Local businesses primed to capitalize on healthcare, bioscience in city

27th April 2015   ·   0 Comments

By Charmaine Jackson
Contributing Writer

With the growing emergence of healthcare and bioscience companies in New Orleans’ BioDistrict, including the newly constructed University Medical Center slated to open in August, opportunities for greater partnerships between small local businesses and New Orleans hospitals are likely to develop as a result of a three-month assessment conducted by The Democracy Collaborative, along with partner, DMM & Associates, on behalf of the New Orleans Business Alliance (NOLABA).

Mayor Mitch Landrieu’s 2014 Economic Inclusion Strategy and the NOLABA deemed city hospitals and anchor institutions as key players for creating “pathways to prosperity for traditionally underserved citizens, not only as job creators but also as purchasing organizations.”

“This study by the New Orleans Business Alliance further proves there are specific opportunities for local small businesses to benefit from collaborating with larger healthcare institutions,” Landrieu said in a statement. “We have made creating employment opportunities for all New Orleans residents a top priority – that starts with healthy businesses, equipped to support the local economy by providing good jobs and opportunities,” he added.

Economic growth is inevitable, as the assessment highlighted that health services and bioinnovation is one of the fastest-growing sectors in the Greater New Orleans area. In the BioDistrict alone, roughly $3.3 billion in investment capital is expected to be deployed over the next 15 to 20 years with the potential to generate more than 34,000 direct and indirect jobs, according to the analysis.

In addition to lucrative economic growth for the city, achieving economic equality is also an objective.

The assessment, which analyzed the procurement practices of a select group of local hospitals and supply chain needs and the capacity of small local businesses’ abilities to meet those needs, zeroed in on “strategic opportunities to leverage the resources of local hospitals in the service of building a more equitable and inclusive economy in New Orleans.”

Interviews were conducted with New Orleans stakeholders, hospital representatives, anchor buyers, technical assistance organizations, small businesses, and a variety of public stakeholders to formulate a plan for tracking opportunities.

The study’s proposal involves connecting locally owned small businesses to supply chain needs at key New Orleans hospitals, such as Ochsner Baptist Medical Center, Tulane Medical Center, the University Medical Center, New Orleans East Hospital, Children’s Hospital, Touro Infirmary, and Veterans Admini­stration Hospital. While resear­chers found “anchor institutions’ supply chain processes typically have not been designed to promote local vendor access, results from the study concluded New Orleans has the ingredients necessary for integrating small businesses into hospital supply chains.”

As a result of the interviews, several other concerns surfaced on both sides of a prospective transaction between hospital leaders and small businesses.

Hospital leaders are apprehensive about patronizing small businesses due to exposure to risk, the possibility of paying higher prices for the same goods and services that can be purchased at a larger, national company for less, and having inadequate knowledge for re-localizing buying patterns. Lack of experience with the bidding process, barriers to capital access, and uncertainty about how to navigate hospital purchasing prevent small businesses from being considered as contenders for business.

Suggested remedies for these issues involve training, education and other support services and technical assistance resources “to strengthen and prepare small businesses for success with large healthcare contracts.” Other means to combat barriers consist of “entities that range from incubators to accelerators to educational programs to free or low-cost counselors and consultants to trade associations and chambers of commerce that supplement financing with a variety of business development services.”

The BioInnovation Center is an example of an incubator that can assist with making small businesses more competitive to local hospitals by equipping them with the necessary resources. They offer public workshops on entrepreneur topics, assistance services, such as business planning, market analyses, support in accessing various capital sources and connecting entrepreneurs to external resources and key industry players.

“When hospital contracts are awarded to emerging local healthcare businesses, that capital can be reinvested right here in the community in new jobs, inventory, and services,” said Aaron Miscenich, president of the New Orleans BioInnovation Center. “The Business Alliance’s report offers critical insights on fostering this collaboration between hospitals and local suppliers to strengthen our regional health sector and promote economic growth,” he continued.

To bridge the gaps, a list of recommendations for NOLABA, the mayor and city government and technical assistance providers were mentioned. The report emphasized compliance and long-term commitments are necessary to meet the goal of ultimately fulfilling “strategic local sourcing that meets institutional needs and creates economic opportunity in New Orleans.”

This article originally published in the April 27, 2015 print edition of The Louisiana Weekly newspaper.