US physicians’ annual economic influence: $2.3 trillion and 12.6 million jobs. Makes me view my GP, specialists in an entirely new light.

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The News:

Physicians support 12.6 million jobs in the US–17.1 jobs each–and contribute $2.3 trillion to the economy, according to a new report from the American Medical Association (pdf) (AMA).

The report–prepared by IQVIA, formerly known as IMS Health and Quintiles–breaks down into four sectors the economic benefit of the 736,873 MDs and DOs in the US (hospital or office-based) who care for patients, according to Medscape.

In addition to jobs and economic activity, the benefits reach to wages and benefits and state and local tax revenues. Physicians also contribute federal taxes, of course, but this paper didn’t calculate those contributions.

Physicians contribute $1 trillion in wages and benefits paid to workers, or an average $1.4 million each. Their contribution in state and local tax revenue that support their communities is $92.9 billion (an average of $126,129 for each physician).

This paper looked at social insurance taxes (both employee- and employer-paid contributions), personal taxes (state and local and license fees, personal property taxes, etc.), business taxes (profits and dividends taxes), and indirect business taxes (such as property and sales taxes).

Contributions higher than in other professions

Economic output and wages attributable to physicians are higher than for those who work in higher education, nursing or community care facilities, or home health and legal services, according to the IQVIA researchers. Washington, DC, where legal services wages are higher, was the only exception.

“This suggests that physicians compensate their employees well, which allows these employees to purchase services from other industries in the state, thereby stimulating their state’s economy,” the authors write.

Travis B. Singleton, senior VP of physician search and consulting firm Merritt Hawkins, told Medscape Medical News that the AMA findings are aligned with the findings of their own research in 2017 (pdf).

“We conduct a parallel study quantifying the amount of net revenue physicians in various specialties generate annually on behalf of their affiliated hospitals. The average for all specialties is $1.5 million but can be considerably over $2 million, depending on specialty and volume,” Singleton stressed.

He added that their economic impact is often missing in deliberations of physician workforce issues.

“Combine their obvious net inpatient and outpatient revenue with the lesser realized community economic impact doctors create and it’s clear who drives the bus in healthcare economics,” he said.

Doctors’ economic impact comes through admitting patients to hospitals, ordering tests, writing prescriptions, hiring staff, buying equipment, and paying for services.

“The physician shortage will absolutely reduce access to care, but it will also blunt economic development in communities nationwide,” Singleton said.

The report provides information on the economic impact of physicians nationally and in all 50 states and the District of Columbia. It used three primary data sources: the 2015 AMA Masterfile, 2015 medical practices data from a data aggregator, and the 2015 IMpact analysis for PLANning, an economic impact modeling system developed by the Minnesota IMPLAN Group.

Steve’s Take:

After reading the AMA report cited above, I wanted to jump in my car, drive over to my primary care physician at UCSD and give him a big hug. But then I thought I’ll just write this piece as a shout out to all physicians for what’s often a thankless, but always an indispensable, service to our communities.

Steve's Take: #Physician recruitment is a wise, and indeed crucial, #economicdevelopment plan that all our communities should have as a public priority Click To Tweet

Regrettably to some degree, but quite fortunately overall, there are numerous excellent physicians (MDs and DOs) I see as a patient on a regular basis for a whole host of medical issues commonplace for those of us in the leading ranks of the “boomer” gen. I also have some doctor friends who live in our neighborhood and are truly close friends we’ve known now for years.

But when I saw the numbers in the AMA report, as a former tax lawyer and CPA, I was stunned. You see, I regard the number “trillion” as one of the bigger quantifiers of large sums of money. I mean, it’s a big number in general. How often do you see 12 zeros after any single number in reference to dollars? And just wait until you have to count 27 zeros for an “octillion.”

That’s why the preceding news report caught my attention and made me realize how under-reported the economic impact of physicians in general, but my own personal clutch of doctors, really is. $2.3 trillion in contribution to our annual economy, and 12.6 million jobs? I mean, who knew? But why not, I wondered.

Phillip Miller at Merritt Hawkins posits that often when healthcare analysts and policy makers look at the economics of medical practice they focus on costs. Physicians continue to drive the healthcare dollar through hospital admissions, the tests and equipment they order, prescriptions they write, and the surgical procedures they conduct.

As a result, physicians can rightly be associated with the cost of healthcare, even though there is much more to high healthcare spending in the US than physician practice patterns. This fact, Miller explains, “is explored in fascinating and eye-opening detail in the book Poverty and the Myths of Healthcare Reform by the late Richard ‘Buz’ Cooper, MD.”

What traditionally is overlooked is the positive economic impact physicians have on their communities and affiliated hospitals. The AMA-sponsored report released last month entitled The National Economic Impact of Physicians offers some compelling numbers, upon which I’ll elaborate in a minute.

Merritt Hawkins periodically conducts a related survey of hospital CFOs looking at the amount of net revenue physicians generate annually on behalf of affiliated hospitals. The average for all physicians is about $1.5 million. Numbers from this survey and the AMA report are included in the Merritt Hawkins’ white paper The Economic Impact of Physicians (pdf).

Bottom Line:

What all the data demonstrate is that physicians–beyond their vital role as caregivers–act as economic engines, driving employment and the tax base up in the communities in which they practice. Here’s a more comprehensive list of this under-reported economic data:

  • 736,873 total number of US physicians providing patient care;
  • 12.6 million direct and indirect jobs supported by physicians;
  • 17.1 average jobs supported by each physician;
  • $3.2 million average economic total generated by each physician;
  • $821.6 billion direct economic activity generated by physicians;
  • $1.5 trillion in direct economic activity generated by physicians;
  • 13% gross state product;
  • $1 trillion total direct and indirect wages and benefits supported by physicians;
  • $92.9 billion total state and local tax revenue generated by physicians;
  • $126,129 average total taxes per physician;

(Download the complete study: https://www.physicianseconomicimpact.org/pdf/FullStateReports/US-Study.pdf)

AMA President David O. Barbe, MD, MHA, said in a press release, “The AMA’s economic impact study illustrates that physicians are strong economic drivers that are woven into their local communities by the commerce and jobs they create. These quality jobs generate taxes to support schools, housing, transportation and other public services in local communities.”

Truer words cannot be uttered.

Final words:

Recruiting and keeping doctors is, of course, critical to maintaining access to quality care, Miller points out. And the recent report on the increase in physician burnout clearly must be taken seriously, to say the least, and remedied.

But after digesting the data in this piece, I think we can all now agree that, more than ever, physician recruitment is a wise, and indeed crucial, economic development plan that all our communities should have as a public priority, not a mere afterthought.

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