Penn State College of Medicine, medical center have $613 million economic impact

Penn State College of Medicine, medical center have $613 million economic impact

Independent firm determines medical center and College of Medicine generate nearly $35 million in state tax revenue; responsible for more than 13,500 jobs in Pennsylvania

Hershey, Pa. -- According to a study released Sept. 16 by Tripp Umbach Healthcare Consulting Inc., the statewide economic impact of the Penn State College of Medicine and Penn State Milton S. Hershey Medical Center equaled $613 million in 2002. The study also concludes that the Penn State Hershey campus generated nearly $35 million in state tax revenue and more than 13,500 jobs both directly and indirectly. The study was released Sept. 16 at a press conference on Penn State Hershey’s medical campus.

Paul Umbach, who produced the Tripp Umbach study, determined Penn State Hershey’s total economic impact is greater than both the regional airline industry in central Pennsylvania ($384 million) and arts and cultural organizations statewide ($600 million). Penn State Hershey also has an additional economic impact of $213 million outside the commonwealth of Pennsylvania, for a total national impact of $827 million.

“In measuring the overall impact of Penn State Hershey, we found it to be an important contributor to both the physical health and economic health of Pennsylvania,” said Umbach. “Penn State College of Medicine received approximately $4.7 million in unrestricted state funding in 2002 for medical education, yet the institution generated more than $34.8 million in total state tax revenue. Stated another way, for every dollar Penn State Hershey received for medical education an additional $7.40 was returned to the state in direct and indirect tax payments.”

According to Tripp Umbach, which recently conducted a national economic impact study for the Association of American Medical Colleges (AAMC), Penn State Hershey compares favorably to the average U.S. medical school, which returns $1.45 for every dollar received from its home state.

“It’s a compelling story and we need to share it with our community,” said Dr. Darrell G. Kirch, senior vice president for health affairs, dean of the Penn State College of Medicine and chief executive officer of Penn State Milton S. Hershey Medical Center. “With the focused growth of our campus and the expansion of our world-class clinical care services, research and medical education programs, the future looks even brighter.”

In February, Kirch unveiled the Master Site and Facilities Plan for Penn State Hershey, which will add more than 832,000 square feet over the next seven to 10 years and proposes free-standing Penn State Children’s Hospital and Penn State Cancer Center buildings.

The Tripp Umbach study projects that with the facilities expansion and the growth of programs and services that will accompany it, Penn State Hershey’s statewide employment impact will grow from 13,520 jobs to 20,000 jobs by 2008, while its overall economic impact in Pennsylvania will reach $914 million. The resulting state tax revenues are estimated to reach $59 million.

The report also shows Penn State Hershey attracts more than $40 million to the state just from federal sources for its research activities. In 2002, more than $30 million of this support remained in the state’s economy, generating $65 million in economic expansion and more than 2,300 total Pennsylvania jobs. With the growth of the Life Sciences Greenhouse of Central Pennsylvania, Tripp Umbach indicates that Penn State Hershey is in a prime position to be a leading player in regional economic development and job creation activities.

“Penn State Hershey Medical Center and our College of Medicine have always been known for outstanding patient care and groundbreaking research, and as leaders in medical education. But this report clearly shows that the impact of Penn State Hershey extends far beyond these descriptors,” said Penn State University President Graham B. Spanier.

The study also points out that the College of Medicine, medical center and its related enterprises also create significant added community impact.

“Penn State Hershey’s total impact goes beyond the $613 million annual economic impact presented in the report,” Umbach said. “Tripp Umbach estimates that Penn State Hershey Medical Center employees and physicians who receive their training here generate more than $94 million annually in charitable donations, volunteer services, provision of free care and health-care cost savings throughout the state.”

The study concluded that:

• In 2002, Penn State Hershey provided more than $11.7 million in care to Pennsylvania residents for which it did not receive full compensation.

• The annual economic impact to Pennsylvania of physicians who graduated from Penn State College of Medicine and remained in Pennsylvania after graduation equaled $24 million in 2002. This does not include medical residents who receive training at Penn State Hershey and remain in Pennsylvania after completing their residency.

• Each primary-care physician who practices medicine in rural Pennsylvania saves the commonwealth $1.56 million per year in unnecessary emergency room care and in-patient hospitalization. Total health-care cost savings to Pennsylvania, attributable to Penn State Hershey in 2002, equaled $28 million.

• Penn State Hershey employees donated $16.4 million in 2002 to local charitable organizations, in addition to the total economic impact of Penn State Hershey.

• Penn State Hershey employees provided 795,000 hours of volunteer services. The economic value of such services is more than $13.9 million.

Offering reaction to the study’s findings, Spanier underscored that the impact of Penn State University is truly statewide, and emphasized that the Penn State Hershey campus is a major economic engine for both the region and the state.

“Not only is Penn State Hershey a magnet for talented and knowledgeable individuals,” said Spanier. “We also are essential providers of care, a vital source of employment, a draw for new industries, and clearly a prime partner in Pennsylvania’s future.”

For charts illustrating the report, go to http://live.psu.edu/still_life/09_16_03_hershey/index.html