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Hospitals: Infusion of Economic Energy to Region
By: John Krikorian

Hospitals are primarily known about health, healing and wellness. They are places to conduct medical research; fight disease; treat addictions; deal with traumas; repair broken bodies; usher people into the world and offer health education.

Hospitals are also hubs of employment; payers of wages; purchasers of goods and services; and generators of tax revenue.  First, there is the direct activity: the operations of the hospitals themselves, plus the related services—all of the ambulance companies’ operations, plus the hospital-related portion of activity at physicians’ offices and medical laboratories. Second, there is the indirect activity generated when hospitals, physicians’ offices, medical laboratories, ambulance companies, and their respective employees purchase goods and services in the local economy.

Hospitals underpinned economic activity that generated $85.5 billion in economic output, contributing an astonishing 12.1 percent of the regional gross product of $708 billion. This showing is truly remarkable, given that the Southern California economy ranks 10th among all countries just ahead of South Korea and Mexico, and just behind Canada and Spain.

Hospitals and related Businesses accounted for direct and indirect employment equivalent to 640,000 full-time jobs in the six-county regions in 2004. This is an understatement of the actual number of workers engaged in hospital-related employment, because many work part-time. Even on an FTE basis, hospital-related employment represents 9.1 percent of all full-time and part-time non-farm employment in Southern California. Combined, these workers earned $29.1 billion in wages, representing 7.2 percent of all non-farm compensation in the region.

Government Revenues: Some people may be surprised to learn that taxes are a product of hospital operations. Yet, the direct and indirect economic activity sustained by hospitals and related services generated considerable tax revenue for the state and local governments.

      Hospital-Related Economic Output

Los AngelesCounty’s total economic output (gross product) was $398 billion in 2004. The area’s 122 hospitals were directly or indirectly responsible for generating $47.2 billon this output accounting for 11.9 percent of the county total. This showing is remarkable, given that Los AngelesCounty economy ranks 17th among all countries.

The Los Angeles Economic Development Corporation estimates that hospitals in Los Angeles County had revenue of $16.6 billion in fiscal year 2004. Offices of physicians had $11.1 billion in revenues; of which they estimate, $4.7 billion (42 percent) was dependent on physicians’ access to hospitals. Medical and diagnostic laboratories owned $159 million of their business revenues (9.4 percent of the industry total) to hospitals. Private ambulance services had revenues of $251 million.

Business Life once again gave the opportunity to our area hospitals to respond and to best localize the economic contribution and impact for our coverage area.


BURBANK

Providence Saint Joseph Medical Center

Patrick Petre, Administrator

Providence Health System is one of the largest employers in the San Fernando ValleyProvidence Holy Cross Medical Center is the largest employer in Mission Hills, and Providence Saint Joseph Medical Center one of the largest in Burbank.

In 2006, Providence Health System San Fernando & Santa Clarita Valleys Service Area’s annual payroll was $205 million, employing more than 3,300 full-time equivalent employees.  Furthermore, many of the positions which Providence employs are highly-skilled, higher paid positions (such as registered nurses, respiratory therapists, medical technologists, etc.) that, through higher discretionary income, contribute even more significantly to the local economy. 

Providence hospitals have been and will continue to be a major purchaser for construction and capital improvement projects.  These include $157 million Northeast Building project at Providence Saint Joseph Medical Center, which began in 1999 and will run through mid-2007.  The Disney Cancer Center at Providence Saint Joseph is a $42 million project that will run from 2006 through 2008.  At Providence Holy Cross Medical Center, $9 million is being expended for the emergency department renovation project, which is currently nearing completion.  Following this, a major four-story, 101-bed expansion will result in another $143 million in construction and capital-related expenditures.  Virtually all of the architecture and constructions services for these projects are procured through local providers.

In 2006, Providence Health System’s San Fernando Valley hospitals spent $7.36 million on non-medical supplies. These include supplies for laboratory and other clinical uses as well as office and housekeeping supplies.  Many of these purchases are made through local companies.

Although they are exempt from income taxes, Providence Health System’s San Fernando Valley hospitals are major taxpayers.  In, 2006, these hospitals paid $13.89 million in payroll taxes. Furthermore, all supplies purchased by Providence are subject to state sales and use tax (except for surgical-related items). Providence will pay approximately $3.81 million in sales and use tax on supply purchases in 2006. Providence also pays all direct-assessment property taxes (such as voted indebtedness, etc.).

Providence hospitals provided $9.46 million in charity care in 2006.  This represents care provided to the uninsured and those unable to pay their medical bills. Providence also provided $3.48 million of uncompensated community benefit services in 2006.


GLENDALE 

The City of Glendale has three hospitals within its city limits: Glendale Adventist Medical Center; Glendale Memorial Hospital and Health Center; Verdugo Hills Hospital

These hospitals are categorized as part of Glendale Water & Power’s (GWP) top 100 large commercial customers, due to the amount of electricity and water consumed on a monthly basis. The average monthly electrical bill is $160,000 and the water portion is $7,000. And after all other City fees have been applied, the average monthly utility bill is $194,000 per hospital, for a grand total of $6,984,000 in annual revenue.

GWP’s Business Energy Solutions program, have assisted all three hospitals with energy surveys and retrofits throughout their facilities.


Glendale Adventist Medical Center

Moore Dean

President & CEO

Ask the average passerby what their first thoughts are when they hear the word “hospital” and chances are they will not mention anything regarding the economic contribution hospitals make to society. In reality however, hospitals play a major role in ensuring a community’s economic success. This is very much the case with Glendale Adventist Medical Center (GAMC).  Although their highest priority will always be the health of  patients, GAMC takes pleasure in positively impacting the economic health of our community as well.

Community outreach is central to their mission as a hospital.  In 2006 alone, Glendale Adventist spent over $30 million in various forms of community aid.  Outreach ranged from major funding of charity care to strong support of health education and training for the community.  In addition,  aid to the uninsured and underinsured is estimated at over $18 million last year.

GAMC is proud of their talented and diverse, 2348-strong employee family. Their hard work and dedication are what allow them to deliver such a high level of care. In 2006, total compensation for employees reached $103,973,000. 

To meet the growing medical needs of the community, Glendale Adventist has invested in a range of construction projects. The largest project that they are working on is a brand new $110 million, 7-story patient care tower, which will open in May of this year. In addition, 2006 saw work on seven additional construction projects including a multi-level parking structure to accommodate ever-increasing patient-demand. In total, $25,085,000 was spent on construction in 2006.

As can be expected, much is spent on purchasing hospital-related services.  In 2006 Glendale Adventist spent $22,458,263 on services purchased from Glendale-based organizations alone. The cost of supplies bought from Glendale businesses in the same year amounted to $713,313.

The well being of its community is of key importance to Glendale Adventist Medical Center. GAMC prides themselve on a century-long tradition of excellent healthcare and are fully dedicated to continuing to be a driving force in Glendale’s economic future.


Glendale Memorial Hospital and Health Center

Catherine Pelvey

President & CEO

Glendale Memorial Hospital and Health Center’s mission is, “with caring and compassion, we will improve the health and quality of life of the people we serve.” For more than 80 years, we have successfully achieved this mission by offering state-of-the-art treatment options, clinical research trials, and prevention programs, to enhance the quality of life of the people in our community. Our non-profit medical facility has 334 licensed acute care beds, with more than 500 physicians representing 50 specialties. We are committed to providing the finest medical services to Glendale and the surrounding communities.

Reaching Out to the Community:

Armenian Bone Marrow Donor Registry: Glendale Memorial is a major sponsor of this important program, which performs registration and search of donors who have compatible tissue types with patients of Armenian decent, suffering from Leukemia and other blood diseases.

Annual “Drive-Thru” Flu Vaccination Clinic: Every fall, Glendale Memorial holds a unique flu vaccination clinic for the public. Participants simply drive through our parking structure and receive their vaccinations without ever having to get out of their car. We provide approximately 1,200 flu vaccinations annually.

50plus: This program focuses on health education and prevention for our senior population. In addition to regularly scheduled health education seminars, we offer seniors exercise programs, such as Tai Chi, and health screenings.


Verdugo Hills Hospital

Leonard LaBella

President & CEO

Verdugo Hills Hospital is the only independent, freestanding hospital in the greater foothill communities. This distinction is not only unique, but is meaningful.  As a non-affiliation status allows Verdugo Hills Hospital to dedicate 100 percent of our focus and effort on local community healthcare needs without external encumbrances from shareholders or corporate bureaucracy.

Verdugo Hills Hospital is governed by a voluntary board of directors, comprised of local business leaders and practicing physicians who are knowledgeable of community needs as well as the latest in healthcare technology.

Over the years, Verdugo Hills Hospital has remained the area’s only independent, freestanding hospital, giving it the flexibility to adapt to the changing needs of local residents. The majority of its physicians, board of directors, and employees reside right here in the greater Foothills communities giving them a personal interest in the hospital’s success. Verdugo Hills Hospital is a medical center that is truly operated by the community for the community.

Glendale Water & Power, GWP’s Business Energy Solutions program is in the process of paying the second $100,000 installment for a $3.4 million dollar retrofit project at the Verdugo Hills Hospital. The retrofit project included, replacing all lighting fixtures, installing motion sensors, new chillers, cooling towers, HVAC compressors and motors, installing variable speed drives on most motors, and updating their energy management system.

 


Pasadena

Huntington Memorial Hospital

Steve Ralph

President & CEO

Pasadena Water and Power’s (PWP) fourth largest customer, based on their data in 2006 was Huntington Memorial Hospital HMH, paying approximately $3.9 million in electric and water bills combined. Of this, $3.6 million is for electric service and $336.294 is for water. HMH Ranks number four in electric revenue for PWP and fifth in water. It is the largest and the only hospital in the City of Pasadena

In January 2001, HMH replaced 11 existing x-ray machines with water saving devices, saving approximately 98% water use in processing x-rays. HMH received approximately $24,000 rebate incentive from PWP, a two-year water saving equivalent.

As part of a comprehensive campaign to safeguard the future of high quality Medical care to their region, HuntingtonHospital added a new, state-of-the-art inpatient tower. The new tower built in 2005 houses128 private patient suites, bringing significant care advantages to more than 20,000 patients each year. It also includes new areas for the laboratory and pharmacy, where more than 1,600 medication order’s and 2,700 tests are processed every day. 








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