The Regional Economic Impacts of Austrian Hospitals

The health care sector is of high social relevance in Austria: high quality health care keeps the human capital productive and a good care of elderly people increases the quality of life of the whole population. Beyond those considerations the health care sector also bears economic importance: its contribution to domestic value added slightly exceeded 6 percent in 2009. This research report deals with the wider economic impacts of part of the health care sector, namely hospitals. These impacts go beyond the direct economic contribution of hospitals. Applying ASCANIO, a multiregional econometric input-output model for Austria, the indirect and induced production, value added and employment effects of the immediate cost of hospital care are being simulated. Taking account the relevant opportunity cost of those economic benefits, an additional simulation exercise includes possible alternative uses of private and public means that are spent on hospital care. The difference between the results of both simulations leads to a "net economic benefit" of the hospital system. Furthermore, the study discusses local economic effects of hospitals. Those effects receive considerable public attention since the economic significance of hospitals increase when moving from a national to a regional and further down to a local level.