February 7, 2007

Michigan’s medical schools and teaching hospitals make a major economic impact on the state and the nation

University of Michigan Medical School and others account for billions in business volume, employment and revenue

ANN ARBOR, MI – A new report from the Association of American Medical Colleges reveals that its member medical schools and teaching hospitals had a combined economic impact of $451 billion on their states and the nation in 2005. In Michigan, the University of Michigan Medical School and other academic medical centers across the state had a combined economic impact of $18,720,302,535.

Michigan’s medical schools and major teaching hospitals are directly and indirectly responsible for more than 121,956 full-time jobs. The U-M Health System directly employs nearly 19,000 people.

Nationally, the report found that the 125 accredited U.S. medical schools and more than 400 major teaching hospitals represented by the AAMC employ nearly 1,670,000 individuals and are directly and indirectly responsible for more than 3 million full-time jobs—one out of every 48 wage earners in the United States.    

The overall economic impact of institutions such as UMHS on Michigan and the national economy takes into account the direct and indirect business volume generated by medical schools and teaching hospitals, including institutional spending; employee spending; and spending by patients, their families, and visitors (excluding spending for patient care and medical services). According to the report, every dollar spent by a medical school or teaching hospital indirectly generates an additional $1.30 when it is “re-spent” on other businesses or individuals, resulting in a total impact of $2.30 per dollar.

Michigan’s medical schools and teaching hospitals also generated more than $976,251,895 in state tax revenue in 2005 through income and sales taxes, corporate income taxes, and capital stock/franchise taxes paid by businesses that collect revenue from state institutions.

In addition, UMHS and other academic medical centers in Michigan generated more than $661,474,813 in out-of-state medical visitor-related revenue in 2005, including direct spending in local communities by out-of-state patients and their friends and families.

The AAMC report, “The Economic Impact of AAMC-Member Medical Schools and Teaching Hospitals,” does not include the economic impact of patient care-related spending at hospitals, nor does it account for the economic benefits of physician training programs and community service programs. This report was prepared for the AAMC by the consulting firm, Tripp Umbach.

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