The value of hospitals to the communities they serve extends far beyond healthcare and plays an important role in supporting the economy, a new report says.
The TrendWatch report, prepared by Avalere Health, LLC and released at the American Hospital Association's annual meeting in Washington, found that hospitals not only provide healthcare services to the community but also stimulate demand for goods and services produced by local businesses.
According to data released by the Centers for Medicare and Medicaid services, in 2006 the health sector represented about 16 percent of the gross domestic product, or approximately $2.1 trillion, with hospitals accounting for $648 billion of that total.
In 2006, community hospitals spent about $286 billion on goods and services in addition to employee wages as well. In what the report calls "ripple effects,' hospitals support nearly $1.9 trillion of economic activity by:
• purchasing goods and services from other businesses in the community (including construction projects, which boost economic activity);
• providing income for employees, who then spend it in the community; and
• paying wages and salaries, which are subject to federal, state and local taxes.
Hospitals also provide jobs and opportunities for job growthm even during times of recession, says the report.
According to Avalere Health's analysis of AHA data on community hospitals, hospitals employ more than 5 million people nationwide - making them the second-largest employer in the private sector - and account for more than 4 percent of employment in most regions.
The portion of private-sector jobs supported by hospitals is one out of 10, says a survey by the Department of Labor and Bureau of Labor Statistics. That survey on Current Employment Statistics also reveals that hospital jobs provide higher pay than other service sector jobs, are a stable source of employment and furnish benefits such as health insurance, which are often lacking in jobs for low-skilled workers.
Hospitals reported a 2.1 percent increase in employment in 2007, despite reported shortages in job classes such as nursing and pharmacy, while all non-farm employers experienced only a 1.6 percent increase, the survey found.
The report indicates hospitals support communities in many additional ways, including community services, charity care and other care for which no payment is received.
The Avalere Health analysis found that in 2006, hospitals provided more than $31 billion in uncompensated care - a mixture of charity care and other care for which payment was expected but not received.
In a state-by-state analysis of the economic contributions hospitals make to the communities they serve, up to 11 percent of state employment was supported by hospitals, the report found.
"Hospitals provide so much for a community," said Rich Umbdenstock, president and CEO of the AHA. "In addition to caring for the sick, hospitals provide jobs, good wages and benefits in the communities they serve. The commitment of hospitals extends beyond its four walls to their communities through outreach and wellness programs and economic promotion and support."