Health care makes mark on economy

Posted: Tuesday, February 25, 2003

Health care accounts for a sizable portion of the nation's economy, creating jobs and generating commerce from insurance premiums that pay for routine dental checkups to hospital purchase orders that buy latex gloves and saline solution.

"Health care is the fastest growing, large-sector industry in our economy," said state labor economist Neal Fried.

In Alaska, health care makes up the biggest part of the service-industry sector -- jobs that don't create a tangible, reusable product -- and represents the second largest nongovernmental employer next to retail trade, providing 17,240 jobs, according to a 2000 employment and earnings report produced by the state Department of Labor and Workforce Development.

Providence Medical Center, based in Anchorage, is Alaska's largest private employer, providing nearly 3,000 jobs statewide. Alaska health-care employees earned more than $625 million in 2000, an average of $3,022 per month that year.

In the Kenai Peninsula Borough, health-related jobs account for the third largest pool of nongovernment employment, next to the oil and gas and restaurant industries, according the Labor report. There were 802 health-related positions in 2000, a little less than 4 percent of the peninsula's work force.

Peninsula health workers earned a total of $19.2 million in 2000, for an average of $1,996 per month. Three of the top 25 employers listed in the borough's 2001 borough Situations and Prospects report were health-care agencies. Central Peninsula General Hospital in Soldotna was ranked No. 5, with 342 employees.

For 2002, CPGH reported 400 employees working in more than 100 different professions from bakers to bookkeepers to therapists to technologists. The hospital's annual payroll exceeded $16 million.

South Peninsula Hospital in Homer appeared 10th on the 2001 borough report with 226 employees, and Homer Community Mental Health Center was No. 20 with 121 employees.

The number of employees at health-care facilities and the money these workers bring home translate into dollars circulating in a given community.

South Peninsula Hospital has a current staff count of 280 full- and part-time employees and a 2002 annual payroll of a little more than $8 million. Hospital CEO Charlie Franz said this money is turned over several times in the south peninsula area by hospital employees.

"You have to figure each one of the dollars we pay to our employees circulates five or six times in the community," he said

"Many of our employees have lived here for a long time. They have to pay rent or a mortgage, pay utilities and property taxes, buy groceries, buy parts for cars or boats and hardware products for their homes. They contribute to our economy in that way."

Franz pointed to a major source of the hospital's more than $24 million patient service revenue, saying that outside dollars enter the hospital through third-party payers -- insurance companies like Blue Cross and Blue Shield. He said the majority of residents in the hospital's service area, from just north of Ninilchik to Seldovia, depend upon insurance payments for hospital services.

"Only 15 percent of our population actually pays for their own health care," Franz said.

Although creating hefty employment numbers is a plus, health care lacks some important economic factors.

For example, while South Peninsula Hospital is the largest employer in Homer, "we're a service organization," said Franz. "... (W)e don't produce a product that brings more money back into the Alaska economy.

"It's kind of like a friend asked me, 'Are you a fresh water fish or a saltwater fish?' Fresh water fish don't leave the pond or bring anything back to it."

For fiscal year 2003, South Peninsula Hospital is budgeted to spend about $2.4 million on food and supplies. But Franz said the peninsula won't see many of those dollars.

"Since most of our supplies are very specialized, they come from Outside," he said. "Not a lot that we use comes from here on the peninsula."

CPGH spokesperson Bonnie Nichols said only 25 percent of the nearly $5.7 million the Soldotna hospital spent for supplies last year was spent in the community.

"I would say the majority of the equipment we use is from Outside," she said. "We certainly purchase all of our office supplies in-state. But hospital equipment is manufactured Outside."

Steady growth of the peninsula's population has called for changes to the scope of the industry.

Acute, or short-term, care at the peninsula's two largest health-care facilities increased from 1990 to 2000 by 56.3 percent at Central Peninsula General Hospital in Soldotna and by 37 percent at South Peninsula General Hospital in Homer. Inpatient care at these facilities jumped 23.4 percent in Soldotna and 32.1 percent Homer in the same time frame.

"The trends show that the population is increasing and getting older over the next 10 to 15 years," said David Gilbreath, CEO for the Soldotna hospital. "When you get older, you have a greater need for more health care."

Because of this, the board of directors of CPGH Inc., the nonprofit organization that runs the borough-owned hospital, is planning a $46 million expansion project.

The plan would increase the facility's patient capacity and modify the building's structure to accommodate emerging medical technologies. A bond proposition could be placed on the October ballot to fund the project.

"We don't want to waste money," Gilbreath said. "But we want to make a place the community will be proud of."

But there is more to keeping up with health-care needs than just adding more facilities. Having adequate personnel in specific roles means more services a medical facility can offer its community. Staffing these specialized roles of health-care providers is becoming more of a problem.

"You've got the issue that (CPGH) works at constantly," said Stan Steadman, executive director of Central Peninsula Health Centers Inc., a consortium of medical and dental facilities in the central peninsula area. "That includes recruiting the type of health-care personnel to provide the type of services needed."

CPGH chief financial officer Ed Burke said the Soldotna hospital only treats 60 percent of the market share because there are gaps in the medical staff that force patients to have to go outside the community for certain services. He said with a service area of a little more than 35,000 people spanning from Cooper Landing to Anchor Point, there are certain services the hospital could support that it is lacking.

For example, Burke said the area's population could support one more pediatrician (there are currently two affiliated with CPGH), a psychiatrist, a radiologist and an oncologist.

"If we had all of the physicians on staff that the population justifies us having, we wouldn't have 40 percent of the community leaving to Anchorage adding to (Anchorage's) economy" he said.

The hospital currently is recruiting for a general surgeon, and Gilbreath said he would not mind finding two. Both he and Burke believe this would increase the amount of business the hospital is able to do, because it would stretch the operating room's capacity.

"When you have a general surgeon, it hits the bottom line immediately, from ordering X-rays and lab work," Gilbreath said.

"But we also want to focus on serving community needs. Not only does (the position) serve the fiscal needs of the hospital, it provides a community need, which is what a community hospital is supposed to do."

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