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Georgia Hospitals Worth More than $38 Billion to State's Economy

Georgia Hospitals Worth More than $38 Billion to State's Economy 

ATLANTA (May 21, 2012) – During a time when Georgia's economy continued to suffer, a new report shows that in 2010, Georgia hospitals provided the state a much-needed $38 billion economic boost.  The report, commissioned by the Georgia Hospital Association (GHA), the state's largest hospital trade association, also showed that with the state's unemployment rate hovering around 10 percent at that time, hospitals accounted for more than 337,000 full-time jobs. 

“Georgia hospitals are known as the guardians of health care in our communities but they are also essential in helping protect the economic health of their communities,” said Georgia Hospital Association President Joseph Parker. “We're proud of the fact that even in the worst economic times, the Georgia hospital community has stood tall and continued to served as a key economic engine and resource for jobs.” 

Contrary to popular belief, however, hospitals are not immune to the economic downturn. The report shows that in 2010, Georgia hospitals provided more than $1.5 billion in uncompensated care, an increase of nearly $46 million from 2009 and a massive

$162 million jump from 2007.  This was primarily due to the state's unemployment rate climbing into double digits, leaving hundreds of thousands of Georgia families without any health care insurance and forcing them out of primary care settings and into hospital emergency rooms.

“It's a huge concern because these numbers are growing exponentially every year with no relief in sight,” said Parker.  “There aren't many businesses and industries that can absorb those kind of losses and still keep their doors open.  Hospitals have become experts in doing more with less.”

In 2010, more than half of Georgia hospitals lost money from the patient care they provided while more than a third of hospitals — exactly 34 percent — operated with a negative total margin. The growing uncompensated care burden, coupled with years of federal and state cuts to Medicare and Medicaid, has many hospital executives throughout the state concerned about the future. To make matters worse, President Obama's recent 2013 budget proposal called for cuts in Medicare of $268 billion and Medicaid by $52 billion over 10 years.

On average, services to Medicare and Medicaid recipients account for 55 percent of hospital revenues.  In the 2010 national health care reform legislation, Medicare payments to hospitals were reduced $155 billion over 10 years with the promise that

32 million currently uninsured Americans would be provided health care coverage under the new law. 

“During a time when the nation's Baby Boomers are beginning to flood the nation's Medicare rolls, the federal government must not back away from its commitment to provide adequate health care coverage for this vulnerable population,” said Parker.  “When you cut payments to Medicare and Medicaid, you not only threaten the ability of hospitals to meet the health care needs of their communities, you also threaten thousands of good-paying jobs in our communities.”

The report shows that the mere presence of a hospital is a major source of jobs in any given community.  As the state's unemployment rate continued to exceed the national average, the Georgia hospital workforce accounted for nearly 157,000 full and part-time jobs in 2010, an increase of 12,000 jobs from 2009.  When an economic multiplier is applied to this number, it reveals that hospitals sustained over 337,000 full time jobs in Georgia. The 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 one industry on the “circular flow” of spending within an economy as a whole.

“When you take a hospital out of a community, you not only lose those valuable jobs and the ability to attract other industries to your area, you create a negative ripple effect that is so destructive to so many other existing businesses in the community and region, ” Parker added.  

The hospital economic impact report also measures hospitals' direct economic contributions to Georgia's working families. Using a household earnings multiplier, the study determines that hospitals generate more than $15 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.