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Health sector expenditures boost local economy, ASU study finds


March 02, 2007

A study just completed by faculty in the School of Health Policy and Management at ASU's W. P. Carey School of Business shows that health sector expenditures contribute to local economies.

The study, “Health Care Delivery as a Community Asset,” considers the economic impact of ambulatory health care delivery on local economies by assessing the impacts of the industry's employment, purchases within the community, and consumer spending by industry employees.

Eugene S. Schneller, professor of health sector supply chain initiatives at the W. P. Carey School , and co-author of the study, says that society tends to regard increased health care expenditures negatively, as a drain on the economy.

Schneller says that health spending is an important generator of economic benefits across the nation. This study, one of several the health management and policy group is conducting for the Arizona Health Care Cost Containment System (AHCCCS), highlights the positive effects of the health care industry on community economic well-being and development.

The study has a special focus on community health centers (CHC) that have been targeted for growth and expansion by the Bush administration, and which provide substantial service to a growing number of uninsured patients and patients served by the AHCCCS.

Estimates from the study indicate that the operations of community health centers have an impact on the Arizona gross state product totaling $118 million per year. CHC payrolls account for 53 percent of that total, and roughly 15 percent of the total is from income generated by CHCs' purchase of materials, supplies and services from other Arizona businesses. Twenty-eight percent of the $118 million can be traced to consumer spending by households whose incomes are affected by CHC operations, including the employees of CHCs and CHC suppliers.

Roughly 2,300 Arizona jobs and $88 million in employee compensation result directly or indirectly from CHC operations. The 80,000-plus ambulatory care center workers in Arizona have an average salary of more than $39,000.

The study asserts that the economic impact of CHCs could be even larger if there were greater integration with local health care service providers, including physician groups, private clinics, and hospitals, and if the CHCs offered additional services that usually are outsourced, such as diagnostic and laboratory services.

“Economic growth among CHCs will be dependent upon their ability to attract and retain patients who value CHCs for the quality and range of services they provide,” says study co-author Marjorie Baldwin, director of the School of Health Management and Policy at the W. P. Carey School of Business. “This will become more important as more choices become available to patients.”