Georgia Hospitals Contribute $47.8B to State's Economy

Staff Report From Georgia CEO

Wednesday, April 19th, 2017

While Georgia hospitals are known for being the guardians of community health for the state’s more than 10 million residents, hospitals also play a huge role in bolstering Georgia’s economic health by pumping nearly $47.8 billion into the state’s economy in 2015 according to a recently released report by the Georgia Hospital Association. The report also revealed that hospitals supplied more than 141,000 full-time jobs and indirectly created nearly 344,000 jobs in Georgia.

“Georgia hospitals are making a positive difference in people’s lives, both at the bedside and in their communities economically,” said GHA President and CEO Earl Rogers. “In communities throughout the state, hospitals are among the largest employers and are a key component of the infrastructure necessary to attract business to those areas.”

Despite their importance to the state economy, many Georgia hospitals continue to face a wide array of financial challenges that have resulted in reduced services and employee cutbacks. Since the beginning of 2013, six Georgia hospitals have closed, and others — especially those in rural areas — are struggling to keep their doors open. According to the most recent Georgia Department of Community Health Hospital Financial Survey, 42 percent of all hospitals in Georgia had negative total margins in 2015, while 68 percent of rural hospitals in the state lost money in the same year. A huge strain on hospital finances continues to be the explosive growth of uncompensated care. According to the GHA study, in 2015, Georgia hospitals absorbed more than $1.74 billion in costs for care that was delivered but not paid for.

“Throughout Georgia, hospitals are the only source of medical care for most uninsured residents,” Rogers explained. “Add to that a growing number of residents who actually have insurance but cannot pay their high insurance deductibles, and hospitals end up absorbing even more losses. These dynamics are not sustainable long term.”

According to a recent study by the Kaiser Commission on Medicaid and the Uninsured, in 2015, Georgia had the second highest percentage of uninsured residents in the country at 14 percent.  Only Texas, with 16 percent, had a higher uninsured rate. To make matters worse, Medicaid pays Georgia hospitals, on average, only about 87 percent of actual costs, meaning hospitals lose 13 cents on every dollar spent treating a Medicaid recipient.   

“The financial pressure that Georgia hospitals face is greater than ever,” said Rogers. “Hospitals have a commitment to be there for the their communities 24 hours a day, seven days a week, but for many, just remaining financially viable is a challenge. When hospitals suffer financially, access to care and services for all Georgians is at risk.”

The report also shows that the presence of a hospital is a major source for jobs in any given community, both directly and indirectly. In 2015, Georgia hospitals employed 141,350 people. But when an employment multiplier is applied, it indicates that hospitals supported nearly 344,000 full-time jobs in the state. The employment multiplier considers the “ripple effect” of direct hospital expenditures on the economy, such as medical supplies, durable medical equipment and pharmaceuticals and several different retail establishments that depend on the hospital and its employees for business.

“These are well-paying jobs close to home that not only sustain Georgia families, but also the local and state tax bases that provide vital community services,” Rogers explained. “These are the kind of jobs that are truly indispensable to our communities and state.”

The hospital economic impact report also measures hospitals’ direct economic contributions to Georgia’s working families. Using a household earnings multiplier, the study determined that hospitals generate over $15.2 billion in household earnings in the state. The household earnings multiplier measures the increased economic contributions from individuals employed directly or indirectly by hospitals through daily living expenditures.