Home Economy Report: Conn. hospitals worth $20B to state economy

Report: Conn. hospitals worth $20B to state economy

Connecticut hospitals employ 54,000 individuals and contribute $20 billion annually to the state and municipal economies, according to a new report from the state’s principal hospital advocacy group.

Each year, Connecticut hospitals spend $5.2 billion on salaries, $3.6 billion on goods and services and $815 million on capital projects, such as renovations and new equipment, according to a Jan. 24 report by the Connecticut Hospital Association (CHA).

The CHA report says that the $9.6 billion in annual direct spending by health care providers results in an additional $10.4 billion in indirect activity among businesses that support or benefit from the health care industry.

Those indirect effects include economic activity that results from hospital employees spending their earnings.

Using a multiplier formula developed by the U.S. Commerce Department, CHA determined that the salaries earned by hospital employees “reverberate through the community,” generating $5.6 billion in economic activity and supporting an additional 55,000 jobs.

“Connecticut hospitals are a critical economic engine,” said Jennifer Jackson, president and CEO of CHA, in a statement that accompanied the report. “They are often a community’s largest employer, stimulating jobs and attracting other businesses.”

In December 2012, more than 16 percent of the state’s workforce was employed within the health care and social assistance sector, according to the Connecticut Department of Labor.

Jackson was critical of state legislatures and Gov. Dannel P. Malloy for enacting a deficit mitigation plan that included about $103 million in cuts to state funding for hospitals between January and June 30, which is the end of the state’s 2013 fiscal year.

The bill was approved by the legislature in response to projections by various administration departments that the state government was facing a deficit for its 2013 fiscal year of more than $400 million.

“Cuts like the $103 million reduced from hospital budgets in December damage not only patients and employees, but also every community in the state,” Jackson said.

Andrew R. Doba, director of communications for the Malloy administration, said the deficit mitigation agreement “presented some tough choices for lawmakers and the governor.”

However, Doba said hospitals will receive about $200 million in state funding during the current fiscal year under the Medicaid for Low-Income Adults (LIA) program, while they received about $71 million in the 2009 fiscal year under the State Administered General Assistance (SAGA) program, which was replaced by the LIA program in 2010.

“Under the old program they often provided care to the indigent for which they received no reimbursement,” Doba said in an email. Now, he said, “they are getting paid for that under the LIA program.”

In 2010, Connecticut became the first state in the country to receive federal approval to expand Medicaid to low income adults under the Affordable Care Act.

Subsequent growth in enrollment in the state’s LIA program, also known as Husky-D, has been principally blamed for the projected deficit that forced in-year budget cuts.

“We recognize that many institutions around the state face their own tough decisions in the months ahead,” Doba said. “But the LIA program is providing a level of funding to hospitals that was unheard of just a few years ago, funding that will grow once the Affordable Care Act is fully implemented in 2014.”

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