Session 43 – Price of Oil and the Fate of Healthcare Practices
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Hello. This Scott McDonald and welcome to the Perfect Place to Put a Practice Podcast.
In these podcasts and throughout the demographic reports we create for practices all over the United States, my staff and I will bring up seemingly unrelated observations about the viability of a practice site and employment, consumption, and even weather patterns of a community. You may ask, “What does the price of oil have to do with the viability of an urgent care practice in North Dakota?” The answer is, “Plenty.” The reality is that the demographic weather (not climate) of an area will strongly influence potential patients to seek or to put off treatment for reasons that may seem more intuitive as they are logical. The cost-of-living will influence the potential flow of patients through area practices. So will rising tax rates or regulatory burdens. An uncertain job market will influence the price of leases as well as the prospects for hiring staff. In short, there is a great deal that goes into making a desirable or undesirably place to practice; certainly more than just how many competing practices there might be. Let’s give a couple of examples that should strongly influence the locations you may wish to practice.
Recently, General Electric decided to move its headquarters from Fairfield, Connecticut to Boston’s seaport district. True, it cost Boston’s governments about $145 million to seal the deal. And even though the headquarters is really only bringing 800 workers to Bean Town, this is expected to bring a great deal of energy to Boston’s downtown with this headquarters move. But more importantly, Fairfield, Connecticut is losing an important asset it seemed to take for granted. Will the practices in Connecticut take a hit? Count on it. It doesn’t help that jobs and middle class workers have been leaving the state and have been for some time over high taxes and expensive housing. An inflated minimum wage will certain not help. The GE move is just a sign of the inevitable troubles in the region.
Another example is Houston, TX. For a long time, Houston has been on a growth path. It has long been an “energy town.” Petroleum was the life’s blood of the region. It was predictable that the price of oil would someday go down. No one considered it would be this fast, however. In only 18 months, housing prices have taken a dive. That is what should expect to see when oil which has been $100 per barrel in August 2014 drops to $29. But the blame should not rest with the energy segment. It falls on city officials who had refused to take a serious look at diversifying the city’s industries. Too much dependence upon a single segment of the economy have made it vulnerable. The same is true with North Dakota which had a boomtown feel last year and has plunged to depression all because there is nothing else holding the job market together.
The lesson is that when doctors are evaluating where to put a practice, they have to look for growth in jobs and population but they also have to consider economic diversity. The diversity of employment and other factors that will influence their patient’s employment must be taken into account.
This is Scott McDonald. Catch us on Facebook, Twitter, and YouTube. At mid-year we are going to be hosting a special preview of the communities you should consider the hot spots on where to put a practice. And don’t forget to visit us on DoctorDemographics.com. And thanks again for listening.