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Researchers examine linking New Orleans small and minority-owned businesses to hospitals market

As the billion-dollar Veterans Affairs and University Medical Center hospitals inch closer to opening in Mid-City, a local economic group is exploring how to bring local small and minority-owned businesses to the attention of hospitals’ hiring and buying.

The New Orleans Business Alliance said Thursday (Sept. 18) that it has hired Washington, D.C.-based Democracy Collaborative and New Orleans-based DMM & Associates for a three-month study. The investigation will look at linking local businesses to New Orleans hospital systems, which are among the area’s largest employers and buyers of goods and services. 

The idea is to create “anchor institutions,” an urban development strategy that aims to build local wealth using the economic power of universities or hospitals.

“We think of anchor institutions as entities that are so rooted in a place that they’re not likely to leave, so you think of universities and hospitals mainly,” said Business Alliance interim president and CEO Melissa Ehlinger.

The Democracy Collaborative has worked in development of anchor institutions in Cleveland in an area where the Cleveland Clinic, Case Western Reserve University and other hospitals and cultural centers are located.

“Increasingly, hospitals and other anchors are beginning to ask themselves how they can do business in new ways that produce significant benefit to the communities in which they are rooted,” said Ted Howard, The Democracy Collaborative executive director, in a news release. 

In New Orleans, researchers plan to review national approaches to anchor institutions, look at hospital procurement practices and interview local hospital officials and small and minority-owned businesses. 

Hospitals often contract for commercial laundry, food, shuttle service, inventory management, medical kit assembly services and landscaping, among other jobs. 

The study will look at which local firms have the ability to fill those needs and at what scale, Ehlinger said. A small business might start with a $500,000 contract, for example, but could grow to handle multi-million dollar contracts.

Ehlinger said one strategy is getting institutions to break up their contracts into smaller pieces.

The study will also examine to what extent hospital systems already buy locally and how much of their procurement is farmed out to national corporations Hospitals will also be asked about their hiring needs.

Earlier this month, Mayor Mitch Landrieu announced a broad policy to help black men in New Orleans find jobs. About 52 percent of African-American men in the city — about 38,000 — are out of work.

According to community-wealth.org, a project of The Democracy Collaborative, the University of Pennsylvania shifted more than 10 percent of annual revenues to buying locally, which injected an estimated $80 million into the West Philadelphia economy in 2006 and 2007.

The Business Alliance’s effort is part the group’s Prosperity NOLA five-year economic development plan for the city. The health care and biosciences industry has been identified as economic opportunity. 

The $100,000 study in New Orleans is being funded by a grant from JPMorgan Chase.  

In the Mid-City hospital complex, the $1.1 billion University Medical Center is slated to open next year; the $995 million Veterans Affairs hospital is expected to open in 2016. 

Publication date: 2014-09-17
Parent publication: The Times-Picayune
Publication URL: http://www.nola.com/business/index.ssf/2014/09/new_orleans_study_focuses_on_l.html

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