Health Care Economic Impact Huge

June 11, 2004
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Newly released data shows health care as the leading employer in Michigan, directly generating more than 424,500 jobs and creating an overall annual economic impact of $25.4 billion.

In terms of employment, Kent County ranks third in the state with 31,701 direct jobs that generate wages and benefits of $1.3 billion, according to a study released this month by a trio of health-care organizations.

Ottawa County ranks 10th in the state with 7,883 jobs and $263 million in annual compensation.

The study, from The Partnership for Michigan’s Health, provides a view of the size of the health-care industry in Michigan and its economic impact.

Directly responsible for eight out of every 100 jobs in the state that provide a collective $17.7 billion in annual compensation, health care ranks as Michigan’s largest single employer, exceeding agriculture, tourism and automotive manufacturing, according to the study.

When indirect employment and jobs induced through the ripple effects and spin-off economic activity are figured into the equation, health care’s economic impact in Michigan is estimated at $25.4 billion and employment at more than 658,000 jobs, the study states.

“The health-care services and programs we deliver to patients are clearly our most important functions. That we are among Michigan’s largest and most important employers is less often recognized,” said Spencer Johnson, president of the Michigan Health & Hospital Association.

The MHHA is comprised of The Partnership for Michigan’s Health with the Michigan State Medical Society and the Michigan Osteopathic Association. Researchers from the Minnesota-based IMPLAN Group Inc. analyzed data from the U.S. Census Bureau, U.S. Bureau of Economic Analysis and U.S. Bureau of Labor to reach their findings.

The Partnership for Michigan’s Health sought to gauge the economic impact of health care in order to create greater public awareness of the industry’s role in driving the state’s economy and to counter negative perceptions about health-care costs stemming from escalating health premiums of recent years. By building that awareness, the group hopes to ultimately better position the health-care industry on public policy issues such as the chronic underfunding of Medicaid, which now has 1.3 million recipients in Michigan and is underfunded by nearly $1 billion annually.

“The idea is to show that health care isn’t just a cost factor. It’s an economic engine,” said David Fox, director of public relations for the Michigan State Medical Society.

“For a lot of folks, their livelihood depends on health care,” Fox said. “Some of those dollars circulate through the community and drive all of the local economies.”

And unlike manufacturing, the study states, health-care jobs are more stable and not as susceptible to economic cycles, nor are they as easily shipped overseas to cheap labor markets, although concerns are brewing about some positions such as medical transcriptionists and professionals who read medical images such as CT or MRI scans.

“Health-care jobs tend to stay in Michigan,” the study states, “providing economic strength and certainty to hundreds of local communities during economic downturns. Relatively strong job growth and demand continues in Michigan’s health-care sector, securing its place as a future major employer across the state.”

In the Grand Rapids area, Spectrum Health is the largest employer, with a work force that now totals more than 14,000 — plus 1,600 physicians — and is growing.

Spectrum Health in the last four months alone has hired 220 new nurses as it prepares to open a new heart hospital. From April 2001 to March 2004, Spectrum Health hired 1,000 new people and expects to hire 1,000 more in the next 18 months, according to the health system’s recent annual report.

Despite its size and economic impact, the health-care industry’s role as a driver of economic growth is tempered somewhat by the lack of income it imports into Michigan, said economist George Erickcek of the Upjohn Institute for Employment Research in Kalamazoo.

Growth in the industry is reflective of the growing and aging population that generates greater demand for services, Erickcek said. With the exception of specialty medical services and procedures that some providers offer, and in contrast to other industries such as manufacturing and tourism, health care generates little in the way of new money flowing into the state from outside of Michigan, he said.

“It doesn’t really bring ‘new’ jobs into the area,” Erickcek said. “Economic development is actively trying to bring new money into the local area and the state. The traditional way of doing that is to try to sell products outside of the state.”

Still, he said, the health-care industry’s growth has provided new, well-paying jobs at a time when the state is losing manufacturing jobs.

“It is a growing field,” Erickcek said.

The Partnership for Michigan’s Health also argues that the industry helps the state’s economy indirectly by helping attract business investments. Major employers from other economic sectors will not locate in communities that lack strong health-care systems and infrastructures, the study states.

“Quality, accessible health care is a key to attracting and retaining skilled workers and to maintaining Michigan’s reputation as an excellent place to do business,” said John MacKeigan, M.D., of Grand Rapids, the president of the Michigan State Medical Society.

The study, titled “The Economic Impact of Health Care in Michigan,” is available online at www.economicimpact.org.               

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