Thursday, November 29, 2012

Study: Solano County hospitals a major driver of local economy

FAIRFIELD — The five privately operated hospitals in Solano County make up more than 11 percent of the local economy, making health care a key driver that could be even more important in the future, according to a new study that details the economic impact of Solano County’s hospitals.

“Hospitals are an economic engine for the community,” said Robert Eyler, Ph.D., an economics professor at Sonoma State University and lead author of the report, which was commissioned by the Hospital Council of Northern and Central California ( Dr. Eyler is also principal of Economic Forensics and Analytics, which conducted the study. “They generate support for education, jobs and businesses, all the while continuing their critical mission of providing health care services locally.”

Dr. Eyler presented the findings today at a Solano Economic Development Corporation ( breakfast meeting at Hilton Garden Inn in Fairfield.

Hospitals included in the study were Sutter Solano Medical Center in Vallejo, Kaiser Permanente Medical Centers in Vallejo and Vacaville, NorthBay Medical Center in Fairfield and NorthBay VacaValley Hospital in Vacaville.

The study found that as of January those hospitals employed approximately 4,085, slightly more than 2 percent of total payroll jobs in the county. They also pay nearly $319 million per year in wages.
Additionally, the number of workers has grown since 2001 and likely will continue to grow as hospitals add new services, expand or build new facilities. And annual revenue from hospitals represents more than 7 percent of total revenue generated by all Solano County businesses, according to the study.

The wider economic impact of hospitals in the last four years includes:
  • More than $1.25 billion in business revenue.
  • More than 7,800 jobs in hospitals and outside those health care systems.
  • More than $64 million in state and local tax revenue.
“Because of their links to education and their demand for skilled workers and medical professionals across multiple job classifications, hospitals heighten their economic impact by paying good wages and salaries and purchasing supplies,” the study said.

Having a trio of robust health care systems in the county — Sacramento-based Sutter Health, Oakland-based Kaiser Permanente and Fairfield-based NorthBay — prevents precious payroll and the purchase of goods and services from escaping Solano County, according to the report. Otherwise, “economic leakage can occur when hospitals spend on goods and labor outside the local market.”
“They provide services locally, rather than allowing adjacent counties to garner these patients or clients and thereby take income away from Solano County,” the report said.

If local policymakers and developers can continue to attract, retain and expand businesses that help support the growth of hospital services, the local financial and social impact of Solano’s hospitals would increase, according to Dr. Eyler.

The likelihood of those hospitals expanding operations within the county can help propel the county out of lingering economic doldrums, according to the report. Hospital construction could help expand the “financial dimensions throughout the county economy.”

Every $50 million spent annually on hospital improvements or new construction contributes:
  • An additional $24.5 million bump in business revenue in the community.
  • More than 250 new jobs while the project is taking place, including construction jobs to support an industry otherwise hurt by the slow economic recovery.
  • Creation of more than $2.27 million in state and local tax revenue.
The complete study, “Economic Impact Report for Solano County Hospitals,” is posted on the websites of the Hospital Council of Northern and Central California and the Solano Economic Development Corp.