Doctors driving an economic engine

Office-based physicians contributed $1.4 trillion in economic activity and supported 4 million jobs in 2009, an AMA report says.

Posted April 18, 2011.

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The headlines tell a story about physicians that's both a bit unusual and very much worth repeating: "Study: State's doctors generate $5B for economy." "Texas medicos give economic shot in the arm." And, "What's up, doc? A lot of jobs and money."

The coverage in the business press and the local news is of a first-ever, state-by-state report from the American Medical Association that detailed the economic impact of medical practices. Some state societies already had presented their own surveys, but this is the first nationwide look, covering all medical specialties.

The report, released March 23, puts the medical profession in a new light as a substantial driver of the economic engine nationally, as well as on the state and local levels. It provides valuable data that physician organizations, especially state medical societies, can use for advocacy efforts such as pursuing medical liability reforms in their states and fighting cuts to physician Medicaid payments.

The bottom line: The beneficial reach of the medical profession extends far beyond physician offices in a practical and, given the high unemployment rate, very timely way. Doctors purchase goods and services, and medical practices create jobs by employing staff. Those workers spend their money in local economies, making other jobs possible. At every step of the way, tax revenues are generated -- about $100,000 per physician in state and local tax revenues in 2009.

All told, office-based doctors supported 4 million jobs and contributed $1.4 trillion in economic activity in 2009, according to the AMA report. On average, one doctor leads to $1.3 million in wages and benefits and $2.2 million in overall financial activity.

A physician supports an average 6.2 jobs, including his or her job, and that impact has been rising through the years. The U.S. Bureau of Labor Statistics said the number of people working in physician offices grew from 463,400 in 1972 to more than 2.3 million in 2010.

Doctors, economic experts, hospitals and others have long known that physicians contribute greatly to the health of local economies. It's useful for state lawmakers to understand that their constituents will feel the impact when Medicaid payments are cut, practices are faced with some new costly burden or existing ones are kept in place. State medical societies already are talking about how the information can be of use.

The Tennessee Medical Assn., for example, has cited the AMA's figures -- $17.5 billion in economic activity and the support of more than 75,000 jobs in the state -- in its backing of tort reforms proposed by Gov. Bill Haslam. The reforms, the TMA noted, are necessary to reduce the threat of lawsuits and improve the overall business climate. Those changes will keep doctors from leaving Tennessee and attract new ones.

The Medical Assn. of Georgia said the report's information highlights the importance of keeping a favorable practice environment for the state's nearly 17,000 office-based doctors, who support 97,513 jobs. Key targets there are health insurance reforms and tort reforms. Another agenda item that will help medical practices sustain the Georgia economy is a bill that passed the state House, and now is in the Senate, that would ensure that doctors get paid in a timely manner.

Meanwhile, the president of the Connecticut State Medical Society cited the research in calling out to lawmakers, saying they need to realize that physician practices are small businesses that help drive the state economy. Unless legislators improve that practice environment, he said, Connecticut will lose jobs and tax revenue and patients will experience reduced access to medical care.

In making the case for medicine, it would be nice if all it took were to point to the health care practices provide. Experience shows that often isn't enough. This report provides an added dimension by focusing on the well-being of communities in another way -- how medical practices contribute economically and what's at risk if they are forced to cut back or leave.

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