Kansas hospitals make valuable contributions to the communities they serve. Thank you to the Office of Local Government and K-State Research and Extension for producing an annual study on this impact.
Economic impact arises directly from the sales, wages and employment generated by business activity. It also arises indirectly through the effect of businesses purchasing goods and services from other local businesses and through health care workers spending wages and other income for household goods and services. These linkages tend to distribute the impact of an activity or event very broadly throughout the economy. The estimates presented represent the annual impact to the state's economy renewed each year by the continuing activity in the sector.
Source: Office of Local Government, K-State Research and Extension, January 2019
Although the connections between health care services and local economic development are often overlooked, there are at least three important linkages to be recognized. A strong health care system can: (1) help attract and maintain business and industry growth, (2) attract and retain retirees, and (3) create jobs in the local area. A vigorous and sustainable health care system is essential not only for the health and welfare of community residents, but to enhance economic opportunity as well.
Health care services employed 238,300 people, or 12 percent of all job holders in the state. This compares to about 10 percent of all job holders in the United States working in health care services. Health care services were the fourth largest aggregate employer in the state.
Health care generated $16.6 billion in total income and more than $28.5 billion in total sales. Additionally, health care was the fifth largest producer of total income and total sales in the state. The health sector plays an important direct role in the state's economy.
The hospital sector employed an estimated 93,048 people in 2017-2018 and had an employment multiplier of 1.91(rounded). This means that for each job created in the hospital sector, another 0.91 jobs were created in other businesses and industries in the state's economy. This is often called the ripple effect. The direct contribution of the 93,048 hospital employees resulted in an indirect contribution of 84,413 jobs throughout all businesses and industries in the state. Thus, the hospital sector employment had a total contribution on state employment of 177,500 jobs.
Note: Any discrepancies are due to rounding
Multiplier analysis can estimate the total contribution of direct income for hospital employees is approximately $6.7 billion. The hospital sector had an income multiplier of 1.59, which indicates that for every one dollar of income generated in the hospital sector, another $0.59 was generated in other businesses and industries in the state's economy. Thus, the hospital sector had an estimated total contribution on income throughout all businesses and industries of $10.7 billion. Funds spent to buy goods and services flow from hospitals to businesses and then ripple throughout the economy. The impact of hospitals on area retail sales generates nearly $3.7 billion in the Kansas economy each year. It is estimated that hospitals generate more than $241 million in sales tax for the state, which is largely used to fund state programs.
NOTE: Any discrepancies are due to rounding
A statewide media release also is available. Please direct questions to Cindy Samuelson, Kansas Hospital Association, (785) 233-7436 or John Leatherman, Office of Local Government, (785) 532-4492.
In addition to this statewide report, county economic impact reports are conducted every other year in cooperation with the Office of Local Government and K-State Research and Extension.