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Community Development

Rethinking the Relationship of Health Care and Economic Development

Who will pay for health care? How should it be delivered? Even though these topics arouse considerable national debate, nearly all economic developers agree on one important point: health care creates jobs.

Health care jobs: A fast-growing sector
Today, ten of the twenty fastest-growing occupations are related to health care, according to the U.S. Bureau of Labor Statistics' (BLS) Career Guide to Industries, 2010–11 Edition. The BLS does not expect this growth rate to abate soon. The agency estimates that between 2008 and 2018, health care will generate 3.2 million new jobs, more than any other industry. This growth rate is fueled by many factors, including America's aging population and its need for more health care services.

Although the health care sector was not immune to the recession—it experienced a decline in elective surgeries and procedures, for example—the industry as a whole remained resilient. In contrast to most other sectors, health care employment was positive in almost every month from December 2007 through December 2010, when growth in other sectors was flat.

Because of the strength of this sector as a source of new jobs, economic developers are reconsidering their traditional view of the connection between economic development and health care and looking at it in a broader context. Historically, economic developers viewed health care as they did other supportive infrastructure, so health care did not figure strongly in their work. Indeed, companies have long demanded local access to quality health care services for their workers and have viewed health care as a critical piece of infrastructure in the community where it locates or expands. Clearly, the presence of certain physician specialties or a hospital can give a community a competitive advantage over another, in the same way that rail spurs, an airport with a 5,000-foot runway, a four-lane highway, and other essentialinfrastructure can give a community an advantage over its neighbor for business retention, expansion, and recruitment.

Health care as economic engine
A March 2010 International Economic Development Council report titled "Creating Quality Jobs: Transforming the Economic Development Landscape" suggests that communities focusing on job quality rather than job quantity are more likely to achieve sustained economic benefits. From this perspective, health care jobs make sense—the average earnings of nonsupervisory workers in most health care segments are higher than the average for all private industry.

For many communities, health care as an economic development strategy is not a new concept. Cleveland and Houston, for example, have long recognized the value of the health care sector as a source of jobs and investment. In fact, many patients travel to these medical centers from elsewhere to seek medical care, bringing dollars to these communities from the outside.

In 2007, the Cleveland Clinic commissioned a study that measured its annual economic impact at $8.9 billion. The study found that the clinic was the second-largest employer in Ohio, supporting 71,000 jobs (either directly or indirectly), which generated $3.2 billion in wages. In addition, the clinic's 2007 annual report says that its annual research expenditure was $266 million, and annual patient visits numbered more than 3.2 million. Houston's Texas Medical Center measured its 2009 annual economic impact at $14.0 billion. In addition, it employed 93,500 people, its annual research expenditure was $1.2 billion, and it had 6.0 million annual patient visits.

These numbers speak clearly for the significant impact health care can have on a community.

A community of support for the local health care industry
Many communities are embarking on strategies to make better use of their existing health care infrastructure. As they do so, they are discovering that it is important not only to have the actual physical facilities but also to develop an appropriate health care workforce development pipeline that goes beyond universities and technical colleges focusing on traditional medical disciplines. Modern health care delivery approaches, they are learning, rely on other occupations, such as engineers and computer programmers, for example, who create and support the hardware and software technology supporting health care.

In Atlanta, Morehouse School of Medicine and Emory University have partnered with Georgia Tech (with nationally ranked engineering programs) to allow students to learn in an inter-disciplinary environment, which is a key characteristic of how medicine is changing. And in the quickly changing health care industry, retraining programs are important as the adoption of new technologies brings steep declines in some health care occupations.

Supportive networks have long been a best practice in economic development. Chamber of Commerce sub-committees and industry councils play a critical role in giving voice to local leaders on the needs of specific industries. The development of such networks around health care is no different. They augment retention, expansion, and recruitment effort, and can catalyze new programs.

Photo of a doctor with patient
Photo credit: Gary Meek
Georgia Institute of Technology
Georgia Tech is a participant in the new Georgia Health Information Technology Regional Extension Center (GA-HITREC) led by Morehouse School of Medicine. Georgia Tech's role in GA-HITREC is built on its role as a National Institute of Standards and Technology Manufacturing Extension Partnership affiliate. Using its existing statewide network of regional technical assistance offices, Georgia Tech will provide direct support to health care providers as they adopt health information technology. In addition, Georgia Tech is helping establish a group purchasing program that health care providers can use to more simply and easily obtain their electronic health record software.

Work force health as competitive advantage
The nation is being challenged with increasing rates of chronic illnesses. In addition to the human toll these chronic illnesses take, they also harm business—reducing employee attendance and firm productivity and running up overall costs. Employers recognize that significant differences in rates of chronic illness exist across regions of the country, as well as among and within states themselves. As a result, they are more and more often considering how well a community addresses its health care and wellness when deciding where to locate or expand.

To encourage better health among the local workforce and their families—and thereby create more of a draw for business—community and economic developers are becoming more engaged in local policymaking. For example, they sometimes help plan the installation of sidewalks, bike paths, and walking trails, or encourage the use of such facilities. They also may facilitate partnerships between employers and organizations that foster better health; such partnerships bring a wide range of economic benefits, as well as improve the quality of life for the community's residents. As employers' health-related costs continue to rise, initiatives like these will become more important to a community's economic development bottom line.

Challenges and opportunities
Our communities will be increasingly challenged to prepare a workforce for the growing health care industry, particularly with the changes brought by new technologies and regulations. Communities will also continue to struggle with how to become healthier for many reasons, including the provision of a healthier workforce for all employers.

However, these challenges also bring tremendous opportunities. Our aging population's demands for more and better health care and the growing prevalence of chronic diseases like diabetes are fostering innovation and entrepreneurial activity along with investment. We can look to many models of innovative approaches that organizations are taking to prepare the workforce, such as the collaborative partnership between Morehouse School of Medicine, Emory University, and Georgia Tech.

A community with nimble and comprehensive workforce development initiatives, innovative partnerships, and a good understanding of employers' workforce needs will distinguish itself. By recognizing the opportunities at the intersection of economic development and health care, our communities can thrive.

By Todd Greene, Vice President, Community and Economic Development