Economic Impact Analysis Santa Clara County Hospitals · 2019. 12. 19. · Economic Impact Analysis...

Economic Impact AnalysisSanta Clara County Hospitals

July 2012

Prepared for: Prepared by:

ALHlECONALH Urban & Regional Economics

in association with

Economic Impact AnalysisSanta Clara County Hospitals

July 2012

Economic Impact Analysis

Santa Clara County Hospitals

July 2012

Prepared for:

Prepared by:

ALH l ECON

ALH Urban & Regional Economics

In association with

Santa Clara County Hospitals Economic Impact Analysis | July 2012

ALH Urban & Regional Economics | i

TABLE OF CONTENTS I. EXECUTIVE SUMMARY ........................................................................................................... 1

Introduction................................................................................................................................................................. 1

Summary of Findings ............................................................................................................................................... 1

II. HOSPITAL OVERVIEW ............................................................................................................ 4

Hospital Distribution ................................................................................................................................................ 4

Key Operational Data .............................................................................................................................................. 5

Hospital Descriptions ............................................................................................................................................... 6

III. ECONOMIC CONTEXT ......................................................................................................... 15

Healthcare Sector Dominance ........................................................................................................................... 15

Employment Opportunities ................................................................................................................................ 15

IV. HOSPITAL ECONOMIC IMPACTS .......................................................................................... 20

Methodology and Data Resources .................................................................................................................. 20

Operational Impacts .............................................................................................................................................. 22

Tax Revenue Impacts ............................................................................................................................................ 25

Long-Term Construction Impacts .................................................................................................................... 25

V. HOSPITAL COMMUNITY BENEFITS ........................................................................................ 28

Definition of Community Benefits ................................................................................................................... 28

Value of Community Benefits ............................................................................................................................ 28

VI. LONG TERM CARE FACILITY IMPACTS ................................................................................... 30

Operating Impacts ................................................................................................................................................. 30

Revenue Impacts .................................................................................................................................................... 30

VII. CONCLUSION ................................................................................................................... 32

ASSUMPTIONS AND GENERAL LIMITING CONDITIONS ................................................................ 33

APPENDIX A: TECHNICAL APPENDIX

APPENDIX B: STUDY RESOURCES

July 2012 | Santa Clara County Hospitals Economic Impact Analysis

ii | ALH Urban & Regional Economics

List of Figures

Figure 1: Hospitals and Hospital Campuses in Santa Clara County

Figure 2: Health Care and Social Assistance versus Total Private Industry

List of Tables

Table 1: Select Hospital Descriptive Data

Table 2: Sectoral Employment, Santa Clara County, 2000 and 2010

Table 3: Sectoral Employment, Health Care and Social Assistance and Total Private Industry,

Santa Clara County, 2000–2010

Table 4: Occupational Employment and Wage Estimates, Healthcare Practitioners and Technical

Occupations and Healthcare Support Occupations, San Jose-Sunnyvale-Santa Clara

Metropolitan Area and the State of California, May 2011

Table 5: Annual Operations Impacts of All Santa Clara County Hospitals

Table 6: Annual Impact of Local Purchasing

Table 7: Significant Impacts to Select Industry Sectors

Table 8: Annual Indirect Tax Revenue Impacts

Table 9: Five-Year Construction Expenditures Estimates

Table 10: Construction Impacts of Santa Clara County Hospitals, 2012–2016

Table 11: Annual Operations Impacts, Santa Clara County Long Term Care Facilities

Table 12: Annual Indirect Revenue Impacts

ALH Urban & Regional Economics | 1

I. EXECUTIVE SUMMARY

Introduction

This study is an economic impact analysis

focusing on the hospitals in Santa Clara

County. The study was commissioned by the

Hospital Council of Northern and Central

California, a nonprofit hospital and health

system trade association representing

hospitals in 50 of California’s 58 counties,

from Kern County to the Oregon border. The

purpose of the study is to demonstrate the

importance of hospitals to the Santa Clara

County community and their importance to

the economic well-being of the county. The

study tasks focused on identifying the direct,

indirect, and induced impacts of the hospitals,

as well as employment, taxes generated, and

value of community benefits provided by the

hospitals to the communities they serve. Due

to data availability, most hospital findings

reflect 2010 operations, expressed in 2011

dollars.

Summary of Findings

Santa Clara County’s hospitals generate

substantial economic impacts to the benefit

of the county’s economy, benefiting workers

through job creation and income earnings,

business output, and the local tax base. These

benefits are all in addition to the hospitals’

incomparable health benefits. Highlights of

these findings are as follows:

The healthcare and social assistance

sector is a very strong, dominant sector in

Santa Clara County, and is strengthening

over time. The healthcare and social

assistance sector has emerged to be the

third largest private industry sector in all

of Santa Clara County, totaling 10.1% of

the county’s employment base. The only

private industry sectors with more

employment are manufacturing at 19.9%

of the employment base and professional,

scientific, and technical services at 13.9%.

The retail sector is tied for third with

healthcare and social assistance.

The strength of Santa Clara County’s

healthcare and social assistance sector is

the result of almost year over year growth

over the 2000 to 2010 decade, with

employment growing 25.1% versus all

private industry employment declining by

almost 20%.

The jobs supported by the healthcare

industry provide opportunities for

employees at a variety of skill levels. On

average, healthcare workers throughout

Santa Clara County earn 45% more than

the average worker employed in the

county. Healthcare workers throughout

Santa Clara County also earn 11% to 22%

more than healthcare workers throughout


2 | ALH Urban & Regional Economics

California. Because of these higher wages,

hospitals in Santa Clara County have the

potential to recruit and retain more

experienced and skilled workers plus

create a greater local economic impact

than hospitals in many other California

locations.

Santa Clara County’s hospitals reflected in

this study employed 23,359 full-time

equivalent people. Their wages total over

$2.6 billion, reflecting average annual

earnings of $113,320 per person. Hospital

spending totaled $7.2 billion. These

wages and spending are the catalyst for

the hospital economic impacts, driving

economic growth and strength in Santa

Clara County.

The combined operations of Santa Clara

County’s hospitals create an annual

economic impact of $14.3 billion. The

hospitals directly and indirectly support

almost 64,000 jobs and $5.9 billion in

annual payroll. These total economic

impacts include jobs, payroll, and output

at the hospitals directly, as well as impacts

at other local businesses that are

supported by hospital and employee

spending impacts.

While the hospitals in Santa Clara County

provide critical healthcare services, they

also play an important role in supporting

other types of businesses and jobs

outside of healthcare. The sectors with the

greatest local impacts include banking,

restaurants, medical and diagnostic labs,

doctors and other health practitioners,

telecommunications firms, and

wholesalers.

Tax revenues are also a source of impacts

associated with the hospitals. This

includes property taxes paid by the for

profit hospitals as well as tax revenues

generated by employees living in Santa

Clara County and the indirect employees

of other local businesses. Estimated

annual property, sales, and personal

income tax revenues total at least $609.7

million, with $130.2 million specifically

benefitting city and county governments.

Over the next five years substantial

hospital construction projects are

planned, totaling $4.0 billion in spending.

These construction expenditures will

result in a total construction impact of

$6.2 billion on the Santa Clara County

economy, 39,530 temporary jobs in

construction and related supplier

industries, and $2.8 billion in payroll over

the next five years.

The combined hospital construction costs

are greater than the costs for any other

major construction project in Santa Clara

County, including such high visibility

projects as the new San Francisco 49ers

Stadium in Santa Clara and the BART

Warm Springs Extension in Fremont. Thus,

hospital construction impacts are greater

than any other construction impacts in all

of Santa Clara County.

As the largest source of construction in

Santa Clara County, the hospitals are

fueling growth of the county’s

construction sector. Because of the nature

of hospital construction it is dominated by

specialized building trades, resulting in

jobs supported by the hospitals that are

well paid with strong employee benefits.



Santa Clara County’s hospitals provide an

extensive array of community benefits to

economically disadvantaged populations

and the broader community. In a given

year these benefits are valued at $600

million, with $375 million including free or

subsidized medical care through charity

care or under-compensated costs of

government-funded programs, such as

Medi-Cal. These benefits represent

substantial additional impacts generated

by the hospitals that go far beyond

economic impacts, affecting the quality of

life for Santa Clara County’s residents and

especially vulnerable populations.

These findings indicate that Santa Clara

County’s hospitals are a great source of

economic and quality-of-life enrichment for

all of Santa Clara County.


II. HOSPITAL OVERVIEW

Hospital Distribution

There are 11 hospitals operating in Santa

Clara County. As shown in Figure 1, the

hospitals are distributed throughout the

county, with most clustered in the more

heavily populated areas in the northern part

of the county. The northernmost hospitals

include Lucile Packard Children’s Hospital and

Stanford Hospital and Clinics in Palo Alto

while the southernmost hospital is Saint

Louise Regional Hospital in Gilroy.

While there are 11 hospitals in the county, the

map in Figure 1 includes the location of 12

hospitals or hospital campuses. This is

because El Camino Hospital has two

campuses, one in Mountain View and one in

Los Gatos. Although there are two campuses,

El Camino Hospital operates under one

license.

The county’s hospitals serve a wide

population, with each hospital having a

distinct affiliation or ownership structure, as

follows:

Non-Profit—Kaiser Permanente, Lucile

Packard Children’s Hospital, and Stanford

Hospital and Clinics

Church—O’Connor and Saint Louise

Regional Hospital

Public—El Camino, Santa Clara Valley

Medical Center, and Veteran’s

Administration Palo Alto Health System

For Profit—Good Samaritan and

Regional Medical Center of San Jose

Because of these differences in ownership

structure, the hospitals represent a variety of

business models, with each providing a

specific mix of patient services and serving a

range of patient population groups. This

diversity of ownership and business models is

a strong asset to the economy, contributing

to the relative stability of the healthcare

sector. A community with only one hospital or

that is over reliant on its County hospital can

be more at risk because there is only one

predominant business model. As a result, if

that hospital falters or fails, it will drag down

the entire healthcare sector in that

community. Thus, the diversity of hospitals

available in Santa Clara County is a source of

strength and resilience for the county’s

economy.



FIGURE 1

Hospitals and Hospital Campuses in Santa Clara County

Key Operational Data

Santa Clara County’s hospitals have the

demonstrated capacity to provide critical

healthcare services to the county’s

population. The 11 hospitals have a total of

4,653 licensed beds, as shown in Table 1.

During the approximate 2010 timeframe, they

collectively provided services for almost 1.0

million census patient days, with another 3.5

million outpatient visits. Net patient revenue

derived from these visits totals more than

$5.6 billion. Through these revenues the

hospitals fund large volumes of charity care

and other community benefits widely

provided by the hospitals (see Chapter V).

Following are descriptions of each hospital

and some of the unique medical services they

provide, showing the wide range of medical

specialties and services available throughout

Santa Clara County.



TABLE 1

Select Hospital Descriptive Data

Hospital Licensed

Beds Total Census Patient Days

Outpatient Visits

Net Patient Revenue

El Camino Los Gatos & Mountain View 542 81,758 283,557 $629,872,280

Good Samaritan 429 82,942 125,399 $522,631,961

Kaiser Permanente Santa Clara1 327 88,874 105,661 NA

Kaiser Permanente San Jose1 242 50,285 70,280 NA

Lucile Packard Children's Hospital 311 81,670 164,139 $835,673,867

O'Connor 358 52,611 152,630 $297,654,892

Regional Medical Center of San Jose 247 56,433 391,713 $340,789,410

Santa Clara Valley Medical Center 574 122,599 856,486 $860,159,651

Saint Louise Regional Hospital 93 12,830 66,718 $93,881,902

Stanford Hospital and Clinics 613 134,394 569,889 $2,001,865,826

Veteran's Administration Palo Alto Health System2 917 228,334 725,807 $19,980,696

TOTAL 4,653 992,730 3,455,036 $5,602,510,484

Notes: 1

Net patient revenue data for Kaiser Permanente hospitals are not available. 2

Includes beds for services not provided by other hospitals in Santa Clara County, such as skilled nursing care, mental health and substance abuse treatment, and rehabilitation care.

Hospital Descriptions

El Camino Hospital, Mountain View

and Los Gatos

El Camino Hospital is an acute-care, 443-bed,

not-for-profit and locally governed

organization with campuses in Mountain

View and Los Gatos. The original Mountain

View Hospital was opened in 1961 in

response to the community’s need to ease

overcrowding in hospitals to the north and

south. The hospital acquired the Los Gatos

campus in 2009 and simultaneously reopened

a state-of-the-art, seismically compliant

facility in Mountain View, referred to at the

time by Popular Science magazine as “the

most technologically advanced in the world.”

The hospital is recognized as a national

leader in the use of health information

technology and wireless communications,

and has been awarded the Gold Seal of

Approval from The Joint Commission as a

Primary Stroke Center as well as back-to-back

ANCC Magnet Recognitions for Nursing Care.

It also received U.S. News & World Report’s

2011-2012 “Best Regional Hospital—San Jose

Metro Region” recognition for its orthopedics

program.

The hospital’s Mountain View campus

provides a wide range of inpatient and

outpatient services, including the El Camino

Surgery Center, Breast Health Center, Oak

Dialysis Center, and Cyberknife Center. It

opened the first Women’s Hospital in



Northern California, which encompasses

Maternal Child Health Services and many

other female-specific clinical services,

including pioneering use of the da Vinci®

Surgical System, a robotic tool for performing

hysterectomies and other gynecological

procedures. The hospital’s Heart & Vascular

Institute became the first Chest Pain Center in

the region to be certified by the Society of

Chest Pain Centers in 2008 and it is

consistently in the top 10 percent of

cardiovascular programs in the United States.

The Melchor Pavilion is home to the world-

renowned Fogarty Institute, Taft Center for

Clinical Research, Genomic Medicine Institute,

and Cancer Center, which strives to guarantee

a consult with patients within 48 hours

following a cancer diagnosis.

El Camino Hospital Los Gatos offers a leading

orthopedic subspecialty, including the

Orthopedic Pavilion, a new postoperative

facility designed exclusively for orthopedic

patients. It also offers one of the Bay Area’s

leading urology programs for both men and

women, and has a new Men’s Health Clinic

that focuses on male health issues. The Los

Gatos campus is home to a 30-bed acute

inpatient Rehabilitation Center that provides

services to patients who have experienced

strokes, brain injuries, multiple sclerosis,

Parkinson’s disease, spinal cord injuries, or

complex orthopedic disorders.

Good Samaritan Hospital

Good Samaritan Hospital is a 429-bed for

profit community hospital located in San

Jose, California. Good Samaritan Hospital

provides acute and tertiary services including

cardiology, cardiovascular surgery, oncology,

obstetrics and gynecology, orthopedics,

neurosciences, inpatient rehab, behavioral

health, emergency care and advanced wound

care with hyperbaric chambers. The hospital is

a leader in neurosciences, and is one of the

first five JCAHO designated Primary Stroke

Centers in the nation. The hospital just

opened a new Neurosciences Intensive Care

Unit to focus on conditions including stroke,

epilepsy, and Parkinson’s disease. This 21-bed

facility is the second ICU in Northern

California developed solely to treat serious

neurological conditions, with the first one

located at UC-Davis Medical Center in

Sacramento. Good Samaritan Hospital is also

the first northern California hospital to receive

CARF accreditation for stroke specialty and

the first community hospital in California to

use tPA and the Merci™ clot-retrieval device.

Good Samaritan Hospital is also certified as a

Community Hospital Comprehensive Cancer

Center by the American College of Surgeons

Commission on Cancer. The hospital received

the Outstanding Achievement Award (OAA)

for quality services and outcomes for cancer

patients in 2004, 2007, 2010 and is one of

only 13 hospitals in the nation to earn the

OAA three times.

Good Samaritan Hospital has advanced

cardio-vascular programs, including state-of-

the-art cardiac cath labs, active CV surgery

program, and dedicated CVICU. The hospital

has an Accredited Chest Pain Center, County-

designated STEMI receiving center, and was

the first hospital in San Jose to implant drug

eluting stents. The hospital is also State of

California Children’s Medical Services certified

for Level III Neonatal Intensive Care Unit and

Pediatric Surgery.

Kaiser Foundation Hospital—San Jose

This full service, 242 licensed-bed hospital,

located in the Coyote Valley of South San



Jose, is part of the Kaiser Permanente San

Jose Medical Center campus. The campus

also has an outpatient surgery center, a family

health center, a large emergency care facility,

and multiple medical office buildings. Kaiser

Permanente’s unique approach to health care

- integrating physicians, hospitals, services

and insurance in one place- makes it easy for

members to connect with their caregivers and

support services, whether in-person, online,

or by phone.

For the second year in a row Kaiser

Foundation Hospital-San Jose was named a

Top U.S. Hospital by The Leapfrog Group, an

independent national nonprofit run by

employers and other large purchasers of

health benefits. This year The Leapfrog Group

also gave Kaiser Foundation Hospital-San

Jose an “A” Hospital Safety Score. The

Hospital Safety Score uses publicly available

hospital safety data to rate a hospital’s overall

capacity to keep patients safe from infections,

injuries, and medical and medication errors.

Kaiser Foundation Hospital-San Jose is

certified by the Joint Commission as a

Primary Stroke Center, and was recognized in

2012 by the American Heart Association and

American Stroke Association with the Get

with the Guidelines—Stroke Gold Plus

Achievement Award.

The Medical Center provides a multitude of

specialized services including chronic pain

management, a regional sleep-disorder clinic,

chemical dependency treatment, weight-loss

management services, chronic conditions

management, home health and hospice, and

palliative care services. The facility also has

maternal child services for uncomplicated

deliveries, a comprehensive Orthopedics

department specializing in total joint

replacement, spine surgery, and sports

medicine. Kaiser Permanente-San Jose is also

known for its regional Genetics department

and Autism Spectrum Disorder regional

referral center.

In the State of California, Kaiser Permanente

is the only health care plan that for the past

four years has received the highest rating of

four stars from the California Office of the

Patient Advocate. In addition, Kaiser

Permanente’s Medicare health plans in

California received an overall rating of 5 stars

for parts C and D, the highest rating from The

Centers for Medicare & Medicaid Services for

2012.

Founded in 1945, Kaiser Permanente currently

serves more than 9 million members in nine

states and the District of Columbia. Kaiser

Permanente is dedicated to care innovations,

industry-leading technology advances and

tools, state-of-the-art care delivery, world-

class chronic disease management, clinical

research, health education, and the support

of community health.

Kaiser Foundation Hospital—Santa Clara

Kaiser Foundation Hospital-Santa Clara is an

acute care facility with 327 licensed beds,

including a 26-bed neonatal intensive care

unit. The new hospital, opened in 2007, is

located on the main campus of the Kaiser

Permanente Santa Clara Medical Center in

Santa Clara. Additional medical offices are

located in the cities of Mountain View,

Milpitas, Cupertino, Campbell, and Sunnyvale.

In addition to primary care and emergency

services, Kaiser Permanente Santa Clara offers

centers where physician specialists focus on

one particular area of medicine, including

cardiovascular services, an inpatient pediatric



care center, a behavioral health center, and

an inclusive labor and delivery facility with

Level III neonatal intensive care. Using the da

Vinci® Surgical System, surgeons are able to

perform minimally invasive robotic assisted

laparoscopic prostatectomies and

hysterectomies. The hospital is certified by

The Joint Commission as a Primary Stroke

Center, and was recognized in 2012 by the

American Heart Association and American

Stroke Association with the Get With The

Guidelines—Stroke Gold Plus Achievement

award.

Kaiser Permanente Santa Clara’s state-of-the-

art cancer treatment center is a regional

referral facility. The center specializes in

pediatric cancer treatment and offers

innovative, breakthrough techniques for

inpatient and outpatient care.

In 2012 the Kaiser Permanente Santa Clara

hospital was honored with an “A” Hospital

Safety Score by The Leapfrog Group, an

independent national nonprofit run by

employers and other large purchasers of

health benefits. The Hospital Safety Score

uses publicly available hospital safety data to

rate a hospital’s overall capacity to keep

patients safe from infections, injuries, and

medical and medication errors.

In the State of California, Kaiser Permanente

is the only health care plan that for the past

four years has received the highest rating of

four stars from the California Office of the

Patient Advocate. Kaiser Permanente’s

Medicare health plans in California received

an overall rating of 5 stars for parts C and D,

the highest rating from The Centers for

Medicare & Medicaid Services for 2012.

Founded in 1945, Kaiser Permanente currently

serves more than 9 million members in nine

states and the District of Columbia. Kaiser

Permanente is dedicated to care innovations,

industry-leading technology advances and

tools, state-of-the-art care delivery, world-

class chronic disease management, clinical

research, health education, and the support

of community health.

Lucile Salter Packard Children’s Hospital

at Stanford (Packard Children’s)

Lucile Packard Children’s Hospital is a 311-

bed, not-for-profit hospital located in Palo

Alto, California. In the 2012-2013 U.S. News &

World Report survey of America’s Best

Children’s Hospitals, Packard Children’s is

ranked as the only San Francisco Bay Area

and Northern California pediatric hospital

with care programs in the nation’s Top 10,

with five programs in the Top 20. Devoted to

the care of babies, children, adolescents and

expectant mothers, Packard Children’s is the

pediatric teaching hospital of the Stanford

University School of Medicine and one of the

most important child health research facilities

in the U.S.

A free-standing children’s hospital with a

separate license and provider number,

Packard Children’s has its own Board of

Directors, with Stanford University as the sole

corporate member. This affiliation, including

the Stanford University School of Medicine,

makes Packard Children’s one of America’s

top training grounds for future pediatricians

and obstetricians.

The hospital opened in June 1991 and

immediately had an impact as the only

children’s hospital in California serving both

expectant mothers and children. The

hospital’s staff, medical staff, volunteers and

auxiliary members are dedicated to the

mission of providing the best in family-

http://www.leapfroggroup.org/



centered care for families. Packard Children’s

is also recognized for its forward-thinking

commitment to quality and safety, and its

research, programs, and services attract

patients from around the world.

As a mission-driven organization, the hospital

is committed to advocacy, outreach,

education, and research. Packard Children’s

continually reaffirms its commitment to the

community by developing innovative

programs to enhance its own and the

community’s capacity to care. Additionally,

the hospital has an extensive network of

community and outreach services in dozens

of locations around the San Francisco Bay

Area, Northern California and the U.S.

Western Region. Making it easier for children

and mothers to access the care they need is

one of the hospital’s primary missions.

To further provide this world-class access,

Packard Children’s is currently preparing for a

new, 500,000 sq. ft. expansion that will

include additional patient beds and

diagnostic capabilities to create the most

family-friendly children’s hospital in America.

The expansion will open in 2016.

O’Connor Hospital

O’Connor Hospital is 358-bed acute care, not-

for-profit, Catholic community hospital

located in San Jose, California. Established in

1889, O’Connor Hospital was built by area

philanthropists and operated by the

Daughters of Charity of St. Vincent de Paul.

O’Connor Hospital and the Daughters of

Charity have served Santa Clara County

longer than any other hospital in the region.

Today, O’Connor Hospital continues to thrive,

providing medical care with a special focus on

the needs of low-income, underserved

populations. O’Connor sponsors the Health

Benefits Resource Center, the Pediatric Center

for Life, a Parish Nursing program, the Family

Health Center and the Stanford-affiliated

Family Medicine Residency Program. Key

services include cardiology, oncology,

mother-baby care, orthopedic and joint

replacement services, vascular care, wound

care, and emergency services. O’Connor

Hospital is a Joint Commission Certified

Center of Excellence for Hip and Knee

Replacement, Wound Care, and an Advanced

Primary Stroke Center. Additionally, the

hospital is fully accredited by The Joint

Commission, the California Department of

Public Health, and the Center for Medicare

and Medicaid Services.

O’Connor Hospital provides quality

healthcare to the community, welcoming all

patients regardless of their financial

circumstances. The hospital provides

comprehensive healthcare services without

delay or limitations and without regard to the

patient’s ability to pay. O’Connor Hospital is a

leader in the community in serving the

underserved and marginalized. The hospital

responds to the needs of the community and

adapts to provide care and services in unmet

areas. O’Connor Hospital is guided by the

mission to serve the sick and those living in

poverty.

O’Connor Hospital is a member of the

Daughters of Charity Health System. The

health system comprises six hospitals and

medical centers that span the California coast

from Daly City to Los Angeles. For more than

375 years, the hospital’s sponsors, the

Daughters of Charity of St. Vincent de Paul,

have been serving the sick and the poor

through healing ministries around the world.

O’Connor Hospital operates with the Mission



Statement, Vincentian Values, and vision of

the Daughters of Charity Health System as an

integral part of every gathering, policy, and

decision.

Regional Medical Center of San Jose

The Regional Medical Center of San Jose is a

for profit acute care facility that was

established in 1965 and provides 247 licensed

beds to the Santa Clara County community.

As an affiliate of a national healthcare

provider, HCA, Regional Medical Centers are

part of an extensive network of hospitals and

surgery centers throughout the United States

and England. The Regional Medical Center of

San Jose hospital facility is undergoing an

extensive $300 million expansion. This

expansion broke ground in 2005 and is

estimated to be completed in 2013. When

completed, the facility will be a state-of-the-

art hospital with an elevated helipad and

extensive upgrades to the existing facilities.

The Regional Medical Center of San Jose

provides inpatient and outpatient services

and specializes in 21 fields of medicine,

dentistry, and podiatry. The Regional Medical

Center of San Jose features six Centers of

Excellence, specializing in Emergency and

Level II Trauma, Cardiovascular, Women and

Children’s Health, Neurosciences, Cancer

Care, and Medical/Surgical Services. Regional

Medical Center of San Jose also provides

specialty services such as Certified Stroke

Center, accredited Level II Chest Pain Center,

Cancer Care in Your Community, Breast Care

Center, research and clinical trials,

rehabilitation services, and Wound Care. In

addition, The Regional Medical Center San

Jose offers care using innovative technology

including da Vinci® Robot Assisted Surgery.

The vision of Regional Medical Center of San

Jose is stated as, “to be recognized as a

comprehensive, state-of-the-art, tertiary care

hospital that exceeds expectations of

excellence through the provision of

compassionate, quality care for the local

community and beyond.”

U.S. News & World Report listed Regional

Medical Center of San Jose as a top

performing hospital in the San Jose

metropolitan area. Leapfrog Group graded

Regional Medical of San Jose in the top

quartile for patient safety. In addition,

Regional Medical Center of San Jose plays an

active role in the community by providing

classes on items such as exercise,

breastfeeding, cancer support, and what to

do after a stroke.

Santa Clara Valley Health &

Hospital System

Santa Clara Valley Medical Center (SCVMC) is

the flagship hospital of the Santa Clara Valley

Health & Hospital System, which includes the

Public Health Department, Mental Health

Department, and Department of Alcohol &

Drug Services. The mission of SCVMC is to

provide quality and comprehensive care from

community based prevention services to

primary and acute care to the transition of

maintaining health at home.

SCVMC includes an acute care inpatient

hospital with 574 licensed beds, 8 regional

clinics providing primary care, and a specialty

center offering a wide-range of specialty

services. SCVMC is considered a health care

“safety net” provider, serving a

disproportionate amount of low-income

income and culturally diverse individuals and

families.

SCVMC has the county’s busiest Emergency

Department (ED) with over 75,000 visits and is



accredited by The Joint Commission. The ED

is a Level 1 Trauma Center for both adults

and children, and is home to the county’s

only Sexual Assault Response Team. The

community’s only public hospital collaborates

with other public agencies to prepare for

disasters that may affect all residents of the

community.

Founded in 1876, SCVMC has been rebuilt

over the years and construction is underway

for a 168-bed building to meet State

earthquake standards. The Seismic Safety

Project is working to obtain Leadership in

Energy and Environmental Design

certification for green building design,

construction, operations, and maintenance.

SCVMC has a nationally recognized and

accredited Rehabilitation Center, providing

care for complex brain and spinal cord

injuries and strokes. The Burn Center leads in

providing comprehensive care from injury to

rehabilitation, and is verified by the American

College of Surgeons and the American Burn

Association.

Regional specialty services provided by

SCVMC include women’s and children’s

health: labor and delivery, neonatology, and

pediatrics. Health coverage for low income

children is provided through the Healthy Kids

program and SCVMC is approved as a

California Children’s Services provider.

For over 50 years SCVMC has served as a

major teaching institution training interns,

residents, and fellows. SCVMC is affiliated

with Stanford University and UC medical

schools, and has free-standing approved

residency programs and major residency

rotations in a multitude of medical specialties.

SCVMC educates a large number of

undergraduate and graduate nursing

students through affiliations with San Jose

State University, Samuel Merritt University,

USF, and Evergreen/SJCC District.

Saint Louise Regional Hospital

Saint Louise Regional Hospital is a Catholic

community hospital and is part of the

Daughters of Charity Health System. As one

of the Daughters of Charity Health System

hospitals, Saint Louise Regional is part of a

regional healthcare system that spans the

State of California offering state-of-the-art

medical technology and holistic care.

Performance improvement leader, Press

Ganey, ranked Saint Louise Regional Hospital

in the top 15 percent of hospitals nationally

for inpatient satisfaction.

Saint Louise originally opened its doors in

Morgan Hill in 1989, moved to Gilroy in 1999,

and currently provides 93 licensed beds as an

acute care hospital with strong community

ties in Santa Clara County through programs

such as the Saint Louise Regional Hospital

Foundation, which offers financial aid and

provides programs such as teaching the

community how to grow a garden, Meals on

Wheels, bilingual educational programs,

support groups, outpatient counseling, online

resources, and free health fairs and

screenings.

Saint Louise Regional Hospital facilities are

state-of-the-art offering CALSTAR emergency

helicopter transport, minimally invasive

surgical procedures, hyperbaric medicine

oxygen chambers, ACR accredited BreastCare

Center with advanced methods of cancer

detection, bone density screening with an

advancement in technology with the recent

FDA approval of a bone-conserving

procedure, CONSERVE® Plus Total Hip

Resurfacing System, developed by orthopedic



surgeon Harlan Amstutz, MD, a stroke

program, and advanced medical imaging

technology through MRIs and Ultrasounds.

Other specialty services include maternal and

child health services, wound care, and the De

Paul Urgent Care Center. Saint Louise has the

busiest Emergency Department in the South

County.

Stanford Hospital & Clinics

Stanford Hospital & Clinics is a non-profit

facility with 613 licensed beds dedicated to

providing leading edge and coordinated care

to each and every patient. It is internationally

renowned for advanced treatment and

expertise in areas such as cancer treatment,

neuroscience, surgery, cardiovascular

medicine and organ transplant, as well as for

translating medical breakthroughs into

patient care. Throughout its history, Stanford

has been at the forefront of discovery and

innovation, as researchers and clinicians work

together to improve health on a global level.

For the 10th time since 2000, Stanford was

ranked by U.S. News & World Report in 2011

among the top 20 hospitals in the U.S. on its

prestigious list of “Americas Best Hospitals.”

The magazine also ranked Stanford as the

best hospital in the San Jose metropolitan

area, and listed 12 of Stanford’s medical

specialty programs as national bests.

Stanford was the fourth hospital in the U.S. to

achieve the highest possible distinction in

electronic medical record implementation

from the Healthcare Information and

Management Systems Society. This year, for

the fourth year in a row, and the fifth time

since the creation of the Leapfrog Group’s

annual class of top hospitals, Stanford was

named as a top U.S. hospital for its record of

patient safety, quality, efficiency and

transparency. Stanford was also honored this

year to be redesignated as a Magnet hospital

by the American Nursing Credentialing

Center (ANCC). Only 7 percent of the nation’s

hospitals have achieved Magnet designation,

widely recognized as the pinnacle of nursing

excellence.

The advanced technology and state-of-the-

art care at Stanford is boosted by its

affiliation with the Stanford School of

Medicine, the oldest medical school in the

Western United States. The hospital’s

physician-scientists drive an aggressive

bench-to-bedside movement of new

knowledge supported by robust research.

Stanford patients also have access to care

through more than 300 clinical trials testing

the most innovative treatment protocols.

In 2011, Stanford began preparation for the

construction of a new 824,000-square-foot

facility that will offer more than 600 beds in

modular patient rooms designed for family-

centered care, a Level 1 Trauma Center and

emergency department tripled in size and

hybrid operating rooms incorporating new

technology and innovations. It is set to open

in 2018.

VA Palo Alto Hospital

The VA Palo Alto is a non-profit hospital

offering the community primary care with 917

licensed beds and an extensive amount of

specialty services. The VA Palo Alto Health

Care System (VAPAHCS) comprises three

inpatient facilities located in Palo Alto, Menlo

Park, and Livermore and seven outpatient

clinics throughout the Bay Area.

Specialty medicine that is provided by

VAPAHCS includes a regional Polytrauma and

Comprehensive Rehabilitation Center, Spinal

Cord Injury Center, a Traumatic Brain Injury



Center, the Western Blind Rehabilitation

Center, a Geriatric Research Educational and

Clinical Center, and a National Center for

Post-Traumatic Stress Disorder (PTSD). In

addition, other specialties include surgery,

psychiatry, dentistry, neurology, geriatrics,

oncology, and extended care.

VAPAHCS serves as a teaching hospital with

state-of-the-art technology, research, and

medical training education for residents,

interns, and students through its affiliation

with Stanford University School of Medicine.

With prevalent research centers in HIV

research, spinal cord regeneration,

Alzheimer’s disease, geriatrics, schizophrenia,

mental health, Rehabilitation Research and

Development Center, and a Health Economics

Resource Center, the VAPAHCS is one of the

top three research programs in the VA. In

addition, the VAPAHCS has received many

awards and recognitions; among the many

include the 2011 California Award for

Performance Excellence Eureka Silver Award,

being listed by the Hospitals and Health

Networks as one of the Nation’s Most Wired

Hospitals for excelling in IT, and the 2011

Performance Achievement Carey Award for

outstanding patient care, satisfaction, quality,

safety, and business practices.


III. ECONOMIC CONTEXT

Healthcare Sector Dominance

The healthcare sector in Santa Clara County,

including social assistance, is a very strong,

dominant sector in Santa Clara County, and is

strengthening over time. In 2000, healthcare

and social assistance employment comprised

6.5% of all county employment (see Table 2).

By 2010, this sector grew to equal 10.1% of all

county employment.

The healthcare and social assistance sector

has emerged to be the third largest private

industry sector in all of Santa Clara County,

following manufacturing at 19.9% of the 2010

private industry employment base and

professional, scientific, and technical services

at 13.9% of the employment base. Retail

trade is tied at 10.1% with the healthcare and

social assistance sector.

The strength of Santa Clara County’s

healthcare and social assistance sector is the

result of almost year over year growth over

the decade versus steep annual declines or

modest growth among all industries (see

Table 3). Healthcare and social assistance

employment grew from 61,219 in 2000 to

76,559 in 2010, growth of 25.1% over the

decade. In contrast, all private industry

employment declined by almost 20% and

total employment including government

declined by 18.5%.

The diverging trends in employment are

especially noticeable in Figure 2, which shows

the cumulative percent change in

employment over the decade in the

healthcare and social assistance sector and

total private industry employment.

Employment Opportunities

The healthcare industry offers a wide range of

job opportunities, with an equally wide range

of earnings potential. A number of these

occupations are included in Table 4, many of

which comprise hospital-based job

opportunities.

The jobs supported by the healthcare industry

provide opportunities for employees at a

variety of skill levels. Regardless of

occupation, healthcare job opportunities in

Santa Clara County tend to provide higher

wages than throughout California, and

healthcare jobs in general provide much

higher wages than all occupations. These

higher wages are a strong contributor to the

economic base of Santa Clara County as

employee spending helps fuel the economy.



TABLE 2

Sectoral Employment Santa Clara County, 2000 and 2010

Industry1 2000 2010

Percentage Growth

Average Annual Growth

Manufacturing 253,690 150,370 -40.7% -5.1%

Professional, Scientific, and Technical Services 127,419 105,516 -17.2% -1.9%

Retail Trade 91,699 76,602 -16.5% -1.8%

Health Care and Social Assistance 61,219 76,559 25.1% 2.3%

Accommodation and Food Services 61,351 61,927 0.9% 0.1%

Administrative and Support and Waste Management and Remediation

77,991 46,484 -40.4% -5.0%

Information 42,511 43,661 2.7% 0.3%

Wholesale Trade 41,689 34,598 -17.0% -1.8%

Construction 48,317 31,349 -35.1% -4.2%

Other Services (except Public Administration) 25,411 30,781 21.1% 1.9%

Educational Services 23,059 28,751 24.7% 2.2%

Finance and Insurance 18,805 17,922 -4.7% -0.5%

Real Estate and Rental and Leasing 15,337 13,367 -12.8% -1.4%

Arts, Entertainment, and Recreation 10,365 12,072 16.5% 1.5%

Transportation and Warehousing 15,373 9,987 -35.0% -4.2%

Management of Companies and Enterprises 21,956 9,637 -56.1% -7.9%

Agriculture, Forestry, Fishing and Hunting 5,089 3,597 -29.3% -3.4%

Not Classified 0 1,756 100.0% —

Utilities 2,061 1,484 -28.0% -3.2%

Mining 215 166 -22.8% -2.6%

TOTAL PRIVATE INDUSTRY 943,342 756,420 -19.8% -2.2%

Government 95,700 90,600 -5.3% -0.5%

TOTAL ALL SECTORS 1,039,042 847,020 -18.5% -2.0%

Note: 1Data are based on two-digit NAICS codes. Industry sectors defined by California EDD.



TABLE 3

Sectoral Employment Health Care and Social Assistance and Total Private Industry

Santa Clara County, 2000–2010

Year

Health Care and Social Assistance

Total Private Industry

Amount Percent Change Amount

Percent Change

2000 61,219 — 943,574 —

2001 63,597 3.9% 911,126 -3.4%

2002 65,823 3.5% 811,779 -10.9%

2003 65,438 -0.6% 761,788 -6.2%

2004 65,746 0.5% 757,166 -0.6%

2005 66,874 1.7% 766,343 1.2%

2006 69,725 4.3% 788,144 2.8%

2007 70,587 1.2% 806,515 2.3%

2008 74,291 5.2% 815,500 1.1%

2009 75,451 1.6% 760,343 -6.8%

2010 76,559 1.5% 756,587 -0.5%

FIGURE 2

Heath Care and Social Assistance versus Total Private Industry Cumulative Percent Change

Santa Clara County 2000–2010



TABLE 4

Occupational Employment and Wage Estimates Healthcare Practitioners and Technical Occupations and Healthcare Support Occupations San Jose-Sunnyvale-Santa Clara Metropolitan Area and the State of California, May 2011

Occupation

Mean Annual Salary

Santa Clara County

State of California

Healthcare Practitioners and Technical Occupations1 $106,350 $87,260

Oral and Maxillofacial Surgeons $197,860 $204,050

Dietitians and Nutritionists $77,500 $66,690

Optometrists $122,510 $101,030

Pharmacists $122,520 $122,800

Anesthesiologists $167,130 $221,990

Family and General Practitioners $189,620 $174,530

Internists, General $143,530 $192,560

Obstetricians and Gynecologists $223,330 $222,960

Pediatricians, General $128,540 $166,500

Psychiatrists $139,100 $192,290

Surgeons $242,860 $216,350

Physicians and Surgeons, All Other $180,450 $182,260

Physician Assistants $98,100 $94,940

Registered Nurses $117,590 $90,860

Occupational Therapists $87,530 $84,750

Physical Therapists $88,990 $86,890

Radiation Therapists $99,820 $93,530

Recreational Therapists $54,920 $57,400

Respiratory Therapists $83,360 $69,930

Therapists, All Other $80,070 $48,880

Health Diagnosing and Treating Practitioners, All Other $87,970 $82,050

Medical and Clinical Laboratory Technologists $86,650 $78,400

Medical and Clinical Laboratory Technicians $54,570 $43,370

Cardiovascular Technologists and Technicians $70,210 $59,730

Diagnostic Medical Sonographers $104,130 $81,750

Nuclear Medicine Technologists $112,260 $92,080

Radiologic Technologists and Technicians $80,050 $68,650

Emergency Medical Technicians and Paramedics $55,080 $36,490

Dietetic Technicians $37,620 $36,590

Pharmacy Technicians $45,760 $38,380

Psychiatric Technicians $45,190 $52,280

Respiratory Therapy Technicians $40,920 $52,150

Surgical Technologists $60,990 $51,940

Licensed Practical and Licensed Vocational Nurses $57,010 $51,130

Health Technologists and Technicians, All Other $57,220 $45,110

HEALTHCARE SUPPORT OCCUPATIONS $34,440 $31,030

ALL HEALTHCARE AVERAGE $102,209 $99,448

ALL OCCUPATIONS AVERAGE $69,880 $51,910

Notes: 1Select occupations not included, but reflected in the averages.

Source: United States Bureau of Labor Statistics May 2011 Metropolitan and Nonmetropolitan Area Occupational Employment and Wage Estimates San Jose-Sunnyvale-Santa Clara and the State of California.



As indicated in Table 4, the average salaries

of healthcare workers throughout Santa Clara

County are $106,350 for healthcare

practitioners and technical occupations,

$34,440 for healthcare support occupations,

and $101,222 across all healthcare jobs. This

includes the hospitals reflected in the study

as well as other healthcare facilities. These

figures contrast with $69,880 for the

countywide average annual earnings. This

indicates that healthcare jobs throughout

Santa Clara County are 45% more lucrative

than the average job in the county, greatly

boosting the county’s economy.

Not only are healthcare jobs relatively high

paying, but healthcare workers throughout

Santa Clara County tend to earn more than

the average healthcare worker in the State of

California. On average, healthcare workers

employed in Santa Clara County earn 11% to

22% more than the equivalent statewide

worker. Because of these higher wages,

hospitals in Santa Clara County have the

potential to recruit and retain more

experienced and skilled workers plus create a

greater local economic impact than hospitals

in many other California locations.

In addition to the strong wages, healthcare

workers typically enjoy strong benefit

packages. In Santa Clara County, standard

hospital employee benefits are very generous

and are appearing increasingly so over time,

as benefits in other sectors are cut back or

disappearing, such as in select private sector

sub-sectors and even government. This

includes the roughly 15% of hospital workers

in the county who are not unionized. While

there are minor benefit variations from

hospital to hospital, income-based employee

benefits can be as generous as 100%

employer paid health plan options, with some

also including family members, and 100%

employer paid defined benefit pension plans

and/or employer match for 401K equivalent

programs. These and other benefits are

funded through hospital overhead running in

excess of 35% for benefits.


IV. HOSPITAL ECONOMIC

IMPACTS

Methodology and Data Resources

Approach to Economic Impact Analysis

The revenues received by Santa Clara

County’s hospitals translate into large

volumes of spending on wages, supplies, and

numerous other expenditures, which in turn

create expenditures in the local economy and

provide economic stimuli. This analysis

summarizes the economic impacts of the 11

hospitals located throughout Santa Clara

County. The economic impacts include both

on-going operations impacts as well as the

non-recurring construction impacts during

the study year and long-term construction

forecasts.

Economic impacts measure the effects of

expenditures in the local economy. These

impacts include direct and indirect jobs,

personal income, and economic activity, or

output that are generated by the hospitals.

Indirect impacts are the result of the

multiplier effect and capture supported

supplier and consumer businesses and their

employees in Santa Clara County that benefit

from purchases by the hospitals and their

employees.

Data Resources

Informational data about the hospital

operations was gleaned from reporting

provided by the hospitals to the State of

California. Many of the hospitals are required

to annually submit a report with descriptive

information about the hospitals, such as

number of beds, revenues, staffing, and

expenditures, among other operating

statistics. Other hospitals voluntarily submit

the reports, which are filed with the State of

California Office of Statewide Health Planning

and Development (OSHPD) on an annual

basis. The reporting periods vary, such that

not all reports are submitted at the same

time, nor are they measuring the same period

of time. The most recent reports available for

the hospitals that submit them reflect the

9/09 – 8/10 and 7/10 – 6/11 time periods. The

figures gleaned for the hospitals reflect these

time periods, with all financial data inflated to

a common point in time, approximating

average year 2011 dollars. Thus all dollar

figures cited reflect 2011 dollars, unless

otherwise stated.1

1 As of this report date, the most recent 2012 inflation

index reflects April, 2012. Thus, complete data are not

available for the purpose of adjusting dollars to 2012.



For some hospitals the OSHPD reports do not

include all data points useful for the

economic impact analysis. In these cases

estimates were prepared based upon the

average findings for the reporting hospitals.

Metrics were developed and applied to

maximize the ability to fully analyze the

hospital data. These metrics included

methods of projecting hospital revenues,

hospital expenditures, and the pattern of

hospital expenditures. In other cases the

hospitals directly provided the necessary data

points. Individual hospital data were provided

for long-term construction plans, which are

not included in the OSHPD reports.

Economic Impact Modeling

The hospital operational data were

incorporated into an economic impact model

for Santa Clara County. The model is based

on software developed by economists at

IMPLAN (IMpact analysis for PLANning) and

geographic-specific economic data collected

by the U.S. Government, which is then

processed and packaged for use by IMPLAN.

The IMPLAN model is designed to generate

analysis regarding the economic impacts of a

range of economic catalysts.

The impact of Santa Clara County’s hospitals

on the county’s economy is greater than the

total of the hospitals’ direct spending on

payroll, purchases, and construction. This is

because money spent by the hospitals is

spent again by the hospital’s employees and

local businesses. Employees use their salaries

and wages to purchase goods and services

from other businesses. Businesses make their

own purchases and hire employees, who also

spend their salaries and wages throughout

the county. A chain reaction of indirect and

induced spending continues, with subsequent

rounds of additional spending gradually

diminished through savings, taxes, and

expenditures made outside the county. This

economic ripple effect is measured by what is

known as an “input-output” economic model,

which uses a series of “multipliers” to provide

estimates of the number of times each dollar

of “input,” or direct spending, cycles through

the economy in terms of “indirect and

induced output,” or additional spending,

personal income, and employment.

The types of economic impacts measured by

multipliers can be defined in the context of

this study as follows: 2

Direct impacts refer to impacts from the

economic activities associated with Santa

Clara County’s hospitals.

Indirect impacts measure output (gross

sales), jobs, and labor income associated

with the businesses and organizations

that support the hospitals’ activities.

Induced impacts accrue when Santa

Clara County hospital employees and

indirect industry employees spend their

wages on local goods and services. These

expenditures in turn stimulate other

sectors in the local economy.

More technical information about economic

impact analysis and IMPLAN is presented in

Appendix B.

2 Indirect impacts are the changes in inter-industry

purchases as they respond to new demands of directly

affected industries. Induced impacts typically reflect

changes in spending from households as income

increases or decreases due to changes in production.

For more explanation of indirect and induced impacts,

see Appendix A.



Operational Impacts

The operations of Santa Clara County’s 11

hospitals provide significant economic

benefits to Santa Clara County. The reported

and estimated data indicate that Santa Clara

County’s hospitals employed 23,359 full-time

equivalent people during the study period.

These jobs collectively represent 14% of the

combined healthcare and social assistance

and government sector jobs discussed earlier

(see Table 2), as the hospital jobs span both

those sectors given the varied ownership

structures, including government. The

hospital employee wages totaled over $2.6

billion, reflecting average annual earnings of

$113,320 per person. Hospital spending

totaled $7.2 billion. This includes spending on

salaries and wages, employee benefits,

physicians and other professional fees,

supplies, purchased services, construction,

leases and rentals, and other operating

expenses. These hospital wages and spending

are the catalyst for the hospital economic

impacts, driving economic growth and

strength in Santa Clara County. These positive

impacts include the following:

Overall Operations Impacts. The

combined operations of the 11 hospitals

included in this analysis create an annual

economic impact of $14.3 billion (see Table

5). The hospitals directly and indirectly

support almost 64,000 jobs and $5.9 billion

in annual payroll. These total economic

impacts include jobs, payroll, and output at

the hospitals directly, as well as impacts at

other local businesses that are supported

by local institutional spending and

employee spending impacts.

Jobs and Income. The hospitals directly

employ about 23,400 FTE employees with

a combined payroll of $2.6 billion

annually. Through the multiplier effect, an

additional 40,200 jobs and $3.2 billion in

annual payroll are created annually at

other businesses in Santa Clara County

that serve the hospitals, their employees,

and patients. These additional jobs and

payroll stem from indirect and induced

impacts of local spending by the hospitals

and their employees.

Additional Physician Jobs and Income.

In addition to the hospital jobs there are

numerous physicians who are not

hospital-based physicians that provide

services through the hospitals. These

physicians are not paid by the hospitals

but their highly compensated jobs and

associated medical staff provided further

economic impacts in Santa Clara County.

The hospital operations, jobs, and income

impacts are therefore minimum estimates

and are not inclusive of these additional

strong and important economic impacts.

TABLE 5

Annual Operations Impacts of All Santa Clara County Hospitals (2011 dollars)

Type of Impact Employment Income Output

Direct Impacts 23,359 $2,647,026,482 $7,234,766,184

Indirect Impacts (local purchasing) 31,416 $2,733,907,787 $5,497,907,056

Induced Impacts (employee spending) 8,784 $486,362,586 $1,538,452,185

TOTAL IMPACTS 63,559 $5,867,296,855 $14,271,125,425



Local Hospital Spending. The hospitals

make a variety of purchases for various

supplies and services such as security,

building maintenance,

telecommunications, laundry services,

insurance, medical supplies, and other

items. Based on the share of these

purchases that are expected to occur

locally, which totals $3.6 billion, the

economic impact of local hospital

spending on Santa Clara County is

estimated at $5.5 billion per year (see

Table 6).

Employee Spending. The 23,400 current

FTE employees of Santa Clara County’s

hospitals also make a significant amount

of local purchases. The effect of employee

purchases from current employees

generates a total economic impact of $1.5

billion on Santa Clara County each year

(see Table 5).

TABLE 6

Annual Impact of Local Purchasing (2011 dollars)

Type of Expenditure

Direct Expenditures

Total Impacts

Supplies Purchased Services Other Jobs Income Output

Medical Supplies Sold to Patients $330,841,189 $1,808,939 $0

2,589 $251,755,346 $497,543,132

Durable Medical Equipment $0 $0 $0

0 $0 $0

Drugs Sold to Patients $265,297,672 $0 $0

2,065 $200,781,847 $396,804,400

Printing and Duplicating $160,621 $2,412,674 $479,397

29 $1,636,244 $4,518,454

Non-Patient Food Services $7,904,590 $6,549,789 $147,709

283 $8,605,038 $22,376,660

Dietary $5,490,060 $3,518,460 $238,182

72 $6,998,063 $13,830,245

Laundry and Linen $4,318,748 $10,295,348 $4,542

293 $15,282,730 $24,706,801

Grounds $25,472 $57,053 $12,953

2 $63,837 $150,615

Security $339,840 $7,226,970 $389,544

208 $7,993,623 $13,502,120

Housekeeping $4,915,827 $8,347,574 $4,499,917

341 $11,876,460 $28,021,172

Plant Maintenance $6,324,490 $42,151,942 $13,773,471

1,196 $41,619,956 $98,197,603

Communications $220,286 $1,373,577 $6,571,505

41 $3,807,961 $13,107,234

Data Processing $8,323,153 $209,701,434 $12,617,646

1,096 $134,915,460 $331,202,080

General Accounting $220,891 $6,405,998 $3,164,918

121 $8,542,678 $15,568,193

Patient Accounting $737,781 $34,654,550 $3,366,212

481 $33,814,160 $61,622,993

Credit and Collection $22,170 $16,234,794 $430,203

386 $16,202,693 $29,813,846

Insurance—Hospital and Professional Malpractice

$0 $0 $34,252,865

457 $30,286,958 $65,072,079

Insurance—Other $0 $0 $13,316,058

178 $11,774,282 $25,297,258

Construction In Progress $0 $0 $489,436,449

4,876 $344,888,533 $768,376,100

Other Expenses $282,721,229 $1,103,527,582 $382,155,816

13,764 $1,338,359,077 $2,644,993,950

Physician's Professional Fees $0 $0 $98,706,139

1,260 $91,841,600 $167,900,740

Other Professional Fees $0 $0 $156,699,722

1,678 $172,861,245 $275,301,382

TOTAL $917,864,018 $1,454,266,684 $1,220,263,245 31,416 $2,733,907,787 $5,497,907,056



Impacts on Other Local Businesses.

Through hospital purchasing and employee

spending, the hospitals support a variety of

other local businesses. Some of these

businesses are within the healthcare sector

such as doctor’s offices and laboratories;

however, there are also significant impacts

in retail, restaurants, utilities, professional

services, higher education, and business

support services (see Table 7). While the

hospitals in Santa Clara County provide

critical healthcare services, they also play an

important role in supporting other types of

businesses and jobs outside of healthcare.

The sectors with the greatest local impacts,

highlighted in Table 7, include banking,

restaurants, medical and diagnostic labs,

doctors and other health practitioners,

telecommunications firms, and wholesalers.

TABLE 7

Significant Impacts to Select Industry Sectors (2011 dollars)

Industrial Sector Output Employment Income

Banking $284,467,008 664 $46,597,583

Restaurants $244,419,693 3,913 $94,370,864

Medical and Diagnostic Labs $232,270,468 1,219 $128,396,831

Offices of Physicians and Other Health Practitioners $227,890,655 1,832 $148,704,229

Telecommunications $187,666,838 334 $45,647,321

Wholesale Trade Businesses $184,344,560 828 $103,108,144

Employment Services $138,118,845 2,277 $116,203,041

Real Estate Establishments $116,539,045 627 $14,590,862

Private Junior Colleges, Colleges, Universities $104,449,406 758 $71,134,353

Legal Services $96,130,940 507 $56,669,523

Services to Buildings and Dwellings $82,307,140 1,270 $36,148,019

Retail Stores—Food and Beverage $74,021,899 1,074 $38,439,783

Insurance Carriers $73,349,751 248 $15,334,665

Other State and Local Government Enterprises $70,350,603 227 $28,085,728

Accounting, Tax Preparation, Bookkeeping, and Payroll Services

$69,869,102 591 $45,032,179

Management of Companies and Enterprises $69,809,921 296 $45,088,148

Electric Power Generation, Transmission, and Distribution

$65,690,239 62 $6,732,158

Internet Publishing and Broadcasting $60,837,958 158 $20,720,174

Management, Scientific, and Technical Consulting Services

$54,478,861 363 $38,570,780

Office Administrative Services $48,339,497 263 $38,527,798

Data Processing, Hosting, ISP, Web Search Portals and Related Services

$46,929,838 96 $9,776,333

Maintenance and Repair Construction of Nonresidential Structures

$45,999,535 298 $22,489,102

Insurance Agencies, Brokerages, and Related Activities $38,006,859 267 $19,011,680

Waste Management and Remediation Services $32,831,645 159 $10,158,006

TOTAL $2,649,120,305 18,331 $1,199,537,303

Note: Does not include all impacted industry sectors.



Tax Revenue Impacts

Tax Revenue Impacts. Tax revenues are

also a source of impacts associated with

the hospitals. This includes property taxes

paid directly by the for profit hospitals as

well as tax revenues generated indirectly

by employees living in Santa Clara

County. Hospitals also pay sales taxes but

these expenditures are not available.

These tax revenues include payment by

both the direct employees of the hospitals

as well as the indirect employees of other

local businesses. Estimated annual tax

revenues total at least $609.7 million, to

the benefit of city, county, and state

government (see Table 8). This includes

property, sales, and personal income

taxes. The local share of these impacts

totals $130.2 million, flowing to city and

county governments.

Long-Term Construction Impacts

Santa Clara County’s hospitals are constantly

improving patient care through upgrading

their facilities. Construction efforts are driven

by multiple objectives, including meeting

stringent seismic requirements imposed by

the State of California. Most of the hospitals

provided information on estimated

construction costs for the next five years,

including 2012. These costs vary depending

upon the status of each hospital’s efforts to

meet California’s hospital seismic

requirements and other improvement or

expansion plans.

Planned Construction Activity. Eight of

the 11 Santa Clara County hospitals

provided capital construction funding

estimates over the next five years. The

most significant expansion will be at

Stanford Hospital and Clinics, Lucille

Packard Children’s Hospital, and Regional

Medical Center. All total, $4.0 billion in

current and future capital projects are

planned between 2012 and 2016 (see

Table 9). Expenditures will be even higher

since some VA projects do not yet have

cost estimates, the Regional Medical

Center figures do not include design fees,

OSHPD-related fees, and equipment

costs, and Kaiser Permanente was unable

to provide long-term construction data.

TABLE 8

Annual Indirect Tax Revenue Impacts (2011 dollars)

Entity

Local

State

Sales Property Sales Income

Direct Taxes Paid by Hospitals $0 $3,977,364

NA NA

Hospital Employees $10,011,054 $35,361,214

$31,284,544 $182,821,986

Other Supported Employees $23,965,252 $60,855,516

$74,891,413 $190,459,284

TOTAL $33,976,306 $96,216,729 $106,175,957 $373,281,270



TABLE 9

Five-Year Construction Expenditures Estimates

Hospital

Annual Construction ($ millions)

2012 2013 2014 2015 2016 TOTAL

El Camino Los Gatos & Mountain View $33.0 $66.2 $55.8 $43.5 $5.7 $204

Good Samaritan1 $32.5 $32.5 $32.5 $32.5 $32.5 $163

Kaiser Permanente Santa Clara2 NA NA NA NA NA NA

Kaiser Permanente San Jose2 NA NA NA NA NA NA

Lucile Packard Children's Hospital $75.6 $106.5 $211.7 $246.2 $312.3 $952

O'Connor $39.3 $28.1 $12.7 $11.4 $9.8 $101

Regional Medical Center $77.8 $77.8 $0.0 $0.0 $0.0 $156

Santa Clara Valley Medical Center $183.8 $289.2 $228.9 $50.9 $86.9 $840

Saint Louise Regional Hospital $0.0 $0.0 $0.0 $0.0 $0.0 $0

Stanford Hospital and Clinics $75.8 $117.5 $254.2 $417.0 $412.7 $1,277

Veteran's Administration Palo Alto Health System3 $157.9 $116.9 NA NA NA $275

TOTAL $675.6 $834.7 $795.8 $801.5 $859.9 $3,967

Notes: 1Good Samaritan anticipates $10–$15 million per year for routine capital and $100 million in new Emergency Department,

parking garage, and replacement of all operating room suites, which is spread equally across each of the five years. 2

Kaiser Permanente construction data not available. 3

Additional VA projects are identified for 2014 but costs have not yet been assigned.

Comparative Value of Construction

Projects. These hospital projects are

among the costliest construction projects

in Santa Clara County, especially when

considered in the aggregate. The

combined hospital construction costs are

greater than the costs for any other major

construction project, including such high

visibility projects as the new San Francisco

49ers Stadium in Santa Clara at $1.2

billion3 and the BART Warm Springs

Extension in Fremont at $890 million.4

Thus, hospital construction impacts are

greater than any other construction

impacts in all of Santa Clara County.

3http://www.sfgate.com/49ers/article/Cost-of-49ers-

Santa-Clara-stadium-now-1-2-billion-3406744.php. 4 http://www.bart.gov/about/projects/wsx/.

Construction Impacts. The level of

planned construction activity over the

next five years translates into a total

construction impact of $6.2 billion on the

Santa Clara County economy, 39,530

temporary jobs in construction and

related supplier industries, and $2.8 billion

in payroll over the next five years (see

Table 10). Although these are non-

recurring impacts, they are significant

during the construction period and will

comprise a significant contribution to

Santa Clara County’s economy and

employment base. These impacts are in

addition to the on-going operations

impacts of the hospitals in this study.



TABLE 10

Construction Impacts of Santa Clara County Hospitals, 2012–2016 (2012 dollars)


Direct Impacts 24,950 $1,868,128,256 $3,967,585,000

Indirect Impacts 5,133 $403,939,507 $864,220,502

Induced Impacts 9,447 $523,749,004 $1,396,985,791

TOTAL IMPACTS 39,530 $2,795,816,768 $6,228,791,293

Construction Industry Support. As the

largest source of construction in Santa

Clara County the hospitals are fueling

growth of the county’s construction

sector. This includes construction jobs

during the three years prior to 2012, when

hospital construction projects kept

numerous building trade sub-contractors

in operation. Because of the nature of

hospital construction it is dominated by

specialized building trades, resulting in

jobs supported by the hospitals that are

well paid with strong employee benefits.


V. HOSPITAL COMMUNITY

BENEFITS

Definition of Community Benefits

Santa Clara County’s hospitals provide an

extensive array of community benefits,

including subsidized or free medical care

services. A community benefit is a service,

program, or project provided or funded by

the hospital that either directly or indirectly

fulfills an ongoing need or service delivery

gap that has been identified through the

hospital’s needs assessment processes. The

primary purpose of a community benefit

program is to improve the health status of

the community in general or improve the

health status of a group of community

members for whom disparities exist.

Many of the hospitals are required to

periodically prepare and submit a Community

Benefit Report and Community Benefit Plan

to the State of California. These explain in

detail the hospital’s commitment to providing

community benefits, the type or programs

and services provided, and the value of the

associated benefits. Community benefit

services and programs typically fall within the

following general categories: benefits for

economically disadvantaged; benefits for the

broader community; and health research,

education, and training programs.

Value of Community Benefits

The information in the hospital Community

Benefit Reports and supplemental

information provided by some of the

hospitals indicates that the value of

community benefits provided by the hospitals

in fiscal year 2011 was $600 million. These

benefits represent substantial additional

impacts generated by the hospitals that go

far beyond the economic impacts, affecting

the quality of life for Santa Clara County’s

residents and especially vulnerable

populations.

The value of these community benefits is

broken down as follows:

$90 million in charity care

$285 million in Medi-Cal shortfall

$251million in a range of other

community benefits

As noted, Medi-Cal shortfall comprised the

largest category of community benefits

provided by the hospitals. This reflects

undercompensated costs of medical services

to government-covered patients that qualify

for Medi-Cal services. The value of these

services provided by the hospitals totaled

$285 million in fiscal year 2011. Charity care,



provided to patients lacking insurance,

totaled $90 million, for a combined total of

$375 million in free or subsidized medical

care.

The remaining $251 million in community

benefits covered a broad spectrum of

programs and services, such as grants and

donations, physician and non-physician

provider education and training programs,

health research, community health

improvement services, and community

building activities. For some hospitals this

figure also includes unpaid costs of Medicare.


VI. LONG TERM CARE

FACILITY IMPACTS

Operating Impacts

In addition to the 11 hospitals that provide

acute and tertiary patient services, Santa Clara

County also boasts 62 long term care facilities

to provide care for people who cannot be

cared for at home or in the community. The

operations of these long term care facilities

also provide significant economic benefits to

Santa Clara County. These positive impacts

include the following:

Long Term Care Facility Impacts. The 62

long term care facilities in Santa Clara

County create jobs for nearly 6,400 full-

time equivalent employees. These

facilities as a whole generate an annual

economic impact of $843.7 million (see

Table 11). This is in addition to the

economic impacts generated by the

hospitals. The long term care facilities

directly and indirectly support 8,600 jobs

and $350.9 million in payroll.

Revenue Impacts

Revenue Impacts of Long Term Care

Facilities. The employees of these long

term care facilities, as well as the

supported employees at other local

businesses, also generate state and local

revenue impacts. Annual revenues from

property, sales, and personal income

taxes are estimated at $9.3 million (see

Table 12). These revenues benefit local

and state government, helping to support

local and statewide services.

TABLE 11

Annual Operations Impacts Santa Clara County Long Term Care Facilities


Direct Impacts 6,386 $225,954,072 $517,824,119

Indirect Impacts 706 $41,239,170 $102,673,784

Induced Impacts 1,508 $83,689,263 $223,220,156

TOTAL IMPACTS 8,600 $350,882,505 $843,718,058



TABLE 12

Annual Indirect Revenue Impacts

Type of Employee

Local

State

Sales Property Sales Income

Long Term Care $854,558 $9,667,225

$2,670,495 $3,694,386

Other Supported Employees $929,717 $3,351,352

$2,905,367 $5,614,220

TOTAL $1,784,276 $13,018,577 $5,575,862 $9,308,606


VII. CONCLUSION

This study has estimated the economic

impact of hospital and hospital-related

expenditures in Santa Clara County. Hospitals

and hospital-related spending generate $14.3

billion in spending annually, create almost

64,000 jobs, and support $5.9 billion in

income and wages. Hospitals and other

medical establishments in Santa Clara County

generate a wide variety of employment

opportunities, providing employment for a

range of skilled and unskilled workers.

The wages and salaries for Santa Clara

County’s healthcare workers are 45% higher

than the average county job. Santa Clara

County’s healthcare worker average wages

and salaries are also 11% to 22% higher than

wages and salaries earned by healthcare

workers throughout California. Because of

these higher wages, hospitals in Santa Clara

County have the potential to create a greater

local economic impact than hospitals in many

other California locations. The healthcare

sector in Santa Clara County is the third

largest sector, and was one of the few sectors

that grew from 2000 to 2010.

Growth in the healthcare sector indicates that

the Santa Clara County hospital impacts are

only likely to grow over time. This is especially

the case given the high volumes of

construction planned by the hospitals, much

of which is targeted to meet California

seismic requirements for hospitals. The $3.8

billion in planned construction activities over

the next five years will result in a construction

impact of $6.0 billion on the Santa Clara

County economy, 38,329 temporary jobs in

construction and related supplier industries,

and $2.7 billion in payroll over the next five

years. Although these are non-recurring

impacts, they are significant during the

construction period and will comprise a

significant contribution to Santa Clara

County’s economy and employment base.

The hospitals’ impacts go far beyond

monetary and labor impacts. The county’s

hospitals provide an extensive array of

community benefits to economically

disadvantaged populations and the broader

community. In a given year these benefits are

valued at over $543 million, with $311 million

including free or subsidized medical care

through charity care or under-compensated

costs of government-funded programs, such

as Medi-Cal. These benefits represent

substantial additional impacts generated by

the hospitals, affecting the quality of life for

Santa Clara county’s residents and especially

vulnerable populations. Hence the hospitals

are a great source of economic and quality-

of-life enrichment for all of Santa Clara

County.



ASSUMPTIONS AND GENERAL LIMITING CONDITIONS

ALH Urban & Regional Economics has made

extensive efforts to confirm the accuracy and

timeliness of the information contained in this

study. Such information was compiled from a

variety of sources, including interviews with

government officials, review of City and

County documents, and other third parties

deemed to be reliable. Although ALH Urban

& Regional Economics believes all

information in this study is correct, it does not

warrant the accuracy of such information and

assumes no responsibility for inaccuracies in

the information by third parties. We have no

responsibility to update this report for events

and circumstances occurring after the date of

this report. Further, no guarantee is made as

to the possible effect on development of

present or future federal, state or local

legislation, including any regarding

environmental or ecological matters.

The accompanying projections and analyses

are based on estimates and assumptions

developed in connection with the study. In

turn, these assumptions, and their relation to

the projections, were developed using

currently available economic data and other

relevant information. It is the nature of

forecasting, however, that some assumptions

may not materialize, and unanticipated events

and circumstances may occur. Therefore,

actual results achieved during the projection

period will likely vary from the projections,

and some of the variations may be material to

the conclusions of the analysis.

Contractual obligations do not include access

to or ownership transfer of any electronic

data processing files, programs or models

completed directly for or as by-products of

this research effort, unless explicitly so agreed

as part of the contract.


ALH Urban & Regional Economics | A-1

APPENDIX A: TECHNICAL APPENDIX

The economic impacts shown in this report

are based on the economic theory of input-

output analysis. Input-output analysis relies

on large matrices of industry data showing

what is purchased and what is produced by

various segments of the economy. These

transaction matrices describe the

interconnectedness of the industries,

households, and government entities in a

specific geographic area. The output of one

industry will appear as the input of other

industries. Certain simplifying assumptions

are made, such as that productive resources

will always be combined in the same

proportions to produce any amount of a final

product. This makes it possible to determine

the total quantities of various goods that

must be produced to obtain a given amount

for final consumption.

Input-output models describe both the

transactions between a particular region and

the rest of the world (imports and exports), as

well as economic activities within a region. In

the case of hospitals, they purchase goods

and services from industries in the local

economy (and elsewhere in the world)

creating additional demand for production at

these industries. They also provide services

that are purchased by local households and

government.

In this case, the IMPLAN (IMpact analysis for

PLANning) input-output model was used to

derive multipliers used in the economic

impact analysis of hospitals in Santa Clara

County. The IMPLAN model was originally

developed by the U.S. Forest Service but is

now widely used by numerous state and

federal government agencies, academic

institutions, and private companies in the

United States. The IMPLAN software performs

calculations and provides an interface for

users to model final demand changes.

IMPLAN then estimates the ripple effects of

these changes in expenditures on the

county’s economic sectors through the use of

economic multipliers.

The IMPLAN model incorporates economic

base data for a specific geography, in this

case Santa Clara County, to describe

commodity flows from producers to

intermediate and final consumers. Industries

producing goods and services for final use

create final demand that drives the model.

Industries like hospitals purchase specific

types of goods and services from

intermediate and final producers who in turn

purchase goods from other industries. This

trickle down cycle can be described using

multipliers to show how a $1 change in final

demand (created in this case by hospitals)

translates into a given amount of additional

output, income and employment for other

local industries.

Multipliers are a numeric way of describing

the secondary impacts stemming from a

change in final demand. Using local economic

base data allows the model to control for the

types of buyers and suppliers that exist (or do

not exist) in the local area, and what must be

purchased outside the local area. This limits

the volume of transactions that can occur

locally and hence the size of the multipliers.

In addition to accounting for purchases

between industries or businesses, the IMPLAN

model also accounts for additional spending

by households. The households in this case

are the families of the hospital employees, as

A-2 | ALH Urban & Regional Economics

well as the families of employees at

supported local supplier industries.

Transactions between industries or businesses

are called indirect impacts, whereas

transactions between households and

businesses are called induced impacts. The

value of services produced by the hospitals in

this study represents the direct impacts.

Direct, indirect, and induced impacts can all

be quantified in terms of three variables:

output, income, and employment. The

application of these three types of impacts to

the hospitals in Santa Clara County is

described below.

Direct Impacts

Output—Value of services produced by

the hospitals, represented in this case by

total net revenues

Jobs—Total number of hospital FTEs

Income—Salaries and wages of hospital

employees

Indirect Impacts

Output—Amount of actual local

operating expenditures made by the

hospitals, which in turn translates into

increased demand for goods and services

from other local businesses

Jobs—Employees at local businesses

where hospitals make purchases

(estimated using IMPLAN multiplier data

based on increases in output by industry

type)

Income—Salaries and wages of

employees at local businesses where

hospitals make purchases (estimated

using IMPLAN multiplier data based on

increases in output by industry type)

Induced Impacts

Output—Amount of local consumer

spending by hospital employees and by


hospitals make purchases (supplier

employees)

Jobs—Employees at local businesses

where hospital employees shop and

where supplier employees shop



type)

Income—Salaries and wages of


hospital and supplier employees shop



type)


ALH Urban & Regional Economics | B-1

APPENDIX B: STUDY RESOURCES

Implan, Data set and software for Santa Clara County, 2010 data file, www.implan.com

Select Santa Clara County Hospital Annual Reports

Select Santa Clara County Hospital Community Benefits Reports for FY 2011

State of California Employment Development Department, “California Regional

Economies Employment Series for Santa Clara County”

http://www.labormarketinfo.edd.ca.gov/Content.asp?pageid=173

State of California Office of Statewide Health and Planning Development, System for Integrated

Electronic Reporting and Auditing, Annual Financial Disclosure Reports, Hospitals and Long

Term Care, http://siera.oshpd.ca.gov/annualfinancial.aspx

United States Bureau of Labor Statistics, Table 4: Consumer Price Index for all Urban Consumers

(CIP-U) U.S. Average, Hospital Services CPI Index, http://www.bls.gov/cpi/#publications

United States Bureau of Labor Statistics, “May 2011 Metropolitan and Non metropolitan Area

Occupational Employment and Wage Estimates San Jose-Sunnyvale-Santa Clara and the

State of California;” http://www.bls.gov/oes/current/oes_41940.htm; and

http://www.bls.gov/oes/current/oes_ca.htm

2239 Oregon StreetBerkeley, CA 94705

[email protected]

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