THE ECONOMIC IMPACT OF NOVANT HEALTH IN NORTH CAROLINA

Transcription

1 APRIL 9, 2013 THE ECONOMIC IMPACT OF NOVANT HEALTH IN NORTH CAROLINA Prepared by the Center for Healthcare Economics and Policy

2 Contents Executive Summary... i Introduction... 1 Scope of Report and Analyses... 4 Structure of Report and Analyses... 5 Economic Impact of Novant Health... 7 Conceptualization of Economic Impact Analysis... 7 Economic Impacts of Novant Health s Provision of Healthcare Services... 8 Implementation of Economic Impact Analysis Economic Impact Analysis Using IMPLAN Software Results of Economic Impact Analysis Economic Impact of Novant Health on the State of North Carolina Economic Impact of Novant Health on the Charlotte-Gastonia-Salisbury Combined Statistical Area Economic Impact of Novant Health on the Greensboro-Winston-Salem-High Point Combined Statistical Area Summary of Economic Impact Analysis Community Impact of Novant Health Novant Health Service Availability and Access Novant Health Service Quality and Outcomes Charity and Unreimbursed Care Community Programs and Outreach Conclusion Bibliography Prepared by the Center for Healthcare Economics and Policy

3 EXECUTIVE SUMMARY Novant Health, Inc. ( Novant Health ) is a not-for-profit integrated system of 13 hospitals, a medical group with 1,123 physicians in more than 350 clinic locations, and numerous outpatient surgery centers, medical plazas, rehabilitation programs, diagnostic imaging centers and community health outreach programs. The majority of this healthcare delivery system is located in North Carolina. More than 21,000 employees in the state of North Carolina contribute to Novant Health s mission of improving the health of its communities, including the major metropolitan areas of Winston-Salem and Charlotte. Founded and headquartered in Winston- Salem, Novant Health supports the economy, patients and residents of North Carolina. Novant Health commissioned this study to provide an assessment and quantification of its economic impacts and contributions to the communities it serves in North Carolina, including the Greensboro-Winston-Salem-High Point and Charlotte-Gastonia-Salisbury Combined Statistical Areas ( CSAs ). 1 The study utilizes Input-Output modeling using IMPLAN, an industry-standard software and data package for regional economic impact analysis, in order to quantify Novant Health s economic impacts in the state and in these two communities. Figure ES-1 below shows the overall results of the economic impact analysis for the state of North Carolina. Figure ES- 1: Novant Health s Total Economic Impact on the State of North Carolina $5.9 Billion Output 44,425 Jobs $623 Million Tax Revenues The economic impact study has a number of key findings: NOVANT HEALTH S OPERATIONS GENERATED MORE THAN $5.7 BILLION OF ECONOMIC ACTIVITY IN THE STATE OF NORTH CAROLINA DURING 2012 During 2012, Novant Health directly and indirectly generated more than $5.7 billion of economic activity in North Carolina through its provision of healthcare services. 2 This $5.7 billion includes approximately $3.0 billion in the Charlotte-Gastonia-Salisbury CSA, $2.4 1 A CSA is a grouping of neighboring metropolitan and micropolitan statistical areas. See 2 Novant Health s activities generate economic impacts through its employment, healthcare delivery services and expenditures, as well as through the secondary effects of additional economic activity by its vendors, employees and local communities. Estimates provided are from the Input-Output modeling using IMPLAN unless otherwise noted. Prepared by the Center for Healthcare Economics and Policy i

4 billion in the Greensboro-Winston-Salem-High Point CSA and approximately $300 million in other portions of the state. Table ES- 1: Estimated Economic Impact of Novant Health Operations on the State of North Carolina, 2012 Impact Employment Labor Income Value Added Output State & Local Federal Tax Tax Revenue Revenue Total Impact 42,868 $2,337,779,769 $3,207,573,674 $5,769,419,785 $197,774,601 $408,181,671 Direct Impact 21,288 $1,491,906,945 $1,660,138,425 $3,172,205,116 $52,328,741 $229,903,283 Indirect Impact 9,424 $374,366,421 $678,890,196 $1,130,596,871 $55,166,726 $77,812,692 Induced Impact 12,156 $471,506,403 $868,545,053 $1,466,617,798 $90,279,134 $100,465,696 Impact Multiplier n/a n/a IN 2012, NOVANT HEALTH S OPERATIONS ARE ESTIMATED TO HAVE CONTRIBUTED $606 MILLION TO PUBLIC TAX REVENUES The operations of Novant Health directly and indirectly contributed an estimated $198 million in state and local tax revenues and $408 million in federal tax revenues. The economic impact model estimates the direct, indirect and induced tax revenues generated by the operations of Novant Health, its suppliers and their employees. 3 NOVANT HEALTH S OPERATIONS SUPPORTED 42,868 JOBS IN THE STATE OF NORTH CAROLINA THROUGH THE SYSTEM S DUAL ROLE AS A PROVIDER OF HEALTHCARE AND PURCHASER OF LOCAL GOODS AND SERVICES The operations of Novant Health supported an estimated 43,000 jobs in North Carolina, yielding an estimated $2.3 billion in wages, salaries and benefits. Novant Health s operations in the Greensboro-Winston-Salem-High Point CSA supported 17,964 jobs, while an additional 22,039 jobs derived from Novant Health operations in the Charlotte-Gastonia- Salisbury CSA and 2,865 jobs were supported in other areas of the state. The employment supported by Novant Health s operations spanned several different industries, particularly the private hospitals, physician offices, and management industries. The estimated impact in these sectors alone was an additional 26,308 jobs either directly or indirectly supported by Novant Health. Table ES- 2: Estimated Top Ten Industries Affected by Novant Health Operations in the State of North Carolina, 2012 Description Employment Labor Income Value Added Output 1. Private hospitals 16,041 $721,510,960 $842,220,774 $2,289,817, Offices of physicians, dentists and other practitioners 7,514 $640,709,660 $657,594,891 $857,724, Management of companies and enterprises 2,753 $216,048,155 $224,194,490 $102,506, Real estate establishments 2,552 $31,146,758 $235,011,794 $336,383, Food and beverage services 1,926 $37,606,146 $54,675,573 $105,356, Employment services 1,886 $53,739,784 $59,466,364 $73,813, Diagnostic labs and ambulatory care services 1,104 $63,618,853 $111,771,325 $208,700, Services to buildings and dwellings 697 $14,923,723 $18,137,772 $36,161, Wholesale trade businesses 614 $43,495,995 $75,505,316 $104,544, Retail stores - general merchandise 482 $12,511,380 $21,361,216 $27,872,469 3 Estimated direct taxes of $282 million include estimates for the following IMPLAN categories of taxes for Novant Health and its employees: contributions to social insurance programs, business taxes and fees, personal income taxes, and corporate taxes paid on unrelated business income. The estimated indirect taxes of $133 million include estimates for these same categories for Novant Health s suppliers and their employees. The estimated induced taxes of $191 million result from the consumption expenditures of the employees of Novant Health and the employees of its suppliers. Prepared by the Center for Healthcare Economics and Policy ii

5 NOVANT HEALTH GENERATED AN ADDITIONAL $169 MILLION OF ECONOMIC ACTIVITY IN THE STATE OF NORTH CAROLINA THROUGH ITS CONSTRUCTION EXPENDITURES During 2012, Novant Health directly and indirectly generated over $169 million of economic activity in North Carolina by investing in new construction projects to expand access to care in its communities. Of this $169 million impact, approximately $105 million was in the Charlotte-Gastonia-Salisbury CSA, $51 million was in the Greensboro-Winston- Salem-High Point CSA, and $13 million was in other areas of the state. Table ES- 3: Estimated Economic Impact of Novant Health Construction Activity on the State of North Carolina, 2012 Impact Employment Labor Income Value Added Output State & Local Federal Tax Tax Revenue Revenue Total Impact 1,557 $67,723,352 $87,862,045 $169,316,808 $6,101,230 $11,391,855 Direct Impact 998 $43,610,956 $46,842,324 $95,423,745 $2,323,069 $6,522,045 Indirect Impact 207 $10,476,136 $15,896,675 $31,478,132 $1,166,763 $1,963,953 Induced Impact 352 $13,636,260 $25,123,046 $42,414,931 $2,611,398 $2,905,857 Impact Multiplier n/a n/a IN 2012, NOVANT HEALTH S CONSTRUCTION ACTIVITIES CONTRIBUTED AN ESTIMATED $17 MILLION TO PUBLIC TAX REVENUES The construction activities of Novant Health are estimated to have directly and indirectly contributed $6 million in state and local tax revenues and $11 million in federal taxes. This amount includes business and corporate taxes paid by construction companies, their intermediate suppliers and sales and income taxes paid by employees receiving wages throughout the process. NOVANT HEALTH SUPPORTED 1,557 JOBS IN THE STATE OF NORTH CAROLINA THROUGH ITS EXPENDITURES ON NEW CONSTRUCTION Through construction activities, Novant Health supported an estimated 1,557 jobs in North Carolina yielding an estimated $68 million in wages, salaries and benefits. Construction activities in the Greensboro-Winston-Salem-High Point CSA supported an estimated 483 jobs, while an additional 892 jobs derived from Novant Health operations in the Charlotte-Gastonia-Salisbury CSA and 182 jobs were supported in other areas of the state. Employment from Novant Health s construction activities spanned several different industries, particularly the construction, food services and architectural and engineering sectors. These three sectors alone accounted for an additional 1,090 jobs either directly or indirectly created by Novant Health s investments. Table ES- 4: Estimated Top Ten Industries Affected by Novant Health Construction Activity in the State of North Carolina, 2012 Description Employment Labor Income Value Added Output 1. Construction of health care structures 998 $43,610,956 $46,842,324 $95,423, Food and beverage services 50 $979,293 $1,423,794 $2,743, Architectural, engineering, and related services 42 $2,575,145 $2,623,123 $4,579, Real estate establishments 27 $330,204 $2,491,488 $3,566, Wholesale trade businesses 22 $1,583,733 $2,749,225 $3,806, Employment services 18 $513,149 $567,831 $704, Offices of physicians, dentists and other practitioners 18 $1,402,638 $1,446,479 $2,227, Private hospitals 15 $923,483 $1,026,363 $1,951, Retail stores - general merchandise 15 $382,323 $652,756 $851, Civic, social and professional organizations 14 $417,639 $368,829 $611,247 Prepared by the Center for Healthcare Economics and Policy iii

6 NOVANT HEALTH PROVIDED CARE FOR MORE THAN 850,000 INPATIENT AND OUTPATIENT ENCOUNTERS DURING 2012 Personnel at Novant Health facilities in North Carolina provided care for nearly 120,000 inpatient discharges and more than 730,000 outpatient visits during The care provided to these patients spanned the entire spectrum of healthcare services, including cardiac, gastroenterology, orthopedic, oncology, maternal, gynecologic, pediatric, neonatal, neurologic, psychiatric, emergency care, general medical and surgical, radiologic and diagnostic, imaging, and other services. Physicians at the Novant Medical Group work in over 51 specialties and provided nearly 4 million physician office visits to patients in NOVANT HEALTH DELIVERED MORE THAN $506 MILLION IN COMMUNITY BENEFITS TO ITS NEIGHBORS AND COMMUNITIES IN 2012 In North Carolina in 2012, Novant Health provided approximately $111 million in charity medical care for the uninsured and an additional $347 million of unreimbursed health services to individuals with Medicare and Medicaid coverage and patients from other means-tested government programs. Novant Health s charity care contributions have increased in each year since 2009, resulting in part from its policy to provide charity care free of charge to individuals below 300% of the federal poverty level. The health system provided an additional $48 million in community benefits via programs serving patients, neighbors and underserved citizens of its communities. Novant Health conducted a number of community outreach services, including events and screenings, health education, and partnerships with local schools and ministries. NOVANT HEALTH HAS WON MULTIPLE QUALITY AND SERVICE AWARDS AND HAS GAINED NATIONAL RECOGNITION FOR ITS EMPHASIS ON QUALITY CARE Nationally, Novant Health is ranked as one of the 25 best healthcare networks by IMS Health. The organization has twice received the prestigious Ernest A. Codman Award from The Joint Commission for improving the quality and safety of patient care system-wide, while The Joint Commission s 2011 national report on quality and safety named Medical Park Hospital, Rowan Regional Medical Center and Thomasville Medical Center among the top performing hospitals in North Carolina. 4 Five of Novant Health s North Carolina hospitals are credentialed by the American Nurses Credentialing Center ( ANCC ) as Magnet Nursing Hospitals for their excellence and quality care in nursing. Forsyth Medical Center and Presbyterian Hospital have earned the Society of Thoracic Surgeons Three-Star rating, placing the cardiac programs at both facilities among the highest-rated heart surgery centers in the nation. 5 The same two facilities also became the first hospitals in North Carolina to receive The Joint Commission s National Primary Stroke Center Certification. More recently, an additional three Novant Health hospitals have earned the Primary Stroke Center designation. NOVANT HEALTH IS A LEADER IN THE INNOVATIVE DELIVERY OF CARE IN NORTH CAROLINA In 2004, Novant Health initiated a system-wide hand hygiene program designed to save lives through the reduction of hospital-acquired infections. Within three years, Novant Health achieved 99 percent hand hygiene compliance and reduced MRSA infections by 63 percent, earning Novant Health the national Ernest A. Codman award from The Joint Commission in 4 Introduction to 2011 Form 990 for Novant Health. 5 Ibid. Prepared by the Center for Healthcare Economics and Policy iv

7 2008. Novant Health shared materials and knowledge developed during the implementation of its hand hygiene program through its public website In recent years, Novant Health has introduced innovative nurse bedside reporting, begun implementation of Electronic Medical Records ( EMR ), developed a free, online tool called MyChart that gives patients access to their personal medical information and facilitates communicate directly with their care team at Novant Health, and hired a chief diversity officer and a chief consumer officer. These and other steps taken by Novant Health are efforts to keep the organization at the forefront of its peer group in the shifting healthcare environment. Prepared by the Center for Healthcare Economics and Policy v

8 INTRODUCTION Novant Health Inc. ( Novant Health ) is a not-for-profit, integrated healthcare system serving patients and communities in North Carolina, South Carolina, Georgia and Virginia. Formed in 1997 by the merger of Carolina Medicorp Inc. and Presbyterian Health Services, the Novant Health system in North Carolina today employs more than 21,000 people from a variety of different professional backgrounds and education levels. In 2012, Novant Health provided nearly 4 million physician medical group visits to patients system wide, and nearly 120,000 inpatient discharges. In addition to 11 acute care hospital facilities with nearly 2,450 licensed beds in North Carolina, Novant Health operates 10 outpatient surgery centers, 29 diagnostic imaging centers and seven rehabilitation centers in the state. 6 These facilities provide access to care for patients in North Carolina and the major metropolitan centers of the state, including Charlotte and Winston- Salem. In 2012, Novant Health cared for patients from each of the 100 counties in the state. 7 Figure 1 displays the extent of Novant Health s presence across the state, while Figure 2 shows the organization and major facility types of the Novant Health system. Figure 1: Novant Health Facilities in North Carolina 6 The 11 North Carolina hospitals include Forsyth Medical Center, Presbyterian Hospital, Presbyterian Hospital Huntersville, Presbyterian Hospital Matthews, Presbyterian Orthopaedic Hospital, Medical Park Hospital, Thomasville Medical Center, Rowan Regional Medical Center, Kernersville Medical Center, Brunswick Novant Medical Center and Franklin Regional Medical Center. 7 Novant Health internal documents and data. Prepared by the Center for Healthcare Economics and Policy 1

9 Figure 2: Novant Health System in North Carolina * *Clemmons Medical Center, which opened on April 3, 2013, is an outpatient Medical Center with a freestanding emergency department, 2 operating room surgery center, multimodality imaging, and lab and pharmacy services. An acute inpatient bed tower has received CON approval to be built on the Clemmons campus in the future Prepared by the Center for Healthcare Economics and Policy 2

10 As part of its mission to provide convenient access to the healthcare services that patients need, the Novant Health system has many locations including those that offer highly specialized services. These include the Derrick L. Davis Cancer Center, the Maya Angelou Center for Women s Health and Wellness and the Women s Heart Center at Forsyth Medical Center, the Rowan Breast Health Center at Rowan Regional Medical Center, a new geriatric behavioral health unit at Franklin Regional, an oncology unit with surgical robotics at Presbyterian Hospital, and a children s hospital with a 24/7 emergency department at Presbyterian Hospital in Charlotte. In North Carolina, 1,077 physicians and 409 mid-level providers at the Novant Medical Group provide a wide range of inpatient and outpatient services in 51 specialties at more than 323 locations across the state. 8 In 2012, the U.S. News and World Report placed Novant Health s flagship tertiary care hospitals, Forsyth Medical Center (Winston-Salem, NC) and Presbyterian Hospital (Charlotte, NC) in the top-ten of the Best Hospitals in North Carolina. The same report named Presbyterian the #1 hospital in the Charlotte metropolitan area. 9 Alongside its healthcare delivery services, Novant Health is a major provider of charitable care and community outreach. The health system operates with a service mission of improving the health of the communities it serves. In 2012, Novant Health provided approximately $506 million of community benefits in North Carolina among the highest of any health system in the state. This provision included the cost of programs serving patients, local citizens, and the uninsured and underserved individuals in the community. Novant Health also incurred over $48 million in estimated bad debt costs in To help patients assess the costs that they will be responsible for, and to identify payment options and other financial assistance, Novant Health has recently introduced its Financial Navigator program. This free service helps patients understand and estimate their insurance coverage and out-of-pocket expenses for a wide range of medical and surgical procedures, including imaging, before receiving treatment. 8 Novant Health internal documents and data. 9 U.S. News and World Report, Best Hospitals in North Carolina, U.S. News and World Report, (accessed March 2013). 10 Novant Health internal documents and data. Prepared by the Center for Healthcare Economics and Policy 3

11 Beginning in April of 2013, all Novant Health hospitals and physician practices in the Carolinas will begin operating under the Novant Health name. Through this strategic rebranding initiative, Novant Health is planning to unify all of its facilities as part of a core commitment to make medical care simpler, more convenient, and more affordable. 11 Additionally, the health system has completed Phase I of Clemmons Medical Figure 3: Clemmons Medical Center Center (see Figure 3 to the left), a two-phase project located in western Forsyth County, North Carolina. Phase I of Clemmons Medical Center opened on April 3, 2013 and features a 24-hour emergency department, an outpatient surgery center with two operating rooms, a laboratory, multiple observation rooms and outpatient imaging services. Phase II will include the addition of an inpatient 50-bed tower and is expected to be completed in Located on a 100+ acre development, the facility will serve as an anchor for office space, residential and retail development. Through March 2013, Novant Health has spent approximately $41 million on the development of Clemmons Medical Center. Total project costs, which include the inpatient bed tower, are expected to reach $100 million. Novant Health also plans to seek additional North Carolina Certificate of Need ( CON ) regulatory approval for new acute beds, inpatient dialysis services, imaging equipment, a new GI endoscopy unit, and a surgery center expansion. In addition, Novant Health has CON approvals to develop hybrid operating rooms for advanced vascular and cardiac surgical procedures, a replacement orthopedic hospital facility, imaging equipment, and a new 50-bed hospital in Mecklenburg County. As a leading provider of healthcare services for the residents of the state of North Carolina, Novant Health has a significant economic impact through its purchases of goods, services, and labor as well as through its provision of accessible patient care. Scope of Report and Analyses Novant Health commissioned the Center for Healthcare Economics and Policy ( the Center ) 12 to undertake a quantitative evaluation and qualitative assessment of the health system s economic impact on the state of North Carolina, as well as the Greensboro-Winston-Salem and Charlotte-Gastonia-Salisbury Combined Statistical Areas ( CSAs ). The Center for Healthcare Economics and Policy applies cutting-edge economics and quantitative methods to assist clients in developing and implementing market-based solutions across the spectrum of healthcare activity. The Center conducted a series of analyses in order to evaluate the total economic impact of Novant Health in North Carolina. These analyses include: 11 Quote from Jeff Lindsay, president of Forsyth Medical Center and CEO of the greater Winston-Salem and Eastern markets for Novant Health. See Fox 8, Novant Health announced unified system brand, Fox 8, February 8, 2013, (accessed March 2013). 12 The Center for Healthcare Economics and Policy is a separate business unit in the Economics Practice of FTI Consulting, Inc. Prepared by the Center for Healthcare Economics and Policy 4

12 Input-output ( I/O ) analysis to quantify the economic impact of Novant Health s operations and construction expenditures; Quantitative assessment of the range and volume of services provided by Novant Health facilities and personnel; Evaluation of the community services and charitable care offered by Novant Health. Structure of Report and Analyses The delivery of health care services by Novant Health in the state of North Carolina directly involves thousands of employees (physicians, nurses, and numerous other professionals), expenditures on goods and services, and construction of facilities to provide access for thousands of patients and patient families in a large number of communities across the state. These activities, in turn, have additional and significant impacts on the economies of the many communities in which Novant Health operates in North Carolina. In addition to economic impacts, Novant Health has broader community impacts including providing access to services, charitable and uncompensated care, and programs to benefit communities. (Figure 4) Figure 4: Novant Health's Impact on the State of North Carolina Community Impact Economic Impact Economic Impact. Healthcare service delivery by Novant Health and its investments in constructing new facilities create positive economic impacts by generating jobs and tax revenues for the residents of North Carolina, directly as well as indirectly. Expenditures and investments also have secondary impacts on local economies, including stimulating demand for goods and services. The Center applied rigorous and proven empirical techniques to quantify the economic impact of Novant Health s healthcare services activities on employment, revenues, and taxes in North Carolina. Community Impact. The provision of these healthcare services affects the broader community. Across all of its facilities in the state of North Carolina, Novant Health makes available a wide range of inpatient and outpatient services without regard to a patient s ability to pay, and offers its innovative Financial Navigator program to help patients better understand the cost of care. Additionally, Novant Health provides Prepared by the Center for Healthcare Economics and Policy 5

13 charity care and other patient financial assistance; unreimbursed health services to individuals with Medicaid and Medicare coverage; community health education; medical services that lose money but are important for the community; support groups; partnerships with other organizations to provide outreach services; community events and screenings; [opportunities for participation] in medical research; academic health programs; and other community initiatives. 13 In this study, the Center compiled data and information and estimated the amount of charity care that Novant Health provides to the residents of North Carolina and evaluated the total amount of community benefits and investments that Novant Health makes in its communities. 13 Novant Health, 2011 Community Benefit Report, Novant Health, Prepared by the Center for Healthcare Economics and Policy 6

14 ECONOMIC IMPACT OF NOVANT HEALTH The healthcare sector is a major source of economic activity and employment. According to the American Hospital Association ( AHA ), hospitals spend more than $702 billion on goods and services from other businesses and are the second largest source of private sector jobs. In 2011 in North Carolina alone, the AHA estimates that 171,445 hospital jobs stimulated 213,089 jobs paying a total of nearly $19 billion in wages. 14 According to data from the U.S. Bureau of Labor Statistics, job growth in healthcare was strong during the latest recession. Growth was particularly strong in the ambulatory health services, hospitals, and nursing and residential care facilities industries. 15 Quantification of the economic impact of Novant Health in North Carolina involves an assessment of its delivery of care through hospitals, outpatient clinics, rehabilitation facilities, diagnostic imaging centers, surgery centers, physician offices, administrative and corporate offices, and other resources used in the provision of care. Novant Health is a major employer of North Carolinians and a significant consumer of locally-produced goods and services. In addition, investments and expenditures made by Novant Health to sustain and enhance the provision of care in the future stimulate the economy now by employing workers in the construction sector, and by supporting local businesses that produce building materials and other important intermediate goods. In order fully to capture and quantify the economic impacts generated by Novant Health in North Carolina, the Center s analysis focuses on the specific ways that the revenues received by Novant Health for patient care flow to Novant Health s employees and suppliers in exchange for their goods and services, and then subsequently to the community at large. Conceptualization of Economic Impact Analysis To better understand the sources of economic impacts of Novant Health s activities, it is helpful to conceptualize the inputs involved in the delivery of healthcare services. Labor. The most significant component in Novant Health s healthcare delivery process is its workforce. Overall, the health system employs over 21,000 people in North Carolina from an array of professional backgrounds. In the nursing field alone, Novant Health employs more than 5,000 Registered Nurses ( RNs ), nearly 1,400 Certified Nursing Assistants ( CNAs ), almost 600 Licensed Practical Nurses ( LPNs ), and approximately 200 Nurse Practitioners ( NP ). 16 The Novant Medical Group employs an array of nurses, administrators and staff in addition to 14 American Hospital Association, Economic Contributions of Hospitals Often Overlooked, American Hospital Association, (accessed March 2013). 15 Wood, C, Employment in health care: a crutch for the ailing economy during the recession, Monthly Labor Review, (accessed March 2013). 16 Novant Health internal documents and data. Prepared by the Center for Healthcare Economics and Policy 7

15 more than 1,000 physicians. In 2012, Novant Health paid the employees at its North Carolina facilities and offices almost $1.5 billion in salaries, wages and benefits. 17 Goods. Novant Health purchases an extensive array of healthcare technologies, instruments, equipment, and other goods and supplies to deliver healthcare services to patients. Its suppliers include medical device manufacturers, pharmaceutical companies, food suppliers, and other vendors providing a host of intermediary products and services in support of patient care and related services. In 2012, Novant Health s North Carolina operations purchased over $479 million of medical and surgical supplies, drugs, and other supplies. 18 Services. Novant Health also utilizes a number of services to provide care for its patients. For example, Novant Health is a major consumer of local utilities, as well as construction services and architectural, accounting, consulting, legal and other professional services. In 2012, Novant Health s North Carolina operations purchased more than $219 million of services. 19 Figure 5 provides a schematic of the Novant Health healthcare service delivery process, including its most significant inputs. Novant Health purchases goods and services and then transforms them using its workforce into healthcare services to be made available for patients and the community at large. Figure 5: Flow of Goods and Services through Novant Health System Labor, Goods & Services Provide inputs to Novant Novant Health Produce high quality healthcare for community Local Community Access health, wellness and prevention services Economic Impacts of Novant Health s Provision of Healthcare Services The analyses that follow quantify the economic impacts of two distinct but interrelated activities representing two major areas where Novant Health impacts the communities that it serves. First, the report identifies and estimates the operational impacts resulting from Novant Health s actual provision of healthcare services. Second, it estimates the construction impacts resulting from Novant Health s investments in healthcare facilities. 17 Ibid. 18 Ibid. 19 Ibid. Prepared by the Center for Healthcare Economics and Policy 8