The Economic Contribution of Hospitals

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

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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.
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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
Full-servicerestaurants
Generalmedical surgicalhospitals
Limited-service eating places
Employmentservices
Grocerystores
Offices ofphysicians
Buildingequipmentcontractors
Departmentstores
Source Department of Labor, Bureau of Labor
Statistics, Current Employment Statistics Survey
custom data request
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Hospitals offer a consistent source of job growth
even during recessions.
Percent Change in Quarterly Employment
Hospitals vs. All Industries2001-2003
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
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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
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Hospital jobs and purchases also support other
sectors of the economy.

• The direct effects of hospitalshospital jobs and
  purchasesare only part of the story.
• Hospital activities create ripple effects
  throughout the economy.
• Hospitals purchase goods and servicesdrugs,
  information technology, food, linens, bricks and
  mortarfrom other businesses.
• Hospital employees spend their paychecks on the
  goods and servicesgroceries, cars, appliances,
  clothingproduced by other businesses.
• Wages and salaries paid by hospitals are subject
  to federal, state, and local taxes.

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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
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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
Direct Effect
Ripple Effect
Total Contribution

• SOURCE The Lewin Group using BEA RIMS-II
  multipliers applied to 2002 AHA Annual Survey Data

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Hospitals support 4 to 13 of state jobs.
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.
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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 patientsnot
  fully reimbursed

Percentage of Community Hospitals Offering
Selected Community Outreach Services 2002
Source Lewin Analysis of AHA Annual Survey data
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Conclusion

• Hospitals are major contributors to the U.S.
  economy.
• Hospitals create a steady source of employment
  even in economic downturns.
• Hospitaland hospital employeepurchases 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.