Inside Higher Ed, Medium Sized Institutions Look To Medical Schools For Future Financial Stability:
As its fellow midsize, modestly endowed private colleges look nervously to the future, Marist College in New York’s Hudson Valley is making a bold, nearly $180 million bet: last month, it announced that it will partner with a regional health-care provider to build a new medical school.
Marist Health Quest School of Medicine is expected to open its doors in 2022, reaching capacity in 2032 with about 500 students.
Adding a medical school to a private college is “honestly a big leap up in scope and complexity,” said [former Loyola-Chicago Law School Dean and Marist College] President David Yellen. But it makes sense, he said. “If you have the resources, there’s room for another good medical school. And we think it will boost our status and reputation.”
The move is unusual -- if not unprecedented -- for a regional institution. In 2013, Marian University in Indianapolis did much the same, opening its College of Osteopathic Medicine, only the second medical school in Indiana.
In both cases, relatively nonwealthy -- if economically secure -- private institutions surveyed the educational landscape and decided that training doctors made sense. Opening a medical school represents not just a worthy pursuit, they concluded, but a possible key to long-term financial security, despite a byzantine and ever-shifting health-care industry.
Marian president Daniel Elsener said the endeavor turned out to be so enormous that it’s best understood not as a typical campus expansion but as an “intergenerational” undertaking. ...
Moody's Investor Services last month said Marist’s plan would have no immediate impact on its $104 million in outstanding rated debt, or on $40 million in proposed bonds to be issued through the Dutchess County, N.Y., Development Corporation. The costs associated with launching and supporting the medical school are “manageable,” Moody’s said, noting that they’ll be split evenly between Marist and Health Quest, which already runs four hospitals in the Hudson Valley and northwestern Connecticut.
Marist will spend about $25 million over the next five years, a small portion of its “sizeable” $290 million in spendable cash and investments, Moody’s said.
Yellen, the Marist president, said building the new school “is only possible because we’re doing very well financially, in an environment that’s pretty challenging for private colleges.”
He estimated that the college and Health Quest will spend nearly $180 million to get the new school to capacity in 2032. It will likely never turn a profit, Yellen said, but if all goes as planned, it will help raise Marist's reputation and drive enrollment to other programs such as the sciences. “This isn’t something we’re doing to generate revenue for the college at all, in any direction -- just the opposite,” he said. “We think it’s going to cost us money for a long, long time.”
Yellen also said the school isn't designed “to spin off money to be used for other purposes.” While he anticipates that alumni could someday give back generously, it'll likely be to the medical school and not to Marist's general fund. “We’re not expecting that medical school alumni will give money to help Marist College build a new undergraduate dorm,” he said. “But it’s kind of a rising tide raising all boats.”