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Average annual economic impact of orthopaedic operations in Missouri, as determined by the MSOA study.

AAOS Now

Published 5/1/2016
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Doug Kiburz, MD; Akin Cil, MD

Orthopaedic Impact Study Pays Dividends to Missouri Economy

If your state's director of economic development announced that he or she had brought an industry to the state that would generate $1.79 billion in total economic output and $28 million in state taxes while supporting 11,000 jobs, it would certainly be statewide news.

Here in Missouri, the Show-Me State, that is exactly what happened.

With the help of a grant from the American Association of Orthopaedic Surgeon's (AAOS) Health Policy Action Fund, the Missouri State Orthopaedic Association (MSOA)—under the leadership of MSOA Executive Director Brian Treece—developed an orthopaedic economic impact study to quantify the dollars-and-cents evidence of orthopaedic healthcare in the state.

Based on a practitioner survey and available public data, Missouri providers of orthopaedic-related services directly hire an estimated 491 orthopaedic surgeons with an additional 2,455 nurses, technicians, and administrative and other support staff (not including contracted labor). These data were used to derive the economic modeling, multiplier effects and subsequent economic impact.

The study analyzed the fiscal impact of orthopaedic medicine on Missouri's economy in the following areas:

  • number of jobs created
  • total payroll and salary
  • income and property tax revenues generated from orthopaedic facilities
  • the rollover of medical and nonmedical equipment, goods, and services

Dramatic results
The MSOA orthopaedic economic impact study found that, in an average year, orthopaedic operations were responsible for the following:

  • $1.79 billion in total economic output and $600.2 million in household earnings
  • 11,100 jobs
  • $28.1 million in state taxes

The physical therapy practices supported by direct orthopaedic referrals generate an additional $470.6 million in economic output and $170.3 million in household earnings, support 3,400 direct and indirect jobs, and generate nearly $8.0 million in state taxes each year.

Orthopaedic practices across the state spend nearly $634 million annually for employee compensation and all other operations. This spending generates $1.8 billion in total economic output annually.

To put this into perspective, the impact of orthopaedic health care on Missouri's economy is more than the estimated value of the Kansas City Royals and St. Louis Cardinals franchises combined.

Adding the economic impact of physical therapy operations attributable to direct referrals from orthopaedic practices, the combined total economic output is almost $2.3 billion annually, just under the total annual operating expenditures for the entire University of Missouri system.

For every orthopaedic surgeon, direct orthopaedic operations support 23 additional direct and indirect jobs in the state and an additional seven jobs based on physical therapy referrals.

In other words, each orthopaedic surgeon supports the equivalent of three small businesses in the state.

Vital contributions
Because Missouri's orthopaedic healthcare system boosts the state's economy by nearly $2 billion every year, it is clear that orthopaedic physicians are important to Missouri's healthcare system and vital to the state's economic engine.

Major capital construction projects for orthopaedic-related medical centers also have a significant impact on Missouri's economy. Because construction jobs are temporary, they were not included in the calculations. But the construction of orthopaedic facilities and surgery centers represents significant capital investment in Missouri's economy. Since 2004, at least $222.5 million has been invested in Missouri for orthopaedic-related facilities.

For example, Mercy Orthopaedic Hospital, in Springfield, Mo., is a $115 million facility and a significant orthopaedic-related capital construction project. The facility was built over 2 years and, assuming $57.5 million in average annual construction spending, its construction supported 224 full-time equivalent construction jobs each year.

In addition, the project generated $173.1 million in state-wide total economic activity (primarily in the Springfield area), as well as $46.7 million in household earnings. It also supported, both directly and indirectly, 1,087 jobs, and generated nearly $2.2 million in state tax revenues.

Using the construction of this facility as a model, the average annual economic impacts from similar capital construction projects can be estimated. Because economic impacts are scalable, every $10 million in hypothetical orthopaedic-related capital construction annually would generate $30.1 million in total economic output and $8.1 million in household earnings, support 190 direct and indirect jobs, and generate $376,000 in state taxes.

The MSOA orthopaedic economic impact study was conducted by an economic development firm based in St. Louis that also conducted an independent orthopaedic practitioner survey to derive the inputs and better understand economic activity that is specific to orthopaedic healthcare services in Missouri.

Although the tangible economic benefits of Missouri's orthopaedic industry are now clearly defined, the more important physical benefits and future productivity associated with orthopaedic procedures have not been fully quantified.

It should be noted that Missouri's orthopaedic surgeons, who have long been proud of the impact they have in their patients' lives, now can also be proud of their contribution to help support and expand Missouri's economy.

Douglas Kiburz, MD, is the Missouri delegate to the AAOS Board of Councilors. He can be reached at kibz@charter.net. Akin Cil, MD, is president of the MSOA. He can be reached at akineton@hotmail.com