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A Tough Pill to Swallow
Midway College’s aborted effort to construct a pharmacy school shows that an assumed quick fix to finance problems might not be as easy as it seems.
Lots of colleges are looking for a miracle cure for what ails them these days.
In 2010, Midway College, a private women's college in Kentucky, thought it had found its wonder drug in the form of pharmacy school. It would be built in Paintsville, a city several hours from the college's main campus, with funds from a major gift. The school, which would be coeducational, could help the college develop an economically disadvantaged section of the country, attract students and tuition dollars, and fill a vital niche in the community.
But after two years and several million dollars spent, the college has nothing to show for its efforts except a damaged reputation, some administrative turnover, and an empty building, with little hope that it will ever be filled.
Over the last two years, Midway College ran into numerous barriers in its effort to launch the new pharmacy school. It has since abandoned efforts to set up its own school at the location, and attempts to find another institution to fill the space have so far proved fruitless. Many individuals who watched the process say the pharmacy school was ill-conceived and rushed and poorly managed. They say that if administrators had examined the landscape better, the college might not have launched the initiative, avoiding a major headache.
Small, enrollment-dependent colleges such as Midway, faced with significant funding challenges, are increasingly turning to professional programs for both undergraduate and graduate students as a way to attract students and tuition dollars to fund the traditional, increasingly costly, undergraduate education model. Numerous higher education leaders have pointed to the addition of professional schools and other cost-effective degree programs as a way for liberal arts colleges that don't have the financial resources of the elites to continue to support the small-college model. Pharmacy schools have been the program of choice for many colleges, since there is high demand for pharmacists and student demand currently outstrips available space. Between 2000 and 2008, the number of accredited pharmacy schools grew from 81 to 112. As of January, there were 127 accredited or candidate pharmacy schools in the U.S.
What the Midway experience shows is that these programs often face high start-up costs and can be more risky than previously envisioned, especially if the student market does not materialize.
The primary impetus behind the Paintsville pharmacy school was a donor from the city who was interested in a way to grow the local economy. Paintsville lawyer Chad Perry, whose wife, Julianne Perry, is a graduate and trustee of Midway, originally envisioned setting up an osteopathic medical school. When one was set up at Pikeville University, another institution in the Appalachian region of Eastern Kentucky, the Perrys shifted the plan to the pharmacy school. The Perrys pledged to give Midway $13 million for the project.
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The college began assessing the potential for a school in 2009.
Johnson County and the City of Paintsville agreed to provide an underutilized entrepreneurial center to house the pharmacy school, though the college would pay to retrofit the building to make it suitable for pharmacy education.
Midway officially announced the pharmacy school in January 2010. At an announcement ceremony in Paintsville, then-president William Drake Jr. said the college planned to open the school in fall 2011 with a class of 80 students (growing to a total enrollment of 320 students), and employ approximately 100 full-time and part-time faculty members. He projected that the annual economic impact to the region would be $40 million. “This is such a game-changer for this school forever,” Drake said at the announcement.
Kentucky had only two pharmacy schools: one at the University of Kentucky and one at Sullivan University, a for-profit institution with campuses in Fort Knox, Lexington, and Louisville.
Lanny E. Foss, a former pharmacy school administrator, was hired in 2009 to be the school's founding dean. In addition to serving as an associate dean of academics and assessment at the Appalachian College of Pharmacy, he also consulted with colleges hoping to open pharmacy schools. In the two years before Midway hired him, Foss had consulted with four colleges as they prepared to open schools of pharmacy.
Throughout 2010, the college began seeking accreditation, hiring faculty members, and recruiting students, with a projected opening date of fall 2011.
But getting the school off the ground proved difficult. Foss was hit by a truck and, though he survived, ended his work overseeing the project. The associate dean at the time, Barry Bleidt, who had less experience starting pharmacy schools, took over the project in summer 2010. Before moving to Midway, Bleidt served as associate dean of academic affairs at the Texas A&M Health Science Center’s College of Pharmacy.
The college delayed its application for accreditation several times, said Ellen Gregory, vice president for marketing and communications for Midway College.
The Accreditation Council for Pharmacy Education visited the campus May 2-4, 2011, to evaluate the site, according to minutes of an October 2011 meeting of the finance committee of Midway College’s Board of Trustees obtained by a group of student journalists at the University of Kentucky who did an investigation of Midway and its ambitions. According to those minutes, in which the trustees discuss the council’s report, the accreditation council took issue with several aspects of the college’s plan. According to the minutes, the ACPE’s report stated that “the strategic plan, teaching and learning methods, curricular core, practice facilities and the financial resources were less than expected.”
In particular, “the ACPE made it very clear that their concern was the inexperience or no experience shown by the dean and the young faculty,” the minutes state. In addition, “the PCAT scores for the applicants who applied to the School of Pharmacy were extremely low. At least 57% of students that applied to the School of Pharmacy were below average on their PCAT scores.”
The cost of constructing the new school had also greatly exceeded expectations. According to the minutes, the building was estimated to cost about $25 million, or roughly double what the Perrys had pledged. Trustees were surprised to learn that the accreditation council required a building – or financial backing in order to build the building – rather than just plans.
In the wake of the ACPE report, the college’s provost, Sarah Laws, became involved in the process of setting up the pharmacy school, according to the minutes. She laid out checkpoints to meet the requirements set out by the ACPE in preparation for another evaluation. The checklist meant the school would not open in August.
At the same time, the Kentucky Council on Postsecondary Education, which coordinates colleges and universities in the state, was threatening to revoke a provisional license for the pharmacy school. In Kentucky, all new academic programs at private colleges are required to seek a license from the council to ensure that students will be repaid if the program closes down. As a condition of granting a provisional license to Midway, the council required regular reports about the school’s progress. In fall 2011, the council stopped receiving reports from Midway. “We started to sense that something was wrong,” said Robert L. King, president of the Kentucky Council on Postsecondary Education.
In October 2011, Bleidt stepped down as dean of the pharmacy school.
Chad Perry passed away in fall 2010, and his widow, Julienne Perry, began withholding payments to the college as the plans started to unravel. Of the $13 million total, the Perrys had contributed about $4 million. Main operating revenues from the college had been supporting the up-front costs for the pharmacy school during the accreditation process, according to the minutes of the finance committee meeting. Cash flow service to the school was said to be $3 million a year.
King met with the college’s president and chairman of the board of trustees in December 2011, where it became apparent that the college was ending its pursuit of the pharmacy school.
According to ACPE records from January 2012, the college voluntarily withdrew its application to pursue accreditation.
An Alternative Solution
As Midway withdrew its application, administrators began to search for another pharmacy school to come in and take over the space, potentially hiring the faculty Midway recruited and enrolling the students.
The University of Charleston, a private institution in West Virginia about two hours from Paintsville, was one of the institutions that Midway approached. Charleston currently operates a pharmacy school at its main campus.
Edwin H. Welch, president of the University of Charleston, said the university came up with 38 factors that it would explore regarding the campus. “We did our due diligence and decided it was just not a good decision to open a branch there,” Welch said. Welch also said that at that point, Midway College had been removed from the process. Charleston was not working with them and was under no obligation to assume the college’s students.
The overriding concern for the college, Welch said, was the forecast about the potential student market. He said the college found that the number of pharmacy schools in the region was increasing, including a planned pharmacy school at Marshall University, a public university in Huntington, W.V. “We might well start a school and in two or three years start to see the numbers go in the wrong direction,” he said. “At that point, there would be an inadequate number to support the program.”
King said the University of Kentucky also explored using the site but decided against it.
Gregory said the college was not continuing with its plans to open a pharmacy school, and that it had not yet found someone to assume the space. “We are working with the city to resolve the future use of the building,” she said. “We have totally withdrawn our application for accreditation and we have no plans to proceed.”
In late March, Drake, who had led the institution for 10 years, stepped down from the presidency.
The board appointed Robert L. Vogel, who had previously served as president of Wartburg College and interim president at Texas Lutheran, Grand View, Waldorf, and Bethany Colleges to serve as interim president while it began looking for a permanent replacement. Gregory could not provide a timeline for the search.
One of Vogel’s first major actions as president was to reorganize the administrative leadership chart, eliminating Laws’s position and replacing it with an academic vice president, appointing Marlene M. Helm, previously the chair of the graduate teacher education division, to take on the position.
Gregory said the college no longer has any liability for the campus in Paintsville. “Students have been going through a reimbursement process,” she said. “Any academic fees or deposits, those are being refunded. We no longer have any faculty or staff in Paintsville.”
Kentucky higher education leaders said there is no reason to believe that the college’s overall financial health has been significantly impaired by the failure to complete and open the pharmacy school, but King said the interim president should conduct a full review of the college's financial situation, to make sure Midway can cover any potential liability from the aborted school and get on a stable path moving forward.
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