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Healthcare from an economic developer’s viewpoint

From an economic developer’s perspective, healthcare in a community is a positive, highly desirable activity. It creates jobs, provides a better quality of life and usually grows the local economy.

One need only consider the impact of two of the most highly-regarded medical institutes in the world. First is the Mayo Clinic, headquartered in Rochester, Minn., with other locations in Phoenix/Scottsdale, Ariz., and Jacksonville, Fla. According to a study conducted by the Battelle Memorial Institute, the Mayo Clinic is responsible for $22 billion in healthcare spending nationwide. About $9.6 billion of that figure is tied to the Mayo Clinic’s home base in Rochester, Minn., where it employs roughly 1,900 doctors and scientists and operates three hospitals. The clinic in Jacksonville employs 370 physicians and scientists, while 400 physicians and scientists work in the clinic in Arizona. The Mayo Clinic is considered the largest integrated, not-for-profit group practice in the world. Overall, it treats more than 50,000 people a year. Mayo employs more than 57,000 people, including 37,000 in Minnesota, and creates an additional 94,000 full-time jobs through its business expenditures and the employment multiplier effect of these.

And then there is the University of Texas M.D. Anderson Cancer Center. The economic impact on Houston and the surrounding area are almost staggering. According to a 2009 study by The Perryman Group, a Texas-based economic and financial analysis firm, the Center has an impact of $7.3 billion in annual spending, $3.8 billion in annual output and 51,960 permanent jobs. Additionally, M.D. Anderson provides $181.1 million in annual state revenue and $108.2 million in annual resources for various local governments.

In case you are wondering how to gauge the economic impact of a hospital on your community, there is online help available. The University of Wisconsin Center for Economic and Community Development offers an online tool for measuring the economic impact of a hospital on a community. Users will be requested to download software from the site after which they will be instructed to enter the following four values:

• Total Revenue — Total operating revenue for the hospital.

• Total Jobs — Total jobs is the sum of the full-time and part-time employment at your hospital.

• Total Labor Income — Total payroll expenses for the hospital, not including employee benefits.

• Total Income — Total income is the sum of the labor income and net income.

But there is more than the economic impact when considering the influence on a community of a hospital and healthcare providers in general. First, healthcare jobs offer a local workforce a wide range of opportunities in terms of pay and skill levels. Entry-level jobs such as housekeeping, pharmacy aides and home healthcare aides abound. For such workers who want to move up the employment ladder, there is hardly a better place to begin a career than a hospital. Many healthcare providers provide in-house education as well offering tuition benefits to workers who want to attend college. Workers in such facilities are regularly exposed to workers in higher-paying jobs, and can thus be more motivated to improve themselves by workers in other occupations who are not able to witness the outcome of their improved education and skills.

A community with a healthcare focus leads to a better, healthier workforce. Citizens of the community are more often provided with positive healthcare messages. Also, they are more likely to know and be influenced by someone in the healthcare field. A workforce that is better able to manage its healthcare issues is obviously preferred. The issue of healthcare costs and the management thereof affects every business. Half of people filing for bankruptcy in a recent year cited healthcare costs. Business leaders know that financial problems faced by their workers leads to all kinds of business problems, such as depression, theft from company and lower morale.

For economic developers, recruiting new industry and other businesses to a community superior healthcare is a “competitive advantage.” Essentially, competitive advantage occurs when a community (or business) outperforms its competitors because of attributes not possessed by its competitors. These may be location, natural resources, weather, educated workforce or, for example, the presence of superior healthcare facilities.

Rural economic developers in particular are affected by lack of healthcare facilities. Nevertheless, progress is being made in the rural healthcare field. Telemedicine, which is generally defined as the ability to provide interactive healthcare utilizing modern technology and telecommunications, is becoming more widely used in rural areas. One impediment is lack of high-speed Internet access, but that issue is getting a lot of attention. Efforts are also underway by large economic development organizations and some state governments to recruit physicians to rural areas. For example, the Delta Regional Authority had implemented the Delta Doctors program, which allows foreign physicians who are trained in this country to work in medically underserved areas for three years. Most choose to stay far longer once they develop a patient base. According to the agency, those in the Delta Doctors program do not take jobs away from U.S.-born physicians. Instead, they provide services in areas where otherwise there would be a shortage of physicians.

As healthcare becomes even more of a priority in the U.S., look for the economic development community to place more of an emphasis on it as a key ingredient in their efforts.

Phil Hardwick is coordinator of capacity development at the John C. Stennis Institute of Government. Contact him at phil@philhardwick.com.


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About Phil Hardwick


  1. smokedsalmoned

    Healthcares Illegal’s Flaw
    Congress and Obama can say that the health care law does not cover illegal aliens but there are three facts that make those statements a lie:
    -Hospitals and doctors currently provide emergency care to illegal aliens and pass the costs on to everyone else. They refuse to deny care or report illegal’s because of their Hippocratic Oath.
    -The Healthcare law created by Congress does not make it a crime for health professionals to either provide care or to fail to report illegal’s or suspected illegal’s to I.N.S. or the local authorities when providing care.
    -Health care reformers erroneously claimed there are 50 million uninsured “Americans”, despite the Presidential Commission on healthcare indicating 47 million, not 50 as well as there being 11 million are illegal aliens within that number. They lied on the number to create a sense of false urgency
    Until the health care law is amended to spell out that doctors and hospitals will be legally required, under penalty of law, to report illegal’s and suspected illegal’s, we will cover illegal’s under our health care program. The system will suffer the cost of 12,000,000 illegal’s in this country and the cost will be passed on to everyone else, just as it is now. In addition, by citing a number of uninsured that includes illegal alien,s of course everyone believes their intent is to cover illegal aliens.

  2. smokedsalmoned

    Tort & Health Care Reform
    Before our government reforms health care in an attempt to provide it universally, we the people must demand that they initiate real and meaningful tort reform. Without it, Doctors will continue to perform excessive, needless and expensive tests to protect themselves from lawsuits and frivolous lawsuits will continue to drive up the perceived need for such tests.
    With health care costs rising at more than twice the level of inflation, we cannot afford universal health care without real cost savings.
    Let your elected official know that health care reform without tort reform is reckless and foolish.

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