A new report from the American Hospital Association highlights just how much hospitals are driving their local economies, as well the national one, with data showing hospitals directly employ nearly 6 million people and purchase more than $900 billion worth of goods and services from other businesses.
But that's not all. Enter the ripple effect. The goods and services hospitals buy drive economic vitality throughout their communities, with each hospital job supporting roughly two additional jobs in the community. Every dollar a hospital spends yields roughly $2.30 of additional business activity.
When you incorporate that ripple effects into calculations, the AHA reported hospitals actually support 16.5 million jobs nationwide and almost $3 trillion in economic activity.
"In 2016, America's hospitals treated 143 million people in their emergency departments, provided 605 million outpatient visits, performed over 27 million surgeries and delivered nearly 4 million babies. Every year, hospitals provide vital health care services like these to hundreds of millions of people in thousands of communities. However, the importance of hospitals to their communities extends far beyond health care," the AHA said.
When it comes to states whose hospitals send the most money into their economies, it's no surprise that California is the top spender, with $103 billion in total expenditures. Factor in that ripple effect and the Golden State's total economic output from its hospitals more than doubles to $230 billion.
New York, Texas, Florida and Pennsylvania rounded out the top five states that are most impacted by hospital expenditures, the report said.
When it comes to a hospitals impact on the state's labor force, it's not just about who creates the most. Maine is actually the state most impacted by hospital job creation with a total of 38,105 hospital jobs. That hospital workforce makes up a little more than 14 percent of the states overall workforce. Ohio was the second most impacted state, with 298,371 hospital jobs that constitute just almost 13 percent of the state's workforce.
Minnesota, West Virginia and Massachusetts rounded out the other top five states whose workforce is impacted by hospital jobs. Minnesota's hospital workforce constitutes a little more than 12 percent of the overall state force, West Virginia's hospital workforce was nearly 11.7 percent and Massachusetts was almost the same with 11.6 percent.
As both healthcare and economic cornerstones of their communities, the pressure is greater for hospitals leaders to find new ways to add value, maintain financial margins and keep doors open. That is one of the drivers behind the rash of merger and acquisition activity. With ever-increasing regulatory burdens that require more manpower or physician's time to manage, coupled with the need to make much needed updates in technology, modernize facilities to meet current trends or just maintain appropriate levels of care and accommodation for patients, not to mention staying competitive for hospitals in areas where other systems want to dip into their patient volumes, hospital leaders are eyeing mergers as a means of keeping doors open so they can continue to support their communities both clinically and economically.