Malpractice crisis casting doubt; Economic impact expected to batter Southern Nevada

July 15, 2002 - Getting doctors, lawyers and insurance companies on the same page will benefit many more people than the pregnant mothers and trauma patients left high and dry by a system in collapse.

Some local economic analysts say if a resolution doesn't come about soon, the state's economy could feel the effects within four months, and a stronger ripple effect within eight months.

That's what Jeremy Aguero, principal for Applied Analysis, a local economic research firm that has studied the state's health care industry, said.

"We agree that all the questions up to now have been properly focused (on doctors and patients), but there is just so much potential for such a broad-based impact on the economy," said Aguero.

He reasoned that the state's medical industry accounted for 54,500 jobs in 2001, and that, despite its troubles, it has been one of the fastest-growing industries in the state. The medical industry has shown a 5.4 percent growth rate in the past year, compared to 1.1 percent growth by the rest of the state's economy. He insists that a slip in these figures could hit harder than many may expect.

"Even now the industry is still showing growth overall," he added.

While the growth and impact numbers may be the focus for economists, Aguero also admitted that the social impact will be much worse.

"With our state's history, with much of our population being over 65, our fast growth, our low number of physicians per capita, high teenage pregnancy rates and mortality rates, it becomes a case where the social impacts of this could be so high you can't measure them," he added.

From an economic perspective, Aguero estimated the state's health and medical industry generate $5 billion in economic activity each year. According to his models, the industry generates $1.59 in economic activity for every dollar spent.

"For every dollar that a doctor makes, he then spends that at the store for food and clothes and supports other jobs," added Aguero.

Keith Schwer, a UNLV economist, agreed with Aguero on this point, and said overall, the cutting of medical services in the state due to the absence of medical professionals to provide care would indeed be a hard hit to the state's economy. Since the crisis is a nationwide issue, there may be few places for doctors to go, he added.

"Doctors, lawyers and insurance companies are fighting for the carcass of the consumer," Schwer said. "If they go, a portion may go to California, but not all."

Fewer doctors in the state will ultimately lead to an increase in medical costs, which will then result in other business' costs increasing "across the board," he said.

Dick Morgan, dean of the Boyd Law School at UNLV, said he can see many different perspectives to the crisis, the legal, medical and insurance sides, but also agreed that the impact on the economy could certainly be felt down the road if a solution is not found soon.

"I would expect this to be harmful to the economy. I would think it's not doing any good in terms of job growth or in-migration," he said. "It's a very complex problem. I just hope that the legislators try to come up with a comprehensive solution."

Aguero's group found through its research that for every 100 health and medical jobs created in Nevada, 58 jobs are supported in other, not-so-closely-related industries.

"The jobs created by the health and medical industry include not only those traditionally thought of, such as nurses, hospital administrators and laboratory technicians, but also include those less commonly associated with health services, like medical building developers, furniture suppliers and pharmaceutical representatives," he added.

Bill Welch, president and CEO of the Nevada Hospital Association, said Aguero's assessment is correct.

"We only raise the issue of economics to try to motivate people when access to quality health care does not seem to be enough of a motivator for them," he said.

Welch said there have been numerous studies done on the issue and also emphasized that without a quality healthcare system economic diversification will be a huge challenge.

"One thing that these studies have all come up with is that to drive an economy you need to have two things in place, and those are an adequate education system and an adequate healthcare system," he added.

"As this situation continues to spiral down, companies that were looking at coming to Nevada are going to have second thoughts or are going to defer their decisions, and that's not good with a declining economy."

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Article Copyright ©: B. Sodoma, LV Business Press