Texas Medical Center "Major Player" in Houston’s Economy
New Study Compiles Two Decades of Economic Data

The Texas Medical Center enjoys an undeniable distinction as one of the world’s premier medical centers. But in addition to its reputation as a definitive authority in all things medical, a recently released economic report credits the TMC as being one of the main economic engines powering the financial health of the city and the surrounding area.

Conducted by the University of Houston Center for Economic Development and Research, the study sifts through 18 years of data gathered and reported by the 42 hospitals, colleges, universities and other organizations that are member institutions of the Texas Medical Center. Such an analysis has never before been attempted.

After crunching the numbers, the UH center said that in 2000, the Texas Medical Center spent an estimated $5.8 billion in Harris County and the surrounding region, and provided or supported 142,000 jobs that produced $3.8 billion in take-home pay for employees. In turn, those employees, along with the 16,500 students who study and train in the Texas Medical Center, spent $131 million on durable goods, pumping money back into the economy.

"Of course, the figures are even greater if you consider those who come to the TMC on a daily basis – such as volunteers, delivery people, contractors and subcontractors, seminar and conference attendees, tour groups, and patients. Last year alone, 5.4 million patient visits were recorded by TMC institutions," said Dr. Robert Hodgin, executive director of research administration at the University of Houston in Clear Lake and a co-author of the study. "This report provides a low-end estimate ... it’s designed to be conservative."

Unlike other industries that dominate Houston’s economy, the Texas Medical Center has grown steadily at a rate of 4 percent for years, Dr. Hodgin said.

"Texas Medical Center institutions have not experienced the kinds of swings and cycles of the energy, high-tech, or aerospace industries."

The Texas Medical Center is very different from the usual cluster of university-affiliated schools, hospitals and clinics that comprise most medical centers. The center is home to the largest concentration of medical facilities in the world, with six general care hospitals, seven specialty hospitals, two medical schools, four nursing schools, a dental school, public health school, two colleges of pharmacy, various health science programs and a magnet high school. With its 12 miles of streets, 42,000 parking spaces, library, laundry cooperative and even its own newspaper, the Texas Medical Center is a "city within a city."

TMC serves as manager of the campus property. Acting through a policy council made up of chief executive officers of each institution, TMC moderates campus-wide issues, such as strategic planning or master planning. Once consensus is reached among the members, TMC implements campus policy. TMC continues to encourage growth and development by buying or receiving gifts of land, which it makes available to member institutions for one dollar per year.

"If the Texas Medical Center were an industrial complex, it would be listed in the Fortune 500," said Dr. Bill Gilmer, senior economist and vice president of the Houston branch of the Federal Reserve Bank of Dallas, which released the UH study’s findings.Texas Medical Center institutions, because they are by definition nonprofits, do not pay taxes, Dr. Gilmer said. But their employees pay taxes, as do the businesses that support those institutions. That activity alone from TMC institutions generates about $244 million annually to local taxing authorities.

"The Texas Medical Center definitely pays its way in Harris County," said Dr. Gilmer, who likens the center to a huge magnet that draws companies from around the nation to Houston.

"The density of the complex is not just the 42 member institutions but also those companies who move here to provide goods and services to those 42 institutions. It’s like a ripple effect. Throw a stone in a pond and the impact creates a ripple, which creates another ripple," he said.

And the pond is steadily getting bigger.

In the next eight years, the Texas Medical Center plans to expand from 22 million square feet to 32 million square feet, which is ahead of the initial 10- to 15-year projections, said Dr. Richard Wainerdi, president and CEO of the Texas Medical Center. This expansion is expected to create 50 percent more workers, he said.

"We have about 220 acres that are not yet developed. Already, the Texas Medical Center is as dense as New York’s Wall Street, twice as dense as downtown Houston, three times as dense as the Galleria area, and the same size as Chicago inside the loop," Dr. Wainerdi said. "It’s safe to say that the numbers included in this report will soar in the next decade."

The Texas Medical Center Economic Impact report is co-authored by Bill Gilmer, Robert Hodgin and Mary Schiflett, vice president of the Texas Medical Center.

Data used in the generation of this report was gathered over an 18-year period by Schiflett, with assistance from the financial and public affairs offices of TMC member institutions.

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©2006 Texas Medical Center

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URL: http://www.tmc.edu/tmcnews/02_15_02/page_02.html