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January 16, 2019

Report: CT hospitals, health systems generate $27B for economy

Photo | Contributed Students participating in a nurse training program at Hartford HealthCare.
By Matt Pilon

A new industry-backed report says Connecticut’s hospitals and health systems generate $27.7 billion for the state’s economy.

The 2019 Economic Impact Report by the Connecticut Hospital Association (CHA), which has released similar annual studies dating back about a decade, says hospitals and health systems directly spend a total of $13.8 billion on employee payroll ($7.6 billion), goods and services ($5.4 billion), and capital projects ($840 million).

While the economic impact is flat from last year’s report, it’s been mostly rising over the years. In 2011, CHA identified a total economic impact of $17.6 billion.

Much of the data used in the latest report is from hospitals’ audited financial statements from fiscal year 2017

The report applies economic multipliers to determine the ripple effects of direct spending on the rest of the state’s economy, reaching the total number of $27.7 billion.

That methodology is from the  U.S. Bureau of Economic Analysis’ “RIMS II” system -- which is  one of several popular models for calculating economic impact.

Connecticut hospitals and their related entities employ 103,000 people, with multiplier effects increasing that number to 204,000, CHA said.

Direct employment is down from 104,000 in last year’s hospital association report, but up from 100,000 in its 2017 report.

Meanwhile, emergency rooms have been treating between 1.5 million and 1.6 million patients for the past several years.

Released simultaneously with its economic report, CHA issued its latest report on community benefits provided by hospitals, which analyzes 2017 data.

That report says hospitals provided more than 12.4 million services to individuals and families at a total cost of $1.7 billion, much of it comprised of unpaid costs of treating Medicare and Medicaid recipients.

According to CHA, community benefits in 2017 included the following:

  •  $763 million for unpaid Medicare
  • $679 million for unpaid Medicaid
  • $196 million for uncompensated care
  • $26 million for community services to spur health communities
  • $12 million for research and other programs to advance healthcare
  • $7 million for community building
  • $7 million for subsidized health services to underserved populations

The reports come at the outset of the legislative session in Hartford.

Hospitals and state lawmakers reached a deal in late 2017 on the state’s controversial provider tax, which is expected to increase federal funding for the state and lessen the tax burden on hospitals.

The CHA says one of its priorities for the session is to protect that agreement, and to “settle past disputes.”

The majority of the state’s hospitals are challenging the provider tax structure in court. The lawsuit, filed in 2016, could cost the state $4 billion if its loses the case, according to former state budget chief Ben Barnes, CT News Junkie reported.

View CHA’s economic report here and the community benefit report here

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