Thursday, November 29, 2012

Study looks at hospitals’ economic impacts

By Barry Eberling November 29, 2012
FAIRFIELD — Solano County’s five privately operated hospitals support or generate more than 11 percent of the county economy, according to a new report.

“We don’t often think of hospitals as economic engines,” Rebecca Rozen of the Hospital Council of Northern and Central California said at Wednesday’s Solano Economic Development Corp. breakfast.

The report by Robert Eyler of Economic Forensics and Analytics argues that local hospitals are indeed big economic players. Eyler presented the results to about 125 people who attended the meeting at the Hilton Garden Inn.

Eyler talked about effects that local hospitals have that go beyond their own 4,085 employees and daily services. These ripple effects extend into such areas as hospital workers supporting local restaurants and hospitals buying supplies.

“Very little of economic life in Solano County goes untouched by hospitals,” his report said.

Putting everything together, Eyler found that local hospitals support and generate $1.25 billion in annual business revenue, about 7,830 jobs and $64 million in state and local tax revenue.

Eyler looked at NorthBay Healthcare’s NorthBay Medical Center in Fairfield and VacaValley Hospital in Vacaville, Kaiser Permanente’s Vallejo and Vacaville hospitals and Sutter Solano’s Vallejo hospital. He did not include David Grant Medical Center at Travis Air Force Base.

He also explored the effects of hospital capital projects. Every $50 million that hospitals spend on construction and expansion generates another $24.5 million in business revenues, 250 jobs during construction and $2.27 million in local and state taxes, he said.

NorthBay Healthcare has three capital projects planned over the next four years, with more than $100 million in construction, NorthBay Healthcare President Gary Passama said.

NorthBay Heathcare has announced plans to build what it calls a “health village” with a cancer center and medical fitness center at its VacaValley hospital. It plans to construct a second building at its Administrative Center on Business Center Drive in Fairfield. It plans to do construction work at NorthBay Medical Center.

Eyler said that construction itself is only part of the economic impact of hospital capital projects. The subsequent growth in hospital services when the project is finished creates new business revenue, jobs and wages, which in turn have a ripple effect on the county’s economy.

The study is more than a snapshot in time, Eyler said. Data can be used to determine what assets are needed in the community to support hospital growth, so hospitals don’t have to spend money in other counties.

“The bane of economic development is leakage,” Eyler said.

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