Report shows health care's $31B impact on state 

Dec 14

December 14, 2013 8:25 pm • Vanessa Renderman

Indiana hospitals and outpatient medical centers have a $31.3 billion economic impact, according to a report that examines the financial role of health care facilities in the state.

Local hospital executives are not surprised by the finding, but some say the figure does not fully measure the role of a hospital in a community.

Franciscan Alliance Northern Indiana Region CEO Gene Diamond described the report as interesting and informative.

"But, if anything, I think it underestimates the economic impact of hospitals," Diamond said. "Hospitals, by engaging in their mission work, particularly in working with their local communities on preventive care and wellness initiatives, have an impact that is significant, beyond what is recorded in reports of this kind."

The report, released in October, references charitable care, showing the cost to deliver that care represents an average 5 percent of all hospitals' budget. In 2011, $607 million in charitable care was delivered by all hospitals in Indiana, according to the report.

Porter Health Care System CEO Jonathan Nalli said the most significant impact the health system offers is being an asset to the community through the services it provides, which enhances the good health and wellness of families in Northwest Indiana.

"Our contributions and dedication to the good health of our community directly impacts the good health of our economy," he said.

Battelle Technology Partnership Practice prepared "The Economic Impacts of Indiana's Public and Private Hospitals and Outpatient Care Centers" for BioCrossroads, the state's life sciences initiative.

The $31.3 billion economic impact figure is comprised of $18.3 billion in direct expenditures within the sector and another $13 billion in indirect and induced spending in the Indiana economy, according to the findings.

"This leads to an output multiplier of 1.71, meaning for every $1 of direct hospital and outpatient medical center expenditures, an additional 71 cents is generated in the state economy," the report states.

The direct effects, indirect effects and induced effects add up to the total impact.

Health care systems employ more than 150,000 Hoosiers, with nearly 15,200 of those in the Gary metropolitan region, according to the report.

Matt Doyle, chief financial officer for Methodist Hospitals, said the report's $31 billion figure is not surprising, because health care is a large employment sector.

"Methodist is the 13th largest employer in Northwest Indiana, and our total economic impact on the regional economy is estimated at around $123 million," he said.

In Porter County, Porter Health Care System is one of the largest employers, providing jobs and creating jobs by buying goods and services from other businesses, Nalli said.

The impact is multiplied by the housing needs and retail sales generated by associates. Porter also offers technology and medical services that attract patients, specialized vendors and contractors to the county, he said.

"Porter also helps to attract new businesses and development as companies relocating want quality health care nearby," Nalli said.

With Northwest Indiana sitting on the outskirts of Chicago, residents often seek care at major hospitals there.

The report does not measure that impact on Indiana's economy, said Simon Tripp, senior director of Battelle Technology Partnership Practice.

"But, it is not unusual for a state to see some leakage of patients who seek to access certain highly specialized care based on institutional reputation," he said.

Battelle has not done an impact study of all hospitals or health systems in an entire state before, so there is no state-by-state comparative data, Tripp said.

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