In 1996, The Greater San Antonio Chamber of Commerce conducted its first Medical Economic Impact Study. This effort was sponsored by the Major Industry Council’s Medical Committee, whose overall charge was to maintain, expand, and promote San Antonio as a world-class center of excellence in medical care and the biosciences. It was widely acknowledged that the healthcare and bioscience sector’s contribution to the local economy was substantial, but there had never before been an attempt to quantify that impact.
The Chamber subsequently decided to compile this information on an annual basis. The present report is the sixth iteration of the study.
The Medical Committee and its current successor, the Healthcare/Bioscience Economic Impact Study Task Force, have employed an inclusive definition of the healthcare/bioscience industry. It includes not only hospitals and direct health care providers (physicians, dentists, optometrists and others), but also medical and biological research centers, producers of pharmaceuticals and other health care-related products, and health insurance companies. Publicly funded providers of primary health care and health related social services are also included, as are military and veterans’ health care. The definition of “health care” includes both preventive care and the traditional medical services.
Information Sources
As noted in the introduction, the information for The Chamber’s Economic Impact Studies is derived from Texas Workforce Commission data aggregated into the lines of business defined by the North American Industrial Classification System (NAICS) coding framework. This data is assembled from unemployment insurance reports to the state. It represents essentially a 100% sample of all the businesses in each NAICS subcode.
The specific subcodes included in this study are listed at the end of the Technical Notes section. They cover both the healthcare and related industry segments in great detail.
The process of selecting which NAICS codes to include requires some judgment. Often it is obvious that all (or virtually all) of the businesses classified in a given NAICS category are part of the healthcare/bioscience industry (for example, NAICS category 32541, pharmaceutical and medicine manufacturing). In other sectors, however, health-related businesses make up only a fraction of the activity included in that code. For example, category 44611 (Pharmacies and drug stores) describes a group of businesses that are an integral part of the health care system but which also sell items, like greeting cards, that really do not belong in this sector.
It is therefore a matter of judgment to determine which industries to include and which to exclude. The rule we followed was to include any 5-digit (the narrowest definition) industry that in San Antonio seems to include a high proportion of medically related businesses and to exclude other categories for which only a small proportion of the included business activity is medically related. Thus, we included industry 54171 (Physical, engineering and biological research) even though many of the kinds of research described in the NAICS code book are not health-related, because in this city the largest share of such research is medical or biological in nature. Similarly, we excluded code 42512 (wholesale agents and brokers), even though it includes a substantial wholesale trade in medical equipment and supplies that we previously captured under the old SIC coding scheme, because these services constitute only a small portion of the entire wholesale industry in San Antonio. In this manner the overall estimates of employment, payroll and economic impact should be reasonably accurate even though some relevant activity has been left out and some irrelevant activity included. Future studies using the TWC database will always be constrained to this sort of compromise. However, this database’s advantages of near-100% coverage of employers, consistent collection procedures and ready availability are considerable.
Translating payroll information to economic impact involves the application of a conversion factor. Sales or revenue for each five-digit NAICS industry is calculated from the TWC’s payroll figures using the ratio of sales to payroll for the corresponding industry in the San Antonio MSA as reported in the 1997 Economic Census. These figures are specific to each NAICS code, and range from a low of 1.46 for psychiatric hospitals to a high of 16.1 for direct life and health insurance carriers. This conversion factor simply translates payroll information to the amount of economic activity or impact generated for each specific industry.
Brooks Air Force Base
In 1997, the Federal government reclassified Brooks Air Force Base from SIC code 8733 (noncommercial research) into code 9711 (national security facilities). Brooks was therefore combined with all of San Antonio’s defense facilities in a single subcode. This reclassification has continued under the NAICS. Since in fact the bulk of the activities at Brooks are research activities that fit within the healthcare/bioscience sector, we have reconstructed the employment and payroll figures for civilian employment at Brooks using data provided to The Chamber by the Air Force. Thus the figures for “related industries” do include the non-military wages and employment at Brooks.