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The Economic Contribution of Hospitals May 2004 Vol. 6, No. 1

The Economic Contribution of Hospitals May 2004 Vol. 6, No. 1. …but fewer are aware of the important role of hospitals in the U.S. economy. The role hospitals play in providing health care is widely understood…. In 2002: Hospitals cared for 34 million admitted patients

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The Economic Contribution of Hospitals May 2004 Vol. 6, No. 1

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  1. The Economic Contribution of Hospitals May 2004 Vol. 6, No. 1

  2. …but fewer are aware of the important role of hospitals in the U.S. economy. The role hospitals play in providing health care is widely understood… • In 2002: • Hospitals cared for 34 million admitted patients • Hospitals treated 556 million ambulatory patients • Provided emergency care to 110 million patients • Performed 28 million surgeries • Delivered 4 million babies

  3. Nationwide, hospitals employ over 4.8 million people. Number of Full Time and Part Time Hospital Employees 1992 - 2002 4.9 4.8 4.7 4.6 4.5 In Millions 4.4 4.3 4.2 4.1 4.0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Source: AHA Hospital Statistics, 1992 – 2002.

  4. Hospitals rank second as a source of private sector jobs. Hospital Employment vs. Employment inOther Industries (in thousands) 2003 4,500 4,000 3,500 3,000 2,500 In Thousands 2,000 1,500 1,000 500 0 Grocerystores Offices ofphysicians Buildingequipmentcontractors Full-servicerestaurants Generalmedical &surgicalhospitals Limited-service eating places Employmentservices Departmentstores Source: Department of Labor, Bureau of Labor Statistics, Current Employment Statistics Survey – custom data request

  5. Hospitals offer a consistent source of job growth even during recessions. Percent Change in Quarterly Employment: Hospitals vs. All Industries*2001-2003 0.8% Recession of 2001* 0.6% 0.6% 0.6% 0.5% 0.5% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.3% Quarterly (3-Month) Percent Change 0.2% 0.1% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% -0.1% -0.2% -0.2% -0.2% -0.3% -0.4% -0.4% Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 2001 2002 2003 -0.6% Hospitals All Industries (Total non-farm) *Does not include farm employment. Source: Department of Labor, Bureau of Labor Statistics; Recession period defined by National Bureau of Economic Research

  6. Along with jobs, hospital dollars support purchases from other businesses. Percent of Hospital Expenditures* by Type 4Q03 Other Products(e.g., Food, Medical Instruments) Professional Fees - 5.4% Prescription Drugs Utilities – 1.3% 12.2% Professional LiabilityInsurance – 0.8% 6.2% Telephone – 0.3% Other Services Postage – 0.8% Wages & Benefits 63.3% 18.4% All Other: Labor Intensive – 5.5% All Other: Non-Labor Intensive – 4.2% *Does not include capital. SOURCE: Centers for Medicare and Medicaid Services, 2003

  7. Hospital jobs and purchases also support other sectors of the economy. • The direct effects of hospitals—hospital jobs and purchases—are only part of the story. • Hospital activities create “ripple effects” throughout the economy. • Hospitals purchase goods and services—drugs, information technology, food, linens, “bricks and mortar”—from other businesses. • Hospital employees spend their paychecks on the goods and services—groceries, cars, appliances, clothing—produced by other businesses. • Wages and salaries paid by hospitals are subject to federal, state, and local taxes.

  8. With “ripple effects” included, hospitals support more than 15 million jobs. Total Impact of Community Hospitals on U.S. Jobs (in millions) 2002 Direct Jobs 4.8 Other Jobs Supported by Hospitals (“Ripple Effect”) 10.3 Total Jobs Supported 15.1 Hospitals support one of every nine jobs nationwide. Source: The Lewin Group using BEA RIMS-II multipliers applied to 2002 AHA Annual Survey Data

  9. SOURCE: The Lewin Group using BEA RIMS-II multipliers applied to 2002 AHA Annual Survey Data Hospitals generate substantial business activity. Total Impact of Community Hospitals onU.S. Economy (in $ billions) 2002 $429 Impact onEconomy $889 $1,318 $216 Impact on Wages & Salaries $419 $635 Total Contribution Direct Effect Ripple Effect

  10. Hospitals support 4 to 13% of state jobs. RI – 8.9% DE – 9.2% DC – 6.1% Percent of Total Non-farm Employment Supported By Hospital Employment By State 2002 Less than 5.0% 5.0% - 7.9% 8.0% - 9.9% 10.0% and above SOURCE: The Lewin Group using BEA RIMS-II multipliers applied to 2002 AHA Annual Survey Data and BLS total non-farm employment data by state.

  11. Hospitals support their communities in many additional ways. • Special programs to meet broader health and social needs • Charity care programs for patients with limited financial means • Medicaid services to other needy patients—not fully reimbursed Percentage of Community Hospitals Offering Selected Community Outreach Services 2002 Source: Lewin Analysis of AHA Annual Survey data

  12. Conclusion • Hospitals are major contributors to the U.S. economy. • Hospitals create a steady source of employment even in economic downturns. • Hospital—and hospital employee—purchases of goods and services support other businesses. • With “ripple effects” included: • Hospitals support one of every nine jobs in the U.S. • Hospitals support over $1.3 trillion of economic activity. • Hospitals support their communities in many additional ways.

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