Knowledge-based exports are a smart way to grow NM economy
Albuquerque needs a new economy and a new way of economic thinking. Presbyterian Healthcare Services is showing us what that could be.
Presbyterian announced Thursday that it is forming a new health insurance company with a group of North Carolina medical providers to operate a Medicaid managed care plan in the Tar Heel State.
North Carolina is getting federal approval to replace its fee-for-service Medicaid program. Once the approval is received, the state will solicit bids from the Presbyterian group and other companies to manage the care of Medicaid beneficiaries.
What makes this of economic interest is the reason the North Carolina medical providers
are teaming with an Albuquerque-based system. The nonprofit Presbyterian system, through its for-profit insurance operation, knows a great deal about running Medicaid managed care plans. It has been doing so in New Mexico for nearly 20 years. Presbyterian’s North Carolina partners were looking for expertise. They were looking for knowledge.
Albuquerque’s economy has been underperforming, by historic measures, ever since the Great Recession because the industries that used to fuel it have been underperforming — in particular, federal government-funded activity. Construction and manufacturing employment have also taken huge hits. New Mexico’s reliance on commodity extraction further penalizes Albuquerque because falling oil and copper prices reduce state government tax collection and, therefore, state and local government spending and hiring.
Presbyterian has opened an entirely new business, one that could bring 600 new jobs to Albuquerque, by exporting knowledge. And its partners include such heavy hitters as Duke University Medical Center.
(Let’s stipulate at this point that health insurance is not the most popular industry in the land, that critics feel forcing Medicaid recipients into managed care plans is cruel to them and hard on medical providers, and that as a major insurer and medical provider Presbyterian is a perhaps too-powerful force in the Albuquerque health care market. Let’s also acknowledge that Presbyterian’s North Carolina venture may fail.)
New Mexico’s long history hosting two national laboratories was supposed to put us in the knowledge business. Our state’s congressional delegation, no matter who its members were, has always worked to turn the Los Alamos and Sandia laboratories into a source of new knowledgebased companies for New Mexico. The results have been disappointing. It’s very hard to lure the labs’ scientists and engineers into establishing knowledge businesses, because the pay, benefits and job security at the labs are so darn good, without the risks of entrepreneurship. The companies that were created to serve the labs are very good at securing and complying with government contracts but are generally not so great at finding nongovernment markets for their knowledge.
New Mexico could have used the Spaceport as a source of knowledge export had we insisted that research and development in spaceflight be conducted there as a condition for using its launchpads and runways. The state’s oil industry could have been a source of knowledge export if, like Dallas and Houston, New Mexico had developed the infrastructure to finance oil patch development.
Fortunately, in some fields, we are very smart.
University of New Mexico Cancer Center researchers know as much about the genetics of certain diseases as anyone in the world. Even better, they know how the genetics of cancers will respond and not respond to drugs. This knowledge is exported in the form of licensing agreements with drug companies.
Lavu, an Albuquerque company with headquarters Downtown, is very smart at managing retail transactions. It exports its knowledge in the form of software licenses to restaurants and hotels and resorts.
There are areas of expertise in our state that ought to be candidates for knowledge export — media production, alternative energy and high-tech materials among them.
Our conventional approach to economic development has been to identify companies that need to relocate or expand and persuade them to come to New Mexico. We usually accompany our sales pitch with a promise of economic incentives, low wages, cheap land and tax relief. It is a pitch that emphasizes the cost advantage of choosing New Mexico.
By exporting knowledge, Presbyterian, the Cancer Center, Lavu and others are bringing money from outside the state and using it to hire the local workforce. It is an approach that emphasizes the value our knowledge can add to enterprises anywhere in the world. As a long-term solution to our stagnant economy, this is the better approach.