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

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…but fewer are aware of the important role of hospitals in the U.S. economy.

• 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

The role hospitals play in providing health care is widely understood…

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Number of Full Time and Part Time Hospital Employees

1992 - 2002

Source: AHA Hospital Statistics, 1992 – 2002.

4.0

4.1

4.2

4.3

4.4

4.5

4.6

4.7

4.8

4.9

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

In

Mil

lio

ns

Nationwide, hospitals employ over 4.8 million people.

4 Source: Department of Labor, Bureau of Labor Statistics, Current Employment Statistics Survey – custom data request

Hospital Employment vs. Employment inOther Industries (in thousands)

2003

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Full-servicerestaurants

Generalmedical &surgicalhospitals

Limited-service

eating places

Employmentservices

Grocerystores

Offices ofphysicians

Buildingequipmentcontractors

Departmentstores

In T

ho

usa

nd

s

Hospitals rank second as a source of private sector jobs.

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Percent Change in Quarterly Employment: Hospitals vs. All Industries*

2001-2003

Source: Department of Labor, Bureau of Labor Statistics; Recession period defined by National Bureau of Economic Research

*Does not include farm employment.

Qu

art

erl

y (

3-M

on

th)

Pe

rce

nt

Ch

an

ge

0.6%

0.5%

0.6%

0.4%

0.3%

0.4%

0.5%

0.4% 0.4% 0.4% 0.4% 0.4%

0.1%

-0.1%

-0.3%

-0.4%

0.0% 0.0% 0.0%

-0.2% -0.2%

0.0% 0.0%

0.1%

-0.6%

-0.4%

-0.2%

0.0%

0.2%

0.4%

0.6%

0.8%

Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4

Hospitals All Industries (Total non-farm)

2001 2002 2003

Recession of 2001*

Hospitals offer a consistent source of job growth even during recessions.

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Percent of Hospital Expenditures* by Type 4Q03

SOURCE: Centers for Medicare and Medicaid Services, 2003

Professional Fees - 5.4%

Utilities – 1.3%

All Other: Non-Labor Intensive – 4.2%

All Other: Labor Intensive – 5.5%

Postage – 0.8%

Telephone – 0.3%

Professional LiabilityInsurance – 0.8%

Other Products(e.g., Food, Medical

Instruments)

Other Services

Prescription Drugs12.2%

6.2%

18.4%Wages & Benefits63.3%

*Does not include capital.

Along with jobs, hospital dollars support purchases from other businesses.

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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.

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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

Other Jobs Supported by Hospitals

(“Ripple Effect”)

TotalJobs Supported

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

Hospitals support one of every nine jobs nationwide.

15.1

10.3

4.8

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Hospitals generate substantial business activity.

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

Total Impact of Community Hospitals onU.S. Economy (in $ billions)

2002

Direct Effect Ripple Effect Total Contribution

Impact on Wages & Salaries

Impact onEconomy

$635

$1,318

$419

$889

$216

$429

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Hospitals support 4 to 13% of state jobs.

RI – 8.9%

DE – 9.2%

DC – 6.1%

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.

Less than 5.0%

5.0% - 7.9%

8.0% - 9.9%

10.0% and above

Percent of Total Non-farm Employment Supported By Hospital Employment By State

2002

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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 patients—not fully reimbursed

77% 76%

66%63%

58%

47%

32%

15%

HealthScreenings

Health Fair CommunityOutreach

SupportGroups

PatientEducation

Center

HealthInformation

Center

EnrollmentAssistanceServcies

Meals onWheels

Percentage of Community Hospitals Offering Selected

Community Outreach Services2002

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.

• 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.