GHA Reports Economic Impact of Georgia’s Hospitals

Lucy Adams

Tuesday, September 2nd, 2014

The Georgia Hospital Association (GHA) released a report today regarding the economic impact of the state’s hospitals. GHA, established in 1929, is a trade organization with a membership of 170 hospitals and healthcare systems. The organization conducts education and research, plus represents and advocates for Georgia’s citizens on health policy issues at the state and national levels. Based on a study completed by the American Hospital Association and updated with the most current economic multipliers available from the Bureau of Economic Analysis, United States Department of Commerce, GHA’s report estimates that Georgia’s hospitals and health systems contribute $40 billion to the economy of the state. (Report data was gathered from the 2012 DCH Division of Health Planning Hospital Financial Survey.)

Health care comprises a large sector of the state’s economy. Hospitals alone employ more than 126,000 people in full and part-time jobs. Hospital activities generate another 287,000 full time jobs in complementary sectors of the economy.

While hospitals bolster local and state economies, many of them suffer the problem of greater costs than income. Since the start of 2013, four rural Georgia hospitals have closed. A fifth is slated to shut its doors. Other hospitals in the state are struggling. Forty-two percent of Georgia hospitals lost money in 2013. Sixty percent of rural hospitals lost money in the same time period. Hospitals, particularly in rural areas, routinely provide care for which no compensation is received. This is a tremendous burden and a threat to maintaining operations. During 2013, unpaid services totaling approximately $1.6 billion were rendered, a huge jump from $60 million in 2011.

Almost half of all patients seeking services in Georgia’s hospitals are insured through either Medicare or Medicaid. State cuts to Medicaid and federal changes to Medicare have reduced reimbursement to healthcare providers. The huge annual deductibles of the private pay policies available through the health insurance exchanges created by the Affordable Care Act have resulted in payment defaults by privately insured patients, as well. This puts a strain on hospitals to meet budget demands while also maintaining quality care.

Hospitals, like any other business, are forced to find ways to reduce costs, often slashing staffing and services. In addition to affecting patient care, the ripple effect of these cuts reaches other entities such as medical equipment suppliers and pharmaceuticals companies. The financial conundrum is complicated when considering that hospitals are the largest employers in some communities, are providers of indigent care to some of Georgia’s poorest regions, and are participants in a large piece of the state’s economic pie. Local hospitals are necessary both for the services they offer and for the household incomes to which they directly and indirectly contribute. The GHA report estimates that $16.3 million in household income is linked to Georgia’s hospitals. 

GHA President and CEO Earl Rogers says, “This study demonstrates that Georgia hospitals do much more than provide life-saving health care services: They are a major part of the economic vitality of the communities they serve throughout the state.” He adds, “The mere presence of a hospital in a community offers residents access to well-paying jobs that are close to home while serving as a key factor in attracting other businesses to open in, or move to, that area.”