has
been certified as the exclusive bargaining representative for their respective classifications bringing us one step closer to
move forward with the project.” Bally’s is operating a temporary casino at Medinah Temple until its permanent location along the Chicago River in River North is ready to take wagers. The planned hotel and casino in River North has hit a road bump as Bally’s disclosed that city water lines running under the Chicago Tribune’s Freedom Center have forced the company to rework plans for a 400-room hotel within its site. The Medinah Temple casino has yet to hit revenue targets, although gambling revenue has increased since the opening in September. That revenue has translated to $3.1 million in tax receipts to the city, according to the Illinois Gaming Board.
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Here’s who will pay how much if the transfer tax proposal passes Crain’s calculated what the three new tax tiers would cost homebuyers at different price points By Dennis Rodkin
In under two months, Chicagoans will vote on one of Mayor Brandon Johnson’s signature proposals, the "Bring Chicago Home" plan to reconfigure the real estate transfer tax to create a revenue stream for fighting homelessness. What will it cost if the referendum passes on March 19? For homebuyers, the tab will be a little more than $15 million. That’s according to Crain’s research into what the past year’s home sales would have generated if the new transfer tax, as revamped under Johnson in August, were in place. That tab is likely only about one-ninth of the total revenue generated by the increase, as the increased transfer tax will apply not only to residential sales but to commercial sales. Many commercial properties sell for far larger amounts than homes, and Crain’s past estimates have pegged the commercial sector's dollar volume at around nine times residential’s. The transfer tax is a one-time tax paid when a sale closes. All together, in 12 months ended Jan. 21, luxury homebuyers in Chicago would kick $15.08 million into the pot the city would use for services to prevent homelessness. Individually, their shares would run to nearly a quarter of a million dollars. The buyers who paid $11.2 million for a Park Tower condo, the highest city home price of 2023, would have paid an additional $223,000 in transfer taxes, on top of the $84,000 they paid under the existing structure.
Unless they’re super-wealthy, buying at the extreme upper end of the housing market, homebuyers are getting off easier than they might have, says Justin Marlowe, director of the University of Chicago’s Center for Municipal Finance. As originally proposed before Johnson was mayor, Bring Chicago Home would have applied an across-the-board increase to the transfer tax for all property sales of $1 million and up, whether residential or commercial. When Johnson agreed last summer to shift the proposal to a three-tiered tax, he “shifted much of the burden away from residential properties and on to the highest-value residential properties and the commercial and industrial properties,” Marlowe said. The tiers — under $1 million, $1 million to $1.5 million, and over $1.5 million — will make less difference to a buyer like Menashe Properties, which paid $45 million for a Monroe Street office building last year. That's because nearly 97% of Menashe's purchase price would have been subject to the highest tier of taxes, and only a little more than 3%, the first $1.5 million of the purchase price, would fall into the lowertax tiers. Here's a look at what homebuyers at various levels of the city’s housing market would pay under the proposed Bring Chicago Home restructuring of the transfer tax.
Median-priced Chicago home This house on West 63rd Place in Clearing sold in December for $310,000, the median price of homes sold that
month in the city. Included in the revised structure Johnson endorsed in August was something that hadn’t been in previous plans to boost the transfer tax: a cut for anyone paying less than $1 million for a property. If the referendum passes, the transfer tax on those sales will drop from 0.0075% to 0.0060%. In December, the buyers of this house paid $2,325 in transfer taxes, or $463 more than they would pay in the new structure.
Equilibrium point Although increased transfer taxes ostensibly kick in at $1 million in the three-tier system, there’s a space above $1 million where transfer taxes actually go down. That’s because the proposal is incremental: All properties at all prices get taxed at the lowest rate for their first $1 million in value, it’s a little higher for the next half-million, and so on. Thus, some buyers at over $1 million will pay less in transfer taxes if the referendum passes. A nicely decorated State Parkway condo sold in October for the equilibrium point: At $1.12 million, the new transfer tax would be the same as the existing amount, $8,400.
A $1.71 million house In March, buyers paid $1.71 million for a sharp contemporary house on Cortland Street in Logan Square. The transfer tax they paid was $12,825. Under Bring Home Chicago as it stood then, the transfer tax would have been more than three times as much, $45,315, with the entire $32,490 difference
The buyers of this $5.1 million house would have paid almost $86,000 toward the city’s homelessness prevention programs if the Bring Chicago Home plan had been in place when they bought it in September. | JAMESON SOTHEBY’S INTERNATIONAL REALTY/POSITIVE IMAGE
going to the city’s efforts against homelessness. The proposal was to raise the transfer tax on all sales at $1 million-plus from 0.0075% to 0.0265%. The revised plan that’s on the ballot may seem more palatable to buyers at this level. If passed, it will make transfer taxes on a $1.71 million home $22,030, with $9,272 going to the fight against homelessness.
Upper end of the market This house on Greenview Avenue in Lakeview sold for $5.1 million in September, the 15th-highest sale price of 2023 in the city. The buyers paid $38,250 in transfer taxes. If Bring Chicago Home had been in place, they would have paid $124,000 in transfer taxes,
with $85,750 going toward the city’s anti-homelessness plans. The photo at the top of this story is also of this house. There’s little question that $5.1 million buyers are likely to be able to afford that difference. But they’re also likely to ask “What are we getting for that?” Marlowe says. As of yet, city officials have not published a plan for how the new revenue generated by an increased transfer tax would be spent. “One of the real shortcomings in the proposal is that it doesn’t say how the money will be spent,” says Marlowe, who lives in Lincoln Park. “Rule No. 1 of good tax policy,” Marlowe says, “is make sure that people understand what they’re paying for.”
There were fewer home sales in 2023 than any year since 2011 By Dennis Rodkin
High interest rates and low inventory in 2023 squashed Chicago-area homes sales to their lowest point since 2011, year-end figures released this month show. In the nine-county metro area, 89,482 homes sold in 2023, according to the data released by Illinois Realtors. That’s the fewest since 2011, when 66,518 homes sold. In Chicago, the year-end tally was 22,400 home sales, the lowest since 19,888 in 2012. The National Association of Realtors reported separately that home sales dropped to the lowest level since 1995, but it’s difficult to make a direct comparison. The national association counts only existing homes, while the Chicago and metro6 | CRAIN’S CHICAGO BUSINESS | JANUARY 29, 2024
area figures include both existing and new-construction sales. Big declines in home sales were anticipated when the Federal Reserve began cranking up interest rates in 2022 to choke off inflation, of which rising home prices were a big part. Hand-in-hand with home purchases go households buying new furniture, window coverings and other material to go in their new homes. These big declines in home sales indicate a significant softening in those kinds of purchases. Compared to 2022, home sales were down 20.1% regionally and 20.9% in Chicago last year. Local home sales peaked in 2021, with 138,107 sold in the metro area and 33,246 in the city. The drop from that year is 35% metro-wide and 32.6% in the city.
To get a look at how much home sales swelled during the boom and then receded, Crain’s compiled annual sales in a selection of Chicago neighborhoods. The charts detail annual sales of houses in one group of neighborhoods, and condos and townhouses — or attached housing — in another. Comparable data was not available for individual suburbs. The figures for 2023 are both well below the average for the “normal” years before the COVID pandemic and super-low interest rates sparked a housing boom in 2020. From 2015 to 2019, the metro area averaged 117,470 homes sales a year. The sales total in 2023 was about three-quarters of that. For Chicago, the five-year average was 27,527. In 2023, home sales totaled 81% of that.
Looking at December’s monthly data, in the city, 1,460 homes sold, an increase of 1.6% from December 2022, and in the metro area, 6,013 homes sold, down 6.8% from the same month last year. The median price of homes sold in December was $310,000 in the city, an increase of 7.8% from a year earlier. That’s the biggest increase since a 10.8% yearover year increase in November 2021, in the heat of the housing boom. In the nine-county metro area, the median price of homes sold in December was $307,000, an increase of 7%. In two recent months, November and August, the median was up by more than 9%. “Although the housing market is continuing its trend of low sales and relatively high prices,
our forecast is that sales will increase over the next three months,” Daniel McMillen, professor of real estate at the University of Illinois Chicago College of Business Administration, said in prepared comments that accompanied the data from Illinois Realtors. “Consumer confidence has increased significantly as interest rates and the rate of inflation have declined.” Since hitting a 21st-century high of about 7.7% in November, interest rates have been falling, averaging 6.69% last week, a slight increase from the previous week. The Illinois Realtors data uses the U.S. Census Bureau definition of the Chicago metro area, which comprises Cook, Lake, DeKalb, DuPage, Grundy, Kane, Kendall, McHenry and Will counties.
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A look at Chicago restaurants that opened in late 2023 The city’s restaurant scene is adapting to challenges that continue to linger from the COVID pandemic. Here are 10 locations that opened between September and December. | By Ally Marotti
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ast year, more restaurants in the Chicago area opened than closed for the first time since before the pandemic. It’s a milestone that in many ways signals recovery from the depths of COVID-19, which ravaged the restaurant industry and changed the way survivors operate. But there is a nuance. Compared to past years, 2023 brought fewer openings and closings overall, according to data from market research firm Datassential. Restaurant operators have honed their strategies, reducing their risks in an industry with historically high failure rates and low profit margins. “The restaurant industry here is finding a more measured, strategic approach,” said Huy Do, research and insights manager at Datassential. The Chicago area had 910 restaurant openings and 849 closings last year through October, according to Datassential. Data for the final months of the year is not available, but Do said the total figures are expected to come close to recent years’ rates. In 2021, for example, more than 1,900 restaurants closed and more than 1,800 opened. The recent struggles the industry has faced have not completely dissipated. Food costs, driven high by inflation, are still elevated, as are labor costs. Consumers still groan over increased menu prices. But restaurant operators are developing tactics to survive despite the headwinds. “The challenges are shifting,” said Matt Sussman, who opened Attagirl in Logan Square last fall. “It’s important for operators to be really smart about what they’re using and how they’re using it.” Here's a look at 10 restaurants that opened between September and December.
Akahoshi Ramen 2340 N. California Ave. Akahoshi Ramen is Mike Satinover’s first restaurant, but he has been making ramen for 13 years. He goes by the name Ramen Lord on Reddit and has gained a following with his recipes. Those internet fans have become real-life customers since Akahoshi opened in December. A week’s worth of reservations disappear in eight minutes when Satinover releases them, and people line up before the restaurant opens to secure a walk-in seat. Satinover taught himself how to make ramen after he moved back from Japan. He ran pop-ups for several years before opening his own brick-andmortar, which is open from 5 to 9 p.m. Tuesday through Saturday. (Don’t hold your breath for lunch — Satinover said Akahoshi is busy enough as it is.)
Anelya 3472 N. Elston Ave. Parachute’s Beverly Kim and her husband, Johnny Clark, opened Ukrainian restaurant Anelya at the 8 | CRAIN’S CHICAGO BUSINESS | JANUARY 29, 2024
end of October. The Avondale restaurant is named for Clark’s grandmother, who came to the U.S. after World War II. Most of the staffers at Anelya are Ukrainian and moved to Chicago after Russia invaded two years ago. There is a language barrier in the kitchen, Kim said, but that does not stop the employees from flavoring the dishes. They’ll suggest tweaks or demonstrate how their mom used to make a certain menu item. “Food is a language of . . . emotional connection to your memories, to your identity,” Kim said. “I’m just so proud to have a space for that.” Though the war has made some Ukrainian wines and ingredients difficult to source, Anelya carries wine from Eastern Europe and makes Ukrainian dishes inhouse with ingredients sourced locally. The playlist is an example: Ukrainians helped curate it.
Attagirl 2829 W. Armitage Ave. Three years after Humboldt Park’s Cafe Marie Jeanne closed, the team behind the French allday restaurant and wine bar joined forces with Logan Square’s Table, Donkey & Stick to open a new restaurant. Attagirl opened in November, and its menu is full of old Cafe Marie Jeanne favorites, some Table, Donkey & Stick mainstays and new creations. Cafe Marie Jeanne’s burger is there, as is Table, Donkey & Stick’s charcuterie, but there are also fish options, like boquerones, mussels and more. It also does weekend brunch. The restaurant, which is about three times bigger than Table, Donkey & Stick, took over the Dos Urban Cantina space after it closed last summer. Expect the wine list to grow, said co-owner Matt Sussman. There’s plenty of storage.
Cariño 4662 N. Broadway The 20-seat restaurant opened in Uptown in late December, serving a Latin American-inspired tasting menu. Chef and owner Norman Fenton’s menus draw from his travels to Mexico, where his wife is from and his child was born. Cariño is open Wednesday through Sunday by reservation only. The first seating is at 6 p.m. for the chef’s counter ($210) and 7 p.m. for the tasting menu ($190). Then at 10 p.m., the chef’s counter switches to a service Fenton calls "taco omakase," which is meant to be a more approachable kind of tasting. It’s $125 and includes three half cocktails or three half pours of wine and targets industry people who are leaving work and don’t want fast food. “Nobody’s serving late-night food in Chicago,” Fenton said. “If you want a hot dog, you can get that any time of day. But if we’re talking about fine dining, quality food, there are not that many places.”
Guinness Open Gate Brewery 901 W. Kinzie St. Guinness opened its brewery
Cariño | KELLY SANDOS
near the Fulton Market District in late September, complete with a restaurant, bakery and, of course, a brewery. Predictably, the Dublinimported Guinness Draught Stout is the bestseller, said Ryan Wagner, Guinness national ambassador and head of marketing. But close behind are two beers brewed onsite: Kinzie Street Pale Ale and Corn Maize Cream Ale, which is brewed using Illinois-grown corn. Guinness renovated a long-vacant former Pennsylvania Railroad Terminal for the brewery, with high ceilings in the taproom and visible brewery equipment. Wagner said people are often surprised it’s not an Irish pub. “There’s a bit of discovery that needs to take place when you walk in,” he said. “We wanted to be a little bit different.” Look for beer dinners coming soon.
Jook Sing 1329 W. Chicago Ave. A group of restaurant industry veterans opened Jook Sing in West Town in late October, aiming to emulate a lively Asian night market. The menu is inspired by Southeast Asian street foods: There are chow mein and chicken wings; num pang, a banh mi-like sandwich from Cambodia; and roti john, traditional street food from Indonesia. Chef and Managing Partner Christian Sia takes inspiration from his upbringing in Singapore. The name, Jook Sing, refers to individuals of Asian descent that were born in Western countries. The restaurant secured its liquor license in December and plans to open a patio in the spring. Jook Sing also just extended its hours later into the night: It is now open until 11 p.m. on weekdays and 1 a.m. on weekends. The latenight hours are a bit of a gamble, said Paul Mena, managing partner. But the night market ethos is at Jook Sing’s core, so it’s a risk the
team is willing to take. “It’s a market,” Mena said. “We have to try.”
Maxwells Trading 1516 W. Carroll Ave. Erling Wu-Bower hates the term “fusion,” particularly as it pertains to the description of his new restaurant, Maxwells Trading. “It’s not fusion at all,” he said. “It’s just big city.” Wu-Bower’s mother is Chinese and Executive Chef Chris Jung's parents are Korean. “When you grow up as a kid, the ethnic kid in the big city in America, you get this multicultural experience that really shapes you,” Wu-Bower said. It also shaped Maxwells Trading’s menu. There’s hummus and French onion dip as well as clay pot rice and a lettuce wrap with fivespiced tofu. The restaurant is on the first floor of a building in the part of the West Loop between Fulton Market and the United Center. On the top floor is The Roof Crop farm, a garden and greenhouse that supplies the restaurant. Wu-Brewer and Josh Tilden, his business partner in Underscore Hospitality, were both previously at Pacific Standard Time and Nico Osteria. Maxwells Trading is named for Wu-Brewer’s 8-year-old son.
Nisos Prime
802 W. Randolph St. Nisos Prime is Parker Hospitality’s second restaurant in this space on Randolph Street. It shut down the first, Mediterranean restaurant Nisos, last May. CEO Brad Parker is delighted with the decision to rebrand: Nisos Prime opened in November and is doing double the sales as the first iteration. Business diners account for part of that boost. Parker said corporate cards make up about 35% of Nisos Prime’s revenue, up from almost nothing when the restaurant was Nisos. Beyond steaks and pastas, the Mediterranean steakhouse has a tableside prosciutto
cart and caviar service. It is also three concepts in one: The steakhouse is on the second floor, and a bar and lounge, which opened in August, are on the first floor. In between openings, Parker Hospitality also opened Tulum-inspired Costera two blocks north in early October.
Ramova Theatre 3520 S. Halsted St. Bridgeport’s Ramova Theater originally opened in 1929 and operated as a movie palace for its nearly six-decade run. The attached Ramova Grill outlasted the theater, closing in 2012. The whole operation just got about $30 million worth of life breathed back into it. The redone 16-seat, dinerstyle Ramova Grill features dishes that nod to its predecessor’s menu, without replicating exact recipes. There’s a new taproom, done in partnership with New York-based Other Half Brewing, an event space, and the theater itself, which hosts live music. The Ramova Grill’s kitchen serves all the spaces, said Tyler Nevius, who founded the new Ramova with his wife, Emily Nevius. The COVID-delayed project opened in mid-December. Running the kitchen is Kevin Hickey of the nearby Duck Inn.
Soul Food Lounge 2 10701 S. Hale Ave. Chef Quentin Love opened the second outpost of his Soul Food Lounge in Beverly in October, about a year after opening the first location in North Lawndale. The restaurants feature soul food inspired by different global cuisines — think Creole seafood dressing and truffle lobster mac and cheese — and each location has its own menu. Love told Block Club Chicago that his goal is to turn Soul Food Lounge into a chain with locations throughout the city.
UAW, Detroit 3 must rebuild relationships after bitter strike By Michael Martinez, Automotive News
The UAW's six-week strike against the Detroit 3 produced lucrative contracts that will significantly raise the automakers' labor costs. It also produced sharp insults and rhetoric that could hamper the success of both sides as Ford Motor Co., General Motors and Stellantis seek to boost profits amid a host of challenges, according to a panel this month at the Federal Reserve Bank of Chicago's Automotive Insights Symposium. “The parties came out of this with relationships that were worse, not better,” said Joel CutcherGershenfeld, a professor at Brandeis University in Massachusetts who follows labor management issues. “Now, if all goes well, they will dedicate themselves to some repair and rebuilding, because they cannot accomplish what they need to accomplish . . . without a relationship that lets them work on quality, safety and continuous improvement.” The latest round of bargaining was particularly bitter. UAW President Shawn Fain entered the talks saying the automakers were the union's "one true enemy" and that its members should prepare for "war." He refused to shake hands with company CEOs, accused them of fomenting vio-
lence on the picket line and played up the class struggle between workers and management by wearing an "Eat the Rich" shirt on a Facebook broadcast. Similarly, the automakers accused Fain of holding the talks hostage to satisfy his personal agenda after private messages leaked that the union wanted to keep the companies "wounded for months." Ford CEO Jim Farley mocked Fain's frequent media appearances, saying he was on TV “more than Jake from State Farm.” It was much different than how negotiations used to happen, said Marty Mulloy, a former vice president of labor affairs at Ford who now has a consulting firm. Mulloy was Ford's lead negotiator in 2007, 2009 and 2011, helping to craft concessionary deals that kept the automaker financially viable during the Great Recession. “What these meetings were built on was trust," he said. "You know the term 'First try to understand and then try to be understood?’ That's what people were practicing.” Thomas Kochan, a professor at the Massachusetts Institute of Technology's Sloan School of Management, said both sides needed to get over the "psychological bump" of feeling attacked. “If that psychological barrier is not overcome, then this will be a
downhill process of more outsourcing, more job loss, more problems with competitiveness,” he said. The UAW deals are expected to raise the automakers' labor costs to about $73 per hour, from $58 before, and be a "material burden," according to Colin Langan, an automotive and mobility analyst at Wells Fargo, who discussed the contracts on a separate panel. That likely would widen the gap between the Detroit 3 and its nonunion rivals, although many of those competitors subsequently gave raises to their own workers. Ford said the deal would cost $8.8 billion — double its original expectation — while GM said its new contracts with the UAW and the Unifor union in Canada would cost a combined $9.3 billion. Both automakers expressed optimism that they'd be able to offset those costs, though panelists Jan. 18 suggested that could mean more automation and job losses. “I honestly don't think the UAW got the optimal contract for all their employees because I believe they've actually put a large portion of their employees, longer-term, in a difficult position," Mulloy said. "I think there's just going to be less UAW employees employed and one of the reasons is because of this agreement.” One way to help improve the rela-
Striking workers picket at the General Motors Lansing Delta Township assembly plant in Michigan. | JACKSON HALLAUER
tionship, panelists said, was to focus on areas of common interest at the plant level and build trust between managers and workers that doesn't necessarily involve top leadership. Still, the Detroit 3 CEOs have expressed confidence they can move beyond the rhetoric of the talks. GM CEO Mary Barra in December said she believes the company and union can have a productive working relationship. “It takes two people to have a relationship," she said. "We're going to continue to engage and share about the business, make sure they understand the opportunities, the challenges. If you think about it, [Fain] was elected into office not long before we got into pretty significant
negotiations, so I do think there's an opportunity, and at GM we'll certainly be making the effort. I'd say I've had many meaningful conversations already.” Ford Executive Chair Bill Ford, even before the talks had concluded, said he thought the automaker and union would be able to move forward. “What I also keep reminding everybody is when this ends, we have to all work together again, and not just work together, we have to become a family again and continue on," he said in October. “And we will.” Michael Martinez writes for Crain's sister publication Automotive News.
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JANUARY 29, 2024 | CRAIN’S CLEVELAND BUSINESS | 9
PE
EDITORIAL
A long to-do list for Charles Smith, the new vice chair of World Business Chicago
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his month, a local insurance executive named Charles Smith went from being Mayor Brandon Johnson’s behind-the-scenes liaison to the business community to being the de facto face of Chicago business to the outside world. In this new, far more public role, the founder of CS Insurance Strategies will fill the vice chair seat at World Business Chicago, where he’ll succeed Mellody Hobson, co-CEO of Ariel Investments. Hobson is exiting the organization along with World Business Chicago CEO Michael Fassnacht and longtime tech cheerleader Mark Tebbe. No word yet on who will fill those particular vacancies but, in the meantime, Smith has his work cut out for him. To be sure, Chicago has been scoring some wins on the economic development front lately, most recently landing the second headquarters for Boston-based solar energy provider Nexamp and becoming the North American base for French fakemeat startup Umiami. But there are still major challenges on the horizon, and it will be Smith’s job, in his new role, to hold onto the assets Chicago currently claims while making the case to other companies that Chicago is a great place to do business and Chicagoans are great people to hire. One particular worry that’s surfaced recently is the status of United Airlines, which sparked a round of hand-wringing earlier this month when Crain’s John Pletz reported the carrier’s long-term growth plans in Denver include building out a campus that could
Charles Smith is going from being Mayor Brandon Johnson’s behind-the-scenes liaison to the business community to being the de facto face of Chicago business to the outside world. | CS INSURANCE STRATEGIES
house up to 5,000 corporate employees — roughly the same number that currently work for United in its Willis Tower offices. That revelation set off a volley of denials from United as well as Gov. J.B. Pritzker that the airline’s headquarters could be in play. Even so, the United shock wave underscored the importance of maintaining good relationships with the city’s corporate citizenry — and being vigilant about potential competitive threats. Chicago is about to be the dramatic backdrop to an event that will draw the attention of the world: the Democratic National Convention. If the Johnson administration handles this well, it should be a prime opportu-
nity for Chicago to show itself off as the city proud Chicagoans know it can be: an excellent place to live and play, work and invest. But this opportunity could just as easily be botched, which is why it’s important that Smith and whoever steps into the World Business CEO role get up to speed now. Once the klieg lights of the DNC have moved on, there will still be hard work to do to convince corporate leaders that the business of Chicago is business. The Johnson administration has earned a reputation for making life harder than it ought to be for the people who want to invest in this city and provide good-paying jobs along the way. That has to change — and in his
new role, reversing that perception should be high on Smith’s priority list. Another to-do item: improving the connections between Team Johnson and the wider business world. When he was elected, Johnson was a relative unknown to the city’s business and civic leadership. Smith can and should help forge better communication between this constituency and the mayor’s office. Doing so would not only help Johnson better understand corporate Chicago’s needs and concerns, thus hopefully shaping more effective policies — it would also help reverse the widespread impression that Johnson isn’t interested in working cooperatively with employers and investors. In a conversation with Crain’s Leigh Giangreco, Smith emphasized that in addition to attracting and retaining big-name companies in Chicago, he wants to provide local Chicagoans a bridge to those companies and to do a better job of creating what he calls “a circular economy,” one that not only benefits the name-brand corporations based here but focuses on inclusive workforce development and small-business creation. Those are worthy goals and also belong on the World Business Chicago priority list. They can’t take a back seat to maintaining Chicago’s place as a major hub of national and international business, however. The small players matter, of course, but helping them becomes much harder if large employers aren’t also here providing the jobs, tax revenue and investment opportunities that create a strong base for growth.
PERSONAL VIEW
The Great Migration’s lessons for Chicago’s upcoming influx
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rom the 1910s to the 1970s, an estimated 6 million African Americans migrated from the South to cities in the Northeast, California and especially the Midwest. In “The Warmth of Other Suns,” Isabel Wilkerson called it “perhaps the biggest underreported story of the 20th century,” a migration that “recast the social and political order of every city it touched.” We may be on the cusp of an even larger and more transformative migration. Over the coming decades, the number of Americans fleeing climate-change driven droughts, fires, floods, hurricanes and water shortages will likely exceed that of the Great Migration by a wide margin. Demographer Matthew Hauer projects that 13 million Americans will be displaced by sea-level rise alone. Solomon Hsiang, a climate economist at the University of California, Berkeley, predicts that while many counties across the Sun Belt could lose more than a third of their GDP from the effects of climate change, the Great Lakes region will see migration of people and capital to cities like Chicago, Detroit, Buffalo, and Milwaukee — i.e., cities with
excess infrastructural capacity and enormous reserves of freshwater. The point is underscored in a recent Time article that begins with the story of a globe-trotting millennial who settles in Milwaukee because “it’s relatively immune to natural disasters, has access to a huge body of freshwater — Lake Michigan — has affordable houses for sale and is diverse.”
Crisis and opportunity The nation’s Rust Belt will thus become its Water Belt, and the transition promises to bring both crises and opportunities. Chicago is already reeling from the more than 24,000 migrants taking shelter in police stations and other sites across the city, of course. Although not primarily a climate-driven phenomenon, this influx is a small sign of things to come. We can expect both more internal migration, especially from the West and Southwest, and more immigrants from Central and South American countries. If history is any guide, we can also expect more conflict and increasing pressure for policy responses from government at all levels.
The wisdom and effectiveness of those responses are critical to our future. Chicago’s racial geography and cultural vibrancy are largely a result of the Great Migration. The race riot of 1919 — which began when Black teenagers swimming in Lake Michigan drifted across an imagined boundary extending into the water from the “Black beach” at 25th Street to the “white beach” at 29th Street — signaled the animosities and violence that would play out over the coming decades. A white man standing on the shore hurled rocks at the Black boys, hitting one on the head. A riot erupted within hours, leaving more than 500 people injured and 38 people dead over the course of several days. These animosities found formal expression through the mid-century years as government agencies collaborated with mortgage companies in the practice of redlining — shading city maps to denote the areas where African Americans lived and where, consequently, they would not be extended credit. Many white residents, meanwhile, enforced segregation by signing restrictive covenants, or agreements not to sell to cer-
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tain people. In turn, landlords steered Black residents away from certain neighborhoods. Urban mayors doubled down on segregation, creating massive public housing projects apart from white neighborhoods. In 1962, for example, Mayor Richard J. Daley dedicated the largest such project on earth: the 40,000-resident Robert Taylor Homes, whose soaring towers were described by journalist Vernon Jarrett as “ghettos in the sky” where Black residents “wouldn’t run into anybody but God.” Meanwhile, publicly funded interstate highway systems made migration to the suburbs possible, while hardening cities’ racial and class chasms. The bulk of the system was built from the late 1950s through the 1970s, during the peak and tail end of the Great Migration. It ultimately connected the nation with about 47,000 miles of highways, with profound implications for virtually every sector of American society, from the quality of public schools to the availability of affordable housing to the robustness of public transit systems. Of course, even as the Great Migration led to policies that stratified and divided
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PERSONAL VIEW Continued the city, it fed an astonishing cultural renaissance, as migrants from Mississippi like Muddy Waters and Howlin Wolf literally electrified the city’s music scene. “When I went into the clubs,” Waters remembered, “the first thing I wanted was an amplifier. Couldn’t nobody hear you with an acoustic.” With their electric instruments, Waters and other musicians transformed a more somber, Delta-style of music into the Chicago blues. In the 1960s and 1970s, rock bands like Led Zeppelin, Cream and the Rolling Stones (named after Waters’ 1950 hit) would forge a new genre by mimicking and adapting the styles of Waters and other masters of Chicago blues.
Rosabeth Moss Kanter of Harvard Business School noted that despite the excellent transit service to affluent parts of the city, Chicago ranked just 53rd in overall labor-market access among U.S. metropolitan areas, with less than a quarter of residents “able to reach the average job using public transit in 90 minutes or less.” It’s telling that Chicago is only now extending the Red Line from 95th to 130th street. The expected completion date of 2029 is fully 60 years after Mayor Daley first proposed it. That long-overdue investment in the South Side is a good step forward. But we will need more imagination, more ambi-
tious thinking and extraordinary political will to begin reversing the harms created by the many decades — and tens of billions of dollars — spent on our dysfunctional paradigm. A good start would be to begin conceiving of CTA and Metra as integrated, complementary systems that create affordable access to every part of the city, all through the day, vs. Metra’s current mission as a commuter system mainly serving suburban residents during rush hours. The coming era of mass migration will force our hand not only in preparing for climate change but becoming a more equitable city. The conflicts over the relatively
small recent influx of Venezuelan immigrants — and the mounting tally of climate-driven disasters across the U.S. and the globe — underscore that time is short. The scale of the challenges is daunting, and the path forward is uncertain. But we have the advantage that we’ve been here before. We’ve seen the cultural flourishing that mass migration can bring. And we’ve seen the results of housing and transportation policies that create divisions and deny opportunities to vast swathes of the population. We can do better. Preparing for, and prospering in, the coming mass migration to Chicago will demand it.
Theo Anderson, left, is a Chicago-based researcher and writer specializing in business case studies. Josh Salzmann is a professor of U.S. history at Northeastern Illinois University in Chicago and the author of “Liquid Capital: Making the Chicago Waterfront” (University of Pennsylvania, 2018).
Policy matters We can draw on this history to prepare for what we know is coming. Many climate migrants will be people who have lost their homes, jobs and possessions to fires or sea-level rise. They will be like many participants in the Great Migration: poor and in need of help. Some longtime residents may bristle at the very presence of new migrants, resist efforts to house them and/or seek to contain them in certain areas. Lawmakers would do well to remember that policies that segregate people, deny them access to jobs and punish them for their poverty only produce despair and fuel the crime and violence that have become synonymous with Chicago. Conversely, better policies will produce a stronger and healthier city. At the most immediate and urgent level, Chicago can begin to address its homelessness problem by looking at what works in cities like Houston, which has cut its population of unsheltered people by more than half since 2011. The New York Times’ Nicholas Kristof wrote recently that one key to its success has been civic leadership that is relentlessly focused on eliminating bureaucratic obstacles and coordinating the efforts and resources of the city’s relevant nonprofits. The logic of the city’s “housing first” approach, Kristof writes, “is that it may be easier for someone to overcome an addiction while safe in an apartment, rather than cold on a wet sidewalk and feeling a need to self-medicate.” Similarly, transportation can be a foundation for upward mobility or an immense obstacle to it. Car culture creates enormous burdens on people who either don’t drive or can’t afford reliable transportation, cutting them off from access to food, good jobs, health care and full participation in the life of the city. A recent analysis by TransitCenter, for example, tallied the number of jobs accessible via a 45-minute (or less) transit ride for different racial demographics in the city’s urban core. It found that Black and Latino residents had access to nearly one-fifth fewer jobs than the average resident, while white residents had access to about one-fifth more jobs. It also found that the average annual cost of owning and operating a car in the Chicago region was nearly $12,000, vs. $900 for a CTA/ Pace pass. In the book “Move,”
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JANUARY 29, 2024 | CRAIN’S CHICAGO BUSINESS | 11
Blue Cross first to open sickle cell gene therapy floodgates By Nona Tepper, Modern Healthcare
Blue Cross Blue Shield insurers have become the first carriers to cover multimillion-dollar new gene therapies for sickle cell disease, and other insurers and Medicaid agencies are moving to follow suit. Blue Cross' Synergie Medication Collective has inked risk-sharing agreements with drugmaker BlueBird Bio to offer its $3.1 million Lyfgenia gene therapy treatment for sickle cell disease to some self-insured employers, as well as competitor Vertex Pharmaceuticals' $2.2 million Casgevy treatment. The U.S. Food & Drug Administration greenlighted the treatments in December. Synergie, launched in January 2023, includes the Chicago-based Blue Cross Blue Shield Association, a number of independent Blue Cross & Blue Shield plans and the pharmacy benefit management company Prime Therapeutics, co-owned by Chicagobased Health Care Service Corp., the parent of Blue Cross & Blue Shield of Illinois. High prices could bankrupt companies writing checks for these treatments and Synergie is balancing the gene therapies' big upfront costs with potential longterm benefits by sharing risk with manufacturers and directing patients to specific providers. With these agreements, drugmakers struggling to turn a profit on new treatments for rare diseases are also making a bet that their pioneering therapies will replicate the results from clinical trials in the real world. The high stakes represent the new norm in healthcare contracting as
expensive gene therapies increasingly come to market. “Our goal is to have an effective outcomes-based contract for every gene therapy on the market,” Synergie CEO Jarrod Henshaw said.
Costly treatment Sickle cell disease is a genetic disorder in which red blood cells' shape alters to resemble a crescent moon, leading to blocked veins, excruciating pain, potential organ failure and early death. It affects 100,000 Americans, the majority of whom are Black and covered under Medicaid. Treatment for these patients often fails to reach national standards, said Dr. Lewis Hsu, director of the pediatric sickle cell program at the University of Illinois Chicago and chief medical officer at the
COMPANIES ON THE MOVE
Sickle Cell Disease Association of America, a patient advocacy group. Patients suffering from acute sickle cell pain often visit the emergency room for care and, because they do not show outside symptoms--such as a broken bone — hospital staff do not prioritize their treatment, he said. Staffers sometime accuse patients of being drug addicts, he said. Some medications can reduce the disease’s severity, but it can be hard for patients to obtain them and none are intended as a cure. Stem cell transplants represent the gold standard for treatment, but that comes with significant risk and requires patients to find a suitable donor. Since the FDA approved treatment in 1984, about 1,200 individuals have received a stem cell
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Weaver, a national accounting and advisory firm, announces a transaction with New York-based Buchbinder Tunick & Company, LLP effective January 1, 2024. This deal significantly expands Weaver’s East Coast presence to five offices, including two in New York City, one on Long Island, one in New Jersey and one in Washington, D.C. It also adds 125 audit, tax and advisory professionals, including 16 partners, to the firm.
von Briesen & Roper, s.c. vonbriesen.com von Briesen & Roper, s.c. announces the opening of its new and larger Chicago office located at 320 S. Canal Street on the 30th floor of the BMO Tower in the West Loop. The firm entered the Chicago market in 2020 and is expanding their presence with strategic growth in the local market. von Briesen is a law firm based in Milwaukee with additional offices in Madison, Neenah, Waukesha, Green Bay and Eau Claire, Wisconsin. The firm has 180 professionals providing a full range of legal services.
transplant for sickle cell, according to a July article in the National Center for Biotechnology Information journal. Black Americans are one of the least likely ethnic groups to find a fully matched donor despite being the most affected by the disease, with fewer than 30% able to find a perfect match, according to a study published last August in the Transplantation and Cellular Therapy journal. “There’s a lot of things that we could do for sickle cell that are not being done,” Hsu said.
Price problems, solutions New gene therapies intended as cures could dramatically improve life for those living with sickle cell. Through Synergie’s deal, selfinsured employers can pay Blue Cross plans an undisclosed fee to cover sickle cell treatments for their workers through their stoploss policies, Henshaw said. Synergie has worked with Blue Cross plans to pool about 10 million patients’ lives, though it’s unclear exactly how many will use Lyfgenia. Synergie did not provide details on how many plans are currently participating. Synergie promises to pay drugmakers the full cost of the drug, so long as they agree to give the company a full or partial refund if certain patient outcomes are not met, Henshaw said. Synergie has contracted with Blue Cross companies' Evio to help navigate sharing risk with drug manufacturers, and with BCS Financial to help structure its stoploss policy. It is also working with independent vendor Emerging Therapy Solutions to direct patients to preferred treatment facilities. Bluebird’s agreement with Synergie lasts three years and is tied to the number and cost of hospitalizations and emergency department visits Lyfgenia patients experience for acute pain events, a Bluebird spokesperson said. Synergie was the first company to ink such an agreement with Bluebird, the spokesperson confirmed. The company also finalized a similar deal with another payer that covers 100 million U.S. lives
this month, which the spokesperson declined to name. Bluebird is also talking with 15 state Medicaid agencies about coverage, the spokesperson said. Additionally, Bluebird is negotiating with the Centers for Medicare and Medicaid Services about inclusion in a pilot program whereby federal regulators would broker payment agreements with drug manufacturers that could be used by all state Medicaid agencies. Bluebird said it anticipates CMS will implement the Cell and Gene Therapy Access Model next year. CMS did not respond to an interview request. Despite the increased coverage, the drugmaker is still struggling to build a profitable business around its gene therapies. Bluebird in January projected it only has enough money to last until the first quarter of 2025. The company listed financial sustainability as a “going concern.” "Everyone's trying to figure out how to manage the affordability and access of these drugs because they're just different than traditional drugs from a price perspective and from a complexity perspective," Henshaw said. Questions remain about whether public and private payers covering Bluebird and Vertex's therapies will receive a return on their investment. The average lifetime cost of a commercially insured sickle cell patient is $1.7 million, according to a January 2023 study published in the Blood Advances journal. Both Bluebird and Vertex have estimated the lifetime cost of managing sickle cell for someone with recurrent pain crises to be between $4 million and $6 million. Bluebird and Vertex’s treatments could be considered reasonably priced at $2 million, according to the Institute for Clinical and Economic Review, a nonprofit that reviews the cost-effectiveness of drugs. Gene therapy manufacturers have inked payer deals similar to Synergie's, which have improved patient access to drugs without lowering list prices. For example, shortly after winning FDA approval in 2018, Spark Therapeutics entered into outcomes-based contracts for Luxturna–an $850,000 gene therapy that treats a rare form of blindness– with nonprofit insurer Point32Health and Cigna's Express Scripts pharmacy benefit manager. Luxturna's sticker price has remained steady since. Insurers are likely weighing both the potential financial and social costs when it making gene therapy coverage decisions, Hsu said. “‘How come you’re not going to pay for that, what kind of cave are you living in?’ That’s probably what [insurers] are hearing,” Hsu said. “Adding to that is that sickle cell disproportionately affects Black and brown people. It would be social injustice for sure if you did not cover it.” Jon Asplund contributed. Nona Tepper writes for Crain's sister publication Modern Healthcare.
ACCOUNTING ORBA, Chicago ORBA, one of Chicago’s largest public accounting firms, welcomes Employee Benefits Consultant, Heather Sinclair-Smelley, to the firm. She assists clients with the oversight, management, planning and compliance of employee benefit plans and activities, and regularly consults with plan sponsors regarding plan amendment requests. Heather is an expert in understanding ERISA compliance department processes, procedures and standards, as well as quality control review for nondiscrimination testing.
ARCHITECTURE site design group, ltd., Chicago site design group, ltd. proudly announces the elevation of Jenna Jones and Rob Reuland to Principal, joining Ernest Wong, Robert Sit, Brad McCauley, and Hana Jones Ishikawa. Since joining the firm in 2013, Jenna expanded her role from Project Manager to Director of Marketing and Communications. In pivoting to Principal, her leadership role will continue to develop the firm’s Reuland strategy in marketing, operations, communications, business development, and recruiting. As Principal, Rob will lead the studio operations, providing oversight for project operations, team management, and project execution. His 17-year tenure as a Landscape Architect features a rich and diverse portfolio across sectors, from master planning through design and construction.
PEOPLE ON THE MOVE BANKING
LAW FIRM
LEGAL
First Bank Chicago, Highland Park
Goldberg Kohn, Chicago
Benesch, Chicago
First Bank Chicago, one of the five largest privately held banks in Chicago, proudly announces the promotion of Stacy Raven to AVP/ Community Relations and Events. She is responsible for developing and maintaining community relations, planning and execution of all internal and external bank events and managing the day-to-day operations in the Marketing department. Stacy is an active volunteer with CBO and a Board member with the Highland Park Chamber of Commerce. Stacy joined our team in 2008.
Goldberg Kohn has elevated corporate attorney Ross Friedman and litigator Joe Hoolihan to Principal. Ross Friedman advises private equity, family Friedman offices, privately held companies, startups and lenders on a variety of transactional matters, including mergers, acquisitions, investments, joint ventures, and debt and equity restructurings. He also drafts and negotiates commercial Hoolihan contracts and provides general corporate advice to clients. Joe Hoolihan represents plaintiffs and defendants in commercial litigation across the country. He handles class action, product liability, false advertising, False Claims Act, fraud, civil conspiracy, breach of fiduciary duty, data breach, bankruptcy, intellectual property and breach of contract disputes.
Ermias Abebe has joined Benesch as an Associate in the firm’s Corporate & Securities Practice Group. Ermias advises private equity sponsors and their portfolio companies, as Abebe well as to both publicly and privately held companies, on complex transactions. These include mergers and acquisitions, divestitures, carve-outs, leveraged buyouts, and other strategic endeavors. Molt Dana Molt has joined Benesch as an Associate in the firm’s Benesch Healthcare+ Practice Group. Dana provides advisory services to clients within the healthcare industry, as well as defends clients in government investigations and litigation. He also offers guidance on a broad spectrum of statutory and regulatory compliance issues.
INSURANCE BROKERAGE Hylant, Chicago Hylant announces the promotion of Andrew Kurt to Vice President, Executive Risk, Private and Non-Profit Team Lead. As the leader of the private company and non-profit executive risk practice, Kurt will expand the organization’s growing executive risk resources and solutions with a focus on the risks faced by private companies and non-profit organizations. Kurt will continue to maintain and strengthen partnerships with Hylant carrier partners and create innovative solutions for Hylant clients.
site design group, ltd. enthusiastically welcomes Kari Lin Aass as Director of Finance. In her new position, Kari Lin will be responsible for leading the finance and accounting functions of the firm. With a degree in International Business Administration, Kari Lin comes with over ten years of experience in financial services, particularly in the design industry, where she has successfully bridged the gap between design and numbers.
LAW Ginsberg Jacobs LLC, Chicago Ginsberg Jacobs LLC, a Chicago law firm representing clients nationally in commercial real estate matters, is pleased to announce that Michael G. Muthleb, Jr. has been promoted to the firm’s partnership. Michael advises clients on commercial real estate matters, including acquisitions, sales, financing, and zoning and land use. Michael received his J.D. from the University of Michigan Law School and his B.A. from Clemson University.
Chicago Commons, Chicago
Goldberg Kohn, Chicago Jeff Dunlop and Maria McGuire have been named Co-Chairs of Goldberg Kohn’s Commercial Finance Practice Group. Jeff and Maria take the helm Dunlop of the largest practice group at Goldberg Kohn, with nearly 50 attorneys dedicated to representing banks, private credit funds, specialty lenders and other commercial lenders in loan transactions ranging McGuire from $15 million to $650 million and involving borrowers across a broad spectrum of industries and sectors. The practice is nationally recognized by some of the largest and most successful financial services companies in the world. Both Jeff and Maria have been named “40 Under 40” award recipients by The Secured Finance Network, which recognizes “the best and brightest rising stars in secured finance.”
LAW FIRM
ARCHITECTURE site design group, ltd., Chicago
LAW FIRM
site design group, ltd. is thrilled to announce that Justin (JD) Rossman has been promoted to Technical Director. JD is a Registered Architect with a background in Civil Engineering. Over his 15-year tenure at site, JD has served as the CAD Manager, a Project Manager, and a Field Representative for wide-ranging projects across the country. In his new role, he will continue to oversee the firm’s documentation standards and lead quality assurance and quality control of construction documents.
Kogut & Wilson, Chicago
P013_CCB_20240129_v2.indd 1
NON-PROFIT
LAW FIRM
Brenda G. Friedman advances to partner at Kogut & Wilson. As a family and matrimonial law attorney, Brenda joined the firm in 2020 and has continuously guided clients through a myriad of issues related to prenuptial agreements, property division, parental responsibilities, child support, maintenance and post-decree modifications. Her legal prowess shines in crafting effective strategies while ensuring comfort and minimized emotional toll as clients move on to the next phase of their lives.
Karina Slaughter has been promoted to Chief Early Learning Officer at Chicago Commons, leading its Early Education programs that serve 1,700 children across 18 communities. She joined Chicago Commons in 2019 as Senior Director of Programs, and swiftly rose to Vice President in 2020 and Senior Vice President in 2021. Karina has a Master’s in Child Development from the Erikson Institute. Her role emphasizes Chicago Commons’ dedication to Early Childhood innovation. NON-PROFIT Daniel Murphy Scholarship Fund, Chicago The Daniel Murphy Scholarship Fund (DMSF) welcomes Tom Ramsden as Chief Development Officer. Throughout his career spanning nearly three decades, Tom has spearheaded annual giving efforts and championed ambitious fundraising campaigns to help schools offer tuition aid and opportunities for students with financial need. Combined with his commitment to unlock educational opportunities, Tom brings expertise and genuine enthusiasm for making a lasting impact in the lives of Murphy Scholars at DMSF.
The Semrad Law Firm, Chicago The Semrad Law Firm is proud to announce Janna Quarless has been promoted to Managing Partner of the Illinois office. For more than 16 years, Janna has been a stalwart pillar of the firm. Previously serving as supervising attorney of the Chapter 7 department, Ms. Quarless has provided transformational leadership and the highest level of service to clients. Janna’s adeptness in streamlining complex systems and ensuring seamless operation will greatly benefit the firm’s entire Illinois operation.
NON-PROFIT Leadership Greater Chicago, Chicago
To place your listing, visit www.chicagobusiness.com/peoplemoves or, for more information, contact Debora Stein at 917.226.5470 / dstein@crain.com
ARCHITECTURE site design group, ltd., Chicago
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Leadership Greater Chicago (LGC), the region’s premier civic leadership development organization, welcomes Lucino Sotelo, Executive Vice President Sotelo at Northern Trust Corporation, and Ann Marie Wright, US Chief Risk Officer at BMO Financial Group, to its Board of Directors. Sotelo, an LGC Fellow since 2006 and Executive Sponsor of Latin Heritage Leadership Council at Wright Northern Trust, will help guide strategy and governance. Wright, an LGC Daniel Burnham Fellow and co-chair of BMO’s Leadership Council for Inclusion and Diversity, brings to the Board her vast leadership skills and commitment to equity and inclusion. The new board members support LGC’s mission to develop a strong pipeline of civic leaders who will shape the future of Chicago and the region. REAL ESTATE Hiffman National, Oakbrook Terrace Hiffman National is pleased to announce the promotion of Carrie Szarzynski to Senior Managing Director, Head of Management Services. Szarzynski, who joined Hiffman in 2017, has been instrumental in the growth of the Management Services group. She will help to expand the group’s reach and capabilities while focusing on strategic growth, leadership and development goals. Szarzynski succeeds Bob Assoian, who held the position for the last 12 years and will head the new Advisory Services group.
REAL ESTATE NAI Hiffman | Hiffman National, Oakbrook Terrace NAI Hiffman | Hiffman National promoted Sarah Cannella to Managing Director, Head of Strategy & Development. In this role, she will focus on exploring new business opportunities for the firm while formulating and executing strategies to achieve its long-term goals. Since 2012, Cannella has built her CRE career at Hiffman, most recently serving as Director of Property Management Operations. She brings a deep understanding of the company and proven success in management services to her new role.
STAFFING / RECRUITING Robert Half, Chicago
REAL ESTATE Daniel Management Group, Chicago Kenia Rivera is promoted to Senior Regional Property Manager at Daniel Management Group (DMG). She has been with DMG for almost three years and is a valued member of the team. Kenia brings to DMG her deep property management experience, attention to detail, and superior client management.
Thomas Vick has been named senior regional director for technology at talent solutions and consulting firm, Robert Half. Based in Chicago, Vick will lead operations for the company’s technology, creative and marketing talent and consulting solutions across Illinois, Tennessee and Missouri. With over 17 years of experience, he brings a wealth of experience to the role. Robert Half has more than 400 locations worldwide and provides comprehensive technology solutions to companies of all sizes.
1/24/24 11:30 AM
By H. Lee Murphy
Chicago’s mighty McCormick Place Convention Center is best known as a host facility for trade shows, corporate meetings and other private, limited-audience events. But its biggest show of the year is a public affair: the Chicago Auto Show, which is expected to draw close to 400,000 people this year, ranking it as the biggest promotional spectacle for cars in the nation. The show runs Feb. 10 to 19 and occupies an important void in the McCormick calendar, filling local restaurants and hotels and 840,000 square feet of the South Building at a time when cold and snow keep visitors otherwise at bay. The show has also reached a crossroads this February, which marks the anticipated return of the big throngs of visitors last enjoyed four years ago, before the pandemic, as well as the retirement of the show’s longtime general manager, Dave Sloan. Sloan, 60, is giving up the general manager post as well as his title of president with the sponsoring organization, the Chicago Automobile Trade Association, based in Oakbrook Terrace, after this show. He’s being succeeded by Jennifer Morand, 37, a Lemont native with a strong background in social and digital media who has
worked closely with Sloan for the past two years preparing for the handoff. A decade ago, social and digital media were considered serious threats to the show’s future. With a new generation of consumers negotiating to buy cars online and not visiting traditional retailers at all, why visit a trade show? But crowds were up by nearly 100,000 last year and are expected to be up close to another 100,000 this year. Social media has only expanded the show’s reach, Sloan explains. “Social media has actually enhanced the show,” Sloan says. “Hundreds of thousands of people come here with phones in their pockets, and they generate all kinds of pictures and video and other content and then push it out to their friends on Facebook and Instagram and TikTok and so on. The shows are very photogenic, and we’ve gained a bigger audience than we ever had in the past.” The Auto Show has always drawn visitors from around the Midwest eager to see new car models on display. But with the advent of social media, the reach extends far beyond that nationally and even internationally — to 64 million people in all, according to social media surveys. “That’s a crazy number,” Sloan says. “Back
CRAIN’S
As the city’s auto show ramps up, its longtime point man looks back in the 1980s we could only have dreamed about reaching that many people.” There are more than 60 car shows in the U.S., though the marketplace is dominated by just four big ones — in New York, Detroit and Los Angeles, as well as Chicago — but Chicago is the first on the calendar each year and traditionally has been looked upon as the favored place for carmakers to announce new models and technology.
Chicago show a trailblazer The biggest car shows overseas are in Tokyo, London, Paris, Frankfurt and Geneva. But many of them are run just every other year and they’re sponsored by manufacturers, not retail dealers as in Chicago. Also, Chicago held its first show as far back as 1901, at the long-gone Coliseum, and is older than virtually every rival. Before 1900, such events showed off bicycles and horse-drawn carriages, not cars. Thus the Chicago Auto Show was a trailblazer. Even so, the event has had to scramble to stay relevant. As new
cars have become less mechanical and more electronic, many carmakers have focused their efforts on displaying their latest technology at the Consumer Electronics Show held each year in early January in Las Vegas. “CES became an important place to make news for the car industry,” Sloan says, while noting that nearly 2,000 media people from around the world are nevertheless expected to attend the Chicago show this year. “CES is a trade show closed to the public. We’re a fully public show, and we’re all about helping our member dealers sell cars. So we’re apples and oranges to each other.” To boost interest, Sloan and his staff have encouraged carmakers to build test tracks, both indoors and outdoors, to allow visitors to actually drive new cars. In one survey, some 70% of respondents who tried electric vehicles on a test track came away more likely to buy an EV sometime soon because of what they experienced. Test tracks are expensive, and rising costs have kept some carmakers away from Chicago in recent years.
BMW and Mercedes and Audi all suspended their attendance five years ago and more. Stellantis, parent company of Chrysler and Ram, caused a stir at the beginning of January when it announced that it was pulling out of the Chicago event. And yet, on the other hand, Sloan reveals that BMW is returning this year and he’s working hard to pull back the other major European carmakers. Meanwhile, his staff has erected a special display corral on the show floor for exotic foreign makes such as Aston Martin, Bentley, McLaren and Rolls-Royce, all priced at $300,000 and up. “Our visitors love being able to get up close to great cars like these,” Sloan says. Crain’s contributor H. Lee Murphy attended his first Chicago Auto Show in 1965 and is currently the owner of 12 vintage cars, kept on display at a private museum in the western suburbs. This story appears in the ChicagoGlobal newsletter, a joint project of Crain’s Chicago Business and the Chicago Council on Global Affairs.
Tesla’s winter woes in Chicago create a publicity black eye By Laurence Iliff, Automotive News
Tesla owners in the Chicago area found out the hard way that the EV maker's vaunted Supercharger network can't always overcome extreme weather conditions. A perfect storm of freezing temperatures, offline charging stalls and high demand combined to create a rare charging breakdown for Tesla, which is the U.S. leader in charging infrastructure — both for the size of its network and its reliability. Tesla no longer has a press office and doesn't reply to media requests for comment. Tesla accounts on the X social media platform — owned by Tesla CEO Elon Musk — didn't post comments related to the Chicago Supercharger troubles as of late Jan 18. Over the long Martin Luther King Day weekend, Chicago news outlets reported that several Tesla owners had to have their vehicles towed after running out of juice while waiting for a charge at jammed Supercharger stations. WGN-TV visited several of the 14 | CRAIN’S CHICAGO BUSINESS | JANUARY 29, 2024
stations Jan. 15 and found long lines and tow trucks, in some cases, taking Tesla vehicles to owners' homes or to other Supercharger stations. An unidentified Uber driver told WGN that he had to wait an hour for an open charger and then had to wait two hours for a full charge. While driving in the cold, battery range fell so fast that he had to charge twice a day while operating as a ride share. "I'm out of this Tesla after today," the driver told the TV station. "I'd rather go back to gas absolutely."
Blame the weather Part of the problem was out of Tesla's control, since EVs use more energy in cold weather, as do gasoline vehicles, according to the U.S. Department of Energy. The agency says on its website that gas mileage is about 15 percent lower in the freezing cold while EV efficiency can fall by up to 40 percent, depending on how much energy is used to heat the cabin. Newer Tesla models have heat pumps that use far less energy than traditional resistive heaters.
EV charging stations are not as plentiful as gas stations and charging takes far longer in the cold since EV batteries need to be warm for a fast-charging session. On its website, Tesla said that cold weather best practices include warming the cabin and battery before leaving home, pre-conditioning the battery before arriving at a Supercharger, driving slower to conserve energy and using seat heaters to keep warm rather than the cabin heater. Brandon Welbourne, who spoke to the media after becoming stranded on Jan. 14, told Automotive News that his suboptimal charging experience came out of the blue. "I've had my Model 3 for three Chicago winters and have never had to wait a minute, let alone five hours" at a Supercharger station, he said in a text message. Welbourne said that he got stranded in Chicago with no heat for five hours in negative 10 degrees weather. Eventually, he arranged a tow for his Tesla. But he stressed that it was a "one-off" bad experience and that he still loves his Tesla.
EV charging stations are not as plentiful as gas stations and charging takes far longer in the cold since EV batteries need to be warm for a fast-charging session. | TESLA
During a Fox News interview, Welbourne wore a black hoodie with the Tesla logo and explained that he has a long commute from his home in Indiana to his work in Illinois, but generally can make the round-trip journey without using public chargers. After work on Jan. 14, he told Fox, he realized he needed to stop at a Supercharger and juice up because he didn't have enough battery power left to make it home. The Tesla navigation software directed him to a Supercharger in Evergreen Park, but only five of the 10 stalls there were working, and
four of the working stalls were blocked by empty cars. That left one charger for a long line of people waiting to use it. "You're supposed to pre-condition your battery when you're on your way to the chargers, so it charges faster," he told Fox News. "Well, when you're sitting in the cold and you're waiting two, three, four, five hours like me, you can't precondition it. So it's like a double-edged sword. Not only are there no chargers available, it's taking longer to charge." Laurence Iliff writes for Crain's sister publication Automotive News.
CRAIN’S PHYSICIAN RETENTION
ALYCE HENSON
Dr. Eve Bloomgarden, an endocrinologist, recently left her job at a Chicago-area health system to explore other options.
WHY DOCTORS ARE CALLING IT QUITS
As burned-out doctors leave medicine, the health care system could buckle under the loss of providers I By Katherine Davis
A
fter more than a decade practicing medicine, Dr. Eve Bloomgarden is thinking of doing something different. Bloomgarden, an endocrinologist, recently left her job at a Chicago-area health system to explore other options. She's asking herself whether she can return to an environment in which she and colleagues spend less time caring for patients and more time staring at screens responding to messages and calls, completing paperwork and negotiating with insurance companies. Those mundane tasks, often done after work hours,
leave them feeling burnt out and discontent. “It would be a shame if I didn’t use my expertise to take care of people, because there’s not enough of us and there’s a lot of patients who need to be seen,” Bloomgarden says. “But I’m not sure what I’m going to do next.” Bloomgarden is among physicians in Chicago and across the country who are wondering about their place in today's health care system. Interviews with physicians, health care industry executives and researchers reveal that doctors are cutting down their patient-facing hours or fleeing
the industry altogether for various reasons, ranging from strenuous workloads, moral injury, lingering trauma from the COVID pandemic and what some describe as the “corporatization” of health care. But the impact of physician burnout and dissatisfaction and the exodus it inspires could be significant and, in some cases, devastating for patients, especially for a health care system already considered complicated, dysfunctional and broken. A widespread physician exodus would worsen See PHYSICIANS on Page 16
“It would be a shame if I didn’t use my expertise to take care of people, because there’s not enough of us and there’s a lot of patients who need to be seen. But I’m not sure what I’m going to do next.” — Dr. Eve Bloomgarden
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JANUARY 29, 2024 | CRAIN’S CHICAGO BUSINESS | 15
CRAIN’S
PHYSICIAN RETENTION
PHYSICIANS an existing doctor shortage in the U.S., as the population ages, demand for care sharply rises and the number of new doctors entering the field fails to keep pace. By 2033, the demand for primary and specialty care physicians will exceed supply by a range of 54,100 to 139,000 physicians, according to the Association of American Medical Colleges. In a city like Chicago, already plagued with tremendous health disparities and inequality, a physician shortage may exacerbate those issues, particularly for the city’s poorest patients as they compete for access to doctors in their communities. Those doctors are often spread the thinnest. “It's always the most vulnerable who suffer anytime there are cracks in any system,” says Dr. Deb Edberg, chief wellness officer at Oak Street Health, a Chicago-based primary care provider owned by CVS Health. “When we see the burnout, it's going to come first from the people who are serving the most vulnerable populations.” In 2021 and 2022, more than 71,000 physicians, or 6%, of the 1.1 million workforce left the profession, according to an analysis based on billing claims data and published in September by Definitive Healthcare, a Massachusettsbased health care data firm. The trend tracks with a survey published in 2022 in Mayo Clinic Proceedings: Innovation, Quality & Outcomes, that showed 1 in 5 physicians said it was likely they would leave their current practice within two years. The data also showed that 1 in 3 physicians, advanced practice providers and nurses intended to reduce work hours within 12 months. “The physician burnout crisis has never been higher,” says Bloomgarden, who's now chief development officer of Women in Medicine, a nonprofit focused on gender parity in the medical field. “With the huge shortage of physicians and nurses now, and the expected worsening of this supplyand-demand mismatch, I worry what the future looks like for health care in our country.”
‘A very difficult period’ The COVID-19 pandemic accelerated Dr. Michael Todd's decision to retire in 2021 from a hospital in northwest Indiana. He was 63 at the time and had worked more than 20 years as an emergency room physician, often treating serious injuries caused by gunshots and automobile accidents. But during the pandemic, working conditions became onerous and, like others, he saw an overwhelming number of patients suffering with the virus. With all hospital beds full, Todd and his colleagues were forced to treat patients in waiting rooms. “That was a very difficult period,” recalls Todd, who lives in Illinois in the south suburbs. “In fact, one shift from seven in the morn16 | CRAIN’S CHICAGO BUSINESS | JANUARY 29, 2024
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From Page 15
Dr. Andrew Carlo is a psychiatrist at Northwestern Medicine.
ing till noon, I was alone — which was normal for a Sunday — and I think I intubated like five people and pronounced six people dead, and all the while I was taking care of 18 other people in the emergency department.” Then he came down with COVID, a relentless case that took him out of work for a month. Shortly after, Todd was diagnosed with coronary artery disease and underwent open heart surgery, which he describes as “the last nail in my coffin as an emergency physician.” While the pandemic intensified everything about his job, Todd says he was already disgruntled with some of the pressures coming from corporate leadership. Over the years, he watched as physician schedules were shifted, resulting in fewer doctors working at once. His days were becoming more burdened with reporting and meeting productivity metrics, as well as maintaining electronic health records — tasks that took time away from patient care. “All that together just kind of made me say, 'This is the time to punch out,'” says Todd, who now teaches the next generation of doctors at Midwestern University’s Chicago College of Osteopathic Medicine.
Charting new paths Even aspiring doctors can experience burnout and disillu-
sionment. Reliable data about the number of medical students who left training programs during and post-pandemic is not available, but a report published by Amsterdam-based academic publishing company Elsevier shows medical students are debating whether to stick with their chosen career paths. In a 2023 survey of more than 2,200 students from 91 countries, Elsevier found that 12% of medical students globally and 25% of U.S. medical students were considering dropping out. David, who asked that his last name not be used in this story, dropped out of his final year of medical school at a New York university in 2020, as the first year of the pandemic took a “massive mental toll” on him and revealed systemic, long-term issues with the profession. Power imbalances among doctors and administrators and health insurance companies were especially difficult to navigate, he noted. The stress of wrangling with health insurance companies to get approvals for patient medical procedures made him question the profession he had aspired to be a part of since childhood. “I'd come home thinking: Who (is) really practicing medicine? Is it the people trained to do it? Or is it the business folk who make the financial decisions?” he says.
He now works as a quality assurance and regulatory affairs manager for a Chicago biotech startup. While it’s not patientfacing care, he says he's making a difference at a company that puts the patient first. So where do doctors leaving the profession go? Some turn to health care-adjacent opportunities at insurance and pharmaceutical companies. Others head to consulting firms or venture into public service at local or federal government agencies. Dr. Andrew Carlo, a psychiatrist at Northwestern Medicine, found a way to juggle both his medical practice and another role he finds fulfilling. About three years ago, he cut patient hours to 10 per week to expand his role as a vice president at the Meadows Mental Health Policy Institute, which researches and analyzes public policy related to mental health. “As a clinician, there’s different ways you can contribute,” Carlo says. “I chose to do what I did because I wanted to have an impact at the patient level — seeing patients myself — but also at a population level.” Cutting down on patient-facing care also minimizes some of the time-consuming tasks such as submitting prior authorizations, calling pharmacies and answering patient portal messages. “Keeping my clinical work at 10
“As a clinician, there’s different ways you can contribute. I chose to do what I did because I wanted to have an impact at the patient level — seeing patients myself — but also at a population level.” — Dr. Andrew Carlo hours allows me to sort of keep a balance and to still do all those other things without it completely overwhelming me,” Carlo says. “It’s the right amount of work.”
Solutions In October, American Medical Association President Dr. Jesse Ehrenfeld stood before the National Press Club and recounted a story about a medical school classmate and emergency room physician who committed suicide. “He was an energetic and loving soul — a brilliant, caring doctor who felt the weight of the pandemic on his shoulders,” Ehrenfeld said. “And he struggled to get out from under it. I am haunted
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ALYCE HENSON
knowing there are thousands of people in his community who can no longer receive his care.” While an extreme example, it’s a scenario that’s funneled more attention to physician well-being, with some health care organizations hiring in-house physician wellness experts. “Various health care organizations are starting to ramp up and create this type of role, mostly as a response to burnout nationally that we’ve noticed heightened during the pandemic,” says Oak Street Health’s Edberg, who was tapped as the organization’s first chief wellness officer last year. In her role, she fields complaints, concerns and feedback from the organization’s 900 providers. The most common burnout-related complaints from physicians include dealing with finicky electronic health records as well as lingering stress and trauma from pandemic turmoil. To address the issues, Edberg operates peer support networks to address job-related emotional burdens and a crisis response team in which behavioral health clinicians help physicians process traumatic events, like a shooting in the area or a severe patient accident. Physician well-being is harder to manage for small, safety-net institutions, says Dr. Ngozi Ezike, CEO of Sinai Chicago, the city’s largest safety-net health system that predominantly serves low-income and Black and Latino Chicagoans with complex medical conditions. Sinai saw some physicians leave the organization during the height of COVID, choosing to retire early. More recently, Ezike has focused on raising pay for Sinai’s nearly 650 physicians and working with external partners who are willing to help supply new technology and equipment that makes doctors’ jobs easier. But she says that securing these benefits is harder for a health system like Sinai, which has slimmer operating margins than some of its nearby peers. A lack of resources sometimes contributes to burnout among doctors, she says. “There is just a chronic fatigue that can happen when you’re trying to be so focused on clinical care and eradicating the disparities, but not always having the tools to support that work.” For Dr. Kate Laslo, a pediatrician and site medical director for an Erie Family Health center in Albany Park, sometimes the hardest part of being a physician is trying to help patients plagued by a confusing and unforgiving health care system. “Patients are hitting more and more barriers to care … and there's really nothing you can do. It makes you feel powerless,” she says. But while the practice of medicine has led to feelings of burnout, especially during the pandemic, she hasn’t considered leaving. “Although I feel burnout is real, I love seeing my patients every day,” Laslo says. “That is the part that keeps me in my community (and) in my health center.”
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PHYSICIAN RETENTION
As demand for pharmacists grows, the industry has hard time filling open positions Stress and burnout are taking a toll on an essential sector of the health care system By Jon Asplund
Before he got out from behind the retail drug counter, Maurice Shaw spent about eight years at major retail pharmacies owned by Walgreens and CVS. Those years were marked by chronic understaffing, managing a revolving door of low-wage technicians who bore the brunt of customer wrath and waking up in the middle of the night in dread wondering if he'd made a prescription mistake. These days, Shaw says he's like many other pharmacists who are staying in the profession. He escaped the stress of retail and works now as a clinical pharmacist at the University of Illinois Chicago, helping manage the Medicaid Preferred Drug List. Pharmacist staffing shortages have been building for years, if not decades, in drugstores nationwide and in Chicago. The shortage has combined with workplace stress, chaos exacerbated by the COVID-19 pandemic and a postpandemic nationwide labor shortage to leave retail drugstores struggling not only to fill prescriptions, but also open positions. A 2021 National State-based Pharmacy Workplace Survey by the American Pharmacists Association and the National Alliance of State Pharmacy Associations reported that stress and workplace conditions "are having a negative impact on the ability to recruit, train, and retain pharmacy personnel." In 2022, 35.1% of unemployed pharmacists were not seeking employment or dropped out of the labor market compared to 15.7% in 2019, according to the Pharmacy Workforce Center, a nonprofit that researches and monitors demography and activi-
ties of the pharmacy profession. Frustrated with overworking and understaffing, pharmacists in fall 2023 planned what some were calling "Pharmageddon," three days of walkouts at Walgreens and CVS drugstores nationwide. While walkouts took place in several states, few reports of significant disruption happened. Shaw, a former pharmacy manager for Walgreens, says that even before the COVID-19 pandemic, "the workload was a little unbearable, especially during flu shot season. And then with COVID-19 vaccinations, you had no time or staff to do anything but give shots. It increased the chance of errors, because there was not enough time to check medicines and prescriptions and not enough (technicians) to help." Following the walkouts, pharmacists joined forces with a health care union. Shaw became a union organizer, working with the Pharmacy Guild, a group of pharmacist activists and organizers that launched in November 2023. The value of a pharmacists' union in retail would be to give the pharmacist a voice in management and staffing, Shaw says.
Technicians needed as well Not only are more pharmacists needed in the stores, but having enough experienced technicians to take orders, count pills, deal with insurance questions, type the orders, and serve customers at the counters and drive-up windows is a struggle, he says. Pharmacist pay isn’t the issue, he says. "But for technicians, just for the verbal abuse they take alone, pay is definitely an issue." Pharmacists, who are legally certified to advise patients, bear the responsibility for ensuring the correct medications are provided to patients. Pharmacy technicians
help pharmacists in preparing prescriptions and generally interact with customers more regularly. "Pharmacists don't really have a voice, a say in how we practice in retail stores," Shaw says. Unionizing "would give pharmacists more say in staffing and allow them to take care of patients and reduce medication errors." Unionizing technicians would get them the pay they truly deserve," he says. "There's no way a worker for Starbucks should be making more than the people responsible for getting your medication in your hands." At the time that the Pharmacy Guild launched, Walgreens spokesman Fraser Engerman said, “We respect the right of our people to choose to be represented by a union.” On Thanksgiving Day, Walgreens closed most of its stores for the first time in company history, acknowledging employees' need for a break. “We have consistently heard from our team members — who are the face of Walgreens — that time off is a meaningful way for us to demonstrate we value them,” Tracey D. Brown, president of Walgreens retail and chief customer officer, said in a statement at the time. Since the beginning of the pandemic, Walgreens has touted a number of efforts to improve recruit, retain and reward pharmacy staff. And with COVID restrictions bolstering remote work and telemedicine, the company says it has worked to digitize more pharmacy resources to streamline work and provide pharmacists with more time for patients. The drugstore chain said it was making investments of $265 million for pharmacy staff in fiscal year 2023, after investing $190 million
on pharmacy staff in 2022. In 2022, coming out of the pandemic, Walgreens said much of its labor spending went to returning about 3,000 pharmacies to normal hours. In 2023, much of the labor investment was due to increased labor costs, the company said in its corporate filings. Anyone who has called a Walgreens in recent years knows that it automates more requests and reroutes its calls to customer relations teams who can support straightforward requests. That kind of automation may become increasingly important as a nationwide pharmacist shortage worsens and with fewer graduating pharmacists. According to a 2023 report by the Philadelphia College of Osteopathic Medicine, or PCOM, the American Association of Colleges of Pharmacy, or AACP, reported that 136 pharmacy schools graduated 13,323 new pharmacists in 2022, down from 14,223 in 2021. And the slide looks like it could continue with fewer than 10,000 students accepted through the Pharmacy College Application Service by its June 2023 deadline. "The pharmacist shortage isn't just a numbers game; it's become a tipping point for healthcare access," the report says. "The shortage is magnified in underserved areas, creating what's known as 'pharmacy deserts,' where patients have limited or no access to essential medications and health advice." But there's a rising demand for pharmacists. The AACP’s Pharmacy Demand Report found 60,882 job postings for pharmacists in the first three quarters of 2023, a 17.9% increase compared to the same period in 2022, which followed a 11.6% leap from 2021, PCOM reported. JANUARY 29, 2024 | CRAIN’S CHICAGO BUSINESS | 17
CRAIN’S
PHYSICIAN RETENTION I COMMENTARY
Doctors and nurses were there for us during COVID. Now it’s our turn. W Mona Sutphen is partner and head of investment strategies at The Vistria Group.
Elizabeth Jurinka is operating director of healthcare policy at Vistria PRG. Vistria is a sponsor of Crain’s Forum.
a doctor in today’s environment. Imagine the challenge if there were 40% fewer physicians in the system. Government data validates this concern: By 2036 we won’t have enough physicians to meet demand and will have shortages in 30 of 35 specialties. It doesn’t have to be a doomsday scenario. A big part of the solution is collaboration between the private and public sector; collaboration to train, support and innovate in shoring up the health care workforce. The silver lining of the pandemic is that in spite of burnout
among some mid-to-late career professionals, there is a renewed interest in health care as a profession, with thousands of young people across the country raising their hands and applying to medical schools, nursing schools and allied health training programs. So, if labor supply is not the problem, then what is? First, administrative barriers to entry remain unnecessarily complex and differ from state to state. Yet new instruction techniques like training on-site and the use of virtual reality, can speed up the time it takes to train a new doctor, nurse or allied health professional without risk to patient safety. Second, it’s not enough to train doctors and nurses. Adapting preCOVID operations to a post-COVID reality is essential to stem the tide of worker burnout. Creating flexible schedules, superior support services, and continued opportunity for training and advancement will be table stakes to achieve the aims of better outcomes and better experience, at lower cost. A third challenge is where care is being delivered. Embracing the home as the focal point of care de-
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e have so much we’d like to forget about the pandemic. But there are so many moments we should remember. Take the nightly quarantine clapping ritual. It was a spontaneous demonstration of gratitude to those doctors, nurses, allied health workers and first responders who were exhausted yet risked their own lives to save others. Intuitively, we understood that doctors and nurses were our main defense against a deadly virus without an antidote. Four years later and the clapping has long since stopped — and with it a daily reminder of the hard work and long hours medical professionals put in to safeguard our health. But despite the lapse in time, health care workers are still burned out. The grind, workforce shortages, and medical misinformation have led to an all-time low in morale and declining trust in our health care system. The former president of the American Medical Association recently sounded the alarm, noting that only 57% of practicing physicians would choose the career again if they were just starting out. It can be difficult getting access to
Th m w
of care for the best patient outcome doesn’t seem like rocket science. But we have yet to crack the code. What will it take? These practical challenges speak to what seems to be existential: From entry level to advanced nursing, we lack an “allhands” approach to the task. This is the moment to shake up conventional practice and chart a new course. In fact, the best thing about America is our track record of seizing innovation and opportunity to solve complex challenges. We must continue to meet the moment and scale proven solutions that will advance our health care system. Otherwise, we’re just clapping.
livery, particularly for patients who can — and want — to remain in place, will help reduce the burden on overstretched health care workers. Keeping patients out of hospitals while managing their complex needs with the support of family and community is a winwin for the patient, their doctor and the entire system. It also happens to be far more cost-effective, too, helping to ensure the right resources get to the right patients. Facilitating opportunities for all providers — from nurses to the most specialized physicians — to operate at the top of their licenses and to prioritize the most appropriate setting
hours per week on papern hospitals, clinics, work and administration. and medical groups Of that, an average of nine throughout the Chicahours is spent on elecgo area—and around tronic health record the country—health care (EHR) documentation. workers are feeling burned Artificial intelligence (AI) out, overworked and discould help address the satisfied. Physicians, nursgrowing burden of es, and other clinical pro- Dr. Jay Bhatt is administrative tasks and fessions often feel like they managing give time back to workers. spend too much time on director of the administrative tasks and Deloitte Health An AI-powered transcripnot enough time on direct Equity Institute tion technology, for example, might record a physipatient care. And some of and the them don’t trust their or- Deloitte Center cian’s conversation with a patient and automatically ganization’s leadership to for Health add it to the medical redo what is best for work- Solutions. cord. That could cut the ers. While burnout has long been a time spent writing notes and may part of the medical profession, it capture information the physician was amplified by the pandemic. missed or forgot. In addition, preWhen clinical staff leaves an or- dictive AI could help identify staffganization, it can have a signifi- ing needs and address possible cant impact on the staff that re- shortages before they occur. • Redesign work teams: A group mains, as well as on patients and their families. The status quo is of clinical professionals (e.g., phynot sustainable. Here are three sicians, physician assistants, speways health care leaders can re- cialists, nurses, nutritionists, sospond to the health care talent cial workers) can provide highly specialized care and produce betemergency. • Reimagine care delivery: Phy- ter patient outcomes than tradisicians spend an average of 15.5 tional care models. These compre-
18 | CRAIN’S CHICAGO BUSINESS | JANUARY 29, 2024
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Here are three ways that health care leaders can address the urgent need for staff I
hensive interdisciplinary care teams are intended to take advantage of each team members’ strengths, bring in more assistive clinical workers and allow clinical professionals to operate at the top of their license. • Restore trust in leadership:
Just 23% of front-line clinicians trust their organization’s leaders to do what’s right for workers, according to a 2022 survey conducted by the Deloitte Center for Health Solutions. Listening to front-line workers, elevating their voice to leadership and building
an inclusive culture could help health care organizations rebuild trust. Holding leaders accountable for worker well-being — by weaving well-being metrics into their compensation and creating leadership positions focused on well-being — can further solidify leadership’s commitment to their workers. Investing in the wellbeing of staff can also help to restore trust. Many health workers say they are experiencing anxiety, depression and other mental health conditions at higher rates than before the start of the pandemic, according to a recent report from the CDC. The physical and mental health of clinical staff should be a priority. Many health system executives are trying to attract and retain clinical staff while continuing to focus on reducing clinician burnout. It would be challenging for health care leaders to automate or recruit their way out of this talent emergency. Solving this crisis will likely require technology, creative ways of working, new leadership strategies and a redesign of how care is delivered.
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CRAIN’S
This Northwestern medical resident wants a union
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Battling fatigue, holds a pediatric neuroling off hunger with bites ogy resident, I am of snack bars while waittraining for the best ing for elevators and nerjob in the world. In my secvously hoping that my ond year of residency at exhaustion would not McGaw Medical Center of impact my effectiveness, Northwestern University, the idea of quitting enmy co-residents and feltered my head for the first lows are forming a union Dr. Peter time. This shift, as intense with the Committee of In- Alexieff is a as it was, isn’t atypical for terns & Residents, local of pediatric residents in hospitals the Service Employees In- neurology across the country. The ternational Union. We resident at last thing I want is for my know that the current med- McGaw ical training model needs Medical Center dream career, and those of my fellow house staff, improvement to ensure of Northwestdoctors like me can contin- ern University. to be another casualty of physician burnout. ue providing the best care The American Medical Associafor the communities we serve. My rationale for forming a tion recognizes the 53% burnout union crystallized during my in- rate of physicians as a problem tern year. In the midst of a surge in that may contribute to an estirespiratory virus cases, a senior mated shortfall of 124,000 physiresident and I started the night cians in the next decade. Accordcaring for 32 patients in our gener- ing to a 2018 JAMA article, nearly al medicine service. Throughout 50% of second-year resident phyour 13-hour shift, we rushed to sicians are experiencing burnout. and from the emergency depart- This is an issue that residents and ment, admitting new patient after fellows, health systems and the new patient, while also triaging country at large have a vested inthe medical needs of the patients terest in solving. But without a union and collecalready under our care.
tive bargaining, residents and fellows have no say in what these solutions will be. Residents are bound to their institutions through The Match, the process that allocates medical school graduates to institutions with a binding, non-negotiable contract. Going through The Match, or a separate but functionally identical system for a few subspecialties, is required in order to train at an accredited institution and be eligible for the licensing exams that allow us to practice as independent physicians. If conditions at the institution change for the worse, residents must either stick it out and hope for the best, navigate the
complex process of changing programs, or quit and be stuck with, on average, $200,000 of student debt and limited ability to practice medicine. Like thousands of resident physicians across the country, my colleagues and I view unionizing as a crucial step in safeguarding the future of the physician workforce and our healthcare system against burnout. As a union, we can collectively advocate for our needs and ensure the administration hears and responds to them. We have the leverage to ensure that our working conditions, salary, and benefits reflect what is required
to reduce burnout and therefore maximize the educational benefits provided by an institution like McGaw Medical Center of Northwestern University. I am excited to become a pediatric neurologist because I get to treat devastating and potentially life-limiting diseases at their earliest stages. Forming a union allows us to address some of the root causes of burnout — at the start of our careers, rather than later. I look forward to our union partnering with McGaw leadership in conquering the difficult issues of residency training and continuing to provide cutting-edge care to the Chicago community.
solutions to address hospital staffing concerns include opening the pipeline by creating more opportunities to attract more people into the healthcare profession, passing legislation to better protect healthcare workers from violence, and joining the national nurse compact to open up the pool of workers for Illinois healthcare organizations. Hospital leaders are innovative in addressing staffing challenges. They have introduced new care delivery models learned during the pandemic, such as increasing
virtual care and expanding home healthcare programs. But they need support to continue cultivating a high-quality, diverse and inclusive healthcare workforce. Healthcare is delivered by a team of workers and the staffing shortage is creating very real challenges for our hospitals to maximize the care they can provide in their communities. Addressing these workforce challenges is critical, so that Illinois hospitals can do what they do best — provide quality, compassionate care to patients across the state.
Illinois hospitals face ongoing staffing shortages H violence and implementealthcare is experiing new models of care. encing a shortage Illinois hospitals are of medical profestaking steps to build a rosionals, from physicians bust worker pipeline for and nurses to healthcare the future, partnering educators and respiratory with colleges and univertherapists. Staff shortages sities to offer scholarpresent significant challenges to the delivery of A.J. Wilhelmi is ships, tuition discounts, loan forgiveness and conhealthcare by driving up president and tinuing education credit. costs and limiting capaci- CEO of the Mentorship opportunities ty at local healthcare facil- Illinois Health are also offered to middle ities. & Hospital and high school students The shortage has exist- Association. to educate them early ed for years, but has been exacerbated since the COVID-19 about the various healthcare professions. pandemic. But, the workforce shortage is Illinois is facing an estimated shortfall of nearly 15,000 nurses by real. According to Fitch Ratings, 2025 and a deficit of 6,200 physi- labor shortages remain a “prescians by 2030. Pandemic burnout sure point” for hospitals and and an escalation of violence health systems for the foreseeable against healthcare workers has future — and the problem will driven an increase in retirements only grow more acute without and people leaving the profession. strategies and plans to grow the In response to workforce chal- healthcare workforce. It is critical lenges, hospitals are taking inno- that the healthcare community vative approaches to attract and and our government partners retain healthcare workers and al- work together to identify shortter this trajectory. This includes term and long-term solutions to increased wages, signing and re- build our workforce and ensure tention bonuses, new procedures access to care will not be jeoparto protect healthcare workers from dized.
During the pandemic, Gov. J.B. Pritzker approved license waivers that temporarily allowed licensed professionals from other states to practice in Illinois. This action was instrumental in allowing hospitals to respond more efficiently to fill essential roles at critical times — particularly for facilities operating in underserved, rural and remote areas. Illinois is an outlier by not participating in the national nurse compact. Thirty-nine states are now members of the enhanced Nursing Licensure Compact that allows them at any time to draw from a large pool of medical workers from participating states. In addition, Illinois’ outlier status as a high-cost medical liability insurance state also inhibits our ability to retain residents who are trained in Illinois. In response to the pandemic, hospitals received much-needed support from state and federal government partners that was essential to assure access to critical healthcare services throughout the state. The hospital community greatly appreciates this support, but we can’t rest on our laurels. Hospital leaders believe the
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COMMENTARY I PHYSICIAN RETENTION
JANUARY 29, 2024 | CRAIN’S CHICAGO BUSINESS | 19
PHYSICIAN RETENTION I COMMENTARY
CRAIN’S
Rocketing suicide rate among physicians should be considered a public health crisis O burnout and/or restore nly one profession mental health and wellin the U.S. holds the being or are new industry unenviable distincentrants designed to do so. tion of having the highest For example, health tech rate of suicide. must be easy-to-use, accuNot military personnel. rate, time/cost-saving. SerNot law enforcement. It is vices like Uber rides home physicians, those who for the bleary-eyed con"serve and protect" every Jodie Green is tribute to restoring quality human being, and who president and of care and quality of life have been taking their own CEO of the — for all providers, includlives at twice the rate of the Clinician ing multidisciplinary care general population. Burnout team clinicians and Think of it as one sui- Foundation. non-clinicians. cide a day. A pandemic COVID magnified all aspects of within a pandemic. America’s other public health crisis. And rapidly both burnout and depression throughout the medical profession rising globally. The industry response to burnout and the alarming rate of suicide and moral injury has largely been to among physicians due to unrealisprovide free wellness programs tic and unreasonable work desuch as yoga, meditation and music mands, regulatory policy run therapy classes. These assume that amok; putting profits before proan already overwhelmed clinician viders and patients (health insurwill want to lengthen their day even ers, not doctors, essentially make treatment decisions when refusing more. Band-aids on a hemorrhage. We’re not going to yoga our way to cover treatment); along with reprisals in the form of malpractice out of this. Enter the Clinician Burnout suits (despite human error acFoundation, which launched at counting for a small fraction of pathe end of 2020. CBF is the first tient harm when the leading cause and only public charity delivering is severely flawed EHRs (electronic solutions, not lip service. Taking health records) — responsible for patient and provider harm with action, not agonizing. At CBF, we put burnout-beating, death by a thousand clicks, forcing mental health-restoring tech, some physicians to spend upward tools and services directly into the of 65% of their workday doing data hands of those in distress today. entry, not caring for patients. There are hundreds of studies And to prevent others from being and surveys and articles about at risk tomorrow. All offerings must meet strict cri- healthcare burnout, and the fundteria — either be proven to reduce ing for more research is ongoing. A
mind-boggling feat to justify pouring millions more into research on the subject when 96% of medical professionals agree that burnout is an issue. One study forecasts a shortage of 122,000 physicians in the U.S. by 2032. Half of America’s nurses — our largest medical workforce numbering 4 million — are considering leaving the profession, with about 800,000 nurses planning to exit by 2027, according to a survey analysis released in April 2023 by the National Council of State Boards of Nursing. This unsustainable trend adds to a healthcare system, which is itself on life support, literally killing the health of caregivers who every human being depends on. Again, providers themselves are also human beings. Many, like the fierce and fearless members of the Clinician Burnout Foundation, are working tirelessly to restore sanity and safety for providers and, correspondingly, patients (including providers too often treated like robots). The Clinician Burnout Foundation casts the widest net to recognize and aid those suffering today and those who are at risk tomorrow: MDs, DOs (doctors of osteopathic medicine), registered nurses, nurse practitioners, physician associates, medical residents, medical school students, pharmacists, dentists and all other oral health specialists, paramedics, emergency medical technicians, medically
trained firefighters and other certified first responders, clinical researchers, pharmaceutical scientists, mental health providers, social workers, all of the many types of specialists and practitioners, all types of personnel who comprise a healthcare team, patient advocates and veterinarians. We also champion all nonclinician members of the healthcare workforce. Consider, surgeons aren't going to clean operating rooms. Sanitation and maintenance employees and all others who effectively enable the work of those who deliver healthcare must not be overlooked. The physician burnout problem is complex and therefore demands complex solutions to remedy the acute economic issue on top of the clear ethical and moral urgencies it presents. On a policy level, we must remove the stigma and other cultural barriers that prevent physicians, nurses and others from pursuing treatment for declining mental health. There is no reason to believe that they would not welcome treatment for depression and other common mental health conditions if they felt safe in doing so. Notably, in 2022 President Joe Biden signed the Dr. Lorna Breen Health Care Provider Protection Act. The bill establishes grants and supports other activities to improve mental and behavioral health among healthcare providers, health profession students and residents.
Leaders in government, healthcare systems and various organizations must work together to re-engineer the system for better physician, clinician and patient care. That means addressing issues in care delivery due to changing work environments, postCOVID consequences, shift work disorder, value conflict, escalating demands, regulatory complexity and financial uncertainties. One recent study estimates $4.6 billion is lost every year in the U.S., with burnout the culprit behind physician turnover and reduced clinical hours. Such economic costs associated with physician burnout are untenable due to rising churn, high recruitment expenses and potential early permanent exit from medical practice. In this deteriorating environment of unbalanced physician supply/demand, recognizing, managing and preventing physician burnout may help preserve the system's most valuable asset and contribute to higher quality and safety of patient care, let alone self-care. There is little time, if any, for physicians and clinicians to have a life outside of work. Studies show that litigation-related or regulatorily imposed stress can precipitate depression and, at times, suicide. Until meaningful corrective changes are made, physician and clinician deaths, patient fatalities and a failing health system will continue. We can, and must, do better. All of our lives depend on it.
PHYSICIANS ON THE BRINK
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In the wake of the COVID-19 pandemic, many physicians re-evaluated their lifestyles. In a 2022 survey on physician lifestyle and happiness, more than 10,000 physicians in over 29 specialties said dealing with vaccine misinformation or adjusting to hybrid work models affected their lives beyond practicing medicine.
Whi
What is the most challenging part of your job?
Bur
How happy are physicians outside of work?
So many rules and regulations 21% 16% Dealing with difficult patients 15% Dealing with Medicare and/or other insurers and getting fair reimbursement 13% Working an electronic health record system 13% Other 10% Worrying about being sued 7% Nothing 3% Danger/risk associated with treating patients with COVID-19 1% 2%
4%
6%
20 | CRAIN’S CHICAGO BUSINESS | JANUARY 29, 2024
8%
10%
12%
Outp
Very unhappy
Long working hours
0%
$3
7%
Offic
Somewhat unhappy
Hea
19% Neither happy or unhappy
15%
Hos
Aca
Offic
Somewhat happy
14%
16%
18%
20%
22%
35%
Offic
Very happy
Othe
24%
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CRAIN’S
Wide health care provider gap persists in Chicago Survey results point to increasing access to care in more areas of the city
T
here is a 10-year gap in average life expectancy between Black and white Chicagoans. Residents on the city’s South and West sides have higher cancer mortality rates than North Side residents. The city’s South Side had no trauma center for 30 years. These stark realities illuminate a serious issue — Chicago residents lack equal access to affordable, quality health care. Cook County residents’ access to health care can often be predicted based on their address, race and socioeconomic status. Chicago’s poorer, and more diverse, South and West Side communities disproportionately suffer from a lack of quality health care when compared to the city’s more affluent, and whiter, North Side neighborhoods. According to a recent Harris Poll survey, 41% of white Cook County residents, but only 23% of residents of color, consider their health care access to be “very good” or “excellent.” Similarly, one-third (36%) of white Cook County residents, but only 20% of residents of color, consider their health care quality to be “very good” or “excellent.” Little wonder: For the 30 years before the University of Chicago opened a Level 1 adult trauma center in 2018, patients had to be transported to a North Side trauma center, delaying potentially life-saving care. Compounding the access problem, Chicago’s communities of color suffer from higher rates of many chronic conditions, including obesity, diabetes and HIV. Nationally,
William Johnson is CEO of The Harris Poll, a global public opinion polling, market research and strategy firm. racial minorities are 1.5 to 2 times more likely to develop most major chronic diseases, according to the Biomedical Research Institute. We’re no exception: Chicago’s communities of color have diabetes rates three times higher than among the city’s white residents. The aforementioned fact that South and West Side residents have higher cancer mortality rates than North Siders owes in part to South Side facilities often being under-resourced and understaffed. The Health Care Council of Chicago reported that South Side specialists treat three times as many patients as those on the North Side: The former sees 1,000 patients for every 350 of the latter’s patients. Household income is also a key predictor of one’s health care quality in Cook County. Our survey found that two thirds (66%) of Cook County residents with a household income of $100,000 or more rate their area’s health care situation as “good,” “very good” or “excellent,” compared to just 52% of residents in households making less than $50,000. Wealthier residents also report having easier ac-
cess to health care, with nearly three quarters (72%) calling it “good,” “very good” or “excellent,” as opposed to just 57% among residents pulling in less than $50,000. One positive step for dealing with this: Illinois politicians have taken note of this need for more health care providers. Last year, Gov. J.B. Pritzker signed legislation addressing Illinois’ doctor shortage by permitting the 12,000 Illinois residents with international health care degrees to secure full licensure in the state. Once the legislation t a k e s effect next January, international graduates will have to complete two years of limited practice supervised by a licensed physician. And they must train in an area of the state with unmet medical need or with a provider that treats underserved populations. One-fifth of Cook County residents (20%) are optimistic that health care in their area will be better five years from now. This is yet another opportunity for state and local leaders to engage the private and social sectors in ensuring residents’ optimism remains well founded. Collaboration among government, business and the nonprofit sector — such as Pritzker’s move to facilitate easier entry into medical practice for qualified residents — can enable further pragmatic approaches to improve the status quo: improving care at existing medical facilities and continuing to attract new health care providers to the Chicago area. Until then, we will continue to see significant discrepancies in health outcomes.
Harris Poll: Personal access to health care Overall, how would you rate your current access to each of the following resources? Health care (e.g. reasonably affordable provider, location of clinics) Excellent
Very good
Good
Fair
Poor
Not at all sure
70%
80%
Cook County residents of color Cook County white residents All Cook County residents
0%
10%
20%
30%
40%
50%
60%
90%
100%
Harris Poll: Health care trajectory Do you think each of the following health care situations in the area where you live will be better, worse or about the same five years from now? (e.g., reasonably affordable providers, location of clinics) Better No change, worse or not at all sure
20%
80%
Source: Harris Poll • Cook County residents
Physician compensation by racial/ethnic group White
Asian American
Latino/Hispanic
African American/Black
$358,000
$351,000
$338,000
$311,000
Burnout by work setting Outpatient clinic 57% Office-based multispecialty group practice ``
57%
Health care organization 55% Hospital 55% Academic (nonhospital), research, military, government 53% Office-based single-specialty group practice 53% Office-based solo practice 43% Other 46%
GETTY IMAGES
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PHYSICIAN RETENTION
Source: Medscape Physician Compensation Report 2023: Your Income vs Your Peers’
JANUARY 29, 2024 | CRAIN’S CHICAGO BUSINESS | 21
AbbVie faces lawsuit over cutting off drug-cost assistance company Sharx AbbVie is facing a lawsuit from a pharmaceutical assistance company stemming from the drugmaker discouraging patients and employers from doing business with the company and naming it in a lawsuit in which it is not a defendant. At issue is how certain for-profits label themselves as “patient advocates,” drawing the ire of both pharmaceutical companies and medical advocacy groups. St. Louis-based Sharx is a company that gets drug discounts for its members. It says it works to lower outrageous drug costs for its members, including employers who offer health insurance. However, big pharmaceutical companies like AbbVie, along with nonprofit, disease-specific patient advocacy groups, say such companies run “alternative funding programs” that require consumers with health insurance to obtain assistance in buying treatments. Drug companies say their patient assistance programs (PAPs) are not intended to lower costs for people with commercial insurance. Sharx rejects the idea that it is an alternate funding program and is suing AbbVie, citing defamation, deceptive practices and tortious interference after AbbVie last year named the company in its PAP documents as ineligible to provide application assistance. “Sharx is not an alternate funding company,” the company said in an emailed statement Jan. 18.
ABBVIE
By Jon Asplund
“Instead, Sharx helps underinsured members procure medication from a growing array of sources to help them attain life-saving and life-altering medications at a reasonable cost. Part of what we are suing AbbVie for is intentionally and wrongfully lumping us in with companies whose profit is dependent on members' use of the PAP.”
‘Bullying tactics’ “For six years AbbVie accepted nearly every application our team submitted on behalf of our underinsured members. Without ever contacting Sharx, they cut off our patients, disregarding the needs of those who qualify for their program by their own standards,” Sharx CEO Corey Durbin recently said in a separate release. “Companies like AbbVie use bullying tactics to protect their profit-rich turf. Health care should work for everyone. Sharx is proud to stand up to their bullying on behalf of our
members and clients.” Sharx said it “works with companies to help their employees get access to lifesaving and life-altering medications that are not covered under their employer health plan,” working with sourcing options, including applying for drugmakers' patient assistance programs. North Chicago-based AbbVie says that it is working to counteract the impact of “alternative funding companies” that misuse patient assistance programs. The myAbbVieAssist PAP web page states “patients with commercial insurance plans requiring them to apply to myAbbVie Assist as a condition of, requirement for or prerequisite to coverage of relevant AbbVie products commonly known as alternate funding programs, are not eligible for myAbbVie Assist.” AbbVie states that its PAP, in 2022, assisted nearly 200,000 people.
“AbbVie is proud to offer industry-leading patient assistance that continues to support thousands of qualified uninsured and underinsured patients,” AbbVie said Jan. 18 in an emailed statement. “We remain steadfast in our concerns regarding alternate funding programs, which profit by manipulating coverage of specialty medicines, misusing patient assistance programs and ultimately diverting resources from those who need them most. AbbVie has taken specific actions to counteract these practices and safeguard our Patient Assistance Program and its mission to provide free medicines directly to qualified patients who are uninsured or underinsured.” In August 2023, 34 patient advocacy organizations called on a Sharx competitor, Payer Matrix, to stop identifying itself as a patient advocacy company. While patient advocacy groups represent, educate and act in the best interest of patients, compa-
nies like Payer Matrix sell their services to employers as a cost-saving solution, CancerCare, a national cancer support organization, said in a press release. In May 2023, AbbVie filed a lawsuit against Payer Matrix alleging that the company engaged in deceitful and unlawful conduct. In response, Payer Matrix defied AbbVie, saying in a press release that as, a patient advocacy company, it would continue to provide services to qualified patients. This month's lawsuit by Sharx against AbbVie, filed in the Circuit Court of Cook County, claims that AbbVie's reference to Sharx in the Payer Matrix lawsuit has hurt its business. “AbbVie has raised the price on just one drug, Humira, countless times since it came out in 2003. It now costs $84,000 per year. That is more than the average income for a family of four in the United States,” Durbin said in the release. “Meanwhile AbbVie makes record profits and they bully anyone who is trying to make a difference for American families in desperate need.” “The health care system in this country is broken. The greed of Big Pharma and the disincentives for other industry players to make changes have forced Sharx to be the one to act on behalf of employers and families,” he said in the release. “We will not stop until every American has access to the lifesaving and life-altering medicines they need at a reasonable price.”
Portal Innovations launches talent-matching program By Katherine Davis
Portal Innovations, a local biotech investor and incubator, will soon expand a new talentmatching service to its portfolio companies across the country after finding success with Chicago startups. The new offering, called Ex3, standing for execution, excellence and elevation, launched last year to help Portal’s earlystage startups find experienced part-time talent to fill specific roles, like marketing, accounting, legal and even CEOs. The program allows startups to focus on developing scientific inventions and spend less time recruiting industry veterans with appropriate biotech business acumen, said Ritu Shah, managing director at Portal and Ex3 founder. And because talent will work on a contractual or parttime basis, early-stage startups with limited financing should be able to afford it. Aside from helping Portal companies, Shah expects Ex3 to boost Portal’s competitive edge 22 | CRAIN’S CHICAGO BUSINESS | JANUARY 29, 2024
as it works to attract early-stage startups to its programs over other incubators. Ex3 may also persuade more investors to finance Portal startups if they see companies as having the necessary talent and expertise to bring drugs and devices to market. “Ex3 is a differentiator,” Shah said. “Not only are we a VC, we're also an incubator providing space to seed and Series A companies, and we also understand that they may need help in figuring out how to staff their organizations.” So far, Ex3 has matched talent with seven Chicago companies, and more are expected as Portal expands the program to its other hubs, in Boston, Atlanta and Houston. Dr. Rishi Arora, president and CEO of local atrial fibrillation therapy startup Inomagen, described Ex3 as “exactly what we needed, connecting us with firstrate individuals,” in a statement to Crain’s. To fine-tune the program, Shah herself has been serving in various roles at Portal portfolio
Dr. Paul Bertin (left), president of Grove Biopharma, and Dr. Lucas Chan (right), director of molecular and cellular biology at CiRC Biosciences, at Portal Innovations. | PORTAL INNOVATIONS
companies. She is the CEO of ClostraBio, the head of operations for ReAx and strategic adviser for Dimension Inx. To recruit others into the program, Shah has been tapping her own network, one she’s built over a 25-year biotech career. She previously held leadership roles at Pyxis Oncology, Levo, AveXis, Shire and Accenture. Portal launched in 2020 with
a model to provide early-stage life sciences startups with wetlab space and seed funding, both of which can be hard to find, especially in Chicago. Other cities, like Boston and San Francisco, have long been life science hubs because of their concentration of venturecapital funding and large health care and pharmaceutical companies. Portal aims to boost that
activity in the Midwest. “I really want to grow Chicago,” Shah said. “I want those founders, those organizations to feel like they don't have to go to the coast necessarily to find the talent and to form their companies.” Portal now operates wet labs in two Fulton Market buildings, where it houses 45 startups, as well as one in Boston. The organization says it is opening more sites in Atlanta and Houston later this year. Portal raised $75 million from investors last year to support the expansion. Like other sectors of the startup industry, biotech and life science investors have pulled back in recent years, following higher interest rates and fears of a recession, which has been a drag for some startups. But as some of that pressure begins to ease this year, Shah expects funding streams to reopen. Her optimism is fueled by recent investor interest in Portal and its portfolio companies. “It’s heading in the right direction,” she said.
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Powerful union group’s chief backs Sox stadium proposal By Justin Laurence
The Chicago White Sox and developer Related Midwest have picked up key support from organized labor as they continue to push the idea of a new stadium in the South Loop. Bob Reiter, president of the Chicago Federation of Labor, says the “project is very exciting for the city.” “Not just for White Sox fans like me,” he told Crain’s on Jan. 25. “It means a lot of jobs, it means a great asset for the city to market to visitors. Not just the stadium, but also the other amenities that will be built out in the neighborhood and the way it would provide connectivity from the Near South Side by Chinatown up into the Loop.” Reiter would say only that he met with “principals” of developer Related Midwest, which owns the massive property known as The 78 where White Sox owner Jerry Reinsdorf has been pitching politicians on building a new stadium. “Creating this neighborhood on that tract of land that's been waiting to be developed for such a long time is going to be great and this is the right project," Reiter said. "It’s going to create 10,000 construction jobs and 22,000 permanent jobs." Is there a guarantee those would be union jobs? “Related is a good union developer and when you look at the jobs in residential and commercial buildings downtown, they've always been good union jobs,” he said. “We have the honor of not only representing the players who are on the field, but also the vendors who work in the grandstands.” SEIU Local 1 represents vendors walking aisles at the current White Sox home, and Unite Here Local 1 represents workers at the various
concession stands at Guaranteed Rate Field. Those unions would expect the same arrangement at any new ballpark. Union support is key to any major project in Chicago, which considers itself the home of the modern labor movement and where the CFL has become a powerful political force. Reiter’s vocal support could give state legislators and Mayor Brandon Johnson cover if and when any public subsidy is considered for the stadium. Bally’s signing a labor peace agreement with the Chicago Federation of Labor to prohibit the company from interrupting unionization efforts was key to winning approval of Chicago’s sole casino license. The White Sox have previously told Johnson and members of the City Council that the team was waiting to publicly disclose its financial plan until meeting with Gov. J.B. Pritzker.
Conditional support Johnson voiced conditional support for the stadium on Jan. 24, saying the project is “impressive” and that he liked the community benefits but said his meeting did not delve into the “intricacies and details” of how it would be paid for. The team has yet to meet with Pritzker, his office confirmed Jan. 25, but a sit-down is expected in the near future. Pritzker previously downplayed his desire to push through a subsidy for the team. The Sox organization may be trying to whip up as much support as it can before it meets with Pritzker and has to answer the biggest remaining question about the stadium proposal: Who would pay for it? Reiter would say only that he was told “no new taxes built in . . .
and right now that property isn’t generating nearly the amount of revenue as it would if it were fully developed.” Sources familiar with what the team is planning, but who say they are not free to speak about the deal, have told Crain’s that the White Sox are likely to ask state legislators to empower the Illinois Sports Facilities Authority to either extend or issue new bonds backed by the existing 2% hotel occupancy tax currently used to satisfy the bonds issued to pay for Guaranteed Rate Field. While that would not raise a new tax, because the hotel occupancy tax is already in place, state legislators may still turn up their noses at extending or issuing new bonds, or providing any public dollars to help build a stadium for a team whose value is measured in billions. The 78 site is also attractive to the White Sox because Related Midwest has already gotten zoning approvals for the development, including allowing a sports stadium. The developer also secured a tax-increment financing deal in 2019 that would help pay for over $500 million in major infrastructure work to unlock the site, including relocating Metra tracks that run through the property and constructing a new CTA Red Line stop. That TIF money, which would be used to reimburse Related Midwest for the upfront costs of the infrastructure work, would be available whether it was to support a stadium or the developer's previous plans of an entire mixeduse neighborhood, although if the infrastructure projects needed to support a stadium were different than the original redevelopment agreement the developer struck with the city, they could need new approvals.
The first mega home sale of the year is a $9.3 million Gold Coast condo The Goethe Street unit has handsome wood elements and a 1,500-bottle wine room | By Dennis Rodkin
POSITIVE IMAGE PHOTOS
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six-bedroom Gold Coast condominium sold Jan. 17 for $9.3 million in the first big residential deal of the new year. Andrew Hall, co-founder of Chicago Trading, sold the 9,000-square-foot unit on the eighth floor of a Goethe Street building. The sale price is about 67% of the $13.9 million he was asking for the condo when he put it on the market last March. The asking price had come down by $1 million before the property went under contract. Hall, who receives the property’s tax bill at a house in Boulder, Colo., that he bought in 2015, could not be reached for comment. Jennifer Mills, the Jameson Sotheby’s International Realty agent who represented the property, declined to comment. The buyers, who are not yet identified in public records, were represented by Compass agent Mark Icuss. Hall bought the space unfinished for $6.7 million in 2011 from former Wrigley Co. chairman Bill Wrigley. There’s no public record of what Hall spent to finish it into livable space. Designed by eminent architect Larry Booth, photos in the listing show that the interior has handsome wood elements including sleek contemporary
walls of cabinetry in the living room, kitchen and office and a headboard in the primary bedroom with an irregular edge that makes it resemble a piece of a fallen tree, not perfectly finished carpentry. There’s a
1,500-bottle wine room and in the building’s corner tower, a circular dining room. On the rooftop deck are a contemporary wood-wrapped pavilion with a bar and television and a pergola draped with
vines. The condo is on the top floor of a Parisian-inspired building, tucked under its metal-wrapped mansard roof. The building is a block off the Drive, but its upper floors, including this one,
have unobstructed views of Lake Michigan over a group of historical low-rise mansions. The $9.3 million sale is the fifth so far in 2024 at $4 million or more, the cutoff Crain’s uses for tracking the extreme upper end of the Chicago-area real estate market. The highest of the others is slightly over $5 million, paid Jan. 8 for a house on Woodley Road in Winnetka. Had it closed in December, the deal would have landed at fifth place on the list of 2023’s highest-priced sales. Crain’s will publish that list Feb. 5. When Hall’s condo came on the market at almost $14 million last year, it was only the second-highest priced offering in its building. Antonio Gracias of Valor Equity Partners and his wife, Sabrina, were asking $16.8 million for a 12,400-square-footer on the building’s third floor. The asking price for that one is now $14.4 million. It’s also being offered in two pieces, an 8,000-square-foot chunk for $9.9 million and about 4,400 square feet for $4.5 million. Also for sale in the building is a four-bedroom unit now priced a little under $6 million, down $2 million from its asking price when it first came on the market over five years ago, in November 2018.
JANUARY 29, 2024 | CRAIN’S CHICAGO BUSINESS | 25
Construction nonprofit catches attention of MacKenzie Scott By Brandon Dupré
A nonprofit that helps build up Chicago and diversify the city’s construction industry is expanding its operation, with a big helping hand from famed billionaire philanthropist MacKenzie Scott. Hire360, which connects minority businesses and communities to contracts and careers in the construction industry, is nearing completion on the renovation of a 40,000-square-foot warehouse at 26th and State streets in Bronzeville that will serve as its business and development hub. The $8 million project, which is slated to open in the spring, will allow the nonprofit to scale up its ambitions, bringing its construction and apprenticeship training right to the workforce under one roof. And as Hire360 continues to grow, so, too, does its recognition. Its efforts recently landed the nonprofit a $3 million donation from Scott, which it said will go toward completing the new center. The new site will include spaces dedicated to learning the different trades, pre-apprenticeship training, and a location to help new contractors conduct business and access other resources. Jay Rowell, executive director of the nonprofit, said it will also be outfitted with hospitality training to serve its members who work with Chicago’s Unite Here Local 1 union, which represents culinary and hospitality workers in the city. Hire360, which was founded in 2020, had previously used space in McCormick Place to conduct its training while the bulk of it had to be done virtually. But with the new center, the training will be much more hands-on and at a larger scale. “We're already planning to run more pre-apprenticeship cohorts, grow the workforce and really amplify the work we're already doing,” Rowell said. And as the student debt crisis makes national headlines, Rowell and his nonprofit are offering an alternative path for young adults, one that offers jobs, the promise of a fulfilling career and prospects of no debt. “There's a great pathway for individuals getting into apprenticeship programs, learning a craft or specialized skill and getting paid to do that rather than racking up debt in college,” Rowell said. "I would argue going into the trades is better than a good college education."
Surprise donation In typical Scott fashion, her $3 million donation to Hire360 was done without any formal application and much to the surprise of its recipient. “We had no idea and it very much just came out of the blue,” Rowell said. An anonymous email seeking 26 | CRAIN’S CHICAGO BUSINESS | JANUARY 29, 2024
A rendering of Hire360’s business and development hub in Bronzeville | HIRE360
information then led to a 15minute phone call that ended with the Scott group saying it would be giving the donation — no application or formal submission necessary, a distinct feature of the MacKenzie Scott experience. Donations like this have been appearing all over the Chicago area over the past few years, ever since Scott signed a pledge to give away most of her wealth in 2019. She has been especially generous to Chicago nonprofits. Overall, she has donated more than $318 million to Chicago nonprofits since catapulting onto the scene in 2020 — the earliest that records are available on her website, Yield Giving — outpacing her donations to both Los Angeles and New York City during that time. While Chicago has landed significant Scott attention, things have slowed as of late. This past year, Scott donated more than $45 million to nonprofits that service Chicago, according to Yield Giving, with a few contributions yet to be disclosed. That total is well short of the more than $95 million that Chicago-serving nonprofits landed in 2022 and 2021, and is still below the $81 million she gave in 2020. But despite the drop in yearly giving, her donations are life-changing for the nonprofits that do receive gifts. They are oftentimes recordbreaking amounts. In one week last fall, she gave $8 million to the Cara Collective and $5 million to Skills for Chicagoland’s Future, both record donations. Other donations included $9 million to Aunt Martha's Health & Wellness, a nonprofit health center, and $3 million to early childhood development nonprofit Family Focus. Since 2020, Scott's largest donations in the Chicago area were $40 million to the University of Illinois Chicago; $25 million to the United Way of Metro Chicago; $25 million to Chicago Public Schools; and $20 million to Easterseals, which serves the Chicago and Rockford areas. Some of Scott's donations share grants with organizations outside of Chicago. To date, Scott has given more than $16 billion to nearly 2,000 nonprofits globally as part of her pledge to give away most of her wealth. The Bloomberg Billionaires Index estimates her net worth at $36.6 billion.
SMITH From Page 3
public service. That improbable Horatio Alger story has continued with his recent appointment as vice chair of World Business Chicago, where he’ll succeed co-CEO of Ariel Investments Mellody Hobson. While Smith may not yet have Hobson’s name recognition, Purpose Brand Agency CEO Diane Primo argues he shares Hobson’s passion for the city and her ability to build relationships. “He looks young but he’s mighty, with a strong leadership ability,” said Primo, who met Smith through the Business Leadership Council. “In terms of someone who, I look at to say, ‘Who’s a cheerleader for Chicago?’ I think he’s a huge cheerleader.” Far from an Achilles’ heel, the fresh-faced 45-year-old argues his age has put him at an advantage. “With my age range, it puts me in the middle of more established folks that have been in the city a very long time, who know how to operate from a civic perspective and a political perspective,” he said, adding that he has learned from veteran leaders and fostered mutual respect with them. Smith has taken those political lessons to heart; he has maintained a good relationship with former Mayor Lori Lightfoot while establishing himself as Mayor Brandon Johnson’s liaison to the business community. Now as a seasoned CEO, Smith has been able to mentor a younger generation of professionals and teach them how to network more aggressively. “I had to chase a Jim Reynolds,”
MESIROW From Page 3
of the tower and updating features of its existing offices “to enhance the employee experience and make this feel even more of a destination for people to come to,” Brown said. The firm still needed plenty of workspace as its employees are required to be in the office on Tuesdays, Wednesdays and Thursdays, but Brown said reconfiguring parts of the office will allow the company to have a more efficient footprint and still have room for new hires. Mesirow explored other office options in Chicago over the past couple years, but found there was a “strong sentiment within our culture that people wanted to stay in this building,” Brown said. “That drove a lot of the decision.” That’s music to the ears of Chicago real estate firm Heitman, which has owned the 1.2 millionsquare-foot tower since acquiring it for $715 million in 2014. Watching one of its largest tenants slash its footprint hurts, but shoring up a big piece of its rent roll for an extra decade could be considered a victory against the current backdrop of record-high office vacancy and rampant distress. Heitman also endured another big space reduction from its larg-
Smith said of the Loop Capital CEO. “That’s how I established the relationships I have today.” In his new role at World Business Chicago, Smith is tasked with attracting and retaining companies for Chicago. At the same time, he wants to provide local Chicagoans the bridge to those companies that he never had growing up. “There are neighborhood businesses and midsize businesses that are isolated from doing business with our corporations,” he said. Smith believes Chicago can do a better job of creating what he calls “a circular economy,” one that benefits not only the namebrand corporations based here but focuses on inclusive workforce development. He points to Show Strategy, a Black-owned, Chicago-grown events management company that has produced exhibits like EXPO Chicago, as an example of the type of growth that Smith would like to model at World Business Chicago. In January, the Democratic National Convention Committee and host committee selected Show as the exposition services provider for the convention, making the local business one of the prime contractors for the event this August. Glenn Charles Jr., Show’s president and CEO, has known Smith for eight years and works alongside him at the Business Leadership Council, which serves as a networking hub for more than 120 Black professionals in the city. Charles, born and raised in Englewood, saw a kindred spirit in Smith. “The biggest connection for both of us is, ‘How do we create generational wealth in the Black community?’” he said.
The day Charles met Smith, he had mentioned he was going on a trip to Jamaica that week. A few days later, Charles received a call from him that morning saying he had flown down there. Hours later, they found themselves sitting on the beach and talking about how to build Black businesses. “Charles (Smith) advocates for small business, and I think it’s because he came from nothing. He honestly understands what it means to start from the bottom and work your way up,” he said. “He takes a lot of pride in connecting the dots and making that happen.” Although Smith’s rolodex now counts Chicago power brokers like Michael Sacks, his colleagues say he’ll pick up the phone for just about anyone. On an average day, his CEO at the BLC, Arielle Johnson, is able to catch him for a quick question between his daily workout and an early-morning breakfast. “It’s a fun ride because he is extremely ambitious and moves very quickly,” Johnson said of their work at BLC together. “He has a lot of ideas and appreciates quality and ensuring that there’s a real, tangible opportunity . . . you always have to be prepared to keep up with him.” That willingness to pick up the phone comes from Smith’s own experience, when he started out without any contacts, he said. At times, he didn’t feel people understood his value, and moving forward, he doesn’t want others to feel that way, he said. “I didn’t come from Harvard or Yale, I’m a local Chicago guy,” he said. “You can’t make yourself inaccessible because you have something else on your plate. It all comes down to consistency.”
est tenant, law firm Jenner & Block, which battled in court with Heitman in 2020 over unpaid rent during the first months of the pandemic. The two sides settled their dispute in 2021, and Jenner is said to have signed a long-term extension for about 225,000 square feet, or about 46% less space than it had before.
13 floors when the building opened, but it has gradually reduced that footprint over time. The company got rid of a significant piece of that space with the sale of its insurance division to Alliant Insurance Services in 2016, which today subleases space from Mesirow. Newer and updated buildings like 353 N. Clark St. have outperformed the rest of the market since 2020 as companies have flocked to buildings they think will help encourage employees to show up. While the vacancy rate at top-tier, or Class A, properties was virtually the same as Class B properties at the end of 2020 at about 18%, Class A vacancy has only risen since then to 19.1%, while Class B vacancy has jumped to 28.4%, according to CBRE data. Mesirow’s lines of business include investment banking and wealth and asset management services, as well as handling employee retirement plans for company clients. Brown said Mesirow had $261.4 billion of assets under supervision as of the end of 2023. Cushman & Wakefield vice chairmen Ari Klein and Scott Shelbourne negotiated the lease extension on behalf of Mesirow. Mike Kazmierczak and Seth Tuscher of CBRE oversee leasing at 353 N. Clark St.
Losing a big tenant Locking up leases with large tenants is also critical for Heitman as it prepares to lose a big tenant in real estate investment trust Ventas. The senior housing and medical office investor is nearing a deal to move its headquarters to about 50,000 square feet in the nearby tower at 300 N. LaSalle St., according to people familiar with the negotiations. That’s roughly the same amount of space Ventas occupies today at the Clark Street building on a lease that’s due to expire this year. Not including the space changes by Jenner, Mesirow and Ventas, the building is 89% leased, according to real estate information company CoStar Group. That compares with the 76% average for downtown office buildings. Spokesmen for Heitman and Ventas did not respond to requests for comment. Mesirow had about 345,000 square feet at 353 N. Clark across
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U OF I From Page 1
other so-called advanced reactors would use molten salt, liquid sodium, liquid metal or other coolants. Both have operational, safety and financial advantages over traditional large nuclear reactors. The advanced microreactor technologies are much smaller and safer than those currently in use. Microreactors would be built in factories, rather than constructed on-site like traditional large-scale reactors that are used to generate electricity for the mainstream power grid. New types of fuel also have safety and efficiency advantages. “One problem with gigawattsized commercial large reactors is the construction cost is almost $10 billion,” says Taek K. Kim, who manages the nuclear systems analysis group at Argonne's Nuclear Science & Engineering Division. “The initial investment is huge. “It takes five to 10 years to build, and they operate for 60 to 80 years. That’s a financially risky project. A small reactor is 300 megawatts or smaller. It’s one-third the size or less, which reduces the initial investment.” Argonne traces its roots to the Manhattan Project and the first self-sustaining nuclear chain reaction at the University of Chicago in 1942. The national lab near suburban Lemont is one of the nation’s centers of nuclear research expertise. Its scientists helped design various advanced-reactor concepts such as a sodium-cooled fast reactor being developed by Terra Power, a startup backed by Bill Gates that is considering a commercial project in Wyoming. Between U of I and Argonne, Illinois intends to have a role in the next chapter of nuclear power. Despite a long history of safety challenges, from Three Mile Island to Fukushima, as well as cost over-
runs that stung electricity customers, nuclear power is getting a fresh look as part of a menu of clean-energy solutions to reduce pollution. As energy companies and private industrial users try to eliminate carbon by shutting down coal- and natural gas-fired electricity plants and replace them with wind and solar generation, nuclear could fill a gap. “You can’t control weather,” Kim says. “Eventually we think renewable plus nuclear is the dominant energy source.”
A dissenting voice Not everyone is bullish on the future of nuclear. Some worry that it will divert resources from developing more environmentally friendly energy technologies such as wind and solar. “It’s an unproven technology,” Abe Scarr, director of Illinois PIRG, a consumer advocacy group, says of the new reactors. “Something we’ve seen time and again from the nuclear industry is that it overpromises and underdelivers. If those promises were true, given the history and experience we’ve had in Illinois with cost overruns, I’d be more open to it.” The lone commercial microreactor project in the U.S., proposed in Idaho by NuScale Power, recently was aborted. “I’m not particularly concerned that (a commercial project) is imminent, which gets to our other worry that it’s a distraction and we should spend time on other technologies that are proven,” Scarr says. State Sen. Sue Rezin, a Republican from Morris whose district borders three nuclear facilities, co-sponsored the legislation to end the state’s moratorium on new reactors. She acknowledges there are no proposals to build commercial reactors in the state, but says, “the first step is lifting the moratorium to send the message to investors looking to develop these projects.” Baltimore-based Constellation,
which operates six nuclear plants in Illinois, didn’t oppose the bill. “As the nation’s largest producer of clean, carbon-free nuclear power, Constellation fully supports legislative and policy solutions that eliminate barriers to maintaining and expanding nuclear’s role in delivering reliability, affordability and energy security,” the company says in a statement. Agriculture and food giant Archer-Daniels-Midland, which operates a 300-megawatt, coal-fired plant in Decatur that supports its manufacturing facilities, also is on board. “We are supportive of the state’s decision to facilitate the technology innovation and development that is necessary to decarbonize the state’s economy, and we are exploring all viable options to meet our sustainability goals,” the company says in a statement, though it declines to elaborate what that might look like. ADM aims for 25% of its total energy use to come from lowcarbon sources by 2035. The transition to a new generation of nuclear technology will be long. Many existing nuclear facilities will continue to run for a couple of decades. “Right now we’re in this quite interesting time,” says Craig Piercy, CEO of the American Nuclear Society in Washington, D.C. “The current fleet is doing OK. Plants will ultimately be decommissioned and need to be replaced, but that’s 10 to 20 years from now. We’re not expecting any new ones until 2030.”
U of I’s reactor plan U of I hopes to be one of up to four university research reactors that are expected to be funded at about $150 million each from legislation known as the CHIPS & Science Act. The university expects to submit its construction permit application to the Nuclear Regulatory Commission this year. If all goes well, the reactor could be opera-
tional by 2028. U of I’s microreactor will serve several important needs: training the next generation of workers, providing R&D and demonstrating the new technology at scale. The university already has a gasfired steam plant on campus that supplies power and heat, as well as two solar farms. It also purchases energy from a nearby wind farm. Energy from a microreactor would be added to the mix. “The underlying concept of the new nuclear technology has been demonstrated,” says Caleb Brooks, an associate professor at the U of I. “What we haven’t done is a proof of package. “Are there new ways of controlling the reactor in such a way you can reduce operations and maintenance expense? There’s a lot of research and (intellectual property) to develop in the way these reactors interface with new markets. “These new reactors have longer core lives. If you have a reactor that might run for 20 years without even opening it (for refueling), are there new ways you can take advantage of that from a monitoring and control standpoint?” One promising use case is to put the new small reactors on site of places like steel mills or chemical plants that need their own sources of energy, often heat for hightemperature manufacturing processes, but currently rely on gas or coal-fired plants. “Traditional nuclear reactors, because of their large size, have inflexible siting, require miles of fencing and armed guards, which makes their ability to co-locate with the end user very challenging,” Brooks says. “New reactors, because of their small footprint, you can begin to co-locate them with the end user. If you can go directly to the end user, you can eliminate a lot of the transmission costs and compete at a much lower end-user price. It could change the way we think about nuclear.”
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WALGREENS From Page 3
our investments in certain markets, exiting certain markets, investing more deeply in others, and that’s going to take us about a year to get back on the right track. How do the different operations within healthcare services connect?
We can build on our pharmacy franchise to extend and enhance the rest of the healthcare system, improve outcomes and lower costs. Shields makes sense because we’re in specialty pharmacy. Our clinical trials recruiting and services business makes sense because we’re touching a more representative sample of people who are taking these complex biologics. Summit is a multispecialty machine. I think pharmacy is connected to a lot of the critical parts of chronic care management. It was disconnected historically. By reconnecting the pharmacist and
pharmacy services with chronic care management by primary care and specialists, we can solve for engagement and adherence problems. By investing in collaborative work with primary and specialists and pharmacists, we can then take more risk around performance, and if we deliver it, we can get paid for it. By investing in and creating a better model with Village, with Shields, with Pearl, we believe we can be paid more. We can get a fairer reimbursement for the services that we provide. The current plan is to close 60 VillageMD clinics. Can we expect more closures or expansions in the next year?
I think there will probably be both. We're going to be expanding and investing in markets where we believe we've got the appropriate density to really scale more economically. Even our low-performing clinics have been growing. They’re just not growing as fast as we would hope. We’ll also be exploring at
Village leveraging physician enablement as well as employed physician models as we think about coming up with a more economical way to scale the business. We will continue to focus on markets of priority like Atlanta, Phoenix, Houston. Whether that means more clinics or more doctors, I’m not quite sure. Any more details on which markets you’ll exit?
In certain areas, we're actually going to partner with hospital systems. In other areas, we may do a sale or a partial sale to the physicians who are there. And in other cases, we'll be doing partnerships with health plans. It’s not exclusively closing clinics. What’s behind the strategy of co-locating Village clinics with Walgreens pharmacies?
Our strategy is to reconnect the disconnected physician services to core healthcare. We're seeing a lot of early indications that a co-located clinic not just drives economic value for us, but
a better patient experience in the clinic. Healthcare is inconvenient. In some cases, like in the co-located clinics, we’re just trying to solve all the cranky little problems that keep people from getting the [prescriptions] they need, taking them for as long as they should and helping patients understand how prescription drugs fit into their chronic care. How do you view your competitors’ similar efforts in healthcare services?
CVS, Walmart and Walgreens all are very focused on solving for cost, convenience and outcomes. We are very excited that CVS is trying some things, that Walmart is trying some things. As each of us succeed, we all win. In a $4 trillion market, there's plenty of room for multiple retail healthcare models to work. We cannot continue to have a system that has lousy outcomes and increasing costs every year. Caroline Hudson writes for Crain's sister publication Modern Healthcare.
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