Report: SVH is good medicine for economy

Sonoma Valley Hospital generates more than $100 million in total economic activity every year, and currently provides 658 direct and indirect jobs in the immediate area. These are the conclusions of the recently completed Economic Impact Report, commissioned by SVH, which makes the case the health-care facility is an important part of the region’s economy.

The figures are found in the study conducted by Philip King, a San Francisco State University economist. Results of his 16-page report were published in mid-March and distributed by the SVH Public Information Officer, Celia Kruse de la Rosa.

“Hospitals in general are an important part of the economic engine for a region, and Sonoma Valley Hospital is a strong contributor both in the Sonoma Valley and throughout Sonoma County,” said King in his report.

According to the report SVH’s recent facility upgrades and expansion created close to 100 construction jobs with a related $16 million in economic activity annually over the last three years. Hospital spending also indirectly created nearly 80 jobs in real estate, restaurants and employment services, responsible for more than $9 million in economic activity last year. All data reported are in 2014 dollars.

Reached by phone, King gave some context for reports such as this one. “This started initially in San Francisco, because everyone was saying San Francisco has high tech, San Francisco has travel and tourism, but nobody thinks about health care.

“It turns out hospitals in San Francisco have a larger share of the economy than either tech or travel and tourism in terms of the overall dollar,” he said, though it has fewer jobs than those in travel and tourism.

The situation is not dissimilar in Sonoma Valley, where the winery and tourism industries are the recognized leading drivers in local economy. However, the study shows Sonoma Valley Hospital has a total economic effect of $103,709,435 – almost $104 million – in spending each year, and supports 658 jobs.

By contrast, the much larger San Francisco health care sector is a $28 billion industry that drives San Francisco, employing 121,000 people according to a 2014 analysis.

Another point King thought worth noting is that in today’s economy, “The larger hospitals seem to be gaining more traction, while smaller hospitals are struggling for a variety of reasons. Some of it may be economy of scale, I would imagine that’s part of it.” Sonoma Valley Hospital has 83 “beds” for patients, and is a full-service acute care district hospital.

King also pointed out that larger, more centrally located hospitals (such as those in San Francisco) tend to have “high value” facilities like oncology centers. “Those places tend to be in the bigger urban hospitals – that means the smaller hospitals like Sonoma Valley Hospital are dealing in types of care that’s not remunerated as well.”

King has done about half a dozen similar studies for other hospitals in the Central Valley and Sacramento area, he said, noting he was initially contacted some time ago by SVH about doing the study. It was only this past winter that the money for his report – about $3,000 – came through.

It didn’t take very long to complete the work, said King, as most of the data he worked with is publically available though the state’s Office of Statewide Health Planning and Development. “The only data I really need to collect from the hospital is data on capital spending, how much they spent on improvements.”

The figures cited incorporate the hospital’s recent facility upgrades and expansion, which created close to 100 construction jobs with a related $16 million in economic activity each of the past three years. Hospital spending also created nearly 80 jobs in real estate, restaurants and employment services, responsible for more than $9 million in economic activity last year, the report concludes.

King, who has done a number of economic impact studies for state and local government agencies as well as hospitals, is clear on the use to which his studies are put. “They want the message to get out that they generate economic activity.”

In Sonoma Valley, even $100 million pales compared to the wine industry – the grape harvest alone is worth over twice that, and the tourism and travel numbers are equally substantial.

The study by Dr. King seems timed to underscore the successful course that the hospital has taken under CEO Kelly Mather, especially in its impact on the local economy.

“Sonoma Valley Hospital has made significant progress toward financial stability over the past five years by increasing revenue, reducing costs, paying down debt, upgrading the physical plant, and improving technology,” Mather was quoted upon the release of King’s study.

Bob Kenney, the hospital’s marketing and communications director, echoed Mather’s assessment.

“Today Sonoma Valley Hospital is in a stronger financial position than it has been in more than a decade,” said Kenney.

King’s study also reports that SVH benefits the community by providing $1.5 million in unreimbursed and charity care over the past three years, much of it going to disadvantaged populations.

“We’re well-positioned to continue contributing to our community for many years to come,” said Mather.

A full copy of the report is available on the hospital website at svh.com.

‘No one was taking it ?seriously, really, because it wasn’t going to benefit ?us in any way.’

- SVHS senior Jake Cross, on last year’s Smarter Balanced soft launch

‘(Hospital officials) want the ?message to get out that they ?generate economic activity.’

- Philip King