UC Davis Health System has major economic impact on regional growth

UCD hospital a major boon
By Enterprise staff

UC Davis Health System and other medical schools and teaching hospitals are a major economic force, with a collective economic impact of $451 billion in the United States and $35.5 billion in California alone, according to a new study released by the Association of American Medical Colleges.

The report, released this month, evaluated the economic impact of 125 accredited medical schools and more than 400 major teaching hospitals in the United States using data from fiscal year 2005. The report, titled “The Economic Impact of AAMC-Member Medical Schools and Teaching Hospitals,” is available online at www.aamc.org/economicimpact.

The AAMC report detailed other key findings, including how medical schools and teaching hospitals employ nearly one out of every 48 wage earners in the United States and provide nearly 200,000 full-time jobs in California.

UC Davis Health System is one of the largest employers in the Sacramento region, with approximately 10,000 individuals on its payroll. It has $465 million in annual total payroll expenses for UCD Medical Center jobs, salaries, wages and benefits.

Ann Madden Rice, CEO of the UCD Medical Center in Sacramento, said in a news release that the hospital is “proud to play such a major role in the local economy and community development.”

“Our mission is to improve health, foster economic development and broaden educational opportunities. All of those goals play a major role in stimulating and adding to the economy,” Rice said.

Other key economic impacts of the health system include:

* $262 million in purchased goods and services for the Medical Center, 80 percent of which comes from local vendors or local branches of national companies;

* $74 million for Medical Center capital expenditures and construction projects, including electronic medical records, the School of Medicine's education and F. William Blaisdell, M.D., Library building, Davis Tower floor completions, and a new surgery and emergency department facilities in Sacramento. The last project is still in process and ultimately will result in $424 million in expenditures.

* $121 million in research grants and contracts, primarily within the UCD School of Medicine, with expenditures for research activities in both Davis and Sacramento.

“To get a good sense of UC Davis' economic contributions, you don't have to look any further than Stockton Boulevard in Sacramento,” Richard Greene, executive director of the Stockton Blvd. Partnership, said in the news release.

“What was once a struggling street of boarded-up buildings in an economically distressed neighborhood is now a vibrant, attractive business corridor. The Medical Center's growth over the past few years accounts for much of that economic vitality.”

In addition, UCD recently completed a new education building and library for its School of Medicine, bringing an additional 200 students to Sacramento for classes and other school-related activities. Many of these students now live in Sacramento, adding to the vitality and growth of the nearby communities.

The AAMC report notes that the overall economic impact of institutions such as UCD Health System on California and the national economy takes into account the direct and indirect business volume generated by medical schools and teaching hospitals, including institutional spending; employee spending; and spending by patients, their families and visitors (excluding spending for patient care and medical services).

According to the study, every dollar spent by a medical school or teaching hospital indirectly generates an additional $1.30 when it is “re-spent” on other businesses or individuals, resulting in a total impact of $2.30 per dollar. UCD Health System estimates its total economic impact in the Sacramento region at approximately $1.5 billion annually, based on multipliers used in a 2004 UCD Economic Impact Study.

The AAMC report does not include the economic impact of patient care-related spending at hospitals, nor does it account for the economic benefits of physician training programs, uncompensated charity care or community service programs such as UCD's free community medical clinics in the Sacramento area that are managed and staffed by medical students.

Monday, February 12, 2007