Portland economy

Survival of the Biggest in Healthcare

In a case of a survival of the biggest, large health care organizations are getting bigger, raising eyebrows and concerns among Oregon business and government leaders who worry about the impact on prices, choices and even quality.

In a case of a survival of the biggest, large health care organizations are getting bigger, raising eyebrows and concerns among Oregon business and government leaders who worry about the impact on prices, choices and even quality.

Oregon decision makers are raising the caution flag over consolidation in the health care industry. A recent CFM/Oregon Business online survey found nearly three in four (74 percent) are very or somewhat concerned about the ongoing trend of consolidation in healthcare.

The CFM/Oregon Business online survey was conducted in April among 293 business and government managers.

While the media has focused primarily on recent mergers in the pharmaceutical and health insurance industries, a similar trend has been largely overlooked in the healthcare services market, including health systems, hospitals and physician clinics.

In the Pacific Northwest, Providence Health & Services and OHSU have significantly expanded their market footprints through acquisitions, mergers, affiliations and partnerships. Legacy acquired the Silverton Health System and Kaiser acquired Group Health. A few years ago Southwest Washington Medical Center in Clark County Washington became part of the PeaceHealth organization. Similar consolidation is occurring throughout the country.

Industry leaders tout the benefits of consolidation, citing lower administrative costs, improved efficiencies in capital investments and better quality of care and outcomes. However, Oregon decision makers aren’t sure bigger is better. In addition to being concerned about merger activity in general, decision makers think the problems associated with consolidation will outweigh the benefits in the following seven of eight areas: 

A majority of decision makers say consolidation will have a negative impact on:

· Cost of healthcare services (66 percent negative impact)

· Access to routine healthcare services in rural areas (53 percent negative impact)

· Overall customer service (52 percent negative impact)

 Managers think the impact of consolidation would more likely be negative than positive for:

· Ability to schedule appointments for routine care when you want it (44 percent negative impact)

· Overall quality of healthcare (38 percent)

· Level of respect and courtesy patients will experience (37 percent negative impact)

· Access to medical specialists (32 percent negative impact)

At best, managers were evenly divided about the range of services available (30 percent positive, 29 percent negative impact).

So what does it all mean? Healthcare providers face an uphill battle to reduce concerns about consolidation. As consolidation continues, as it surely will, organizations should develop trust and confidence by implementing these five key pieces of advice.

· Deliver on the promise of better quality of care.

· Be transparent about costs.

· Improve operations, like billings.

· Increase access and availability of care in urban, suburban and rural areas.

· Make every patient touchpoint a positive experience.

Tom Eiland is a CFM partner and the leader of the firm’s research practice. His work merges online research with client communications and engagement efforts, and he has a wide range of clients in the education, health care and transportation sectors. You can reach Tom at tome@cfmpdx.com.

 

Traffic Congestion Should Drive Transportation Innovation

As traffic congestion worsens, frustrated motorists, planners and politicians are starting to demand new ideas, including giant buses that straddle roadways, using airspace not wider right of ways.

As traffic congestion worsens, frustrated motorists, planners and politicians are starting to demand new ideas, including giant buses that straddle roadways, using airspace not wider right of ways.

Mayor Charlie Hales says Portland should be viewed as a major American city, and the worsening level of congestion here proves his point. Portland ranks ninth among the most traffic-jammed cities in America, trailing Washington, D.C., but worse than Chicago.

The good news about growing congestion: the situation is getting bad enough that motorists, planners and politicians are demanding fresh ideas and better answers. 

First the bad news. According to the TomTom Traffic Index, North American traffic congestion has jumped 17 percent since 2008 compared to a 13 percent global increase. Congestion declines in Europe, especially in Italy and Spain, may be due to weaker economic performance.

A more recent survey by INRIX that was reported in the Portland Tribune pinpointed several Portland-area corridors as among the most congested in the country. No surprise to regular Portland-area commuters and truckers, they include potions of Highway 26, Highway 217, I-5, I-84 and I-205. 

The growing presence of light rail, buses, cars and pedestrians across Portland adds to the congestion on surface roads.

The growing presence of light rail, buses, cars and pedestrians across Portland adds to the congestion on surface roads.

“Urbanization continues to drive increased congestion in major cities worldwide,” the INRIX survey said. “Strong economies, population growth, higher employment rates and declining gas prices have resulted in more drivers on the road and more time wasted in traffic."

The Portland Tribune cited a report by the Value of Jobs Coalition that projects worsening congestion could cost the Oregon economy $1 billion by 2040, with most of that price tag in the Portland area.

At a personal level, slower commutes can eat up between 50 and 60 hours per driver a year. Slow-motion traffic often becomes an invitation to check out phone messages or engage in other distracted driving activities, which can lead to accidents that slow down traffic even more. Or as one cynical Portland driver put it, “A fender bender can bring Portland traffic to a crashing halt.”

Now some good news. Los Angeles, which remains the most congested city in America, is attempting to diversify its transportation network with an expanded light rail network to take pressure off its overloaded freeways. Some of Portland’s highly congested corridors already have parallel light rail routes. Planners are now exploring a new light rail line extending from downtown Portland south to Tigard and Tualatin.

The challenge of light rail, street cars and buses is they are ensnared in congestion on surface roads the same as cars, trucks and bicycles. Fixed guideway transportation sometimes shrinks road space for cars.

This map traces the route of a tunnel that will replace Seattle's crumbling Alaskan Way Viaduct. The expensive project has been fraught with drilling complications.

This map traces the route of a tunnel that will replace Seattle's crumbling Alaskan Way Viaduct. The expensive project has been fraught with drilling complications.

Many urban areas don’t have a lot of room – or political appetite – to expand roadways. That has caused some cities to consider other options. Seattle is replacing the aging, unsightly Alaskan Way Viaduct with a massive and expensive underground tunnel. If not for the expense – and complications of drilling long tunnels, Portland might consider ditching the Marquam Bridge and putting I-5 underground as it goes through downtown Portland.

Another line of thinking is to use the airspace above roadways. Chinese engineers have developed a modern-looking straddle bus that can roll down a roadway overtop cars without adding to congestion or taking up a lane of traffic. The bus, which resembles a moving bridge, runs on rails built flush with the road, not requiring sequestered road space. Unlike subways that require a lot of digging, the only infrastructure needed for the straddle bus are elevated stations.

A prototype of the Chinese straddle bus, which is electric powered, reaches speeds up to 40 mph and carries as many as 1,400 passengers, will be tested this summer after the idea has languished since it was first conceived as far back as 1969. 

With tempers flaring and commute times expanding, there has never been a better time to think differently about how we get around.

Housing Supply Key to Price Inflation

Making room for more housing, whether by physical expansion or zoning changes that allow upward growth, is a key to modulating housing prices – and possibly to bolstering family incomes.

Making room for more housing, whether by physical expansion or zoning changes that allow upward growth, is a key to modulating housing prices – and possibly to bolstering family incomes.

Cities that make room for more housing have faced less housing-price inflation, according to an analysis by BuildZoom which drew the eye of the Wall Street Journal.

Issi Romem, an economist for BuildZoom, divides the urban landscape into “expansive cities” versus “expensive cities." 

He cited as an example the San-Francisco-San Jose area, which experienced a sharp population increase, but added only 30 percent more land for residential development between 1980 and 2010. Housing prices during that time period, he said, rose 188 percent. Romem contrasted that to Atlanta, which in the same time period expanded by 208 percent with housing prices increasing by only 14 percent.

The BuildZoom report shows Seattle expanding its residential footprint by 69 percent as housing prices rose by 119 percent. Portland was among the cities analyzed with the least physical expansion and rising housing prices nearing 80 percent.

WSJ reporter Laura Kusisto wrote, “Mr. Romem’s research reads on its face like an argument for suburban sprawl, which has come under fire both for its environmental consequences and tendency to lead to oversupply that can lead home prices to crash.”

Romem says the issue is less about sprawl than supply and demand. Ideally, he explains, cities would relax regulations to allow building up. However, adding density to existing neighborhoods can be unpopular, regardless of whether it involves the addition of tiny houses, building on open space or replacing single-family homes with multifamily apartments.

“If you don’t let the city grow,” Romem said, “you’re going to get prices going upward and see the middle class being pushed out.”

The Portland City Club’s recently released housing affordability study echoed many of Romem’s points as it recommended removing barriers to a wider array of housing types and a housing land bank to convert underutilized or foreclosed properties to housing.

While the BuildZoom research centers on major urban areas, the supply-and-demand problem also vexes suburban areas. Portland suburbs have seen price escalation in part because of voter rejection of annexations that would add more housing. Opponents have claimed sizable housing developments would overtax already congested roads and crowded schools.

The Portland metropolitan area’s land-use is constrained by an urban growth boundary, which is intended to restrict urban development and protect farmland from urban sprawl. The strategy has resulted in relatively small urbanized land expansion, forcing higher-density uses on and within the urban growth boundary. It also has led to sometimes awkward infill development and the exodus of families to what have become commuter communities outside the UGB such as Newberg, North Plains and even Keizer.

Housing patterns are being heavily influenced by different demographic preferences and economic realities. Baby Boomers are retiring and moving to smaller housing units nearer central cities. Young professionals, often burdened by high college student debt, are looking to rent, not buy. Some younger people are forsaking the whole “home is my castle” idea and settling for smaller, simpler housing that applies less pressure on their pocketbook and lifestyle choices.

Romem suggests businesses will be attracted to cities with available affordable housing and perhaps be turned off by cities without a supply of affordable housing. The economic consequences of inadequate housing supply are not just a concern for homebuilders and local boosters. President Obama’s White House advisers have pointed to a lagging housing supply as a major barrier to full economic recovery and higher incomes.

Artificial constraints on housing supply hinders mobility and increasing mobility is going to be an important part of the solution of increasing incomes and increasing incomes across generations,” says Jason Furman, chairman of the White House Council of Economic Advisers. 

The Overlooked Plight of America’s 'Middle Child'

Generation X gave us all sorts of pop culture treasures, like Nirvana, Molly Ringwald and Ethan Hawke. But sandwiched between the Baby Boomer generation and the fast rising Millennials of today, Generation X has become America's forgotten middle child. 

Generation X gave us all sorts of pop culture treasures, like Nirvana, Molly Ringwald and Ethan Hawke. But sandwiched between the Baby Boomer generation and the fast rising Millennials of today, Generation X has become America's forgotten middle child. 

As Baby Boomers fade into the sunset and Millennials are on the ascendancy, members of Generation X feel overlooked. And at least one Gen Xer is mad as hell about it.

Mat Honan, a card-carrying member of Gen X, launched a rant on Tumblr that summed up his disgust with whining by Boomers and Millennials. “First generation to do worse than their parents? Been there. Done that.”

"Generation X is tired of your sense of entitlement. Generation X also graduated during a recession. It had even s#*#*#*# jobs, and actually had to pay for its own music. (At least, when music mattered most to it.) Generation X is used to being f#*#*# over. It lost its meager savings in the dot-com bust. Then came George Bush, and 9/11, and the wars in Iraq and Afghanistan. Generation X bore the brunt of all that. And then came the housing crisis.

"Generation X wasn't surprised. Generation X kind of expected it.

"Generation X is a journeyman. It didn't invent hip hop, or punk rock, or even electronica (it's pretty sure those dudes in Kraftwerk are Boomers), but it perfected all of them, and made them its own. It didn't invent the Web, but it largely built the damn thing. Generation X gave you Google and Twitter and blogging; Run DMC and Radiohead and Nirvana and Notorious B.I.G. Not that it gets any credit.

"But that's okay. Generation X is used to being ignored, stuffed between two much larger, much more vocal, demographics. But whatever! Generation X is self-sufficient. It was a latchkey child. Its parents were too busy fulfilling their own personal ambitions to notice any of its trophies, which were admittedly few and far between because they were only awarded for victories, not participation."

It's hard to believe 60 million people could be ignored, but Generation X has become known as the Forgotten Generation. The Pew Research Center has referred to Generation X as America’s neglected “middle child.”

Even though a Gen Xer occupies the White House, this generation lacks its own distinctive identity.

A Bloomberg Business report last year said it is a generation that has grown up and become grumpy.

"The members of Generation X have plenty to be grumpy about. For starters, no one talks about them anymore. It’s all Millennials all the time. There’s another reason Americans born between 1965 and 1980 are gloomy: Gen Xers are in even worse shape financially than the baby boomers who preceded them or the millennials who followed.

"Sure, many Boomers haven’t saved enough for retirement. And Millennials are squeezed by high student-loan debt. But Gen Xers are still paying off student loans while raising families on wages that have barely budged in recent years. They have more debt than other age groups and are more pessimistic about ever being able to afford to retire, according to many surveys.

"Almost 40 percent say they 'don’t at all feel financially secure,' and 38 percent have more debt than savings, more than any other generation, according to a recent survey of 5,474 Americans by Northwestern Mutual Life Insurance Co. On average, people in their 40s had saved $62,087 in 401(k) retirement plans at the end of 2013, according to the Employee Benefits Research Institute. That means Gen Xers who plan to retire at 65 have a considerable way to go to accumulate the $1 million they’ll need to generate $40,000 a year as seniors.”

It probably makes business sense to give a little love to America’s middle child.

​A Humming Economy with Trouble Below the Surface

On the surface, the Portland metropolitan area's economy seems to be humming. Just under the surface, things don't look quite so rosy.

The Portland region's economy continues to grow jobs, but full-time jobs and per capita income continue to lag other comparable metro areas.

The Portland region's economy continues to grow jobs, but full-time jobs and per capita income continue to lag other comparable metro areas.

According to the sixth annual Value of Jobs economic check-up released last week, job growth in the Portland region continues at a strong pace for the seventh consecutive year, at a rate outpacing most other peer metro regions across the nation. Portland added 35,800 jobs in the last year and now boasts 70,000 more jobs than its pre-recession peak in 2007.

However, the per capita rate of full-time jobs in the Portland region falls below the U.S. metro average and has actually declined since 2000 to only 47.9 percent of total employment.

The decline of full-time employment in Portland parallels – and may be the cause of – a troubling shrinkage of middle income households, which has serious implications for affordability in the region's hot housing market. In 1980, the study says, middle-income jobs represented 69 percent of the Portland region's total employment, but that number has fallen to 57 percent and continues to drop.

The study reaffirms Portland's outsized economic reliance on manufacturing and exports. It also points out those solid numbers rely heavily on jobs and exports associated with semiconductor manufacturing. Without Intel's output, the Portland region's manufacturing sector would be just on par with other peer metro areas. Likewise, semiconductor products represent 41 percent of the Portland region's exports.

The Value of Jobs study says the decline in the Portland region's per capita income began at least a decade before the last recession and fell below the national average as early as 2007, when the national economy peaked.

A key goal of the Oregon Business Plan is to boost per capita income, but that hasn't happened. The Portland region is now $1,821 below the $47,615 national average for metro areas. Real per capita income in Portland has only increased by $740 since 2000.

The study for the third year measured median household income, which yielded a brighter note for the Portland region. Even though median household income has remained stagnant in Portland, it still surpasses the national metro area average by $3,700. Portland checks in higher than peer metro areas such as St. Louis, Cincinnati and Sacramento, but trails Salt Lake City, Seattle and Denver, and it falls short of aspirational levels expressed by local business leaders.

As Oregon politicians and voters wrangle with a higher minimum wage, the Value of Jobs data indicates that Portland's lowest wage-earners (the bottom 20 percent) earn 19 percent more than the national average, which could be attributed to Oregon's relatively high minimum wage. It is the top end of the wage scale that lags behind other regions and pulls down the Portland region's overall per capita income.

The economic check-up is part of the Value of Jobs Campaign launched in 2010 to examine the Portland region's job market. The coalition that supports the effort includes the Portland Business Alliance, Associated Oregon Industries, Oregon Business Association, Oregon Business Council and the Port of Portland.