Medical schools and teaching hospitals: Economic engines for their communities and the nation


The nation’s medical colleges and teaching hospitals are substantial contributors to the nation’s economy, with their patient care, education, and research work adding more than $728 billion to the gross domestic product (GDP) and supporting more than 7 million jobs, according to a report from the AAMC.

“Medical colleges and teaching hospitals are economic engines, generating and sustaining substantial employment and economic development for surrounding communities,” according to the report.

The study reached that conclusion by measuring both direct effects — that is, money spent to run the institutions (such as on staffing) — and secondary effects from what the institutions and their employees spend with other businesses.

The results are based on 2019 data (before the onset of COVID-19) from 154 medical schools and 258 teaching hospitals in 47 states, the District of Columbia, and Puerto Rico. The report includes a state-by-state breakdown of the economic impacts.

Among the highlights:

National economy

Medical schools and teaching hospitals contributed more than $728 billion to the nation’s GDP.

  • That accounted for 3.2% of the total GDP of the United States, which is comparable to the size of the GDP contribution of the transportation and warehousing sector, and accommodation and food services sector (as defined and calculated by the US Department of Labor).
  • This contribution amounted to $2,218 in economic impact for each person in the country.
  • Every dollar spent by AAMC member institutions contributed $1.62 to the economy.

The contribution to individual states’ included $4 billion in Utah, $17 billion in North Carolina, and $27 billion in Illinois.

Jobs

Spending by AAMC member institutions supported 7.1 million jobs (full and part time), accounting for 4.4% of all jobs in the United States.

Three million of those were “direct jobs,” where employees worked for the medical schools and teaching hospitals. These include nurses, faculty members, and administrative staff.

  • Spending on those jobs (including salaries, wages, and benefits) totaled $232 billion.
  • The average annual wage was $77,455.

The other 4.1 million were “secondary jobs” — that is, jobs at businesses where the medical schools and hospitals bought supplies and services (such as medical devices and public outreach campaigns), as well as at businesses where the institutions’ employees spent money ( such as local stores and restaurants).

Among the states with the most total jobs supported by medical schools and university hospitals were New York (628,700), California (495,400), and Minnesota (323,500).

Research

Looking at the research enterprises at medical schools and teaching hospitals, the report found that their total impacts contributed:

  • $33 billion to the nation’s GDP
  • $21 billion in labor income
  • 348,000 jobs

Among individual states, the contributions of research jobs included about 2,600 in Iowa, 7,200 in Florida, and 15,500 in Washington state.

The study was conducted for the AAMC by RTI International. It updates a 2018 report that found that medical schools and teaching hospitals supported more than 6.3 million jobs and generated about 3.1% of the GDP at that time.

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