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In the News

Hospital a Big Player Economically

Thursday, September 22, 2011

by Matt Pedigo, Citizen Times, originally published on 9/22/2011

A recently-released report by the Louisville-based Kentucky Hospital Association (KHA) shows The Medical Center at Scottsville, in addition to being a key medical services provider in the county, is also a shot in the arm for the local economy.

The KHA's Kentucky Hospitals' Economic Importance to Their Communities report studied economic impact of local hospitals on their communities for 2009, the most recent year for which the data has been compiled. The study also noted the nonprofit hospital's major impact in another area vital to people: The care it provided for patients who were unable to pay for it.

Treating uninsured patients whose annual income was below the federal poverty level resulted in an unreimbursed cost of $926,000 to the hospital in 2009. These patients were never billed, according to the report. This doesn't include bad debt, or full costs, beyond government-set reimbursement levels, of caring for Medicare and Medicaid patients. Under state law, all patients seeking treatment at hospitals must be treated, regardless of ability to pay.

The KHA reports that for 2009, The Medical Center at Scottsville paid its then 207-person workforce almost $8.1 million in compensation. This, added with purchases of local materials and services, meant the 25-bed hospital spent $12.7 million for the year. This, the report states, had a substantial ripple effect on the local economy.

"We have close to 300 employees now," said Medical Center at Scottsville Administrator Eric Hagan. "Of those, 65 percent are from Allen County. They pay local taxes; they live here, and go grocery shopping here. And all the services we can get locally, they try to."

Hagan noted that many materials for the hospital's new addition, to be detailed next week, had come from local businesses like Johnson Lumber Company and The Decorating Centre.

For 2009, the KHA report puts the hospital's service level at 722 patients were treated on an inpatient basis, from a total of 5,586 in-hospital days. A total of 8,944 patients sought emergency room care. Outpatient visits totaled 20,493.

In accomplishing this, from fuel to food, the KHA estimates that The Medical Center's employees spent $3.6 million to buy local goods and services for the year. The hospital was responsible for $4.6 million in purchases of local goods and services, the report states.

The hospital paid the City of Scottsville $121,229 in occupational taxes, and $80,820 to the County of Allen. The KHA report links The Medical Center at Scottsville employee compensation and sales taxes to $678,885 in state income and sales tax collected. The hospital paid $419,722 in state provider taxes.

The report argues against cuts in Medicare and Medicaid, noting that a 10 percent cut would reduce the hospital's employee compensation by a combined $808,000. This, KHA projects, would result in lost jobs or decreased compensation. In either case, the report states, the ripple effect could go the other direction, reducing state and local government revenue through withholding and occupational taxes by $159,237. The study projects a loss of $3.5 million in local and regional sales for goods and services, and $1.1 million annually in related worker compensation around the region.

Statewide, in terms of numbers of jobs, hospitals rank fifth among all employers, but were fourth highest among wages and salaries paid. Average pay for hospital employees is 12 percent higher than that of private-sector employees.

Copyright 2011 Citizen Times (Scottsville, KY)