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Doc groups play up economic impact

April 6, 2011

Physicians are regarded as smart, successful and helpful when you’re sick—but not usually as a big driver of the economy. Now, however, physician trade groups are arguing that docs are good for business, too.

Indiana has 11,549 office-based physicians generating $14.7 billion in economic activity a year, according to a report released in February by Virginia-based The Lewin Group. The report was sponsored by the American Medical Association and state affiliates including the Indiana State Medical Association. It uses multipliers to estimate the economic ripple effects of wages paid and supplies or services purchased by office-based physicians.

By way of comparison, a 2009 study of Indianapolis-based Eli Lilly and Co. conducted by Indiana University's Indiana Business Research Center concluded the company and its (then) 15,500 state employees contributed $8 billion to the state’s economy. The studies used different methodologies, thus aren’t comparable scientifically. They did, however, use the same economic multipliers.

The Lewin study calculated that each physician hires about two employees directly and supports nearly three more through economic ripple effects. Wages of all those jobs total $9.6 billion.

“Hoosiers benefit directly when the state creates a positive practice environment for physicians,” the medical associations wrote in a report about the Indiana numbers. “By attracting and keeping physicians in the state, the people of Indiana have better access to health care and a stronger state economy.”

You’d expect lobbying organizations for physicians to say nothing less. Although the economic argument is relatively new.

In general, economic developers view physicians somewhat like retailers—they’re vitally needed, but don’t tend to create a lot of wealth. A manufacturer—of pharmaceuticals, for instance—is seen as creating wealth by adding value to raw materials, and in Lilly’s case, bringing wealth from around the world.

So don’t expect to see property tax abatements for physicians any time soon.

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