Wednesday, April 24, 2002

Georgia hospitals contribute $26.7 billion to state's economy

Georgia hospitals contributed more than $26.7 billion to the state's economy in 2000, according to a recent report prepared by the Georgia Hospital Association, the state's largest hospital trade association. Hospitals also helped sustain 269,145 full-time jobs in Georgia during the same year.

The report, which was based on a study prepared by the Economic Forecasting Center at Georgia State University, revealed that Georgia hospitals had direct expenditures of more than $8.9 billion in 2000 an increase from $8.7 billion in 1999. When combined with an economic multiplier developed by the United States Department of Commerce's Bureau of Economic Analysis, the total economic impact of those expenditures was $26.7 billion. This output multiplier considers the "ripple" effect of direct hospital expenditures on other sectors of the economy, such as medical supplies, durable medical equipment, and pharmaceuticals. Economic multipliers are used to model the resulting impact of a change in autonomous spending in one industry on the "circular flow" of spending within an economy as a whole.

"This study shows that Georgia hospitals and health systems not only serve to protect and improve the health of every Georgia resident, they are critical components to the economic health of the state as well," said GHA President Joseph A. Parker. "During a time when so many hospitals throughout the state aresuffering due to sagging Medicare/Medicaid payments, a declining health care workforce and a growing uninsured population, it is our hope that local, state and federal lawmakers, along with community leaders, will join us in our efforts to ensure that Georgia hospitals can continue to provide top-quality health care services to the residents of this state for many more years to come."

According to state statistics, in 2000, 128 out of 173 hospitals in Georgia or 74 percent had negative operating margins for payments for patient care services. In addition to continued financial obstacles, Georgia hospitals are also suffering from a severe shortage of qualified health care workers. According to a recent GHA survey, vacancy rates for nursing-related positions grew 38 percent from 1999 to 2001. Over the same period, vacancy rates for allied health positions which includes hospital pharmacists, radiographic technologists and respiratory therapists jumped 40 percent.

The hospital economic impact report also measures hospitals' direct economic contribution to Georgia's working families. Using a "household earnings multiplier," the study determines that hospitals generate more than $6.7 billion in household earnings in the state. The household earnings multiplier measures the increased economic contributions from households employed directly or indirectly by hospitals through daily living expenditures.

The report also concluded that:

After an output multiplier is applied to the $853 million that Georgia hospitals received from treating Medicaid recipients in 1999, the total annual economic impact generated by hospitals and Medicaid is more than $1.9 billion.

Hosiptals in Georgia provided more than $924 million in community benefits in 2000. Uncompensated care, which includes indigent care, charity care, bad debt write-offs and other free care, accounted for 10.4 percent of all hospital expenses.

Georgia rural hospitals, often most severely impacted by state and federal budget cuts, contributed more than $5.9 billion to the state's economy and provided nearly 60,000 full-time jobs. Furthermore, these hospitals contributed more than $202 million in benefits to their communities in the form of uncompensated care.

"Despite financial hardships, every day of the year, 24 hours a day, Georgia's hospitals and health systems continue to honor a fundamental promise to their communities to be there, doors opened, whenever they are needed," said Parker. "If that is to continue, we cannot ignore the many issues which continue to tear at the fabric of our state's entire health care system."

Established in 1929, GHA is the leading trade organization of hospitals and health systems in the state providing education, research and risk management services to its more than 180 hospital and health system members. Additionally, it represents and advocates health policy issues benefitting Georgia's citizens before the state legislature and U.S. Congress as well as before regulatory bodies.