Thursday, June 5, 2003

Hospitals cash cows for city

Economic impact far greater than sports, zoo

By Tim Bonfield
The Cincinnati Enquirer

Many know that Greater Cincinnati's economy benefits from the tourists who come here to watch pro sports or to visit the zoo.

But who knew that medical tourists - out-of-town residents coming here for hospital care - generated more than $363 million last year for the local economy?

That figure dwarfs the estimated $75 million out-of-town fans are expected to spend this season at the new Great American Ball Park. It blows away the $19.5 million in new money brought to town by visitors to the Cincinnati Zoo & Botanical Garden.

This statistic was just one of many eyebrow-raising details from a report issued Wednesday that measures the massive economic impact of the local hospital industry.

Every year, Greater Cincinnati's 33 hospitals generate an overall economic impact of $7.5 billion and employ more than 46,000 people. And even though every hospital in the metro region is a nonprofit organization, they still generate $216 million a year in local and state income taxes, mostly from employee earnings.

The figures were compiled for the Greater Cincinnati Chamber of Commerce and the Greater Cincinnati Health Council by the University of Cincinnati Economics Center for Education & Research.

How some other economic engines compare with the hospitals:
Cincinnati-Northern Kentucky International Airport: Generated a $3.9 billion overall economic impact and 66,500 jobs, which could rise to $6.4 billion after completing a new north-south runway, according to a 1998 study.
Indiana riverboat casinos: The first five years of business at Argosy and Grand Victoria casinos combined generated about $540 million in local and state taxes and created an estimate 3,496 jobs, according to Dearborn County reports and Indiana University.
Newport Aquarium: $200 million economic impact in its first 24 months; $1 billion economic impact projected after eight years, according to the aquarium and state tourism officials.
Cincinnati Zoo & Botanical Garden: $88.4 million annual economic impact; 1,200 jobs; $2.7 million a year in local taxes; $19.5 million in out-of-town tourist spending, according to a UC study.
Great American Ball Park: A predicted 2.6 million fans will generate 3,900 jobs and an economic impact of $253 million, according to a UC study.
It was the third hospital economic impact report to be published since 1991. The UC center also produced the economic impact studies for the ball park and the zoo.

"These are huge, huge numbers," said economist George Vredeveld, director of the UC economics center. "$216 million is a lot of tax money and a lot of that goes to the city of Cincinnati. The hospital industry is a very significant part of this community and seems to be one that's underestimated."

Local governments generally don't compete for hospital jobs, and rarely pay to expand or upgrade local hospitals, even though some were built with public funds.

Politicians rarely get involved when hospitals close or shift jobs from one jurisdiction to another.

"Maybe it's because hospitals have been a part of their communities for such a long time that they seem like nothing special. After all, every community has a hospital, so we tend to underestimate the importance they have," Vredeveld said.

In business circles, the out-of-town money cited in the economic impact report has attracted attention, said Nick Vehr, vice president of economic development for the chamber of commerce.

Not only do institutions like Cincinnati Children's Hospital Medical Center and the University of Cincinnati Medical Center provide cutting-edge care to local residents, they also help put the city on the map for outsiders, Vehr said.

"It's not entertainment. It's life-saving, life-altering stuff. But at one level, it is still outside money that is being spent in the region," Vehr said.

While the report brings new focus to the economic value of hospitals, it also underscores the stakes involved when the hospital industry struggles, said Lynn Olman, president of the Greater Cincinnati Health Council.

The new report shows a 4 percent "profit" for hospitals - based on overall income exceeding overall spending. But that gain comes after years of financial losses for most of the area's biggest hospitals, Olman said.

Many hospitals still struggle to hire staff to meet the demands of an aging population and to keep up with evolving medical technology.

In fact, Wednesday's report indicates that Greater Cincinnati hospitals would hire more than 2,700 people right now - if they could find enough applicants for nursing, therapy and technician jobs.

Those open jobs are roughly equal to all the full-time jobs at Christ Hospital or all the people working at the three hospital campuses of Northern Kentucky's St. Elizabeth Medical Center, according to the health council.

Meanwhile, hospitals are gigantic purchasers of goods and services from for-profit companies.

Area hospitals spent $43.5 million last year just for information technology.

Just paying the electric bill and throwing away the trash added up to $64 million a year for hospitals.

That's more than the $58 million the Cincinnati Reds will spend on player salaries this season.


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