Thursday, July 8, 2010

New hospital expected to give boost to many local businesses

The construction phase of Owensboro Medical Health System's new hospital is expected to generate from 1,000 to 1,500 new contract worker jobs over three years, according to OMHS' estimates.

But the addition of this new, 477-bed, $385 million hospital also will result in a trickle-down effect that could boost the bottom line of some of the health care system's local customers and the region as a whole.

"We are their food vendor," said Steve Frey, president of CRS OneSource. "Along with the hospital being vital to the community, they are very important to our 162 employees. They are a very good customer of ours."

The patient count is expected to go up along with the hospital's payroll. That will translate into a greater amount of business for the food vendor, Frey said.

"The larger they become, the more they will increase their services," he said. "And they do stay local with a lot of their business."

CRS does business with a lot of hospitals, Frey said.

"When the economy goes bad, people stay home and don't go out to eat," he said. "Having the hospital's business is good for us."

Frey estimates that OMHS now purchases about $1.2 million in goods annually from CRS.

The company delivers food at least once daily to OMHS and sometimes more often, as needed.

Groundbreaking for the new hospital was June 5.

The economic boost from construction doesn't count the medical profession jobs that will be added as the hospital prepares to open the new facility in 2013.

OMHS expects its annual payroll to go from $169 million reported in February of this year to $193 million in 2013, according to OMHS President/CEO Jeff Barber's estimates.

Combined employment in 1995 when Owensboro-Daviess County Hospital and Mercy Hospital merged was 2,000. In February of this year, the total was 3,200.

It is likely to exceed 4,000 in the next five to 10 years, Barber has said.

Several other local businesses are certain they will benefit from the hospital's growth.

The hospital has been a good customer for Ernie Davis and Sons Mechanical for many years, and its expansion should have a positive impact, Ernie Davis said.

"It's just hard to say by how much," Davis said. "We do a lot of doctor's offices, and my brother (Jerry) and I have a lot of rental property, so I expect it to help us in many different ways."

Levi Reames, owner and operator of Comfort Keepers, sees the benefits of a new hospital campus for both his business and the community.

"It's impossible to quantify the impact for us, but the new hospital will be absolutely great," he said.

Comfort Keepers provides non-medical home health care.

"People are living longer and need more health care, and often they also need someone to take care of them when they go home," Reames said. "It's nothing for me to see a 90-plus-year-old that is still highly functional because of advances in health care."

Reames, who moved to Owensboro from Kokomo, Ind., also is proud of Owensboro for nurturing the health care industry.

"Kokomo is a factory town with about 20 percent unemployment," he said. "The jobs here are not going to be shipped out."

EDC study shows impact on region

Nick Brake, president and CEO of the Greater Owensboro Economic Development Corp., often refers to health care as a major driver of the regional economy.

"Hospitals make substantial contributions to local and regional economies through the purchase of goods and services and the employment of large numbers of workers," Brake said.

Brake analyzed statistics from the Bureau of Economic Analysis and the Bureau of Labor Statistics in September 2009 to get a glimpse of the additional earnings and jobs the hospital's expansion will create.

The data shows that the hospital is a base industry in the Owensboro metropolitan statistical area, which means that each dollar spent for earnings and employment creates additional earnings and jobs in the region.

The hospital's investment in a new facility will lead to 500 new long-term health care jobs through 2014, Brake said. That will translate to 800 new jobs in the region and more than $24 million in new payroll earnings in the five-county region.

Brake's estimates don't include the construction jobs or the new jobs that will come with new physicians recruited to the area.

The EDC president points to research from 2009 at the University of New Orleans that shows how hospitals in small, metropolitan areas such as Owensboro have the potential to evolve as a significant export industry -- since they often provide basic care in surrounding geographic areas.

Citing the hospital's 11-county service area, Brake said health care likely will grow as an export industry and add significantly to the regional economic base.

The hospital's percentage of Medicare dollars received from patients outside the metropolitan area is a significant measure of export revenue from the health care industry, Brake said.

OMHS receives 20 percent of its Medicare revenue or $75 million in net payments from outside Owensboro and Daviess County, according to the hospital's data. The median percentage in the University of New Orleans study was 12 percent.

The greater Owensboro region also has a stronger concentration of health care-related jobs than nationally, also a sign of the importance of this sector to the regional economy, Brake said.

And the average salary for health care practitioners in the region is more than $52,000 per year -- more than double the median income in the Owensboro MSA.

* To learn more about the new hospital project, go to:

Joy Campbell, 691-7299,