Published 6/1/2012
Jennie McKee

Private Practices Have Significant Economic Impact

MSSNY-sponsored study evaluates private practices in New York state

What impact do private practice physicians such as orthopaedists have on local and state economies? According to a study sponsored by the Medical Society of the State of New York (MSSNY), these physicians make important contributions to the state’s economy as well as to the public good.

“At this time when policy decisions are being enacted that affect every participant in the provision of health care, it is increasingly important for practitioners and their member groups to possess a solid understanding of their roles within health care as a whole, as well as of the impacts of those roles,” wrote the authors of the study, “Economic Impacts of Private Practice Physicians in the State of New York.”

The authors also noted that “private practice physicians are vitally important to the state of New York, both in terms of their contribution to the structural economy—ie, economic impacts—and their contribution to the public good.”

Measuring economic impacts
The study, which was prepared for the MSSNY by two outside professional consulting services, evaluated the economic impacts of private practice physicians in each of the state’s 62 counties using input-output economic modeling.

“In an input-output model of the structural economy,” explained the study authors, “the impact of any specific sector can be estimated by removing all activity for that sector from the region of interest and allowing the model to remove any other activity that would otherwise have supported the sector of interest.”

The economic model drew data from entities such as the Bureau of the Census, the Bureau of Labor Statistics, and the Bureau of Economic Analysis. The study focused on the following data for the state of New York:

  • Total employment
  • Total personal income
  • Total corporate sales
  • State tax revenues
  • Local tax revenues

According to the study, contributions to the structural economy made by private practice physicians encompass more than direct employment, wages, and output. The goods and services used in the process of conducting a business and by employees when they spend their wages must also be considered.

Evaluating the results
According to the study, private practice physicians supported more than 330,000 jobs in 2008 (
Fig. 1) and created more than $24 billion in personal income. In addition, they generated more than $44 billion in corporate sales and were responsible for more than $4.5 billion in state tax revenues and more than $4.6 billion in local tax revenues.

“Throughout the United States as a whole during 2008, offices of physicians supported more than 670,000 jobs, created more than $41 billion in personal income, and generated more than $91 billion in corporate sales,” wrote the study authors. “By 2020, these numbers for both the state of New York and the United States as a whole are projected to grow significantly.”

In addition, private practice physicians make contributions to the public good, which can have clear economic ramifications, such as enabling patients to be more productive due to improved physical capabilities and improved health. Although measuring the economic impact of these contributions was beyond the scope of the study, the study authors asserted that, “put in dollar terms, physicians engaged in private practice medicine generate economic activity on an enormous scale.”

To download the study, visit www.mssny.org, click on “Practice Resources,” and select “Economic Impact Reports”

Jennie McKee is a staff writer for AAOS Now. She can be reached at mckee@aaos.org