Saturday, March 16, 2013

House call on the Tampa Tribune

The Trib's editorial today, House call on local economy,  highlighted "disruptive innovation", with a focus on medical care, leveraging the medical resources and investments in Hillsborough County.
It may seem just another business conference, but with commitment and enterprise "MediFuture 2023" could end up being the pivotal step toward the Tampa Bay area becoming, as Hillsborough County Commissioner Mark Sharpe puts it, the "Silicon Valley of personalized medicine."
The May 13 event, organized by the Tampa Hillsborough Economic Development Corp., aims to position the region as the epicenter of "disruptive innovation" that will reshape the health care industry.
It's an effort that merits citizens' attention and support.
Does it merit our attention and support?  Before we commit, let's ask a few questions.

Tampa does have some good, and in some cases, unique medical capabilities to consider building something around.

  • USF Medical School
  • H. Lee Moffitt Cancer Center
  • USF Byrd Alzheimer's Institute
  • Tampa General Hospital 
We're glad to have these assets in the community, and there are others as well in the greater Tampa Bay, such as All Children's Hospital in St. Petersburg.

USF Health facilities
However, this rings of a "Tampa come lately" economic development strategy.  

Anyone on the Trib editorial board or our vaunted County Commission heard of Obamacare?  It's supposed to be about reducing the costs of healthcare, while increasing access for more patients.  It's side effects, however, will reduce medical innovation and research.  Obamacare will also drive more doctors into formalized employment relationships with Accountable Healthcare Organizations, which will pack more patients into already crowded medical system, while doing nothing to increase the supply of doctors.
We now need to leverage these resources to make the region the focal point of a health-care revolution.
Thus, after Christensen's keynote speech and an examination of the medical advancements being made in the region, participants will concentrate on what should be done to attract more companies, entrepreneurs and high-paying jobs here.
We hope this is the rare conference whose blue-sky ambitions can be tied to pragmatic actions.
The goal is to make Tampa the place to come to keep pace with what's new in health care. It is an ambitious one, but one that would energize our economy.
Byrd Alzheimer Institute 
Perhaps, but we may be at the end of the medical economic growth bubble.
In the last few decades, as suburbanization and deindustrialization devastated so many cities, they turned to two sectors that seemed not only immune to decline, but were actually growing: universities and hospitals. The so-called “eds and meds” sectors, often related through university affiliated hospitals, became a great stabilizer for many places. For example, the fabled Cleveland Clinic cushioned the blow of manufacturing decline in that city. Apr├Ęs steel, a city like Pittsburgh practically saw themselves as defined by an eds and meds economy, with the new economic pillars being the University of Pittsburgh Medical Center and Carnegie-Mellon University.
Perhaps unsurprisingly, these sectors have come to dominate so many cites' economic development strategies. It’s harder to find a major city that isn't touting some variation of a life sciences “cluster” as a strategic industry than one who is, and local medical schools and hospital complexes feature prominently in this. Similarly, technology transfer from schools is supposed to power startups, while in many cities growth in the number of students itself is supposed to be an engine of growth.
Many, if not most of these medical facilities, and those cited above in Tampa, are non-profit, non-taxpaying institutions.  While the employment may grow, its not clear that this will offset the lack of revenue from these rather large, and as proposed, more and larger tax subsidized and tax-exempt institutions.

Again, if we are the end of this medical economic and therefore employment growth bubble, what can we really expect?

We all know medical and higher education costs have been exploding.  Unsustainably so.  More from Aaron Renn at
Clearly, such a trend cannot go on indefinitely. As the US starts to groan under the weight of spending on health care and higher education, it's clear that, as a society, we need to be spend less, not more on these items as a share of national output. Some cities with unique strengths, like Boston, with its many specialized biotech firms, or Houston, with the world’s largest medical center, may thrive in this environment, but the vast majority of cities are likely to be very disappointed in where eds and meds growth will take them.
Regardless of how it plays out, when you look at spending in aggregate in America, it's clear increases in health care and higher education spending cannot keep increasing at current rates. This means that it just isn't possible for all the cities out there dreaming of eds and meds glory to realize their dream. America simply can't afford it.

Whether the end of the great growth phase in eds and meds comes 1, 5, or 10 years from now can't be predicted. But come in the reasonably near future it will, and that's when the bulk of the cities that put all their chips in those baskets will receive a very rude awakening.
But he's not the only skeptic.  Here's Richard Florida, from, who is not exactly Mr. Conservative on urban and social issues.
If Renn warns of a bubble that is yet to burst, from where I sit, the problem is already apparent. The data, including detailed analyses I've conducted with my Martin Prosperity Institute colleagues Charlotta Mellander and Kevin Stolarick, shows that eds and meds contribute little, if anything, to levels of regional economic development.
In our paper, [...] we looked at the specific occupations that are associated with regional growth and development, measured in terms of income and wage levels. We found no statistical association between either eds or meds occupations across U.S. metros.
[Mellander's] findings: meds and eds was not associated with regional wages, levels of high-tech industry, or levels of innovation (measured as patents per capita), and was negatively associated with economic output per capita (-.29). In contrast, the other three groups of occupations — business and management professionals, science and technology, and arts, design, media, and entertainment — were substantially positively associated with all three economic development measures, with correlations consistently in the range of .4 to .7.
The larger the sector's share of local jobs, the lower average regional wages are.
Mr. Florida concludes:
It’s past time for city and regional leaders to wake up to this fact. Eds and meds may constitute a large part of the urban workforce and provide a substantial job base for many cities and regions, but they are not by themselves a source of economic development.
Emphasis mine.

Again, from the Trib:
It's an effort that merits citizens' attention and support.
Really?  It's about time our local leaders wised up. There's substantial evidence this "MediFuture" will not result in significant economic development.  Can our politicians and media not ask a few questions or use the Google?  Apparently not... so we have to.  Please read the whole thing here and here.

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