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Nov. 3, 2011 Volume 33, No. 11

MU study shows economic boon from Missouri hospitals


Hospital sector ‘virtually recession proof’

While Missouri hospitals provide healthcare and well being to Missourians and residents of surrounding states, new research from the University of Missouri shows that those hospitals also provide key support to the state’s economic structure.

Tom Johnson, the Frank Miller professor of agricultural and applied economics in the College of Agriculture, Food, and Natural Resources (CAFNR) and professor in the Truman School of Public Affairs, found Missouri hospitals directly account for nearly six percent of the state’s economy and another four percent to five percent indirectly.

Johnson’s study analyzed patient, expenditure, revenue and staffing data presented by the Missouri Hospital Association (MHA) for every hospital in the state of Missouri. He found that Missouri hospitals are responsible for creating more than 265,000 jobs in the state and increasing gross state product by $18.8 billion.

Johnson also found the construction projects from Missouri hospitals’ capital expenses created an additional 21,000 jobs and generated another $1.2 billion increase in gross state product.

“The health care and social assistance sector, of which hospitals are a major component, is the fourth largest sector in the Missouri economy,” Johnson, who is also the director of the Community Policy Analysis Center at the University of Missouri, said. “This sector accounted for nearly 11 percent of Missouri’s jobs in 2009.”

Johnson’s study revealed that Missouri hospitals bring in much revenue through “medical tourism,” which is when non-Missouri residents come to a Missouri hospital for medical treatment. Medical tourism accounted for approximately 850,000 out-of-state patients.

Johnson found these patients created an additional 3,000 jobs and $124 million in gross state product for Missouri. Johnson says these numbers show how important Missouri hospitals are to the state economy, especially in the current economic climate.

“We found that the hospital sector is virtually recession-proof,” Johnson said. “The state’s hospitals continue to provide employment, income, retail sales and state and local tax revenues while other sectors of the economy have faltered. The overall state economy, unemployment rate and home values would be significantly more depressed if it were not for the strength and stability of the hospital sector.”

Johnson also explained that rural areas of the state receive even more positive economic effects from Missouri hospitals due to the nature of the jobs they create.

“The hospital sector is spread across the state to meet the medical needs of the state’s residents,” Johnson said. “Hospitals provide good paying, steady jobs and are a bigger relative presence in rural areas than most sectors.”

The study was funded by the Missouri Hospital Association.