EDITOR’S NOTE: Ross University School of Medicine was forced to move its operations out of Dominica after the passage of Hurricane Maria in September 2017 as the institution was not spared from the devastating impact of the monster storm on the island. Nearly one year later, with no definite indication as to if, and when, Ross will return, anxiety is understandably mounting about the significant economic loss caused by the absence of the 40 year-old institution.
In the following article, Neal Nixon, a member of the Green Haven Group (www.thegreenhavengroup.com), an organization that seeks to connect investors overseas with projects on the ground, addresses the economic impact of Ross on the island.
On the heels of Ross University School of Medicine 40th anniversary, it may be fitting and instructive to take a look at its history and its economic impact on Dominica. Moreover, when a company’s annual contribution surpasses 15 percent of a nation’s GDP, in which it functions, that company’s operation, culture, and people must be observed most carefully; its prospects, its growth, and continuous progress should merit uncommon attention. In the following text, the author will give a brief history of Ross in Dominica and will attempt to show its financial contribution (quoted in US dollars) to Dominica’s economy. Included are recommendations to the Government and People of Dominica.
In 1978, just a few months before the ravages of Hurricane David on Dominica, Dr. Robert Ross established the University of Dominica School of Medicine with the enrollment of 11 students. In 1983, encouraged by a vision of success and moved by expectations of a more favorable future, he officially named it the Ross University School of Medicine (Ross University). Concurrently, he established the Ross University School of Veterinary Medicine in St. Kitts (RUSVM) and placed both institutions under the control of Dominica Management, Inc., a company exclusively owned by Dr. Ross.
As a consequence of financial challenges and the pressing need to recapitalize the business, Dr. Ross sold 90% of Dominica Management, Inc. to Leeds Equity Partners and JW Childs Equity Partners for an attractive $100 million in February 2000.
Three years later, Dominica Management, Inc. was sold to DeVry for $329.3 million, out of which Dr. Ross got $48 million for his remaining ten percent ownership, a sum evidently greater than ten percent of the sale price, presumably because of the appraised value of intangible assets related to the “Ross University” name. The table below shows the details of the sale:
On May 16, 2003
| Current Assets | $45,751,000 |
| Property and Equipment | $21,986,000 |
| Intangible Assets | $70,170,000 |
| Goodwill | $238,588,000 |
| Other Assets | $199,000 |
| Liabilities | $47,435,000 |
| Net Assets Acquired | $329,259,000 |
DeVry was the holding company for DeVry University, Ross University, RUSVM located in S. Kitts, American University of the Caribbean (AUC) located in St. Marten, Adtalem Brazil, EduPristine in India, Chamberlain and Carrington in the United States, Becker CPA program, ACAMS, and miscellaneous equity positions in other education-based institutions. In 2017, the company changed its name to Adtalem (ATGE) and divested its entire stake in DeVry University. Therefore, the holding company of Ross University is Adtalem, a publicly traded U.S. company, listed on the Nasdaq Stock Exchange, with $2.9 billion in market capitalization and sixty million shares outstanding.
The Effects of Ross University on Dominica’s Economy
Ross University campus comprises of approximately 273,000 square feet of property located on 33 acres of land, of which roughly 22 acres are under lease, and 11 acres are owned by the institution. Before Hurricane Maria, Ross University had approximately 1,215 students and about 450 (315 Dominicans) faculty and staff in Dominica.
Ross medical students go through a ten semester (approximately 40 months) course before qualifying for residency. Students spend the first 16 to 20 months (four semesters) in Dominica, where they pursue basic science and preclinical curriculum. The remaining 24 months are spent doing clinical rotations, conducted at roughly 40 affiliated U.S. hospitals. The University has graduated over 14,000 students since its inception in 1978.
Like any other medical school, the cost of attending Ross University is hefty. A quick glance at the Adtalem 2017 annual report shows that students pay something in the region of $23,000 per semester for tuition and fees, a 240% increase from 2003 figures of $9,600, an appreciable 6.00% compound annual growth rate.
Gauging from the rental prices of houses and apartments in the vicinity of Portsmouth, particularly those advertised to students, one can estimate within a reasonable limit of certainty that Ross University students pay an average of $600 per month in rental expenses. Taking mid-range prices of living expenses reported by Island Med Student, on a blog article published 11 years ago by a former med student, and adjusted for a 2% annual inflation, one can conclude that the average monthly living expenses of a Ross University student can be broken down as follows:
Utilities – $136
Food – $610
Phone – $50
Laundry – $30
Entertainment – $180
Incidentals – $10
From these figures, we calculate the university’s annual economic impact on Dominica. The table below summarizes annual revenue generation:
Ross University’s Annual Contribution to Dominica’s Economy
| Tuition and Fees | $83,835,000 |
| Rental Expenses | $8,748,000 |
| Living Expenses | $14,813,280 |
| Other | $2,000,000 |
| Total Contribution | $109,396,280 |
One may argue that tuition and fees have no impact on Dominica’s economy since it is money collected directly from the students by the company, and, therefore, have no circulatory effects in the country. Permit me to explain why it merits a place on this table. Approximately 30 percent of tuition income is expended on the salaries of 450 employees who live in Dominica, and who incur living expenses within. In addition, another 40 percent is earmarked for administrative expenses, and upkeep of general operations. The remaining 30 percent are either deposited in Dominica’s banks or banks within the region, as alluded to in the company’s annual report.
Admittedly, there are a few notables that were not integrated into the calculation: the cost of maintenance of facilities and equipment, the consumption of electricity and water, independent contractors, land lease, airport fees, banking fees, and various incidental expenses incurred in Dominica. I did not take into consideration the circulation of new currency in the economy or the effects of new construction in the Portsmouth area.
The correlation between Ross University’s contribution and Dominica’s GDP was indicated at the onset of this article. Now, considering the above calculation and holding as a denominator $580 million (Dominica’s GDP last reported by the World Bank a year or so ago) we can safely conclude that Ross University accounts for 19% of Dominica’s GDP, 19 cents of every dollar generated.
There are a few equally significant, but less observable, benefits of Ross University. In a Dominica News Online article, dated March 13th, 2013, William Hughson, then president of DeVry Healthcare Group, stated, “Each year the school makes charitable contributions to support national and local programs in education, health, culture, and sports, with particular attention to programs that improve opportunities for local youth. Ross University also provides two full scholarships annually to Dominican students who meet the university’s admissions criteria and wish to pursue a medical degree. Since 1996, Ross University has granted scholarships to 57 Dominicans, totaling EC$13.5 million.” He continued, “Since 2005, 202 Dominicans have participated, with benefits totaling EC$19.4 million.”
The Effects of Hurricane Maria on Ross University
On September 18, 2017, Hurricane Maria, a category five whirlwind, blasted Dominica and caused unprecedented destruction. The hurricane severely incapacitated Dominica’s infrastructure creating a difficult, if not impossible environment for students. The campus facilities incurred significant physical damage. As a result, all the students and staff were evacuated out of the island. As a consequence, all non-US and Canadian students (4% of student population) were sent to a makeshift school in St. Kitts, and its US and Canadian students were assigned to facilities at Lincoln Memorial University in Knoxville, Tennessee pending the completion of repairs and remediation to the Dominica campus.
Logically, one can conclude that the temporary closing of Ross University has led to a loss of $9M in monthly revenue for Dominica and a loss of even more significant numbers in indirect business activity. $9M represents a monthly slice of $150 for every man, woman, and child in a country grappling with debt and destruction. These numbers are based on the conceivable mass migration that transpired following Marie and the author estimates the present population at 60,000.
Adtalem’s quarterly report, dated March 31, 2018, disclosed: “As of March 31, 2018, Ross University recorded expenses of $39.3 million associated with the evacuation process, temporary housing, and transportation of students, faculty, and staff, and additional costs of teaching on the ship in St. Kitts. Based upon preliminary damage assessments of the Ross University facilities, impairment write-downs of building, building improvements, furniture, and equipment of $14.5 million were recorded as of March 31, 2018. Management estimates that total costs to repair and replace damaged facilities and equipment will be in the range of $30 to $40 million.” As of the date of the report, the company had received insurance proceeds of $36.6 million, sufficient to cover the cost of assessed damages.
Recommendations to the Government and People of Dominica
Adtalem has received a sweetheart deal from Dominica’s Government, an agreement stipulating complete tax exemption indefinitely. RUSVM in St. Kitts and AUC in St. Marten signed similar contracts. Because the company is a persistent beneficiary of zero tax liability, it pays only a 15 percent tax rate when filing its US corporate taxes, compared with its counterparts who pay out 35% of revenue to taxes. This low tax rate has been a boost to the company’s button line, affording it a comparative advantage over its competitors who operate only in the United States. But something interesting occurred recently – something that threatens the attractiveness of this tax incentive: the Tax Cuts and Jobs Act signed by President Donald Trump in November 2017.
The statute lowers the US corporate income tax rate from 35 to 21 percent, a few percentages shy from 15 percent. If Dominica finds itself in the path of a series of destructive hurricanes that would cause additional harm to the company’s business, and, if state and local tax incentives from Tennessee and other competing locations are offered likewise, the continuation of Ross University will hang in the balance. Dominica cannot continue to rest on its laurels. The government of Dominica has no bargaining chip to keep Ross University. Taxes? Corporate taxes are falling around the globe. Sun, sea, and sand? You can get that in many countries. In business, there are no permanent friends, just strategic partners.
So, allow me to paint a picture which the reader may appreciate. When a profitable company has such an extensive footprint in a country, when its effects within are so material, and when its existence and expansion so evidently beneficial, it becomes highly incumbent on government and entities of financial means to seek a partial ownership interest in that company.
In 2003, the stock price of Adtalem, then Devry University, was $12.10 per share with 70 million shares outstanding. It is a common practice on Wall-street that when an investor purchases 5 percent or more of outstanding shares, it qualifies the investor to appoint someone to the board of directors, a privileged position with compensation, access to information and the authority of making company decisions. What if, at that junction in 2003, the government of Dominica, St. Marten and St. Kitts had created an equity holding company to invest primarily in Devry. For the sake of argument, we will refer to it as DSS Equity Partners (DSS). Let’s suppose, in 2003, DSS had purchased 3.5 million shares for a cumulative price of $42.35 million ($14.12 million from each country). That is a colossal sum, but a prudent investment predicated on securing a nation’s interest. Through stock price appreciation (307% as of this writing) DSS investment value would have ballooned to $175 million; it would have received an additional $8.2 million in dividend disbursements. So, one may ask, “where would the government get this sum of money to invest?” May I remind you that Dominica lost $28 million in the Clico insurance fiasco and the country did not hiccup. Or should I ask to canvass the several white elephants that grace Dominica’s landscape? 140 black books, adorned with our country’s flag, at $100,000 a pop, and there you have it.
Although the return on invested capital would be quite impressive, a more significant benefit would be DSS armed with authority to nominate an individual for a position on the Board of Directors of Adtalem; a person charged with the duties of looking out for the best interest of DSS, and by extension Dominica, St. Marten, and St. Kitts. The incredible inside information accessed would be used to explore additional synergies and to formulate plans and proposals to invite other educational institutions to set up shop in the region.
The reader has been made acquainted with the 14,000 students that graduated from Ross University. I beg the reader to now look at these graduates from a different vantage point: medical doctors who are alumni of Dominica. May I humbly suggest that the government of Dominica creates a program to gift to them two weeks of a free hotel room stay every year indefinitely. It would be a gesture of saying thank you for choosing Ross University; it would be a thoughtful incentive to have them and their respective families to return to Dominica. Obviously, it would be a cost to the government of Dominica, but happily, it would not be a cost to Dominica. It would be transference of currency from the government to the private sector. Since hotel occupancy rate in Dominica is about 30 percent, then the government should bargain for a discount price on a wholesale basis for a portion of unused capacity. These good doctors on their arrival in Dominica must eat; they will party; they will explore; they will spend. Interestingly, some may desire to carve out a portion of their vacation time towards medical work – thus a foray into medical tourism.
References
Adtalem 2003 Annual Report
https://www.sec.gov/Archives/edgar/data/730464/000073046403000019/0000730464-03-000019-index.htmAd
Adtalem 2017 Annual Report
https://www.sec.gov/Archives/edgar/data/730464/000114420417044976/0001144204-17-044976-index.htm
Adtalem 2018 3rd Quarter Report
http://culturedominica.com/dm/govt/assembly.htm
Dominica News Online
Island Med Student
http://www.islandmedstudent.com/2007/08/20/cost-of-living-at-ross-university/
Not all Ross alumni are as “hooked” on Dominica as we are. Many don’t get away from campus hardly at all to enjoy Dominica and most go back to the United States as often as possible during their studies. Accordingly, a program as you have suggested, would bring more students and their families back to Dominica and may prove successful. There may soon be a large number of new accommodations funded by the CBI that may be open and available. However, whether it is accommodations, complimentary tourist passes to the sites, rental car assistance, decreased taxes & baggage at the airport, or other incentives to get around and “support the economy”. I’d be happy to participate on a committee with the government of DA to help work something like this out. When I started at Ross a government official said that students are welcome to seek citizenship. However, now that I ask about it, I get no response. Maybe that can be revisited for those who are interested?
Mr. Nixon, Thank you for your very well researched and thought provoking article. As an alumnus of Ross University, my wife (who traveled with me) and I fell in love with Dominica and its citizens. We were welcomed and well treated by the people of Dominica. We go back to Dominica as often as we can (yearly of late) and now bring our children who say that Dominica is their “favorite place”. Early 2018 we took spring break and brought school supplies, relief supplies and toys and returned Dominica to play a small part in your recovery. No electricity or hot water, but lots of smiles and the same beautiful country (in recognizable, but different ways, of course). We don’t just stick to Portsmouth anymore. We love the Southeast and the north of the island as well. We stay in hotels and vacation rentals, shop in Roseau and eat in Toucari, Calabishie, Rosalie, and hire Dominicans to show us more.
I’ll continue in another post.
RossAlum,
Thank you for your observations. I was wondering whether a Ross Alumni group could approach the government with the incentives idea. It would be a win-win for everyone.
My girlfriend is a student at Ross. I lived with her, and we evacuated the island together after Maria. I fear for the future of Ross on the island. Global warming has all but assured that these kinds of mega-storms will recur. Even if Dominica is hit once every 10-15 years, this is still too much. The cost of insuring the university is simply too high. And even if the school were built sturdy like a bunker to withstand such storms, the island’s infrastructure is not. Students need places to live, food, etc. – things not in the control of Ross.
That said, I can tell you first-hand that we and many others fell in love with the island. Any way that the government of Dominica could incentivize our regular return, or just make it easier, would be a wonderful gesture of good will, and many students would be delighted for such an opportunity. It is not crazy to offer free hotel rooms, for example, if they were offered in exchange for medical services performed during a part of their…
I appreciate that Dominica needs to have an open mind and seek opportunities to grow its economy.
However …
This article massively overstates the economic impact of Ross university.
For example of the 88 million in tuition fees collected, 30% is spent on “450 staff living in Dominica”.
This does not mean they are Dominicans – as the article states, the benefit to the island is merely the amount they spend on living expenses.
A bit rich then to include the full 88 million in the “19% of GDP” claim?
This is characteristic of the article generally.
I find it interesting also that Dominica’s hotels run at average “.30% occupancy” when the regional average is 65 to 70%?
Why is this?
I also note that the Dominican Govt has allowed Ross “complete and indefinite tax exemption”.
Having then noted that there are “trickle down” benefits to DA from Ross personnel living expenses, the article then suggests free flights and hotels for them.
All seems rather tipsy turvy and…
I know some Ross students. One of the students has a family and they paid $1200 USD a month while in Dominica, just in rent! This is not to mention their food cost and electric cost. I know many in the Picard/Portsmouth communities are hurting because the students and staff are not here. We should do whatever we need to do to get Ross back.
That is not to mention that we don’t need the government to tax Ross, we need the money to go to the local people from the students’ rent and food money. In this way, we avoid the need for the government to “bail out” the local people and allow them to instead make a decent living by offering services to the students and faculty.
Great article,…..however, we seem to be forgetting here is the fact that Ross would not exist without students…….may I suggest that we butter up the student and faculty with free chartered flight travel to and from Dominica to their perspective connecting flights etc. to Barbado, Antiqua, Puerto Rico ,etc…. The number one issue I and students faced was reliable flights to our perspective connecting destinations……. Just some thoughts…….. The students are the ones who really hold the trump card in this deal…….
Neal, I read your piece with utter amazement; it was well-researched, convincing and the recommendations you proposed are practical and explorable. However, I need more light on this statement:
“140 black books, adorned with our country’s flag, at $100,000 a pop, and there you have it.”
This statement was made as your recommendations for Dominica’s accumulating its 14.12 million portion towards the DSS partnership towards the purchase of the recommended shares.
But, I am left to wonder; what are this “black books”? Are they technical terms in the business/financial world or are they physical books? If they are physical books; then, I wonder what would they contain to have made people pay such a hefty price ($100,000) for a copy? I think a little more clarity is needed on the black books to evaluate the practicality of the recommendation.
Radio Kord Kapi,
Thank you for your kind words. I was trying to use a metaphor to refer to the CBI program but failed miserably in doing so.
Neal Nixon, this is an excellent, well-written article. You did a great job laying out your case on the impact this one company has on Dominica. You have some great points – investing in our investors, medical tourism (free hotels for former Ross students) and so on. These are out the box ideas for an out-the-box country like Dominica.
Your article also brings to light the necessity for diversification in this sector. I think that pre-Maria, gov’t should’ve solicited other educational companies to set up in Dominica. I’m not sure if All Saints University is still functioning – but institutions like them should be wooed to Dominica’s shores. Even tax concessions made by government will be recouped thru various taxes and increased business activity. We would definitely see increased revenue from taxes such as airport, hotel, payroll, construction permits, VAT and demand for other consumer services. But anything to bring back and keep Ross should be done in the meantime.
AP George,
Thank you for your kindness. Your comments are on point. Voices like yours are much needed.
It’s all about business, this is the way multi-national corporations do their thing, so-called self govern states like Dominica, remain vulnerable when dealing with these enimies of the less developed. Dominica, will never be able to develop on its own, depending on crumbs, Ross might have receive from Dominica, a whole lot of free gifts, to keep them happy, but Ross is about profits, they are competing within the group for most annual profits. Their business structure, is beyond Dominica’ imaginations, as a matter of fact, the annual budget of the group Ross belongs to, is mind boggling. At the end Dominica have nothing to show for Ross venturing on the Island, the few low paying, low level jobs have come to not, Maria saw to that.
This is a well written article. I agree on the gov’t buying shares in Ross, maybe it should had been part of the deal since the 80’s or 90’s. I remember in the early 90’s Miss Charles was pressing them it pay taxes, she should had negotiated for 10-20% ownership back then. UWP was never interested in that thing, especially since they sold DOMLEC. It’s just weird you suggested the gov’t in 2003, when it was known DOminica was under IMF austerity measures, as the time to buy the inflated priced company.
Also the suggestion of free hotel rooms indefinitely for Ross alumni- does that happen anywhere in the world? You are aware Dominica is a poor island, for the gov’t to be giving free vacations for wealthy white people on the taxes of poor black people- boi u done lost ur mind?!
Do the math…all good risks that would pay off big in time. What can we add to this conversation? This is meaningful research. One has to spend to make, take some risks. For example the coast of living in Dominica. Many items/goods/commodities are taxed at customs at exorbitant rates of 45%, 60%, 90% even 130+% in the case of automobiles (significant enough for countries to go to war over such rates impose on their goods). I’m quite sure these customs duties are relied upon to meet government payroll. Can you imagine the exponential effect lowering those rates significantly can have on the economy? It’s a risk worth taking, brave steps have to be taken. On that alone the government would: Lower the cost of living, increase economic activity exponentially and meet all is obligations. The only Down side, too many jobs would be created we’d have to import workers.
@Bro:
Although “wealthy white people” may be an accurate assessment of the average Ross University alumni, your colour vision seems to be blind to the changing demographic of an increase in multi-racial (including more Dominican) students.
The Dominica passport sales to people from all nationalities makes your “on the taxes of poor black people” comment baseless.
Also, a few nights of complimentary hotel stay do not amount to “free vacations”.
Dominica is changing. The world is changing. Don’t just get old, evolve.
Bro, thank you for your comment. The interesting think is that anybody is free to purchase shares in the company, since it is a publicly traded entity. We need to think “ownership” moving forward
stupes that is portsmouth people business wee. tell them to go sell crabs like bubbles to help them pay fpr the appartments. they were warned for years about this illegal and incompetent government. tell them to go to hell. its none of their damn business if ross is coming back
You’re a jerk if you thing Portsmouth people are the only one affected if Ross is not returning. Foolish. Dumb!!!
He right, that’s possie people problem in their district it located and thats where them white people spend de most money. I always sayin de reason why possie lookin so nice is because of ross, now that finni bat time for them to look like grandbay country side scene
smh its a good thing you anonymous. I have been on DNO for years and never see such an idiotic nincompoopish comment. You have beat all the idiots alive today, big wow to you. I will make an excuse for you, let us say you do not live in DA, you do not know anything about it and you have no idea what Ross University is about, who works there, who has property in the area etc. I will give you this benefit so meanwhile do some research. How sad to see we have people with access to internet who are so daft, I am amazed, bamboozled, in awe. Next time darling, leave the smart articles alone, pass straight.
You dam idiot! Get a life!
So in other words, when they surpass 2% of GDP, it’s time to drive them away? That is essentially what you are suggesting. How about a more novel idea….increase the numerator – GROW THE ECONOMY so that they never get close to 2% of GDP?
It looks like Ross has grown, but the economy has lagged their growth over the past 40 years.
That should be to increase the denominator.
Has consideration been given to the notion it is not in the country’s best interest to have so much vested in one entity, especially one whose primary purpose is profit?
When a company reaches 2% of GDP, it’s time to start raising their taxes, not give them tax breaks so they can better control the country.
“Dan The American:” To me the strategy would be work with other international companies to establish operations in Dominica that can go the distance to help expand our revenue stream.
This will reduce the % contribution of Ross to the overall GDP because at 15% they are threat to the survival of our Economy…Not to push Ross away with Raising Taxes as we are in a global market which has other countries with compelling tax benefit.
Therefore this is not responsible strategy that should be taken by any GOVT.