HEALTHCARE & BIOSCIENCE

2014 SAN ANTONIO HEALTHCARE & BIOSCIENCE ECONOMIC IMPACT STUDY [based on 2013 data] Conducted by Richard V. Butler, Ph.D. Mary E. Stefl, Ph.D. Trinity University San Antonio, Texas 1

OVERVIEW HIGHLIGHTS Unlike most previous versions, this current study includes the impact of The University of Texas Health Science Center at San Antonio, some elements of the military medical presence in the region, and the multiplier effects of the goods and services local healthcare and bioscience businesses sell or deliver to customers and patients outside the region. This study attempts, as in the 2009 and 2011 studies, to include credible approximations of the size of these important contributors to the San Antonio economy. This expanded definition of the industry is represented in the comprehensive estimates. To facilitate comparisons with the past, traditional estimates using the previous industry definition are also reported. The Healthcare and Bioscience Industry continues to be one of San Antonio s largest industries. Its economic impact in 2013 was $23.9 billion measured conservatively, and approximately $30.6 billion by a more comprehensive estimate. By the more comprehensive estimate, the industry paid $7.6 billion in wages and salaries to 164,537 employees in 2013. Nearly one of every six San Antonio employees works in the Healthcare and Bioscience Industry. The Healthcare and Bioscience Industry has added 41,567 net new jobs over the past decade (a 40% increase), fueling San Antonio s growth. As one of San Antonio s leading industries, the Healthcare and Bioscience Industry has shown steady growth and innovation over the past two decades. 2 2014 Healthcare & Bioscience Economic Impact Study San San Antonio, Texas 3

OVERALL GROWTH & IMPACT The economic impact of San Antonio s Healthcare and Bioscience Industry in 2013 totaled $30.6 billion. The impact of San Antonio s Healthcare and Bioscience Industry in 2013 is more than twice the size of the industry a decade ago, and more than four times its size in 1993. Measured by the dollar volume of final sales of its products and services, the economic impact in 2013 totaled $30.6 billion by the comprehensive estimate, which is 6% above that for 2011, and 23% above the 2009 level. By the traditional method, which is the measure most useful for comparison over time, the 2013 economic impact was $23.9 billion, a healthy 10.6% increase from the 2011 level. The economic impact of the Healthcare and Bioscience Industry has more than doubled in the past decade. 4 2014 2014 Healthcare & Bioscience Economic Impact Impact Study Study San San Antonio, Antonio, Texas Texas 5

The South Texas Veterans Health Care System (STVHCS) is one of only five Polytrauma Rehabilitation Center sites nationwide. 6 2014 Healthcare & Bioscience Economic Impact Study San Antonio, Texas 7

The Healthcare and Bioscience Industry generated over 41,000 net new jobs in the last decade. In 2013, a total of 146,190 San Antonians were employed in the portion of the Healthcare and Bioscience Industry represented in the traditional data. This represents nearly one-sixth of the total San Antonio civilian workforce. The comprehensive total of 164,537 includes more than 18,000 uniformed military personnel and employees of the UT Health Science Center who are not counted in the Texas Workforce Commission (TWC) employment data, so the share of the total regional workforce employed in healthcare and bioscience is likely in excess of 18%. Using the comprehensive estimates, 68% of these employees were involved in the direct provision of health and medical services; the remaining 32% were employed in related industries. IMPACT ON THE WORKFORCE Nearly one in six San Antonio employees works in healthcare and bioscience. Considering the traditional estimates for a comparison over time, the 146,190 employees in the narrower definition of the industry represent a 5.6% increase over the 2011 level, and a 15.4% increase since 2009. The industry generated 7,761 net new jobs since 2011. Looking at the decade as a whole, the industry added 41,567 net new jobs, an increase of 40%. Employment in Related Industries and Services both grew at the same (40%) rate, demonstrating balanced growth over the period. 8 2014 Healthcare & Bioscience Economic Impact Study San San Antonio, Texas 9

San Antonio has been the Home of Army Medicine since 1947 and is now the Home of Military Medicine with the Medical Education & Training Campus (METC), which along with the Army Medical Department Center & School, annually train more healthcare professionals than any organization in the world. 10 2014 Healthcare & Bioscience Economic Impact Study San San Antonio, Texas 11

Payroll in the Healthcare and Bioscience Industry grew 73% over the past decade. A GROWING ANNUAL PAYROLL The total annual payroll in healthcare and bioscience (by the comprehensive estimate) was $7.6 billion in 2013, an 18% increase over 2009. Looking at the traditional definition of the industry, payroll grew by 73% over the decade. 12 2014 Healthcare & Bioscience Economic Impact Study San San Antonio, Texas 13

SALARIES ABOVE AVERAGE Using the comprehensive estimates, individuals employed in the Healthcare and Bioscience Industry earned, on average, $46,333 in 2013. This is almost 7% above the 2013 average of $43,450 for all workers in San Antonio. Annual incomes of workers in the Health Services sector averaged $48,467. The average salary for the Related Industries sector was $41,751. Healthcare and bioscience salaries were nearly 7% above the average annual salary for San Antonio. These figures include only direct wage payments. Total compensation, which includes benefits, would be considerably higher. In interpreting these averages, it is important to note that employees in the healthcare and bioscience sector include not only well-paid healthcare providers and scientists but also support staff of various types. Also, since the employment figures include both full-time and part-time employees, the average salary reported here is no doubt lower than that received by a typical full-time employee. This margin of difference has persisted over at least two decades, though it is more pronounced when the highly-paid faculty at the UT Health Science Center and the military medical installations are added to derive the comprehensive estimates. Still, even by the traditional estimates, salaries in the industry have stayed well above the San Antonio average. 14 2014 Healthcare & Bioscience Economic Impact Study San San Antonio, Texas 15

The Defense Medical Readiness Training Institute is a unique DoD command conducting joint medical readiness training in trauma, burn care, disaster preparedness, humanitarian assistance, and CBRNE preparation/response. 16 2014 2014 Healthcare & Bioscience Economic Impact Impact Study Study San San Antonio, Antonio, Texas Texas 17

IMPACT OF HEALTH SERVICES & RELATED INDUSTRIES The Healthcare and Bioscience Industry is both large and diverse. It includes a wide variety of direct healthcare services, as well as industries related to the provision of health and medical care. The overall size or impact of the Health Services sector has always been larger than the Related Industries sector, and that difference remains when the comprehensive definition of the industry is used. Health Services represent about 56% of the total economic impact of the industry in San Antonio, but both sectors have experienced healthy growth in the past two decades, more than doubling since 2003 and more than quadrupling since 1993. 18 2014 Healthcare & Bioscience Economic Impact Study San San Antonio, Texas 19

In 10 years, the economic impact of hospitals has increased by 130% and that of physicians has jumped by 95%. HEALTH SERVICES Includes a wide range of healthcare professionals and businesses providing direct care to patients. Within this sector, there are five major groups: hospitals; physicians; ambulatory and other services, including laboratories; nursing and home health services providers; and other providers of health services (dentists, therapists, optometrists, chiropractors and others). In San Antonio, this sector includes both civilian and military medicine, a Veterans Administration medical center and a variety of governmental, for-profit and non-profit operations and facilities. Physicians and hospitals, the two largest provider groups, have consistently made a substantial contribution to the San Antonio economy. This remains the case when the comprehensive definition of the industry is used. 20 2014 2014 Healthcare & Bioscience Economic Impact Impact Study Study San San Antonio, Antonio, Texas Texas 21

RELATED INDUSTRIES Incorporates a variety of entities that support and complement the direct provision of healthcare services. These industry sectors include health insurance carriers, pharmaceutical companies, medical equipment producers and manufacturers, civilian and military medical education, biomedical research organizations, residential care and social service providers, and a variety of related endeavors. The Education and Research sector is buoyed considerably by the inclusion in the comprehensive estimate of more than 18,000 UT Health Science Center San Antonio and military medical training employees absent from the TWC data used for the traditional estimates. Over time, both the Insurance and the Social Services/Residential Care sectors have shown steady growth. This reflects rising healthcare costs over the period as well as San Antonio s population growth. 22 2014 Healthcare & Bioscience Economic Impact Study San San Antonio, Texas 23

In 2013, San Antonio s major biomedical research institutions were awarded more than $325 million in external research grants. 1 of 6 BSL4 maximum containment labs nationwide is at the Texas Biomedical Research Institute in San Antonio. Here, scientists conduct many of the nation s vaccine and therapy studies for deadly emerging viral threats such as Ebola virus. 24 2014 2014 Healthcare & Bioscience Economic Impact Impact Study Study San San Antonio, Antonio, Texas Texas 25

HISTORY OF HEALTHCARE & BIOSCIENCE IN SAN ANTONIO 1805 Hospital established at the Alamo as a military hospital for Mexican troops 1853 Bexar County Medical Society chartered 1869 San Antonio s first private hospital, now known as CHRISTUS Santa Rosa Health System, opens as Santa Rosa Infirmary 1873 Dr. Josephine Kingsley becomes the first woman physician in San Antonio 1879 Temporary wooden 12-bed hospital built at Ft. Sam Houston 1892 Mental health hospital, today known as the San Antonio State Hospital, opens 1903 Physicians and Surgeons Hospital, now Baptist Health System, established in downtown San Antonio 1912 Bexar County Tuberculosis Sanatorium founded 1916 City of San Antonio and Bexar County sponsor the Robert B. Green Memorial Hospital 1918 Santa Rosa becomes the first hospital in Texas to devote a separate unit for the care of crippled children 1930 The first medical mall in the U.S., now known as the Nix Medical Center, opens 1931 Sisters of Charity of the Incarnate Word establish a nursing school, today known as the Ila Faye Miller School of Nursing and Health Professions 1938 Hospital opened on Ft. Sam Houston, later named Brooke General Hospital in 1942 1938 DPT Laboratories, then known as Texas Pharmacal Company, opens as the first dermatology company in the U.S. 1941 Texas Biomedical Research Institute, formerly known as the Foundation of Applied Research, and then Southwest Foundation for Biomedical Research created as a non-profit institution 1946 U.S. Army Medical Field Service School transfers to Ft. Sam Houston 1946 Mission Pharmacal founded; its first product, IROMIN, increases hemoglobin content in blood 1947 Community leaders create the San Antonio Medical Foundation 1947 U.S. Army establishes the Institute for Surgical Research at Ft. Sam Houston 1947 Thomas Slick, Jr. establishes the Southwest Research Institute, providing contract research and development services to government and industrial clients 1959 Legislation passed to found The University of Texas Health Science Center at San Antonio 1959 CHRISTUS Santa Rosa Children s Hospital dedicated 1963 Methodist Hospital opens as the first hospital in the South Texas Medical Center 1966 Center for Health Care Services is established 1969 The South Texas Medical School is established. This was a precursor to The University of Texas Health Science Center at San Antonio 1969 Bexar County Teaching Hospital (now University Hospital) dedicated 1969 School of Nursing begins educating students at the UT Health Science Center 1973 Audie L. Murphy Memorial VA Hospital founded 26 2014 Healthcare & Bioscience Economic Impact Study San Antonio, Texas 27 26 2014 Healthcare & Bioscience Economic Impact Study San Antonio, Texas 27

1974 Cancer Therapy and Research Center created 1976 Kinetic Concepts (KCI) founded with initial focus on products like hospital beds 1979 Twenty community physicians collaborate to build Southwest General Hospital 1985 Stent patented by UT Health Science Center physician Dr. Julio Palmaz 1991 Institute of Drug Development created for oncology clinical trials 1993 OsteoBiologics bone technology spinoff started 1994 ILEX Oncology becomes San Antonio s first biopharmaceutical company 1955 Bexar County voters overwhelmingly approve establishment of the Bexar County Hospital District 1996 KCI introduces portable wound vacuum technology 1996 San Antonio Chamber of Commerce Health Care and Bioscience Committee survey implemented 1998 Methodist Healthcare opens the Methodist Children s Hospital, the first hospital designed and built in San Antonio specifically for children. 2005 Base Realignment and Closure Commission consolidates medical training on Ft. Sam 2004 Feik School of Pharmacy founded at the University of the Incarnate Word 2004 ILEX acquired for $1 billion by Genzyme Corp. 2005 OsteoBiologics acquired for $72.3 million by Smith&Nephew 2005 BioMed SA created as an industry cluster organization 2009 Medtronic chooses San Antonio as home of Diabetes Therapy Management & Education Center 2011 KCI purchased for $6.1 billion by Apax Partners 2011 Vision Works/HVHC announces national headquarters move to San Antonio 2011 BRAC established the San Antonio Military Medical Center as the hospital component of Brooke Army Medical Center Command 2012 U.S. Navy Medical Education & Training consolidated to San Antonio 2012 CHRISTUS Santa Rosa Health System opens the city s first and only free-standing children s hospital 2013 All U.S. Army and Air Force healthcare delivery integrated into one of the Department of Defense s six enhanced multiservice health systems, one of which is located in San Antonio 2014 1 million-square-foot Sky Tower opens at University Hospital, doubling the size of the campus 28 2014 Healthcare & Bioscience Economic Impact Study San Antonio, Texas 29 28 2014 Healthcare & Bioscience Economic Impact Study San Antonio, Texas 29

NAICS CODES & OTHER SOURCES Health Services Physicians 62111 Offices of physicians Other Healthcare Providers 62121 Office of dentists 62131 Offices of chiropractors 62132 Offices of optometrists 62133 Offices of mental health practitioners 62134 Offices of specialty therapists 62139 Offices of all other health practitioners Nursing Homes/Home Health 62311 Nursing care facilities 62161 Home healthcare services Hospitals 62211 General medical and surgical hospitals 62221 Psychiatric and substance abuse hospitals 62231 Other hospitals MTF U. S. Department of Defense inpatient Medical Treatment Facilities uniformed military (civilian employees included in 62211) Labs 62151 Medical and diagnostic laboratories Other Direct Services 62191 Ambulance services 62199 All other ambulatory healthcare services MTF U. S. Department of Defense outpatient Medical Treatment Facilities uniformed military (civilian employees included in 62199) INFORMATION SOURCES Related Industries Research & Education 54171 Physical, engineering and biological research UTHSCSA University of Texas Health Science Center at San Antonio AMEDDC&S Military medical education and training facilities USA MEDCOM Military medical education and training facilities AFMOA Military medical education and training facilities NMETC Military medical education and training facilities MIL RSCH Military Medical Research Social Services 62142 Outpatient mental health and substance abuse centers 62149 Other outpatient care centers 62321 Residential mental retardation facilities 62322 Residential mental health and substance abuse facilities 6233 Community care facilities for the elderly 62399 Other residential care facilities 62412 Services for the elderly and disabled 62431 Vocational rehabilitation services Pharmaceuticals 32541 Pharmaceutical and medicine manufacturing 42421 Druggists goods merchant wholesalers Equipment Manufacturing and Wholesaling 33911 Medical equipment and supplies manufacturing 42345 Medical equipment merchant wholesalers 42346 Ophthalmic goods merchant wholesalers Insurance 524114 Direct health and medical insurance carriers Miscellaneous 44611 Pharmacies and drug stores 44613 Optical goods stores 44619 Other health and personal care stores 92313 Administration of public health programs The information for the traditional estimates presented here is derived from the Texas Workforce Commission s Covered Employment and Wages database. The data is aggregated by the TWC into the lines of business defined by the North American Industrial Classification System (NAICS) coding framework. It represents essentially a 100% sample of all the businesses with employees in each NAICS subcode. The specific subcodes included in this study are listed above. They cover both the healthcare and related industry segments in great detail. Center and the military presence in San Antonio s medical industry was derived from data supplied by these two entities from their own financial reports. Since these data are compiled for a different purpose than that reported to the TWC, using different procedures, the additional contributions attributed to these activities must be understood as approximations. Still, their impact is so great that it would be a significant understatement to exclude them. Details of the methodology used to create the estimates reported in this The information necessary for the inclusion of the UT Health Science study may be found at www.sachamber.org. 30 2014 2014 Healthcare & Bioscience Economic Impact Impact Study Study San San Antonio, Antonio, Texas Texas 31

Special Thanks BENEFACTOR Methodist Healthcare System PATRON San Antonio Medical Foundation UT Health Science Center BioMed SA CORPORATE Baptist Health System CHRISTUS Santa Rosa Health System Mission Pharmacal FRIEND Provenir Texas Biomedical Research Institute HEALTH CARE & BIOSCIENCE COMMITTEE Geoffrey Crabtree, Chairman ECONOMIC IMPACT STUDY COMMITTEE Mary DeLay, Chairman Andrew Boardman Corbett Christie Mary Garr Col Michael Higgins Leni Kirkman Pam Leissner STAFF Will Garrett Trisha Lodde Tina Luther Mary Nava Cory Ramsey Phil Reidinger Steve Soliz Ann Stevens San Antonio Chamber of Commerce 602 E. Commerce San Antonio, TX 78205 (210) 229-2100 www.sachamber.org 32 2014 Healthcare & Bioscience Economic Impact Study