LED Blue Ocean 01-14-2011

For decades, LA’s economy underperformed the South and the U.S. . . .
Total nonfarm, annual employment (100=1980)

Rest of South
United States
Louisiana
1
. . . But Louisiana has performed relatively well since early 2008 . . .
Total nonfarm, seasonally-adjusted employment (100=January 2008)
Louisiana
South**
United States
2008 2009 2010
2
. . . And we’ve been positioning our state for greater economic success
▪ Workforce development reforms

▪ Governmental ethics reform
▪ Business tax reform
▪ Infrastructure investment
▪ Workers compensation reform
▪ National image / branding campaigns
▪ Targeted economic development incentives
3
The big question . . .
How do we position
Louisiana to grow
faster than the South
and the U.S. on a
regular basis?
4
In line with their national counterparts, several of Louisiana’s primary
industry sectors have been losing jobs for many years
U.S. annual employment
Louisiana annual employment
Chemical Manufacturing Agriculture / farming Paper Manufacturing
5
Accordingly, some economists expect Louisiana’s traditional industry mix
will lead our state to underperform in job creation over the next 20 years
Cumulative state employment growth for next 20 years (millions)

2.8
LA at Aspiration rate (GA, NC, TX)
2.7
2.6 LA at Peer rate (South)

Gap of
2.5 525,000
Gap of jobs vs.
2.4 400,000 jobs Aspiration
vs. Peer
LA at US rate
2.3
Current
2.2 LA forecast1
2.1 LA projected
to gain 290,000
2.0 new jobs
0
2010 2015 2020 2025 2030
SOURCE: Moody’s Economy.com estimates 6

For the last two years, we have aggressively pursued eight integrated
economic development strategies
Improve state
Enhance community
economic
competitiveness
competitiveness
Blue Ocean
Cultivate top Develop initiative will
regional Focus on business national- focus these
economic retention and caliber strategies on
development expansion business high-growth
assets recruitment industry
capacity segments
Cultivate small Develop robust

Aggressively
business, workforce
tell our story
innovation, and solutions
entrepreneurship
7
The process to generate and prioritize potential growth opportunities
Prioritization & Most attractive

Idea generation
portfolio shaping growth options
Explore
Other prioritization metrics

Louisiana
Potential for job growth

strengths
Fit with strengths

List of
Time horizon
top growth
options
with
ideas for
Review
capturing
industry
characteristics
+ growth trends
8
By combining employment growth, value of jobs, and LA’s ability to win,
six “Blue Ocean” themes and 12 growth initiatives were selected
Sector themes Growth initiatives
Digital media/ ▪ Next generation digital media/software development ecosystem

New software (includes Healthcare software development)
capability development
Next ▪ Auto: Supplying the future driving experience
generation
auto
▪ Specialty research hospital and corridor: Treating the nation
Specialty ▪ Obesity/diabetes research and treatment
Fit with healthcare ▪ Manufacturing pharmaceuticals
existing
assets Renewables & ▪ Energy efficiency: Green living, green building, green manufacturing
energy ▪ Renewable energy: Power and fuel for the future
efficiency ▪ Nuclear Power: Parts and modular production
▪ Water management: The Netherlands of the US

Water
management
Traditional ▪ Ultra-deep water: Under the sea
strength Next wave oil & ▪ Unconventional gas: Not everything’s bigger in TX
gas ▪ Enhanced oil recovery: Scraping the bottom of the barrel
9
These targets could add 225,000-400,000 extra jobs over the next 20 years
LA job growth 2009-29

(thousands)
Opportunity Direct Total
▪ Next generation digital media/software development ecosystem ▪ 11-23 ▪ 25-55
▪ Water management: The Netherlands of the US ▪ 10-20 ▪ 20-45
▪ Specialty research hospital and medical district: Treating the nation ▪ 10-20 ▪ 20-40
▪ Ultra-deep water: Under the sea ▪ 10-15 ▪ 40-55
▪ Unconventional gas: Not everything’s bigger in TX ▪ 10-15 ▪ 40-55
▪ Auto: Supplying the future driving experience ▪ 5-15 ▪ 10-35
▪ Energy efficiency: Green building, green living, green manufacturing ▪ 5-10 ▪ 10-20
▪ Renewable energy: Power and fuel for the future ▪ 8-12 ▪ 20-30
▪ Enhanced Oil Recovery techniques: Scraping the bottom of the barrel ▪ 5-7 ▪ 20-25
▪ Nuclear power: Parts and modular production ▪ 3-5 ▪ 10-20
▪ Obesity/diabetes research and treatment ▪ 1-2 ▪ 2-4
▪ Manufacturing pharmaceuticals ▪ 1-2 ▪ 5-10
Total ~80 - 145 ~225 - 400
SOURCE: US Department of Commerce Regional Multipliers (input-output modeling system); McKinsey analysis 10

(thousands)
Total ~80 - 145 ~225 - 400
A well-developed medical center is one way for Louisiana to take
advantage of healthcare trends and employ significant numbers Direct jobs
Mayo Clinic UPMC

39k 50k
Cleveland
Clinic
30k
COBTH1
UCLA Medical 75k
Center
14k UAB Medical
Center
10k
Texas Medical
Center
73k Duke Medical
Center
14k
1 Conference of Boston Teaching Hospitals (14 Boston-area academic medical centers)
SOURCE: Clinics’ websites 12

A large, renowned hospital is a centerpiece of a successful medical district
Hospitals will attract patients from around

A strong governance the state and region and provide a
body is needed to destination for implementation of new
coordinate strategic Hospital(s) techniques and methods all while providing a
vision for the district, needed public good for the community
ensure land use goes to
highest value-add
The medical schools are the training
projects, and attract new
grounds for the hospitals and clinics
businesses to drive Medical Medical around the state and region; close ties to
growth center school(s) teaching hospital(s) will increase potential for
leadership encouraging students to concentrate in certain
specialties (to support niche hospital efforts)
Research Research centers will be the fuel for

centers and endogenous growth in the district as new
Suppliers findings spawn start-ups that grow into
labs
larger businesses and employers
Suppliers will be
attracted to a close- Business
knit, well-developed support Business support resources could be provided
medical district as operations by the district to its members to assist
costs will be reduced researchers in commercializing their findings,
and a centralized source esp. with finding funding and attracting the right
of demand is present business talent to cultivate the upstarts
13
LA could explore developing a specialty field based on several criteria,
including where other SE states do not have a leading Top 10 hospital
Number of Top 10 hospitals by region Decision criteria
Field NE SE Category Considerations
Diabetes/Endocrine 5 01 Economics • Is there sufficient demand (in-

Digestive 3 01 state, out-of-state)?
Geriatrics 4 1 • Will patients travel for treatment?
• What is availability of research
Gynecology 4 1
dollars?
Neurology 3 1 • What is the payor reimbursement
Orthopedics 5 1 for these cases?
Rheumatology 4 1 • What is the cost to care for these
patients?
ENT 3 2
Cancer 3 2 Talent draw • What is the availability of talent
Heart 4 2 (MDs, Ph.Ds, nurses, techs,)?
• What would it take for LA to
Kidney 3 2 develop top training facilities in
Psychiatry 4 2 the field?
Rehabilitation 3 2 • What resources would be needed
Respiratory 3 2 to attract top talent?
Urology 2 3 Competitive • Is there a leading provider in
Ophthalmology 2 3 landscape the region?
1 There are several Southeastern hospitals in top 25 but 0 in top 10 rankings

2 SE states: AL, VA, TX, AR, TN, SC, OK, NC, MS, FL, GA, LA, KY; NE states: VT, RI, PA, NY, NJ, NH, CT, DE, MA
14
SOURCE: US News & World Report, 2009; US Census Bureau

(thousands)
Total ~80 - 145 ~225 - 400
The blue ocean initiative can help us achieve our target growth rate while
generating huge amounts of new population and tax revenues
Total jobs added, 2009-29

Thousands
Baseline forecast
LA at rate of South
LA at Aspiration rate
SOURCE: Moody’s Economy.com estimates; McKinsey analysis 16


Thousands
Blue
Baseline forecast
225-400 515-690 Ocean
plus Blue Ocean
Additional economic
LA at rate of South impact over 20 years
from “Blue Ocean”
alone
▪ Billions in new State
and local tax revenue
▪ ~515-920K in new
population


Thousands
Other
Baseline forecast
225-400 125-300 ~815 efforts
plus all other efforts
LA at rate of South

Where do we go from here?
▪ Maintain efforts to develop BioDistrict New

Orleans and catalyze related opportunities
▪ Coordinate efforts at the state level (e.g., LED,

DHH) to pursue related opportunities
▪ Consider targeted incentives to create jobs tied to

net new healthcare spending and research grants
▪ Pursue opportunities to attract “breakthrough”

investments from major foundations
19
APPENDIX
20
Appendix: The business case for the Blue Ocean initiatives
▪ Next generation digital media/software development ecosystem

▪ Specialty hospital and corridor: Treating the nation
▪ Obesity/diabetes research and treatment: A healthier, productive state
▪ Pharmaceuticals: Manufacturing pills for the people
▪ Ultra-deep water: Under the sea
▪ Unconventional gas: Not everything’s bigger in TX
▪ Auto: Supplying the future driving experience
▪ Energy efficiency: green living, green building, green manufacturing
▪ Renewable energy: fuel and power for the future
▪ Nuclear power: parts and modular production
▪ Enhanced Oil Recovery: Scraping the bottom of the barrel
21
Executive summary
Given the expected rise in demand for healthcare services, Louisiana

has opportunities to increase employment by developing a research
hub to address the state’s growing obesity problems with treatment
centers spread throughout the state and by specializing in high value-
add services at an existing hospital to attract out-of-state patients and
anchor a flourishing medical district
▪ Louisiana could build on existing hospital assets to develop a Center
of Excellence in a highly specialized field that will attract patients
from across the region, country, and nearby countries and serve as
the anchor for a medical district that attracts additional research and
treatment operations
▪ Louisiana could become the center of research and treatment of obesity
and co-morbidities by leveraging and coordinating existing assets such as
Pennington Biomedical Research and building regional clinics to treat
patients
22
A well-developed medical center is one way for Louisiana to take
advantage of healthcare trends and employ significant numbers Direct jobs
Mayo Clinic UPMC

39k 50k
Cleveland
Clinic
30k
COBTH1
UCLA Medical 75k
Center
14k UAB Medical
Center
10k
Texas Medical
Center
73k Duke Medical
Center
14k
1 Conference of Boston Teaching Hospitals (14 Boston-area academic medical centers)
SOURCE: Clinics’ websites 23

A large, renowned hospital is a centerpiece of a successful medical district
Hospitals will attract patients from around

A strong governance the state and region and provide a
body is needed to destination for implementation of new
coordinate strategic Hospital(s) techniques and methods all while providing a
vision for the district, needed public good for the community
ensure land use goes to
highest value-add
The medical schools are the training
projects, and attract new
grounds for the hospitals and clinics
businesses to drive Medical Medical around the state and region; close ties to
growth center school(s) teaching hospital(s) will increase potential for
leadership encouraging students to concentrate in certain
specialties (to support niche hospital efforts)
Research Research centers will be the fuel for

centers and endogenous growth in the district as new
Suppliers findings spawn start-ups that grow into
labs
larger businesses and employers
Suppliers will be
attracted to a close- Business
knit, well-developed support Business support resources could be provided
medical district as operations by the district to its members to assist
costs will be reduced researchers in commercializing their findings,
and a centralized source esp. with finding funding and attracting the right
of demand is present business talent to cultivate the upstarts
24
LA could explore developing a specialty field based on several criteria,
including where other SE states do not have a leading Top 10 hospital
Number of Top 10 hospitals by region Decision criteria
Field NE SE Category Considerations
Diabetes/Endocrine 5 01 Economics • Is there sufficient demand (in-

Digestive 3 01 state, out-of-state)?
Geriatrics 4 1 • Will patients travel for treatment?
• What is availability of research
Gynecology 4 1
dollars?
Neurology 3 1 • What is the payor reimbursement
Orthopedics 5 1 for these cases?
Rheumatology 4 1 • What is the cost to care for these
patients?
ENT 3 2
Cancer 3 2 Talent draw • What is the availability of talent
Heart 4 2 (MDs, Ph.Ds, nurses, techs,)?
• What would it take for LA to
Kidney 3 2 develop top training facilities in
Psychiatry 4 2 the field?
Rehabilitation 3 2 • What resources would be needed
Respiratory 3 2 to attract top talent?
Urology 2 3 Competitive • Is there a leading provider in
Ophthalmology 2 3 landscape the region?
1 There are several Southeastern hospitals in top 25 but 0 in top 10 rankings

2 SE states: AL, VA, TX, AR, TN, SC, OK, NC, MS, FL, GA, LA, KY; NE states: VT, RI, PA, NY, NJ, NH, CT, DE, MA
25
SOURCE: US News & World Report, 2009; US Census Bureau
Though LA has a wealth of medical assets, New Orleans is likely the best
candidate for locating a specialized hospital
# Region
Schools & Hospitals1
Medical Schools Why New Orleans is well suited for

a specialized hospital
1▪ LSU School of Medicine (New
Orleans) ▪ New Orleans is one of 3 major cities
1▪ Tulane University School of with accredited medical centers
Medicine (members of AAMC):
3▪ LSU School of Medicine 3 – New Orleans
(Shreveport) – Baton Rouge
– Shreveport
Teaching hospitals & health
systems ▪ New Orleans has a distinct
1▪ New Orleans advantage over the other two
– Medical Center of LA at New locations:
Orleans – Access to an international
airport (Louis Armstrong
– Ochsner Clinic Foundation
2 International Airport)
– SE LA Veterans Health Care
System – Largest MSA in the state where
– Touro Infirmary 1 it is home to 35% of
– Tulane University Hospitals Louisiana’s population (2008)
1▪ Kenner – Visitor accommodations
– Kenner Regional Medical
Center ▪ New Orleans Regional Medical
Center (NORMC) and Greater New
2▪ Baton Rouge
– BR General Medical Center Orleans Biomedical Economc
Development District (GNOBEDD)
– Our Lady of the Lake
are two entities that are making
Regional Medical Center
efforts to stimulate growth in the
3▪ Shreveport
– Overton Brooks VA Medical medical sector
Center
1 Focus is on nationally-recognized facilities that could scale up quickly, so AAMC facilities used as a proxy
26
SOURCE: American Association of Medical Colleges; US Census Bureau
There are 2 paths to success in developing a specialized hospital
Organic growth Inorganic growth
▪
1 Build specialization in existing hospital from “the –
2 Recruit a leading provider to the state and assist
ground up” by recruiting top talent and building with establishing a regional branch
cutting-edge facilities – Existing hospitals could partner with a provider to
– State can support its existing assets through open a branded clinic (e.g., University of
targeted land and financial offers (e.g., assist John Pittsburgh Medical Center’s 40 cancer centers)
Ochsner Heart and Vascular Institute in becoming – This approach will give the system instant
renowned facility) credibility and benefits from established protocols
– This approach will create strong buy-in from state and knowledge
stakeholders but will require a significant
investment in infrastructure (e.g., UMHS’s facility
investments)
“[UMHS is] undergoing one of the largest “This (partnership) approach is […] a hub-
expansions of any hospital system in the and-spoke system that UPMC first perfected
nation with expectations to add 3M sq. ft of in western Pennsylvania, where it now
hospital space largely devoted to a variety of operates more than 40 cancer centers
specialty clinics” (e.g., $120M Brehm Diabetes providing a wide range of oncology services
Center funded in part by $44M private donor and supported by UPMC’s academic and
gift) clinical hub at the Hillman Cancer Center in
--University of Michigan Health System Pittsburgh.”
--University of Pittsburgh Medical Center
SOURCE: Hospital websites 27

If LA pursues path 2, there are several potential players to partner with
Number of Top 10 hospitals by region
Field NE SE Potential players to recruit for path 2
Fields with only 1 or less Top 10 Hospitals in SE1

Diabetes/endocrine 5 0 Opportunities in these fields could be covered by the
hub-and-spoke research/treatment system
Digestive 3 0
Gynecology 4 1
Neurology 3 1
Fields with competition in SE but opportunity to focus on delivering regional service
Cancer 3 2
Heart 4 2
Other fields that may have a Top 10 hospital in the region (e.g., heart, cancer) could also
be included given that these fields have direct links to treatment of obesity and diabetes
28
Specialty healthcare value proposition
LA’s value proposition Regional strengths
Research and treatment centers Southeast

▪ Pennington Biomedical Research Center ▪ New Orleans has a high concentration of
has a strong position within the field of hospitals, universities, and other medical
obesity and diabetes research businesses
▪ LA has one of the highest concentrations
of obesity and diabetes in the US Capital
▪ LSU’s Pennington Biomedical Research
Specialty hospital Center has been focusing on a range of
▪ LA has numerous hospital assets whose issues important to improving the state’s
specializations could be cultivated into health
renowned clinics
▪ LA’s geographic location makes the state Acadiana
an attractive destination for a hospital to ▪ Regional Medical Center of Acadiana
serve the Southeast possesses several fields of excellence (e.g.,
bariatric surgery, Cycle II Chest Pain facility)
Medical district
▪ New Orleans already has the Southwest
infrastructure and medical district ▪ High concentration of doctors and nurses
governance in place provides human infrastructure that could be
leveraged and built upon
29
Appendix: The business case for the Blue Ocean initiatives
▪ Next generation digital media/software development ecosystem

▪ Specialty hospital and corridor: Treating the nation
▪ Obesity/diabetes research and treatment: A healthier, productive state
▪ Pharmaceuticals: Manufacturing pills for the people
▪ Ultra-deep water: Under the sea
▪ Unconventional gas: Not everything’s bigger in TX
▪ Auto: Supplying the future driving experience
▪ Energy efficiency: green living, green building, green manufacturing
▪ Renewable energy: fuel and power for the future
▪ Nuclear power: parts and modular production
▪ Enhanced Oil Recovery: Scraping the bottom of the barrel
30
Executive summary
Given the expected rise in demand for healthcare services, Louisiana has
opportunities to increase employment by developing a research hub to
address the state’s growing obesity problems with treatment centers spread
throughout the state and by specializing in high value-add services at an
existing hospital to attract out-of-state patients and anchor a flourishing
medical district
▪ Louisiana could build on existing hospital assets to develop a Center of
Excellence in a highly specialized field that will attract patients from across
the region, country, and nearby countries and serve as the anchor for a
medical district that attracts additional research and treatment operations
▪ Louisiana could become the center of research and treatment of
obesity and co-morbidities by leveraging and coordinating existing
assets such as and Louisiana Cancer Research Consortium and
building regional clinics to treat patients
31
LA is uniquely suited to address one of the several major trends
that will impact the healthcare space Focus area for LA
Trend Pros for LA Cons for LA
▪ The rise in obesity and obesity-related ▪ In 2005, LA was one of 3 states ▪ People may not travel for obesity
co-morbidities (e.g., hyperlipidemia, with > 30% of population obese treatment (but may for treatment of
hypertension, diabetes) comorbidities)
▪ Rise in aging-related illnesses (Alzheimer's, ▪ Across the US and LA, the Boomer ▪ People unlikely to travel for the most
chronic diseases, wellness centers, long- population will continue to dominate common of aging-related diseases (but
term care facilities) the economy, esp. healthcare will for more complicated diseases: e.g.,
Parkinson’s)
▪ Increased focus on research and treatment ▪ Advances in research and ▪ Personalized medicine research requires
within personalized medicine (genetic techniques will drive significant a high-level of specialization and funding
illnesses such as Down syndrome, autism) changes in delivery of healthcare
▪ Increased demand for diagnostic testing ▪ LA is home to one of nation’s fastest ▪ Training of medical technicians not likely to
(e.g., CT scans) CT scanners be large employment opportunity for LA
▪ Increased demand for women’s health ▪ Duke University is only SE hospital ▪ 6 SE hospitals in Top 25, so it will be
centers (e.g., osteoporosis, birthing centers) in Top 10 for gynecology easier for other states to build upon their
existing assets
▪ Increased demand for executive health/ ▪ LA’s tourism assets could provide ▪ Executive health centers unlikely to be a
concierge medicine attractions for out-of-state patients significant center of job growth
& families
▪ Increased role of technology ▪ LA’s Medicaid/Medicare system has ▪ Private sector needs to take an active
(i.e., electronic health records) in operations strong control over its operations role in driving the transition to
of medical facilities and payments technologically-savvy operations
▪ Potential effects of public policy on the ▪ Like all states, federal changes ▪ Shortage of doctors and Medicare/
healthcare industry (e.g., public option likely to extend medical coverage to Medicaid funding challenges will
insurance) most citizens continue to strain LA’s healthcare system
32
Obesity is a serious disease, which causes many other diseases and
drives significant costs throughout the health system
Obesity is associated with a high number of co- In Louisiana, obesity is a burden to the healthcare
morbidities, which increase with age system and economic prospects
Percent of obese people that have 0, 1, 2, or 3

co-morbidities, by age
Health-risk behaviors including
Percent
smoking, sedentary behavior and obesity
100% 2 related illness account for
Obesity + 7 10 approximately 48% of Louisiana’s
3 co-morbidities 25 healthcare budget.
Obesity + 22 -- Obesity Council
2 co-morbidities
Obesity +
Obesity currently results in ~$1.2B of
1 co-morbidity
health care spending and is expected to
38
nearly quadruple by 2018
-- The Future Costs of Obesity
Obesity with no
co-morbidities
Nationally, some estimates have

Co-morbidities shown that businesses suffer ~$20
considered billion in productivity losses each year
▪ Hyperlipidemia <35 35-50 >50 from absences due to illness caused by
▪ Hypertension obesity.
▪ Diabetes Age -- Emedicinehealth.com
SOURCE: National Payor Health Assessment of large employer, n= 38,000, Sturm, R., “The Effects of Obesity, Smoking, and Drinking on Medical
Problems and Costs,” Health Affairs, Vol. 21, No. 2, March/April 2002, pp. 245-253.; Obesity Council; Emedecinehealth.com; Future 33
Costs of Obesity (2009)
The Southeast, and Louisiana specifically, is at the center of the US
obesity epidemic
Obesity in the US has reached epidemic
proportions … … With no end in sight
1990 Obesity prevalence
Millions of cases
Percent of
population
with obesity1
166.9 168.7
No Data 163.2 165.1
<10% 161.3
159.4
10%–14% 157.5
15%–19% 154.1 15%
20%–24% 150.6
2005 25%–29% 147.3
>=30% 144.0
2005 06 07 08 09 10 11 12 13 14 2015
1 BMI ≥ 30, or ~ 30 lbs overweight for 5’ 4” person
SOURCE: Behavioral Risk Factor Surveillance System, CDC; Decision Resources; William J. Clinton Foundation 34
Accompanying the high concentration of obesity is a similarly high
concentration of diabetes in LA and the Southeast
Obesity and diabetes are linked
Number of Diabetes Deaths per 100,000 Population, 2006
▪ About 90% of type 2 diabetes is
attributable to excess weight. The
increase in the prevalence of type 2
diabetes is closely linked to the
upsurge in obesity.
▪ One study found a fourfold increased
risk for type 2 diabetes in women
overweight vs. women with normal
BMI
– Morbidly obese women were 93x
more at risk than women with
normal BMI
The diabetes situation in LA cannot

be understated
▪ Diabetes is the 5th leading cause of
State Rankings
death in LA
Diabetes deaths per 100,000 people
▪ Effective treatment of diabetes drives
Rank State Total a number of industries including
specialized treatment centers (e.g.,
1 Louisiana 35.5 cardiovascular and neurology) and
support activities (e.g., social
2 West Virginia 33.1
workers, diagnostic labs,
nutritionists, neighborhood
3 Wash., DC 30.6 pharmacies)
SOURCE: Statehealthfacts.org; NEJM.org; Dukehealth.org; LA Health Report (2007) 35

The alarming rise in obesity has led to a rapid increase in NIH funding for
obesity and diabetes relative to other diseases Focus area for LA
$ Millions
Obesity
CAGR
+16%
2003 04 05 2006
Smoking Diabetes
CAGR CAGR
+4%
-1%
2003 04 05 2006 2003 04 05 2006
HIV/AIDS Cardiovascular diseases

CAGR CAGR
+2%
+1%
2003 04 05 2006 2003 04 05 2006
SOURCE: NIH 36
Though not a significant source of job growth, a hub and spoke system
will improve the productivity of LA’s workforce and reduce current
spending on obesity-related healthcare costs
▪ Rationale for initiative
Potential locations for clinics and research hub1
– Businesses and state-funded programs
(e.g., Medicare) pay an enormous sum in
Treatment clinic health care expenses related to obesity
Monroe – Decreasing obesity in LA will indirectly
Research hub
strengthen the economy:
▫ Reduce preventable health care
spending by businesses and
government
▫ Increase the productivity of the
workforce while making the state a
more attractive place to locate a
business
Baton Rouge ▪ Jobs created by

Alexandria – 1,000 to 2,000 jobs from hiring
New Orleans practitioners who can deliver proper
preventative care to those in need
– Additional jobs from attracting other
organizations and institutions focused on
these issues (diabetic medical instrument
suppliers) that want to locate in a state
with a high population of obesity and
diabetes
Lake Charles – Additional jobs from collecting significant
amounts of data that would be attractive to
1 In the long-term, additional clinics could be built. In near-term, LA could initially focus research and development operations
on a few dispersed clinics across the state
SOURCE: LA Health Report Card (2007) 37

Hub-and-spoke value proposition
LA’s value proposition Regional strengths
▪ LA suffers from one of the highest Capital

rates of obesity in the country ▪ Pennington Biomedical Research
Center already specializes in
▪ LA possesses a strong medical research on obesity and related
infrastructure throughout the state diseases
that could be leveraged to address Southeast
this issue ▪ University and research assets make
the location an attractive destination
for companies looking for highly-
educated workforce
Southwest
▪ Medical assets provide pre-existing
infrastructure to locate regional clinic
Central
Northeast
38
Overview of blue ocean targets
Why exciting? Why Louisiana?
Next generation digital ▪ High expected employment growth in ▪ Highly competitive and broad digital
media / software US in key areas (e.g., education IT, interactive media tax credit
development healthcare IT, digital gaming, cyber ▪ Creative culture that is attractive to
security, mobile apps) young professionals
▪ High-wage, skilled positions that are ▪ Opportunity to capitalize on
“sticky” significant IT infrastructure
▪ “Buzz” factor that could transform investment
image of Louisiana ▪ Early business development wins in
▪ Potential to attract researchers, the sector (e.g., EA, Pixel Magic)
entrepreneurs, and investors that
keep developing the “next wave”

Auto: Supplying the ▪ Poised for growth as U.S. shifts to ▪ Early win (V-Vehicle Co.) adds
future driving more efficient and environmentally credibility and indicates willingness
experience friendly automobiles to tailor creative solutions
▪ Growth also expected in next ▪ Louisiana FastStart: one of the best
generation composites and parts workforce solutions in the U.S.
manufacturing ▪ Potential to capitalize on our
▪ Shift is global in scope, driven by petrochemical base to develop
market and regulatory factors lightweight, durable composites
▪ New, disruptive entrants with new
business models that need new
facilities
39
Overview of blue ocean targets (continued)
Energy efficiency: ▪ Potential to lead the South into the ▪ Momentum and rising demand exists in
Green living, green “green century” by attracting the state, particularly in hurricane-
building, green manu- manufacturing operations impacted areas
facturing ▪ Large projected investments in ▪ Competitive, flexible labor
energy efficiency globally and ▪ Distinctive natural resources and
domestically transportation assets leading to a
natural competitive advantage
Renewable energy: ▪ Large U.S. and international ▪ Wealth of natural resources for
Power and fuel for the mandates and incentives commercial stage technologies
future anticipated – Mississippi & Red Rivers for
▪ Growing consumer demand to hydropower
pursue green energy – Supply of timberland for wood-based
▪ Long-term potential to reduce biomass & biofuels
electricity costs with renewable ▪ Resources for renewable fuel sources
fuel sources (e.g., algae, switchgrass, sugarcane)
▪ High concentration of energy-intensive
operations that would benefit from lower
cost energy sources
40
Nuclear power: Parts ▪ Large international demand; ▪ Early win in the manufacturing sector
and modular production 50-200 new plants expected (Shaw Modular Solutions) provides
globally as countries shift to energy opportunity to serve global demand
sources with no CO2 emissions ▪ Louisiana FastStart: one of the best
▪ Substantial domestic demand with workforce solutions in the U.S.
5-10 new plants expected, could ▪ Historical fabrication workforce
increase dramatically strengths
▪ Distinctive logistics and transportation
assets

Specialty hospital and ▪ Healthcare projected to be one of ▪ Wealth of assets concentrated in
medical district: highest growth sectors in U.S. specific areas (e.g., Shreveport, Baton
Treating the nation ▪ Opportunity to fill Southeast’s void Rouge, New Orleans)
of top ten ranked hospitals in ▪ Exciting opportunities to drive
certain areas significant improvements (e.g.,
▪ Potential to become a medical building of Academic Medical Center
destination that attracts both out-of- in New Orleans, Our Lady of the
state patients and talent Lake / LSU partnership)
▪ Vibrant culture as a draw for medical
travelers
41
Obesity / diabetes ▪ Growing epidemic in U.S. with no ▪ One of the highest rates of obesity
research and treatment end in sight and diabetes mortality rates in the US
▪ Southeast is at the epicenter of the ▪ Costs expected to reach $4.5 billion
problem annually in Louisiana by 2018
▪ Large increases in national funding ▪ Pennington Biomedical Research
and research grants Center is a leader in the study of
obesity and preventative medicine

Manufacturing ▪ Interest from international ▪ Low-cost manufacturing environment
pharmaceuticals manufacturing operations to enter (especially Northwest Louisiana)
the U.S. market in lower-cost ▪ Access to distinctive transportation
destinations assets providing outlet to rest of the
▪ High overall U.S. industry growth country and world
▪ Worldwide growth driven by close ▪ Increasing momentum led by recent
to $300 billion in branded drug and potential wins (e.g., Dr. Reddy’s)
sales going off patent by 2015
42
Water management: ▪ Coastal restoration and defense ▪ Will spend roughly $3-4 billion a year
“The Netherlands of the becoming increasingly important to on coastal restoration in next 20 years
U.S.” communities around the world ▪ Initial base of 40 companies
▪ Renewed attention to threat/impact ▪ U.S. dependence on Louisiana’s
of natural disasters energy production may necessitate
▪ Nascent industry domestically with additional long-term commitments
no clear regional leader

Unconventional gas: ▪ Shift from tight gas supply to ▪ Haynesville Shale is the largest
Not everything’s bigger discovery of substantial domestic unconventional natural gas play in the
in Texas resources U.S. (fourth largest in the world)
▪ Cutting edge drilling and fracking ▪ Initial production has exceeded
technologies to unleash full expectations and drilling remains very
potential of natural gas reservoirs economically competitive
▪ Cleaner alternative to other widely ▪ Developed oil and gas industry with
used fuels (e.g., coal) experienced and skilled workforce
▪ Potential to cultivate R&D operations
that export technologies to other
unconventional gas basins
43
Ultra-deep water: Under ▪ New wave of exploration to ▪ Established oil and gas infrastructure
the sea capture oil deposits 10,000 feet to capture increased service
beneath the ocean surface operations new deepwater resources
▪ One avenue to decreased ▪ Better proximity to existing and new
dependence on foreign oil deepwater discoveries
▪ New technologies have driven ▪ Developed oil and gas industry in the
increased interest on the part of state with skilled workforce
energy companies in unexplored
areas

Enhanced Oil Recovery ▪ Increases yields of existing oil ▪ Large number of mature oil fields
techniques: Scraping resources leveraging new within the state
the bottom of the barrel technologies ▪ Some legislative action in place
▪ Potentially very cost competitive incentivizing the use of CO2 EOR
▪ If carbon capture technology ▪ Potential to capitalize on non-CO2
develops, could be a use for EOR techniques by leveraging
carbon in traded carbon economy expertise of existing petrochem base
▪ Developed oil and gas industry with
skilled workforce
44

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For decades, LA’s economy underperformed the South and the U.S. . . .

Total nonfarm, annual employment (100=1980)

Total nonfarm, seasonally-adjusted employment (100=January 2008)

2008 2009 2010

▪ Workforce development reforms

Chemical Manufacturing Agriculture / farming Paper Manufacturing

Cumulative state employment growth for next 20 years (millions)

2.6 LA at Peer rate (South)

SOURCE: Moody’s Economy.com estimates 6

Cultivate small Develop robust

Prioritization & Most attractive

Other prioritization metrics

Potential for job growth

Fit with strengths

Sector themes Growth initiatives

Digital media/ ▪ Next generation digital media/software development ecosystem

▪ Water management: The Netherlands of the US

LA job growth 2009-29

LA job growth 2009-29

Mayo Clinic UPMC

1 Conference of Boston Teaching Hospitals (14 Boston-area academic medical centers)

SOURCE: Clinics’ websites 12

Hospitals will attract patients from around

Research Research centers will be the fuel for

Diabetes/Endocrine 5 01 Economics • Is there sufficient demand (in-

1 There are several Southeastern hospitals in top 25 but 0 in top 10 rankings

LA job growth 2009-29

Total jobs added, 2009-29

SOURCE: Moody’s Economy.com estimates; McKinsey analysis 16

Total jobs added, 2009-29

SOURCE: Moody’s Economy.com estimates; McKinsey analysis 17

Total jobs added, 2009-29

SOURCE: Moody’s Economy.com estimates; McKinsey analysis 18

▪ Maintain efforts to develop BioDistrict New

▪ Coordinate efforts at the state level (e.g., LED,

▪ Consider targeted incentives to create jobs tied to

▪ Pursue opportunities to attract “breakthrough”

▪ Next generation digital media/software development ecosystem

Given the expected rise in demand for healthcare services, Louisiana

Mayo Clinic UPMC

1 Conference of Boston Teaching Hospitals (14 Boston-area academic medical centers)

SOURCE: Clinics’ websites 23

Hospitals will attract patients from around

Research Research centers will be the fuel for

Diabetes/Endocrine 5 01 Economics • Is there sufficient demand (in-

1 There are several Southeastern hospitals in top 25 but 0 in top 10 rankings

Medical Schools Why New Orleans is well suited for

Organic growth Inorganic growth

SOURCE: Hospital websites 27

Fields with only 1 or less Top 10 Hospitals in SE1

Fields with competition in SE but opportunity to focus on delivering regional service

LA’s value proposition Regional strengths

Research and treatment centers Southeast

▪ Next generation digital media/software development ecosystem

Trend Pros for LA Cons for LA

Percent of obese people that have 0, 1, 2, or 3

Nationally, some estimates have

1 BMI ≥ 30, or ~ 30 lbs overweight for 5’ 4” person

The diabetes situation in LA cannot

SOURCE: Statehealthfacts.org; NEJM.org; Dukehealth.org; LA Health Report (2007) 35

2003 04 05 2006 2003 04 05 2006

HIV/AIDS Cardiovascular diseases

2003 04 05 2006 2003 04 05 2006