NASHVILLE – Nashville’s health care industry has a total economic impact of $18.3 billion in the Nashville MSA and 154,800 jobs can be attributed to health care, 22 percent of the region’s non-farm employment in 2004, according to an economic impact study released today by the Nashville Health Care Council (NHCC).
Over the past 10 years, health care has been the fastest growing industry sector in the Nashville MSA. With employment of 94,346 in 2004, Nashville’s health care industry cluster represents the largest non-governmental employer in the region, the study found. Conducted by the Business and Economic Research Center (BERC) at the Jennings Jones College of Business at Middle Tennessee State University (MTSU), the report examined the impact of the health care industry on business revenue, personal income, employment, office space and other factors.
The MTSU analysis also includes a comparison to 12 similar MSAs such as Dallas, Atlanta, Birmingham, Ala., Denver, Colo., Indianapolis, Ind. and Louisville, Ky. The comparison ranks Nashville first among the 13 regions based on objective indicators relating to health care business climate and health care infrastructure.
“This study serves to quantify the true economic value of Nashville’s standing as a health care industry capital,” said Harry R. Jacobson, MD, current chairman of the Nashville Health Care Council and vice chancellor for Health Affairs at Vanderbilt University Medical Center.
“Not only does Nashville’s health care industry have a significant economic impact locally, but also a significant national and international impact. As the study shows, Nashville is home to 21 publicly traded health care companies that operate facilities and offices across the United States and globally, and are responsible for nearly $60 billion in revenues and 312,000 jobs worldwide,” Jacobson said.
Murat Arik, PhD, associate director of the BERC at MTSU and lead researcher for the project, noted that six of the fastest-growing occupations in the state are in health care and the study projects 27 percent growth in health care occupations between 2002 and 2012.
“Nashville has a very dynamic health care industry. Its makeup is unlike those in other markets,” Arik said.
“In addition to the core health care services, which include doctors, hospitals and other providers, the entire health care cluster we studied includes a large number of health care management companies and the support services they require that have an economic impact not found in other markets.”
The study also found that Nashville-based health care companies have had strong access to start-up and growth capital. Of the top 10 private equity-related transactions in the health care sector throughout the United States in 2004, four involved Nashville-based companies for a total of $3.8 billion.
Moreover, a 13-state comparison in terms of venture capital invested in health care from 1995-2005 found that Tennessee (driven primarily by Nashville) ranked third overall in terms of total investment and first in the area of health care services, attracting more than nine percent of all venture capital invested in health care services in the United States during that period.
“As the study highlights, Nashville’s health care industry and Health Care Council member companies continue to generate new and innovative approaches to improving care on a regional, national and international basis – providing not only important patient care benefits, but also significant economic benefits,” said Council President Matt Gallivan. “The fact that 39 percent of all investor-owned hospitals in the country are owned or operated by Nashville-based companies underscores Nashville’s role in the health care system.”
The BERC research presents two views of the Nashville area health care industry: the core health care industry, defined as facilities providing care; and the health care industry cluster, encompassing the core plus related industries such as health care management, biomedical research, and financial and other professional services supporting the industry. The study also provides a profile of NHCC member companies and their impact from a global perspective.
Key Study Findings of the Nashville Health Care Industry Cluster
• Nashville’s health care cluster generated a total of $18.3 billion (direct, indirect and induced) in business revenue in 2004. The cluster’s direct impact was $11.9 billion.
• This total economic impact corresponds to nearly 18 percent of the Nashville MSA’s and nearly 5 percent of Tennessee’s total business revenues.
• Nearly 3,300 health care establishments occupied 26 million square feet of office space, 13 percent of Nashville’s total commercial space.
• Of the top 10 private equity-related deals in 2004, four involved Nashville-based health care companies and totaled $3.8 billion.
• Nashville-based health care companies accounted for $62 billion in revenue and 336,000 jobs worldwide in 2004.
• Twenty-one publicly traded health care companies are headquartered in Nashville.
• Nashville-based health care management companies own or operate 39 percent of the investor-owned hospitals in the United States.
• Nashville’s health care industry cluster is the area’s largest non-governmental employer, with 94,346 people directly employed in the industry and a total of 154,800 jobs attributable to health care in 2004.
• The average annual wage in the health care industry cluster is $44,517 as compared to the average annual wage in the Nashville MSA of $35,449.
• The Nashville health care industry cluster generated a total of $8.4 billion (direct, indirect and induced) in personal income, which corresponds to 18 percent of the Nashville area’s total personal income. Direct personal income in 2004 was $6.3 billion.
• Six of the 10 fastest-growing occupations in Tennessee by 2012 will be in health care, with 27 percent growth predicted for the Nashville area.
• The Nashville health care industry cluster accounted for an estimated $459 million in state and local taxes in 2004 – nearly 20 percent of sales, residential property, and gasoline taxes collected.
• The Nashville health care industry cluster accounts for one-fifth of total tax revenues (including business taxes) collected within the Nashville MSA.
NHCC Member Company Findings
• NHCC member companies generated $17 billion in Nashville-based sales in 2004.
• NHCC member companies employed 41,200 people with a base payroll of $3.6 billion in the region.
• On a global basis, NHCC member companies generated $179 billion in annual revenues, and employed 838,788 people with a total payroll of $37 billion.
To view the full health care industry economic impact study, visit www.healthcarecouncil.com.
About the Nashville Health Care Council
Founded in 1995 as a program of the Nashville Area Chamber of Commerce’s PARTNERSHIP 2010 initiative, the Council is an association of health care industry leaders working together to further establish Nashville’s position as the nation’s health care industry capital. For more information, please visit the Council’s web site at www.healthcarecouncil.com.
About the MTSU Business and Economic Research Center (BERC)
The MTSU BERC supports the public service activities of the Jennings A. Jones College of Business. The organization engages in a variety of educational and research activities aiding businesses, government, civic organizations and other interested individuals to help them understand the economic and business climate of Tennessee (www.mtsu.edu/~berc).