The Economic Contributions of Health Care to New England
Feb 01, 2003

For the past few decades, the health care sector has been among the fastest growing sectors of the U.S. economy. The industry ranges from health services, such as health practitioners and hospitals, drugs and pharmaceuticals, medical instruments and supplies, medical service and health insurance to research and testing services where much of the burgeoning biotechnology sector is recorded.

Nurturing expansion in health care is increasingly vital to global, national and regional economic prosperity. Population growth, due in part to dramatic advances in medical science, the aging of the baby boomer generation and increased wealth are stimulating demand and opportunities in health care fields.

Health care consumption has doubled, from less than 6 percent of U.S. GDP in 1970, to slightly less than 13 percent in 2002. By 2011, health care consumption expenditures in the U.S. should reach 17 percent of GDP according to the Centers for Medicare & Medicaid Services. Senior citizens, who will account for 30 percent of the population in 10 years, represent 15 percent of the population and purchase one-third of all prescription medications dispensed in the United States. On a global basis, the over-65 population is expected to expand from 600 million in 2000 to over one billion by 2020, according to the World Health Organization.

According to this new study, commissioned by the New England Healthcare Institute, New England and the Middle Atlantic states are the only regions in the U.S. to have a substantially higher than average proportion of health care industries contributing to their gross regional product. GRP is the total economic value of goods and services produced in a region. Health care directly comprises 7.5 percent of New England's GRP based on 2001 figures, leaving the region's GRP almost 10 percent more concentrated in health care than in the nation as a whole. These figures understate the ultimate contribution to New England as its effects ripple throughout the rest of the regional economy.

Based upon our Health Pole Index which depicts local concentration of health care and a metro area's importance in the context of the nation as a whole, the Boston metro area is the leading health care center. The Health Pole concept can be thought of as a measure of the spatial density and diversity of health care sectors in a metropolitan economy and placed in a national perspective. This report represents the first unveiling of health pole statistics.

These comparisons all depict New England as a major force in the U.S. health care industry; however, there are less than stellar signals based on recent growth performance comparisons with other key regions. New England is not fully leveraging the vast innovation capacities and diversity of its health care sectors for maximum economic benefit for the region. Warning signs on the health care industry's future should not be ignored.

For more information, visit the New England Healthcare Institute web site.
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