by Jon Lane Smith
Director ETSU Bureau of Business and Economic Research
In 1960, health care spending accounted for a little over 5% of the nation’s gross domestic product. By 2006, it exceeded 16%. With the aging of the Baby Boom generation, this proportion is expected to increase. This trend has generated considerable discussion and alarm in Washington. There is hardly a day that goes by that some pundit does not loudly proclaim that “the end is near”. While there is no doubt that funding rising health care costs is a serious concern for the nation, there is something of a silver lining for us here in the Tri-Cities region.
The opening of East Tennessee State’s College of Medicine in 1978 sowed the seeds of what has become a powerful economic engine for the region. A recent study by ETSU’s Dr. Steb Hipple found that the in 2008, the university’s College of Medicine had an economic impact upon the region of $437.8 million and created 3,800 jobs. An additional study indicated that ETSU’s new Pharmacy school generated an additional impact of $20.6 million in its second year of operation. When the figures contained in a 2001 economic impact study done by Dr. Hipple that examined the impact of the entire health related industry’s impact upon the region is adjusted to account for inflation, in 2006 the economic impact (business output) of health related industries was approximately $1,473,834,208 in Washington County is and $4,026,213,210 the entire Tri-Cities.
The growth of the health care establishment has created literally hundreds of high paying jobs for the region. In 1981 the Tennessee Statistical Abstract indicated that there were a total of 619 physicians in Sullivan and Washington counties. In 2006, there were 1247 with an average salary of $265,137. Associated with each physician is a number of other health care professionals including nurses, laboratory technicians, and facility administrators all of whom contribute to the regional economy.
This abundance of doctors and related health care professionals has helped the Tri-Cities to become an important health care supplier for the extended region. Also, this is clearly demonstrated when one examines the region’s employment. Nationally, the U.S. Census Bureau’s County Business Pattern data indicated that in 2006 health care and social assistance employment accounted for 13.7% of total. In the Tri-Cities, employment in this sector accounted for 17.5% of the total. This is an indication that the region is “exporting” health care services. That is, the region is providing services to residents from outside of the immediate area.
The Tri-Cities’ health care establishment is also spinning off new businesses as health care entrepreneurs take their research skills and products to the market. Currently, ETUS’s Innovation Laboratory hosts a number of health care related start-ups. Rayford Johnson, the new Director of the Innovation Laboratory, has indicated that in the future, the Laboratory will concentrate upon nurturing health related and biotechnology start-ups. He indicated that he feels that with the region’s extensive health care infrastructure, the potential for new business growth in this area is strong.
In summary, health care may be a problem for the country, but it is an opportunity for the Tri-Cities Region.