Teaching hospitals, medical schools vital to economy

February 26, 2004

Report finds academic medical centers in Pennsylvania account for more than $26 billion in total economic impact, second highest in the U.S.

Washington, D.C. -- According to a new Association of American Medical Colleges (AAMC) report on the economic impact of medical schools and teaching hospitals, academic health centers in Pennsylvania are a significant economic force, impacting the state's economy to the tune of more than $26 billion in 2002. The total economic impact of Pennsylvania's teaching hospitals and medical schools ranks second in the nation, trailing only the total impact of academic health centers in New York. Pennsylvania ranks ahead of California, Massachusetts and Texas in the top five.

"This report shows that, in Pennsylvania, academic health care is a critical component of the state's economy," said Paul Umbach, Tripp Umbach Healthcare Consulting, who produced the report for AAMC. "On a per capita basis, the economic importance of academic health care in the state is even more dramatic, especially when you consider the populations of New York and California -- those states ranked in the top tier with Pennsylvania."

U.S. medical schools and teaching hospitals represented by the AAMC had a combined economic impact of over $326 billion and employed one out of every 54 wage earners in the United States labor force during 2002, according to a new AAMC report. The AAMC represents 126 accredited U.S. medical schools and some 400 major teaching hospitals. The study, "The Economic Impact of Medical College and Teaching Hospital Members of the Association of American Medical Colleges," measures the financial contributions of the association's member institutions in the regions in which they are located and the nation as a whole.

In Pennsylvania, the AAMC's academic medical center member institutions reflected in the study are Penn State Milton S. Hershey Medical Center and Penn State College of Medicine in Hershey; University of Pittsburgh School of Medicine and University of Pittsburgh Medical Center; Philadelphia-based Drexel University College of Medicine; Jefferson Medical College of Thomas Jefferson University; University of Pennsylvania Health System and University of Pennsylvania School of Medicine; and Temple University School of Medicine and Temple University Hospital.

The report corrects a major misconception that medical schools and teaching hospitals do not generate revenue for their respective state governments. Although these institutions are generally not-for-profit, AAMC medical schools and teaching hospitals produced a total of $14.7 billion in state government revenues in 2002, with Pennsylvania accounting for more than $1.16 billion of that total. Within their states, these institutions also generate additional government money by paying sales taxes, corporate net income taxes and capital stock/franchise taxes.

"This study demonstrates how our institutions play a crucial role in the economic well-being of their communities," said Robert Dickler, AAMC division of health care affairs senior vice president. "By serving as major employers and generators of economic activity, the contributions of AAMC medical schools and teaching hospitals extend beyond their traditional missions of education, research and patient care."

One of the report's important findings is that medical schools and teaching hospitals are major employers in their home states, accounting for 2.7 million jobs directly or indirectly in 2002. More than half of these -- 1.5 million -- were full-time positions. In Pennsylvania alone, the state's six AAMC member medical schools and closely affiliated teaching hospitals account for approximately 205,000 jobs.

"It's clear that the future of academic medicine in Pennsylvania will have a lot to do with how economically strong the state will be 15 to 20 years from now," says Umbach.

(Media Contacts)

Last Updated March 19, 2009