Report courtesy of TXP
In the wake of comprehensive federal healthcare finance reform, there continues to be substantial public discourse surrounding issues of quality, cost, payer mix, and access for consumers. Often lost is the fact that hospitals, physicians, and other medical professionals constitute a major economic driver for many communities, employing thousands of people and spending millions of dollars on equipment, supplies, and services. The New York Times recently reinforced this point, stating that “health care represents nearly 18 percent of the American economy and has been adding jobs even as other industries have laid-off workers or refrained from hiring. Hospitals are the largest component of this sector, with roughly five million employees. As hospitals buy goods and services from other businesses, they create additional jobs.”
Communities with a strong presence in academic medicine enjoy additional benefits beyond the impact described above. An institution of academic medicine itself is an economic engine, directly employing thousands of people and spending millions of dollars annually. For example, proposed Austin-based efforts ultimately could well have close to 5,000 physicians, faculty, and associated medical staff. When spending in the community by students, residents, and non-local patients and visitors is added into the equation, TXP estimates that Austin-based academic medicine would translate into approximately $600 million in direct annual economic activity.
In addition, supporting the growth of academic medicine in Central Texas should stimulate technology transfer and economic development. According to the Milken Institute, “The 21st century biotechnology cluster race has many regional entries in the U.S. and around the world. Within the U.S., California has several metropolitan areas that are among the leaders as the race commences including Oakland, San Francisco, San Jose, Los Angeles, Orange County, and San Diego. The East Coast has Boston, Philadelphia, Washington, D.C., and Raleigh-Durham among the leading aspirants. Seattle and Austin appear to be two other top geographic contenders.”
Academic research related to medicine is a fundamental underpinning of the growing life sciences cluster of the economy. Relying on research done by Milken on the factors which shape growth of the biotechnology and life sciences industries, TXP estimates that increasing the presence of academic medicine in Central Texas could accelerate additional economic development in the life sciences at the rate of $340 million in new annual activity and about 2,100 new permanent jobs.
The combination of the new facility and economic development in the life sciences ultimately would yield just under a billion dollars in direct economic activity, over half a billion in earnings, and approximately 7,000 permanent jobs. When the ripple effects are considered, these figures rise to just under $2 billion in economic activity, $900 million in earnings, and approximately 15,400 permanent jobs that can be attributed to the influence of local academic medicine. This exceeds the total impact of all corporate relocations and expansions in Austin during 2010. Clearly, growing academic medicine is a significant step in realizing the region’s medical and life sciences economic development potential.
The Perryman Group also analyzed the economic benefits of medical education in 2008. You can find that study here.