Arizona’s health care industry serves as key economic driver

Arizona’s health care industry has proven to be an important business sector across the state, not only for patient care but also for increased economic development, according to leading economists and industry advocates. 

Experts say there are a number of reasons for the industry’s durability and success. One major factor is a “competitiveness package” that was adopted by the state Legislature and former Governor Jan Brewer a decade ago. 

The 2011 package was designed to encourage business investment and diversify the state’s economy in the state in the wake of the Great Recession. 

Today, Arizona’s health systems are at the center of a global pandemic and are managing an unprecedented demand on the system, said Lorna Romero, a spokeswoman for the Health System Alliance of Arizona (HSAAZ), which represents 80 percent of the industry from doctors and nurses to academic medicine and ancillary health services.  

“Our ability to continue to provide world-class care in the midst of a global pandemic shows the strength of Arizona’s health systems,” she said.  

Since the beginning of the pandemic, Arizona hospitals and health systems have collaborated to manage resources and balance the demand on the health care delivery system, pledging to be ‘In It Together.’ 

“This type of collaboration would not be possible without strong health care infrastructure in the state,” Romero said. 

See how far Arizona’s health industry has come 

Today, the fruits of the legislation are evident in the expanding healthcare infrastructure across Arizona. Research hubs have cropped up near hospitals. High paying jobs have followed. 

The state has come a long way since the competitiveness package was adopted in 2011 when the healthcare industry was suffering from major job losses due to the Great Recession. An economic impact study conducted by Rounds Consulting Group, Inc. for the HSAAZ, shows just how far the industry has come.  

“We need to ensure that Arizona’s health care sector keeps pace with our growing state, delivering outstanding care and plentiful options,” Romero said.  “Not only are Arizona’s health care systems essential to the state’s economy, but they make it a better place to live and work.” 

Among the findings of the study, which analyzed data from 2018, are: 

  • Arizona hospitals generated $29.8 billion to the economy    
  • Arizona hospitals’ total employment impact was 184,969 jobs, about 7 percent of the state’s 2.9 million workers 
  • State and local governments collected $808.7 million in tax revenues from direct and indirect hospital-related activities  
  • Direct, indirect, and induced jobs from hospital related activities produced $12.3 billion in wages 
  • In rural communities, high wages from the industry are responsible for a disproportionate amount of the local economies
  • Hospital workers earned an average wage of more than $92,200 

Direct health related impacts also create additional indirect and induced “multiplier” impacts as hospitals purchase goods and services from local supplier businesses and hospital workers spend their incomes on household goods and services, said Jim Rounds, president of Rounds Consulting

When additional impacts of medical related businesses that locate nearby hospitals are considered, the number of jobs impacted rises closer to 250,000 and tax revenues to $1.1 billion annually, Rounds said. And that does not factor in the jobs related to hospital construction. 

More opportunities await  

Still, there are opportunities for growth, particularly in new areas of research and technology, said Rounds, who has spent two decades helping state leaders, universities and community groups shape public policy.  

The state’s major universities are embarking on ambitious projects coming out of the pandemic like the University of Arizona’s goal to seed an immunology hub in Tucson, he said.  

Among the goals the state should strive for are to shore up the nursing count, maintain adequate levels of physicians and encourage new industries in both urban and rural areas, he said.  

“This will become one of those industries that wasn’t discussed previously as a key economic development sector and instead is going to be discussed as one of the primary and one of the most important economic development sectors going forward.”

Victoria Harker

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