August 20, 2014

Kansas hospitals and health care systems help boost state economy

As the fifth largest producer of total income and sales in the state, the Kansas health sector is a powerful economic force. The contributions of the health care systems to the state’s economy are often overlooked, including the number of people employed, the impact of hospital and health system purchases and the impact of employees’ spending and tax payments.
A January 2013 report entitled The Importance of the Health Care Sector to the Kansas Economy, produced by researchers at the Office of Local Government, K-State Research and Extension, estimated the “gross” impacts associated with the health care sector on economic activity in the State of Kansas. The report identified three general areas of health care’s importance to the state’s economy: 1) health care attracts and retains business and industry; 2) health care attracts and retains retirees; and 3) health care creates jobs in the local economy.
“Hospitals and health services truly represent an economic anchor in our state,” said Tom Bell, president and CEO of the Kansas Hospital Association. “This report documents the relative importance of the health care sector to the Kansas economy. While the estimates of economic impact are substantial, they are only a partial accounting of the benefits that health care in general, and community hospitals in particular, provide to the state. Kansas community hospitals help to not only stabilize the population base, but also invigorate their communities and contribute significantly to the quality of life.”
According to the report, Kansas hospitals employ 81,931 people or 4.4 percent of all job holders in the state. This is a one percent increase over last year’s findings. The report calculated economic multipliers and estimated that hospitals account for another 61,855 jobs throughout all businesses and industries in the state. Thus, the hospital sector employment had a total impact on state employment of 143,786 jobs. This means that for each job created in the hospital sector, another 0.75 jobs were supported in other business and industries in Kansas.
Furthermore, the entire health sector in Kansas employs 226,333 people or 12.0 percent of all job holders in the state. This puts Kansas ahead of the national average of 10.1 percent of all job holders in the United States working in health care services. The total employment impact of the health services sector in Kansas resulted in an estimated 358,025 jobs in the Kansas economy. The health care sector is the fourth largest aggregate employer in the state.
The study found that Kansas hospitals generate approximately 4.9 billion in direct labor income to the Kansas economy each year. For every one dollar of income generated in the hospital sector, another $0.48 was generated in other business and industry. Thus, the hospital sector had an estimated total impact on income throughout all business and industry of nearly $7.2 billion.
Funds spent to buy goods and services flow from hospitals to businesses and then ripple throughout the economy. The impact of hospitals on area retail sales generates more than $2.2 billion to the Kansas economy each year. Additionally, it is estimated that the hospital sector generates more than $142 million in sales tax for the state, which is largely used to fund state programs.
“While these raw numbers indicate the importance of community hospitals and health services to the Kansas economy, they also make it clear that the challenges faced by our state cannot be met by those directly responsible for health care administration alone,” said Bell. “These challenges require a community-wide response involving government, business and civic leaders. They also require supportive state- and federal-level policies and programs that don’t take for granted the access to care provided by the community hospital.”

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