When most people think of economic development, they think of the large industrial plant moving to town or the Fortune 500 company bringing a few hundred new jobs to the area. But in many communities throughout Georgia, the biggest and most reliable source of economic development and stability is the place that many take for granted: your community hospital.
Georgia hospitals generated more than $38.6 billion to their local and state economies in 2011 and accounted for almost 7 percent of the state’s entire gross domestic product in 2010. Additionally, more than 124,000 people are directly employed by a Georgia hospital or health system, and these institutions also indirectly generate another 283,000 jobs in Georgia as hospitals purchase a wide array of goods and services from other businesses as they provide optimal care for patients.
To put that into perspective, Georgia’s hospitals employ more people in our state alone than Coca-Cola Enterprises does in all of North America (roughly 75,000 people) and more than Delta Air Lines has worldwide (80,000 people). These important, mission-driven hospital jobs impact all areas of the state, including the large urban centers from Atlanta to Savannah and Columbus to Augusta and the many rural towns from Bainbridge to Royston and Cedartown to Waycross.
In short, Georgia hospitals not only save lives and serve the health care needs of their communities, but also put food on the table and a roof over the heads of hundreds of thousands of Georgia families.
Yet the future of the industry and its continued economic viability is not necessarily secure. Earlier this year, three of Georgia’s hospitals were forced to close due to severe financial difficulties: Calhoun Memorial Hospital in Arlington (worth $12.4 million per year to its local and state economy); Stewart Webster Hospital in Richland (with an annual economic impact of $11.2 million); and Charlton Memorial Hospital in Folkston (worth $18.4 million to its local and state economy in 2010). How do these small communities, which also lost a combined 305 jobs, recover from such a loss? How do they attract new business to those areas when there is no nearby place to deliver a baby or receive life-saving care during a medical emergency?
Unfortunately, these aren’t the only Georgia communities facing uncertainty when it comes to access to health care, as well as critical economic growth. According to the most recent Georgia Department of Community Health Hospital Financial Survey, 38 percent of all hospitals in the state had a negative operating margin in 2011. Among Georgia’s rural hospitals, 55 percent lost money.
The presumption is that, because people will always need medical care, hospitals and other health care providers are recession-proof. That couldn’t be further from the truth. Since the nation’s economy plummeted in 2008, the number of uninsured/underinsured people that Georgia hospitals treat has skyrocketed (nearly 20 percent of Georgians are currently uninsured). At the same time, budget-crunched state and federal governments have cut Medicare/Medicaid payments to hospitals.
In 2011, Georgia provided $1.57 billion in uncompensated care, a massive increase of approximately $270 million in only four years. Add that to the $4.5 billion in Medicare cuts that Georgia hospitals will absorb over a 10-year period under national health care reform, and you have many communities in Georgia fearful that their hospitals will be next on the endangered list.
When it comes to advocacy initiatives like opposing payment cuts to hospitals that treat Medicaid recipients or attempts to weaken the state’s Certificate of Need (CON) program, the Georgia Hospital Association is fighting not only to preserve access to vital health care services, but also to protect thousands of jobs in communities throughout the state. We know that your hospital, like your local school and the public utility system, is an indispensable part of your community infrastructure.
At GHA, we take hospital closures personally and focus on your hospital’s well-being. Our annual hospital economic impact study serves as a reminder of the importance of your hospital to the community, which stretches far beyond providing health care services. After more than five long years, it appears that Georgia is finally on the path to economic recovery.
But if we’re to experience true prosperity again, we must ensure that your hospitals are strong and able to serve not only as the guardians of health, but also as one of your area’s most important economic engines.
*Information based on the most recent available hospital data reported on the annual Georgia Department of Community Health Hospital Financial Survey and on Medicare Cost Reports in accordance with a methodology established by an original study from Georgia State University commissioned by the Georgia Hospital Association.
Earl Rogers is president of the Georgia Hospital Association.