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Tennessee hospitals generate more than $18 billion for state economy

New data from states including Tennessee and Connecticut highlight the importance of helping sustain community well being.

Jeff Lagasse, Associate Editor

University of Tennessee Medical Center. Credit: Google Street ViewUniversity of Tennessee Medical Center. Credit: Google Street View

Hospitals in Tennessee contribute significantly to the state's economy, according to an economic report released by the Tennessee Hospital Association. The financial impact of healthcare industry employment in 2015, the most recent year for which data is available, was $18.3 billion, and hospital employment made up $6 billion. 

THA's report follows the Connecticut Hospital Association saying this spring that the state's hospitals accounted for $27.7 billion in its economy, employed some 104,000 people in the state and healthcare otherwise helped to support an additional 103,000 non-hospital jobs.  

Taken together, the reports suggest two things hospital executives in all U.S. states might well consider: Their organizations have a broad economic impact and, in turn, their own strength relies to a certain extent on the well-being of a region or community.

Healthcare employees in Tennessee, Connecticut and elsewhere, for instance, also have household members who are employed in the community, which in Tennessee created a ripple effect resulting in $28 billion in salaries and pay that year. That's the impact of the 586,000-plus healthcare jobs in the state, of which 180,532 are hospital-based.

Those employees are spread across the 172 hospitals that are located throughout the state.

Hospitals have been a reliable source of employment in Tennessee, with many offering a sustainable living wage and employee benefits, according to the THA. This impact is particularly significant in rural communities, where hospitals are frequently the largest employer and a major driver of economic development. With nine rural hospital closures in the state since 2012, and other facilities facing challenging futures, the importance of rural hospitals is being underscored in the wake of the report's findings.

National statistics indicate those rural hospitals may be facing an uphill battle. A recent study from Chartis Group and iVantage Health Analytics found that about 41 percent of rural hospitals faced negative operating margins in 2016. One of the key factors behind this was a high rate of uninsured patients, and a payer mix heavy on public insurers with lower claims reimbursement rates.

Tennessee's own payer mix sees about half (50.7 percent) of inpatient visits covered by Medicare, with Tenncare comprising 19.4 percent, and 19.2 percent covered by Blue Cross Blue Shield of Tennessee or other commercial carriers. For outpatient visits, the mix is 34.1 percent Medicare, 20.4 percent Tenncare and 32.3 percent commercial.

Beyond boosting the economy, the work of hospitals to care for communities is vital to the well-being of Tennesseans, the report said. In 2015, the state's hospitals treated 3.7 million people in emergency departments and provided more than 8 million outpatient visits and roughly 852,000 inpatient stays.

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