Academic medical center could be economic boon across Pennsylvania

Published: May 5, 2010

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Health care is an economic colossus in Pennsylvania, despite a host of problems facing the industry - especially the hospital sector.

A new report by the Hospital and Healthsystems Association of Pennsylvania quantifies the economic might of the current system. More important for this region, it indicates the degree to which health care could become a huge economic driver for Northeast Pennsylvania if local hospitals agree to develop an academic medical center centered on the Commonwealth Medical College, based in Scranton but with satellite centers to extend services to other counties in the region, including Bradford and Sullivan.

Hospitals in Pennsylvania directly provided 273,000 jobs and supported another 280,000 in related service industries, and generated $89.8 billion in economic activity in 2008, according to the report, a $6 billion increase over 2007. The institutions are among the top five employers in 55 of the state's 67 counties.

In eight counties of Northeast Pennsylvania, including Bradford and Sullivan counties, the industry generated $2.97 billion in economic activity while supporting about 30,000 jobs. That looks impressive, but the totals are the seventh lowest in dollars and sixth lowest in employment among the eight regions of the commonwealth identified in the report.

Now, consider that Blue Cross of Northeast Pennsylvania has calculated, based on its own claims experience, that patients from the region spend about $1.2 billion every year on medical services provided outside of the area - New York, Philadelphia, Baltimore and elsewhere.

That lost market - which by itself is about 40 percent as large as the NEPA market identified by the HAP report - represents the potential for exponential growth of one of the area's most important industries.

But that is only part of the potential. Creation of a comprehensive, high-level academic medical center not only would capture much of the market identified by Blue Cross, but create an entirely new market. The region would become a destination for patients from other areas seeking specialty services, making Scranton and Northeast Pennsylvania an importer, rather than exporter of patients and the economic activity that they directly and indirectly generate.

The potential difference-maker for the region obviously is the new medical school. It makes no sense for individual hospitals to try to make their own fragmented way, when TCMC is a mechanism to create a unified regional health care industry as a powerful economic engine.

At a time when economic development is elusive nationwide, Northeast Pennsylvania is sitting atop a potential economic volcano. The region's health care, civic, business and governmental leaders must abandon institutional protectionism and regional parochialism to make it explode.

See the full report at:

http://www.haponline.org/downloads/HAP_Pennsylvania_Hospitals_Strengthen_Pennsylvanias_Economy_March2010.pdf

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