The Ripple Effect

Oregon’s hospitals and health systems continue to make ever-larger economic impacts in the communities they serve.

By Jon Bell

When Scott Kelly joined Asante nearly 20 years ago, the Medford-based health system had about 2,200 employees.

Today, that number is up to more than 5,800.

Asante, which has three hospitals in Southern Oregon, has a service area of more than 600,000 people, and it sees 100,000 emergency department visits and 25,000 inpatient admissions every year. Asante doles out $489 million in salaries and benefits annually—about $1.3 million per day—and is the largest employer in the entire Rogue Valley region.

And yet, according to Kelly, president and CEO at Asante as of January, a lot of people in the community may not know just how large an impact the health system makes on the area.

“I think when people hear that we are the largest provider and the largest employer in the region, they are pretty shocked by that,” he said. “A lot of people think of us as just what we were when we started­­—a single individual hospital—but we’ve definitely continued to grow and thrive in our communities.”

Hospitals across Oregon have indeed been expanding to meet increased demands of an aging and growing population. With that growth has come an ever-larger impact that hospitals and health systems have on the communities they serve, and not just in terms of providing care. From direct and indirect jobs to community donations and drawing massive amounts of federal dollars into the state, hospitals are making huge economic impacts all around Oregon.

“I just think you can’t underscore enough the important role of hospitals in the regional economies,” said John Tapogna, president of ECONorthwest, a Portland-based economic consulting firm that has produced multiple reports on the impacts of Oregon’s community hospitals. “And they’re always going to be here in one shape or another.”

Numbers game
The latest report from ECONorthwest, completed just this spring, shows that Oregon’s community hospitals are continuing to make huge contributions all over the state. The report, called “Economic Contributions of Oregon’s Community Hospitals,” sized up a range of impacts from the 62 hospitals in 32 of Oregon’s 36 counties (it did not include three hospitals that are not part of the Oregon Association of Hospitals and Health Systems).

According to the report, hospitals were responsible for 68,362 direct jobs in 2017, the most recent year that data from the American Hospital Association Annual Survey Database was available. Secondary jobs, those related to supply chain and consumption driven effects, hit 69,477. In total, those 137,839 jobs made up 5.5 percent of total employment in Oregon.

Direct output from hospitals in Oregon—the value of goods and services produced—hit $11.4 billion, with secondary impacts driving the total up to $20.9 billion. In addition, hospitals generated $256 million in tax and fee revenue for state and local tax jurisdictions in 2017; add in the secondary impact on that latter statistic and the total approaches $700 million.

All of those figures are up significantly from ECONorthwest’s last report from 2015, when hospitals were responsible for 62,278 jobs and a total economic output of $16.4 billion

Growing season
Much of what’s driving that growth is a steady gain in population and the inevitable aging of people that finds them needing more care closer to where they live.

“Baby Boomers want to know they are not far away from a good hospital,” Tapogna said, “So in a way, hospitals have become part of the story of economic development.”

Kelly said Asante’s service area increasingly serves a larger retirement-aged community, which has driven the need for more services and a wider range of care. The result? A concurrent growth in Asante’s employment base and overall impact.

“We try our best to keep up with the demand and have seen quite a bit of growth,” he said.

The same goes for other more rural parts of the state, albeit at a somewhat different pace.

“Oh yes, it continues to grow for us,” said Dennis Burke, president and CEO of Good Shepherd Health Care System, which is based in Hermiston and has a service area of close to 55,000 people.

Good Shepherd currently has about 600 full-time equivalent employees; its annual payroll in 2018 was approximately $43 million. Burke said the health system isn’t the largest employer in the area—a Walmart distribution is larger, as is the local school district—but it’s definitely in the top five.

The jobs also pay well above the average income for the area. According to Burke, Good Shepherd’s average salary is around $59,000 a year, while the overall average for the area is closer to $40,000.

“When you have a business that pays higher wages than the average, I think you really see how that contributes to the area,” Burke said. “There’s more buying potential, more discretionary spending.”

Reaching farther
The economic impacts of hospitals and health systems in Oregon go far beyond jobs and salaries. For starters, hospitals provide a huge amount of charity care every year, covering the costs for patients who aren’t able to pay for themselves. In 2017, that number hit $429 million.

Hospitals have also helped draw increasing federal dollars to Oregon communities through the expansion of Medicaid and the Affordable Care Act. Oregon was quick to jump on the expansion wagon, which helped bring federal dollars here when some other states were refusing to get on board.

“Those are dollars that are coming here from outside the state,” Tapogna said. “That Oregon was early in that process really helped push our numbers.”

Similarly, Tapogna added that though some Oregon residents might bemoan the influx of older outsiders moving to places like Central and Southern Oregon, there’s no denying the economic impact they’re helping to spur by tapping into community hospitals for care.

“Folks might not be excited about all the in-migrants, but they’re coming with Medicare cards and using coverage in local hospitals,” he said. “That has important implications for quality of care.”

Into the future
The main drag on hospitals being able to further have an economic impact on their communities is the always-present funding issue. Oregon at present is facing a Medicaid funding gap for the next six years, part of which will be filled by an increase in the existing hospital assessment and part of which, as of late April, was yet to be determined.

“The politics of funding are always going to be with us,” Burke said, adding that recruiting top talent also continues to be a challenge for rural providers like Good Shepherd.

Still, health care shows no signs of slowing, which means that hospitals and health systems will no doubt continue to play an integral role when it comes to making an impact on the health and economies of their surrounding communities. At Asante, a new regional cancer center that will help patients find treatments locally is on its way, while an expansion of Rogue Regional Medical Center in Medford will increase its procedural platform and critical care capacity. Kelly said he thinks the system will surpass the 7,000-employee mark in the next decade if not sooner.

At Good Shepherd, Burke said the hospital is adding a family practice clinic and a comprehensive pain center to help meet increasing demand as the community continues to grow.

“This is our community,” he said. “I think that it has a sense that this is their hospital. We are a resource, and our success here is key.”