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DVHC of HAP: Hospitals Support 1 in 8 Jobs, Contribute $28.7B to the Economy

May 9, 2013

HospitalDelaware Valley Healthcare Council of HAP released facts showing that during 2011, hospitals and health systems in southeastern Pennsylvania supported nearly one in eight of the region’s jobs, contributed $28.7 billion to the economy, and providing more than $2.2 billion in uncompensated or subsidized health care, community improvement, medical education, and research—known collectively as community benefit.

For the first time, the council’s release of regional hospital contributions incorporates newly available Internal Revenue Service (IRS) Schedule H data about the community benefit provided by not-for-profit hospitals.

“We now have a more complete picture of the resources that hospitals dedicate to caring for all who come through their doors, to improving communities, and to developing the health care professionals and medical treatments of tomorrow,” said Curt Schroder, the council’s regional executive. Schroder noted that investor-owned hospitals also provide community benefits, but these are not publicly reported in a uniform way that could be captured for the fact sheets.

The $2.2-billion in community benefit provided in fiscal year 2011 by the region’s not-for-profit hospitals included:

More than $447 million in charity care, financial assistance, subsidies for crucial health care services, and other uncompensated care.
About $620 million in Medical Assistance and Medicare subsidies, to cover the gap between the cost of the care provided to these patients and what hospitals are reimbursed.
$54 million for community improvement.
Nearly $243 million for hospital-based education programs to train highly skilled health care professionals.
Nearly $850 million in research to cure illnesses and advance medical treatments and services.
In 2011 not-for-profit and investor-owned hospitals in southeastern Pennsylvania contributed $28.7 billion to the region’s economy. Hospitals directly employed 97,830 and indirectly supported the employment of an additional 114,150, accounting for nearly 212,000 jobs or almost 12 percent of the region’s employment. Hospitals spent nearly $13 billion on wages, services, technology, equipment, supplies, construction, and other costs of operation. This direct spending generated nearly $16 billion more in indirect economic stimulus.

Community benefit information for the fact sheets was compiled from 2010-IRS 990, Schedule H submitted by the region’s not-for-profit hospitals and health systems. Economic impact information is based on analysis of hospital Medicare cost reports, employment information from the Pennsylvania Department of Labor and Industry, and the U.S. Bureau of Economic Analysis’s employment and final demand output multipliers.

“Hospitals sustain the health and economic vitality of southeastern Pennsylvania,” said Schroder. “In all five counties, they are among the top five employers, providing stable, family-sustaining jobs and high quality health care. Our internationally recognized academic medical centers draw patients and students from around the world, are among the nation’s top recipients of National Institutes of Health funding, and conduct research and education that support the region’s life sciences sector. But hospitals simply cannot absorb any more cuts or mandates without jeopardizing the services their communities rely on, now more than ever.”

Over the next 10 years, federal Medicare and Medicaid payments for the region’s hospitals and health systems have already been cut by $3.4 billion as a result of the Affordable Care Act of 2010 (health reform), the Budget Control Act of 2011 (sequestration), and other federal legislation. In addition, Pennsylvania’s not-for-profit hospitals may face threats to their charitable missions as a result of the recent Pennsylvania Supreme Court decision undermining Act 55 of 1997, the state law defining institutions of purely public charity.

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