"Eds and Meds": Anchoring Boston's Economy

In early October, more than 110 of Philadelphia's business, civic and government leaders traveled to Boston as part of the 2014 Greater Philadelphia Leadership Exchange. One of the key learnings from this trip was that in both Greater Boston and Greater Philadelphia, educational and medical anchor institutions serve as economic flotation devices, community partners, and catalysts for growth in their local communities and in their regions at large. 

Greater Philadelphia and Greater Boston are home to world class healthcare systems and higher education institutions, and more than a quarter of working residents are employed in “eds & meds” industries in both regions. During this year’s Greater Philadelphia Leadership Exchange in Boston, we traveled to Cambridge to examine the role these “anchor institutions” play in their communities by participating in a walking tour of MIT’s campus and neighboring Kendall Square followed by a dynamic discussion featuring Kevin Casey, associate vice president for public affairs & communications at Harvard University; Matthew Fishman, vice president of community health at Partners Healthcare; and Dr. Lee Pelton, president of Emerson College. 

The visit and the conversation revealed three major themes about the function these anchor institutions serve in their communities and as part of a broader region:

“Economic Flotation Devices”

Universities and healthcare systems provide jobs at all levels, from facilities managers to PhD researchers, and are relatively resistant to economic fluctuations. In fact, a recent Moody’s analysis focused on Boston, Philadelphia and Baltimore found that the high concentration of healthcare and educational jobs in these cities (more than 20 percent compared with 15 nationally) helped them weather the most recent recession better than many of their peers.

For example, Harvard University employs more than 10,000 people, making it the fifth largest employer in Massachusetts. With more than 20,000 students and 600 buildings, the university costs more than $4 billion a year to run. Much of this money is spent locally, with more than half spent on employees, not to mention the significant share of purchasing that supports the local economy. In addition to Harvard’s direct spending in the community, the University also brings in nearly $1 billion annually in research funding.

Community Partners

Higher education and medical institutions also invest in their surrounding neighborhoods in various ways that can produce “win-wins” for both the institutions and the local community. For example, Emerson, a liberal arts college focused on communications and creative industries, made the decision to move from Boston’s Bay Back to the neighborhood around Boston Common – then known as “the combat zone” – about 15 years ago. Since that time, Emerson has spent a half-billion dollars in the area – an investment which has paid off in a significant resurgence in residential units, restaurants and high-end hotels that serve a now-thriving Theater District.

Similarly, since Partners HealthCare was established by Massachusetts General Hospital and Brigham and Women’s Hospitals nearly twenty years ago, the nonprofit healthcare network has grown to include community and specialty hospitals, community health centers, home care and other health-related entities. One of its most successful strategies to engage the community has been establishing community health centers. Not only are the centers employers of choice in the neighborhoods they serve, but the community-based preventive care they offer helps Partners focus on providing the specialized hospital care it is known for at its main facilities.

Partners also achieved another win-win when it forged an innovative partnership with the State’s Department of Mental Health almost a decade ago. At that time, Brigham and Women’s was seeking more space for neuroscience research, while the Mass Mental Health Center two blocks away was in desperate need of repairs that the state budget couldn’t cover. They decided to work collaboratively; by doing so they were able to ensure not only that the state got a new mental health center but also that Brigham secured the space it needed for research. In addition, Brigham’s physicians are now providing primary care to patients served in the state’s mental health facility, providing continuity of care for these vulnerable individuals.

Catalysts for Economic Growth

Universities’ ability to capitalize on their rich research resources for commercial success can buoy the local economy and fuel growth. There are few examples of university investment that rival MIT’s long-term involvement in making Kendall Square into the internationally recognized center of innovation is it today. Back in the 1960s, MIT anticipated the need for more space and began buying land surrounding its campus as the last of the city’s manufacturing plants left. Using long-term ground leases and working with government agencies and private developers, the institution created millions of square feet of office and lab space for private companies interested in being near campus. Today, Kendall Square is densely packed with venture capital firms, startups, innovative co-working spaces, university researchers, and, more recently, big-name firms (like Google, Microsoft, Johnson & Johnson and Amazon, to name a few) looking to be close to the action.

And, just down the road, Harvard is creating new university offerings to supplement its traditional life sciences commercialization strengths. In late 2011, Harvard created the “iLab” – a nearly 30,000 square foot space in Allston where students and faculty from across the university can collaborate and work together to launch new ventures. Due to iLab’s enormous success, the University recently established two accelerator funds to support these student entrepreneurs and created a new “Launch” incubator space across the street from the iLab where Harvard alums can pursue their own innovative business ideas.

Emerson has also gotten in the game, with a new accelerator that just opened in Boston’s Innovation District. Its first crop of student entrepreneurs are focused on bringing new technologies to music and television production and piloting a way to 3-D print organic food.

Here in Greater Philadelphia, anchor institutions are playing similar roles, from Drexel and the University of Pennsylvania’s efforts to make University City a world class innovation center to the Children’s Hospital of Philadelphia’s investments in improving the health of neighborhood residents in West Philadelphia. Similarly, just across the Delaware River, the Cooper Health System provides a stabilizing effect on the local economy as the largest employer in the City of Camden. Temple University is also engaging with its local community in North Philadephia, by providing education and workforce training programs with funding that supplements the federal Choice Neighborhoods Implementation grant.

However, as anchor institutions take on more of a role in their local communities, both in Boston and at home, they face greater expectations and scrutiny from residents and other stakeholders who see big endowments, land buys and new facilities and think they should be doing even more to address the needs of those living nearby. In addition, these institutions are rarely able to adjust nimbly to changes in their local environments, given their size and complexity. In fact, Emerson President Dr. Lee Pelton quipped that creating real change in a college or university is often "like trying to move a cemetery," given burdensome administrative structures and the culture of academia.

While these are signs that times are changing, and that these institutions understand that they must quickly adapt in order to keep up, it’s clear that they cannot solve all issues on their own. Instead, anchor institutions function best as part of an ecosystem of government entities, small and large businesses, nonprofit organizations, and engaged residents who are all seeking to improve their communities and their regions at large.   

To read more about the role anchor institutions are playing here in Greater Philadelphia and in five other cities across the county (including Cambridge), see the Penn Institute for Urban Research’s recent report.