THE BUSINESS OF CARING:

1. THE BUSINESS OF CARING: The Economic Impact of Hospitals in Washington State

2. The Data: Hospital Employment

3. Hospital Employment • Washington hospitals had more than 65,000 FTEs in 2001 • This represents jobs for 74,000 people • Hospitals collectively are one of the largest employers in the state

4. Hospitals as Major Employers Number of Jobs

5. Hospital Workers Well Paid Hospital Worker $42,462 Washington Resident $35,996 Hospital Worker, Including Benefits $51,692 Average Annual Salary

6. Others Cutting, Hospitals Hiring The number of people employed by Washington hospitals increased 18% from 1998 to 2001.

7. The Data: Other Economic Impacts

8. Health Worker Employment Significant Doctors Offices (including Osteopathic) 46,620 Total Health Service Employees 215,418 Medical and Surgical Hospitals 73,950 Other Health Services 56,529 Skilled Nursing Facilities 26,801 Home Health Services 8,000 Medical Laboratories 3,518 Washington Health Service Employees

9. Purchased Goods drugs uniforms food paper products Purchased Services utilities financial and legal services laboratory testing equipment repair insurance Hospitals as Purchasers More than 90% purchased in Washington State

10. Where Hospitals Spend Money Washington Hospital Operating Expenses (2001) Payroll $3.8 billion PurchasedGoods andServices $2.8 billion 53% 38% 9% Other Expenses $700 million

11. Hospital Construction • Local construction increases jobs • In 2001, Washington hospitals spent $369 million on construction in progress • This represents about 10% of their net property, plant and equipment

12. Hospitals as Tax Payers $56 million Sales Taxes $56 million $143 million B&O Taxes $267 million Payroll Taxes Taxes Paid in Millions

13. Home States of Out-of-State Patients Idaho 7,000 Oregon 6,000 Alaska 2,000 MT 1,000 Total: 16,000 Private insurance patients from other states and countries paid $143 million for inpatient services.

14. Federal Funds to State, 2001 • $2.3 billion in federal Medicare payments • $470 million in federal Medicaid payments

15. Professor Bill Beyers’s Report Economic Impact of Hospitals in Washington State (2001) EXECUTIVE SUMMARY William B. Beyers, Ph.D. Professor, Department of Geography, University of Washington Hospitals are one of the largest industries in the Washington economy, with employment rivaling aerospace and exceeding computer services—two of the key industries popularly regarded as fundamental to the success of our state economy. In the year 2001, hospitals employed a full time equivalent of 65,000 people in Washington State. They were located in 35 of the state’s 39 counties. The hospital industry in Washington State had expenditures of $7.3 billion in the year 2001, of which $3.8 billion was employee compensation to the people working in this sector of our economy. Through multiplier effects associated with these expenditures, the total level of business activity in the Washington economy related to hospitals was $17.5 billion in the year 2001. For every direct dollar of spending by hospitals, about $2.40 in business activity was created in the Washington economy. This business activity created a total of about 204,000 jobs, slightly more than two jobs for every hospital industry job. Total labor income created was $7.7 billion, just double the direct labor income payments to people working in the hospital sector statewide. Most economic impacts are concentrated in the service industries. Wholesale and retail trade, consumer services, and financial services are the sectors with the largest impacts outside the health care sector. Statewide, full time equivalent employment in hospitals accounted for 1.83 percent of total employment in the year 2001. When the direct, indirect, and induced impacts of the hospital sector are estimated, the contribution of the sector to the total state economy increases to 5.73 percent. Many counties have concentrations of hospital employment well above the state average, and in these counties the relative contribution of the hospital sector is above these state averages.

16. The Bottom Line: Hospitals • Washington hospitals employ 65,000 FTEs • Creating an estimated 204,000 jobs • Slightly more than two additional jobs for every hospital job • Total labor income is $7.7 billion

17. The Bottom Line: Hospitals, continued • Every direct dollar of spending by hospitals creates $2.40 in business activity • This results in $17.5 billion in economic activity for the state

18. Major Sectors Impacted by Hospitals

19. Hospitals Generate Other Tax Revenue Total: $634 million Hospitals $199 million Indirect Economic Activity $435 million State / Local Sales and B&O Taxes in Millions

20. The Bottom Line: Health Services Sector • Directly employs 215,000 people (6.1% of all jobs) • Creates an estimated 446,000 jobs (12.6% of all jobs) • Total labor income is $15 billion

21. The Bottom Line:Health Services Sector, continued • Generates health services revenues totaling $17.9 billion • Creates $34 billion in economic activity for the state • Generates more than $1.2 billion in state Business & Occupation (B&O) taxes and sales taxes

22. Comments on Hospitals as Businesses

23. Three Case Studies Lincoln County Mason County Spokane County

24. “Losing the hospital would be a big hit to the pulse of this town, . . . The hospital employs a lot of people.” - Lincoln “When the hospital gets a cold, the whole region gets sick.” - Spokane “People producing food products deserve the same access and quality of care as the people buying and eating the food products.” - Lincoln

25. “Hospitals are the hub of our economic wheel.” - Spokane “The hospital is a magnet that draws business and people to the area.” - Mason

26. Cathy McMorris - House Minority Leader “Our health care facilities represent the heart of our rural communities . *** The organizations and people who provide for the well-being of rural families have a far-reaching effect on our economy and our quality of life.”

27. Eileen Cody - Chair of the House Health Committee “When the state makes health care purchasing decisions, we should also be aware of the impact these decisions will have on the overall economy, the ability of the state’s businesses to succeed, and specifically the viability of Washington State’s health care sector . . . .”

28. Hospitals as More Than Businesses

29. Hospital Services Washington Hospital Discharges (2001) Cardiac 12% Orthopedic 9% Pulmonary8% Maternity26% GeneralSurgery 6% Other 39%

30. Community Benefits Community Benefits Provided by Hospitals Rural? Charity Care $ 78 million Unpaid Medicaid Costs $84 million Urban Community Services $79 million “Community services” include community health programs and activities, health professionals education, health research, and cash and in-kind donations

31. Key Message So when it is time to make decisions that impact hospitals, keep in mind all their roles: as a safety net, as a healer, and as a vital economic resource.

32. Questions? Comments?