Shands Looks East
The organization's Jacksonville strategy isn't a slam dunk, however.

Jacksonville is getting a big new player on its healthcare scene. Shands HealthCare, based in Gainesville and affiliated with the University of Florida, seeks to fortify its competitive position in northeast Florida by setting up a second headquarters in Duval County.

This fall, Shands signed and sealed its takeover of the 514-bed University Medical Center and 244-bed Methodist Medical Center just north of downtown.

For Shands, which has had a strong presence in Gainesville since the late '50s, staking out a new venue was crucial. While operating income improved in 1999 to $28 million, Shands' financials have been shaky; the system had an operating loss of $613,000 in 1998 and had to sell off almost all of its home health business.

Shands also needs a larger base to compete for research dollars. Clinical drug trials, for instance, require population bases larger than Shands can muster even by combining Alachua County's 212,000 residents with populations Shands serves at hospitals in Suwannee, Columbia and Bradford counties. With more than a million people, Jacksonville offers both size and important amenities such as better air service, an important factor in Shands' strategy of drawing patients from outside the region.

Leading the move into Jacksonville is Shands chief executive J. Richard Gaintner, who orchestrated mergers of Harvard-aligned hospitals in Boston before coming to Gainesville in 1997. This year, he imported Bob Norton, a hospital administrator and biomedical engineer who worked closely with him in Boston. Norton heads Shands Jacksonville and is overseeing integration of the two recently acquired hospitals with Shands and UF's medical school, which already had an agreement to place doctors and med students at University Medical.

The Jacksonville strategy isn't a slam dunk, however. University Medical and Methodist have been money-losers, with combined debt of about $181 million and annual debt service around $20 million. In addition, Shands is counting on strong population growth on Jacksonville's north side, where growth has been slow despite efforts by city officials to steer development there. Also, in order to attract better-heeled patients, Shands will have to re-engineer University's reputation as the hospital for the poor.

Shands does have some advantages as it enters the Jacksonville market. Lori Bilello, executive director of the Health Planning Council of Northeast Florida, an oversight agency, believes Shands can use its specialties in transplants, neonatal critical care, trauma, cardiovascular disease and neurology to compete successfully.

And lenders have shown confidence by giving Shands Jacksonville a $45-million line of credit for future investments, Norton says. State lawmakers are chipping in $5 million for a new proton-beam cancer therapy and $4 million for other oncology equipment, although Gov. Jeb Bush vetoed about $10 million that would have helped Shands Jacksonville with the costs of caring for the poor and merging the hospitals.

Both Jacksonville hospitals now under the Shands' umbrella have colorful histories. University Medical Center, founded in 1870 as Duval Hospital and Asylum, is Florida's first non-military hospital. Methodist traces its history to 1901 as a nursing school and all-black hospital when medical care was segregated. The two institutions have "provided care under very challenging circumstances," says Norton. "Think of what we can do with more support."

In the News

Alachua County -- Despite a fire that destroyed most of Seabring Marine Industries' boat-making operation in Archer, the company plans to keep its 190 employees on payroll until it regroups. Seabring fears losing trained workers to other employers in the excruciatingly tight labor market. A separate new plant that would absorb some of the workers was under construction in Williston before the blaze.

Clay County -- A large office project in the works will bring more jobs close to home. The first phase of a $20-million, 200,000-sq.-ft. high-end office project by United Land Developers should be completed next summer at Fleming Island Plantation. As corporate tenants move in, new jobs should help reduce the ranks of the 54% of local workers who commute to jobs outside the county.

Flagler County -- Palm Coast, a community created by ITT Corp. and home to 32,872 people -- nearly 70% of the county's residents -- becomes a city on Dec. 31. About 60% of the residents who went to the polls voted to incorporate. Proponents wanted a stronger local voice in future growth. Meanwhile, county officials debate whether Marineland, down to 11 people, should remain a town or be absorbed into Flagler County.

Gainesville -- The city's largest mixed-use development to date is undergoing local and state reviews. Greenways of Gainesville, a project proposed for the city's northern border by Boca Raton investor Arthur Weiss, will be scrutinized for its potential impact on the region in a hearing this winter or early next year. The proposal calls for 2,000 homes, three-quarters of a million square feet of retail space and nearly half-a-million square feet of office space on a 900-acre tract.

Jacksonville -- Neighbors of Craig Airport, corporate pilots and tenants of the business airfield are debating the extension of a runway from 4,000 feet to 6,000 feet. Proponents have pushed for it since the mid-1980s. The Jacksonville Port Authority assembled an advisory group of airport users and neighbors who are reviewing a noise-reduction study.

Economic development and port officials got a taste of the cruise ship industry when the Royal Viking Sun stopped here last spring with some 700 passengers. A recent study by West Palm Beach-based Gee & Jenson says the city has grown enough that it has a good shot at establishing a cruise ship home port. But the city is likely to start small and lure more ships before the area is added as a Florida cruise port of call.

With the pending sale of Xomed Surgical Products (Nasdaq-XOMD) to Minneapolis-based Medtronic Inc. for $800 million in stock, the city would lose another corporate headquarters. But officials at Xomed, which makes ear, nose and throat surgery tools, have reported that the operation would remain here and could add to its local
staff of 500.

To boost housing near downtown, the Jacksonville Economic Development Authority approved $868,000 in tax rebates for a 257-unit apartment complex in Riverside. Developers Atlanta-based Lincoln Property Co. and Northwestern Mutual Life Insurance Co. planned to close on a vacant riverfront site this month.

The Jacksonville City Council approved $700 million in new debt for the JEA (Jacksonville Electric Authority) for improvements and upgrades to the system over the next four years.

The U.S. Customs Service plans to establish an eight-aircraft illicit-drug surveillance squadron at Jacksonville Naval Air Station. Officials say housing the civilian drug patrol operation may help secure the base's future when military base closure commissions meet to decide which sites will get the ax.

Putnam County -- Lafarge Corp., a giant drywall and wallboard manufacturer, plans to build an $85-million plant near Seminole Electric Cooperative's generating plant north of Palatka. Raw materials used to create the construction materials are a by-product of Seminole Electric's generating process. If the Department of Environmental Protection approves the project, the new plant would add at least 100 full-time jobs.

St. Augustine -- After heated debate among locals and users of the waterway, Florida Department of Transportation officials decided to spare the historic Bridge of Lions from the wrecking ball. Instead, the old bridge will get a $26-million renovation. [See related feature, "Water Under the Bridge," page 56.]

Trenton -- A Melbourne couple took over a furniture manufacturing operation here last year and has nearly doubled the number of employees to 40. Now, Crispen Holdings Inc. is expanding into wholesale sales of its "New Dawn" futons and hardwood furniture and plans to triple production capacity in the next two years.

Overheard
Ponte Vedra Beach's growing number of wealthy residents isn't going unnoticed. The trend has caught the attention of two highly regarded out-of-state banks that specialize in providing trust and private banking services to high net-worth customers. Northern Trust and Wilmington Trust are exploring opening offices in the beachside community about 20 miles east of Jacksonville in St. Johns County. In addition to the growing number of well-to-do executives and retirees, the companies perceive a lack of competition from existing money-management firms, say those familiar with the banks' plans. A move into Ponte Vedra would represent the first time either bank expanded into north Florida. Chicago-based Northern Trust has 25 Florida offices, most of them in south Florida and the Tampa Bay area. Wilmington Trust, based in Wilmington, Del., has offices in North Palm Beach, Vero Beach and Stuart. The banks are looking at acquiring an existing money management firm or opening new offices.