Special Report: What Health Care Means to Texas' Fiscal Health

Physicians play a critical role in our communities — maintaining and improving the health of patients. They are in charge of the care millions of patients receive in medical offices, clinics, hospitals, urgent care centers, emergency departments, and community centers across Texas. Most people recognize this role. What they may not know is the crucial role physicians play in improving the fiscal health of our communities.

Health care is a vital component of the Texas economy, generating tens of billions of dollars in revenue each year and providing hundreds of thousands of jobs. A March 2014 economic impact study by IMS Health, on behalf of American Medical Association (AMA) and state medical societies, puts dollar figures on exactly how much doctors’ offices contribute to the Texas economy. That report found Texas’ 48,314 practicing physicians boost the state’s economy by supporting 522,619 jobs and generating $78.6 billion in economic activity

Texas office-based physicians generate significantly more economic output (i.e., medical and nonmedical sales revenues) than the legal industry; and produce more jobs than colleges, universities, and nursing homes combined. Texas physicians also compensate their employees better, who in turn are able to purchase goods and services. 

In fact, physicians pay more in wages and benefits than higher education, legal, nursing, and home health industries combined.

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 “Physicians carry tremendous responsibility as skilled healers charged with safeguarding healthy communities, but their positive impact isn’t confined to the exam room. The study illustrates that physicians are strong economic drivers that are woven into their local communities by the economic growth, opportunity, and prosperity they generate.”

— AMA Past President Ardis Dee Hoven, MD

The IMS Health study concluded that, in Texas:  

  • Economic output: Office-based physicians created a total of $78.6 billion in direct and indirect economic output in 2012. The output multiplier for office-based physicians in Texas is 2.01, meaning an additional $1.01 of indirect output is generated in the state over and above each dollar of direct output created in the practice of medicine. Indirect output captures the value of revenues generated by other businesses as a result of the office-based physician industry, e.g., the sale of equipment to an office or the sale of laboratory services related to a physician visit. 

  • Jobs: Texas’ office-based physicians supported 522,619 jobs in 2012. On average, each office-based physician supported 10.82 jobs, including his or her own. The jobs multiplier in Texas is 7.655, meaning that 7.66 additional jobs, above and beyond the clinical and administrative personnel who work in physician practices, were supported for each $1 million of revenue a physician practice generated. 

  • Wages and benefits: Physician offices contributed $43.0473 billion in direct and indirect wages and employee benefits in 2012. On average, each physician supported $890,990 in total wages and benefits. This includes the payroll multiplier, which concludes that an additional 34 cents in wages and benefits was generated for every dollar of direct employee compensation within the industry. 

  • Tax revenues: Physician offices supported $2.5422 billion in local and state tax revenues in the year 2012. The total tax contribution is computed by summing taxation on employee income, proprietor income, indirect business interactions, households, and corporations.  

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Across the country, the nation’s 720,000 practicing physicians support 9.9 million jobs, generate $1.6 trillion in economic activity, support $775 billion in wages and benefits, and generate $65.2 billion in state and local tax revenue. 

A healthy and viable medical system is vital for continued economic development in our state. Without a healthy and educated workforce or ready access to high-quality medical care, Texas cannot attract new industries and employers. 

“The bottom line is that Texas’ physician practices, without a doubt, are good for the economic health of our communities and our state.”
— TMA Immediate Past President Stephen L. Brotherton, MD 

Healthy Vision 2020

 


Healthy Vision 2020

 


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