Mayo, other health-care providers sustain sluggish economy

March 18, 2010

By hammersmith

As dismal as 2009 was for Arizona’s economy, the state would have been in significantly worse shape without the strong performance of the health-care sector, the only segment of the economy to add jobs for the year. And as a recent study illustrates, health-care providers have an outsized economic impact in the state. Just by itself, Scottsdale’s Mayo Clinic generates more than $747 million annually in direct economic output.

Mayo, which employs more than 4,600 full-time workers in Arizona and supports nearly 6,000 more, generates a total economic impact of $1.5 billion each year, according to the study by Battelle Technology Partnership Practice. That sum includes the spending that would not occur in Arizona if Mayo were absent. The research hospital generates $208 million in tax revenue for the state of Arizona.

The data on Mayo’s Arizona campus are part of Battelle’s larger study of Mayo Clinic’s economic impact. Together, the three Mayo campuses–in Scottsdale, Jacksonville, Fla., and Rochester, Minn.–generate a total economic impact of $22 billion per year.

 “The study confirms that Mayo Clinic is a national economic force, but what’s particularly interesting is the size and scope of not only their clinical practice, but also research and educational activities,” said Simon Tripp, Battelle senior director. “Mayo Clinic home states and regions are likely to see significant further impacts and benefits in the future.”

Nationwide, Mayo invested $391 million of its own funds into research and education in 2008. That total includes support for the Mayo Clinic College of Medicine on the Minnesota campus, but also for fourth-year medical students and resident physicians at the Scottsdale campus. Mayo in Arizona is also a major research-performing institution; in 2009, its scientists secured more than $5 million in grants from the National Institutes of Health.

“Mayo is a significant economic driver for our communities, states, and nation,” said Glenn Forbes, Mayo’s medical director of state and local government affairs. “At the same time, while economic impact is an important part of our story, what’s more telling is the work that Mayo Clinic staff do every day to care for those in need. This study illustrates our commitment to patient care, education, and research.”

Numerous other studies of health-care institutions in Arizona have underscored how important the sector is to the state’s bioscience enterprise and the overall economy. One comprehensive study, commissioned by the Arizona Hospital and Healthcare Association study in 2007, pegged the direct economic impact of the state’s hospitals at $4.2 billion. And Battelle’s most recent metrics for Arizona’s Bioscience Roadmap recorded almost 75,000 people working in 118 hospitals statewide, earning average annual wages in 2008 of nearly $55,000, a sum that exceeded the private-sector average by $13,000.

St. Joseph’s Hospital and Medical Center, like Mayo one of Arizona’s largest hospitals, reported last month that it employs well over 5,000 workers, earning an average salary of $65,000. And St. Joseph’s, which is home to Barrow Neurological Institute, is like Mayo a significant center for education and research, characteristics that generate substantial economic returns. Barrow’s medical residency program in neuroscience is one of the nation’s largest, St. Joseph’s will soon be educating more than 80 third- and fourth-year medical students from Creighton University, and as a whole, the institution conducts over 400 clinical trials and manages more than $15 million in sponsored research.

Arizona’s most prolific generator of research funding, while difficult to determine precisely, is likely the Arizona Cancer Center at the University of Arizona. Last year, it received a $20.8 million, five-year extension of its designation as a Comprehensive Cancer Center by the National Cancer Institute (NCI); the year before, it received a $12 million extension of an NCI grant to study gastrointestinal cancers. The Cancer Center has a research budget of around $80 million and a workforce of 450, and has spun off 14 firms that employ an additional 1300 workers, according to a 2008 UA study.

While the need to alleviate a shortage of health-care professionals has been one of the primary arguments for developing the Phoenix Biomedical Campus, including the UA College of Medicine-Phoenix in partnership with Arizona State University, the long-term economic impact of the Campus a compelling rationale for investing in its build-out. A 2005 Tripp Umbach study projected that the Campus’s total economic output could reach $2.1 billion by 2025.

The long-delayed authorization of just one new building on the Campus, the Health Sciences Education Building, is expected to generate as many as 5,300 construction jobs.

For more information:

Arizona Workforce Employment Report,” Arizona Department of Commerce, 03/04/2010

Mayo Clinic Responsible for $1.5 Billion Economic Impact in Arizona and $22 Billion Nationwide,” Mayo Clinic news release, 02/24/2010

News You Need to Know about St. Joseph’s Hospital and Medical Center,” St. Joseph’s news release, 02/2010

Arizona Cancer Center Has Global Economic Reach,” Arizona Cancer Center news release, 04/28/2009

There to Care: Investing in a Healthy Arizona; the Economic Impact of Arizona’s Hospitals on the State and Its Counties,” Arizona Hospital and Healthcare Association study, 02/2007

Study: Phoenix Biomedical Campus Can Generate Billions Annually for Arizona,” UA news release, 12/20/2005