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Heavyweights in Health: Missouri’s health systems account for 10% of gross state product

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Whether it’s through jobs, medical tourism or gross state product, hospitals make a major impact on the Springfield-area and statewide economy.

A report compiled by David Mitchell, a Missouri State University economics professor, studied data from 143 hospitals across Missouri to determine the industry’s economic impact.

Mitchell said the most startling fact from the report, “An Analysis of the Economic Impact of Missouri Hospitals,” which was released by the Missouri Hospital Association in May, is how the GSP, or a measurement of a state’s output, is highly impacted by hospitals.

“You have hospitals here contributing roughly 10% of the state GSP,” he said. “The job numbers are large and so are the wages, but the interesting part is that so much comes just from hospitals.”

According to the report, $26 billion in GSP and nearly 310,000 jobs are directly and indirectly the result of hospital operations in the state. Directly, out of the 143 hospitals in Missouri, there are 155,346 employees and payroll from Missouri hospitals reach $8.4 billion, plus $2.1 billion in benefits offered.

Brent Hubbard, president and chief operating officer of Mercy Hospital Springfield, said he considers employee salaries and benefits the greatest impact Mercy has on the community.

“Our payroll is about $780 million annually,” he said. “That’s a significant impact on Springfield and the surrounding areas, as we employ more than 12,000 co-workers, physicians and midlevel providers throughout southwest Missouri.”

According to the MHA report, since 1990, health care related employment has doubled. Out of the 559,000 jobs the Bureau of Labor Statistics said was created in Missouri over the past three decades, 212,000, or over one third, are in the health care sector. Put into context of other industries, manufacturing jobs have shrunk by one third in the same time.

As of 2018, Mercy Springfield Communities was the top employer in the area, with CoxHealth at a close second. Both Mercy and CoxHealth each have about 12,000 employees, which varies throughout the year. The next largest Springfield-area hospital is Citizens Memorial Hospital in Bolivar, with over 1,300 employees, according to Springfield Business Journal list research.

“It is related to the demand,” CoxHealth President and CEO Steve Edwards said of the sector’s employment growth. “We know that once we hit 65, we use three to five times more health care.”

The need doesn’t appear to be slowing. For the next decade, 10,000 baby boomers will turn 65 years old every day, according to the Pew Research Center.

Costs and concerns
Mercy recently announced a restructuring of company operations, which includes layoffs, citing smaller Medicaid and Medicare reimbursements.

The MHA report indicates half of all net patient revenue for Missouri hospitals in 2017 came from those two federal programs combined; Medicare repayments represented 35% of the sum.

“It’s an interesting phenomenon, or a perfect storm,” said researcher Mitchell. “You have more and more people collecting money from Medicare, needing health care, but there’s fewer people that are actually going to be there to pay the bills.”

Comparatively, other net patient revenue sources the same year were insurance, at 45%; self-pay, 4%; and other government payment, 1%.

Hubbard said the numbers just mean hospitals have to be adaptable.

“It’s about being able to be nimble and adjust our cost structure along the way, while providing top-notch care and quality,” he said. “It is imperative as we move forward in health care.”

Mitchell said health care costs will continue to be a problem in the years to come, as the research in the report found chronic diseases are becoming more common, putting a larger strain on hospitals.

“Diseases like diabetes are becoming more and more prevalent,” he said. “But we’re curing more and more diseases, and people are staying alive longer. You can see where health care is going to become more and more expensive in the future. It depends on how much people are wanting to pay for it. If people aren’t willing to pay for it, we will have hospitals shutting down.”

However, he noted with advances in health care, an increase in medical jobs likely will continue.

“I don’t think there will be a decreased need for health care in our children’s lifetime,” he said. “If they wanted to become a doctor or a nurse, there’s going to be plenty of work for them.”

According to The American Nurses Association, there will be more registered nurse jobs available through 2022 than any other profession nationwide. The BLS projects 1.1 million additional nurses are needed to avoid a further shortage.

More than health care
Even as cost, revenue and employment structures change, the GSP data from 1997 through 2019, shows the hospital industry did not slip during times of recession. It goes so far to call health care a “recession proof industry,” in regard to output and employment.

The report, which is produced at least every three years, also showed hospitals have a major economic impact on employment in other nonhospital industries, with the top being real estate. Local hospital officials also cited medical tourism for bringing patients outside of the region to the Springfield for care.

Hubbard said Mercy is an approved hospital through retailers Lowe’s and Walmart for employees needing certain procedures. According to past SBJ reporting, Mercy has held the medical destination program for the past seven years.

Edwards said CoxHealth is a major driver for bringing in more patients to Greene County, as two thirds of the health system’s business comes from outside the county.

According to the MHA report, over 10% of inpatient discharges in Missouri were from patients who resided out-of-state. Additionally, 7% of outpatient discharges were because of medical tourism.

Health care in Missouri also brings an increase in tax revenue. In the MHA report findings, hospital economic activities produced nearly $1.6 billion in tax for state and local governments and $4.1 billion in federal taxes.

Mitchell contends the trends identified in his research will continue for the next 30-60 years.

“One in three people have a chronic health condition,” he said. “I think these things are going to continue to drive these changes in health care. That’s why I think we’ve seen such an increase in the past 20 to 30 years.”

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