Study says hospitals help drive economic health of communities
A Harrisburg-based organization recently released results of a study it conducted on the economic impacts hospitals have on communities across Pennsylvania. And like any crackerjack photographer, Brook Ward anticipated what was coming.
“I’m not surprised by the results,” said Ward, who is more commonly recognized as president and CEO of Washington Health System. “Because of how important health care is, the economic impact on our communities is huge. We are not just taking care to keep the community as healthy as possible, but dealing with a significant pure economic impact.
“This affects how many people we can employ and what we can buy, and it has downstream effects as well. People employ people in businesses that are related to us. This is what I saw in Michigan, too.”
Those impacts are impressive, the Hospital & Healthsystem Association of Pennsylvania concluded in its research, titled “Critical to Communities: Pennsylvania Hospitals’ Economic Impact, Fiscal Year 2021.” HAP, which also developed a statewide membership services organization that serves 235 hospitals, patients and communities.
HAP found that hospitals are the largest employer in 18 of Pennsylvania’s 67 counties, including Washington and Allegheny. It also says 59 counties have at least one hospital as a top 10 employer; that among all industries, hospitals rank fifth in employment; and that hospital jobs pay, on average, about 6% more than the average for all sectors.
The organization reported that hospitals across the commonwealth provide an economic impact of $168 billion, support 590,000 jobs resulting in $38 billion in wages and benefits, and provide $866 million in uncompensated care.
Hospitals in a 10-county region of Southwestern Pennsylvania, according to HAP, have a $20 billion impact, provide 103,000 jobs and pay out $5 billion in wages. That area includes Washington, Greene, Fayette and Westmoreland continues.
Washington Hospital, according to the state Department of Labor & Industry, was Washington County’s biggest employer during the first quarter of 2022. Ward estimated that WHS has about 3,000 employees and providers at more than 40 facilities.
“We care for people in Washington and Greene counties,” he said, “but also West Virginia, eastern Ohio, and Beaver, Westmoreland and Fayette counties.”
WHS is one of four health systems operating in Washington County, along with Penn Highlands Healthcare Mon Valley, Allegheny Health Network’s Canonsburg Hospital and Advanced Surgical Hospital.
Referring to those facilities in particular, Jeff Kotula, president of the Washington County Chamber of Commerce, said he wasn’t surprised by the HAP findings either. He said in a text message: “Not only do they provide quality health care, but provide our residents with a high level of services close to home.
“In addition, the facilities are major economic generators, sustaining thousands of local jobs and supporting local businesses through vendors and other relationships.”
This study chock full of positives, however, has emerged amid a backdrop of soaring inflation, recession speculation, the Great Resignation and effects from the Russia-Ukraine War.
“This is a tough time economically for hospitals,” Ward said. “Our business is very labor intensive because the health-care profession needs people who care for others with their hearts, heads and skills. But as wages go up at a faster-than-normal rate, it’s hurting hospitals’ bottom line.
“The federal government sets the reimbursement rate, so we can’t update. We got a 2.1% increase, but that was at a time inflation was 9%.”
Penn Highlands chief operating officer Mark Norman said the government pays “us 2% a year on average, but that rise doesn’t keep up with inflation. This is having an impact at hospitals across the state and the nation.”
Norman likewise was not surprised by the HAP findings. “The impacts are large for us and across the state,” he said. “We’re looking to provide high-quality, safe care to all of our communities, while also providing real economic benefits.”
His DuBois-based system, which acquired Monongahela Valley Hospital in October 2021, has eight hospitals “in really rural markets where they are among the top two or three employers.” Highlands Hospital in Connellsville is part of the network.
Penn Highlands, which Norman says employs about 7,000, is building a ninth hospital in State College. It has more than 150 health-related facilities, including nursing and personal care homes.
He said Penn Highlands’ financial impact in fiscal year 2021 was $1.7 billion. The ripple effect included “employing people, construction projects, purchasing medical and office supplies, other equipment and furniture.”
Norman also cited a training and education program for physicians. “A big driver of our economic impact is recruitment of physicians,” he said.
Lindsay Meucci agrees that hospitals and health systems “play a pivotal role in the economic health in community, through employment and spending within the community.”
Meucci is vice president of Marketing, Communications and Advocacy for St. Clair Health. She said the Mt. Lebanon-based provider, which has three outpatient locations among its facilities, is “the largest employer in the South Hills, with 2,500 employees and 600 physicians.” (Not all physicians are full-time employees.)
“What not everyone realizes is the ripple effect we have on the economy,” Meucci said. “A lot of our employees and physicians live in the community, where their kids are going to school. They’re giving back in indirect ways.”
Meucci acknowledged that the health industry has had to deal with an uncertain economy, but is striving to serve.
“I think hospitals aren’t immune from feeling changes in the economy,” she said. “It’s more important than ever to take care of community. The pandemic enabled us to be there for the community, providing vaccination clinics and other uncompensated care.”
The Service Employees International Union, which is often involved in health care-related labor issues, also weighed in on the study.
Matthew Yarnell, president of SEIU Healthcare Pennsylvania, said in an email: “Health-care workers are some of the most dedicated and hard-working members of our society and they have a tremendously positive impact on the communities in which they live and work. But not all of those workers are treated equally or compensated fairly.
“While the HAP report correctly identifies the enormous impact hospitals and health systems have on our communities here in Pennsylvania, it misses a crucial factor that should be part of the conversation – that health-care workers who have formed a union are paid more than their non-union counterparts and have more say in their working conditions and staffing in their facilities.
“A June report by U.S. House and Senate committees noted that union workers nationwide earn more than 10% higher wages than non-union workers. And while some health systems may be creating family-sustaining jobs in the communities they serve, others are paying health-care workers poverty wages and … fighting against workers organizing.”