Economic Impact of Lacor Hospital on the Surrounding Area

Abstract

The health care industry is an important contributor to the economy, especially to that of the area surrounding health institutions. This effect is even more marked in the case of rural facilities. At national level, it comes in the form of ensuring a healthy productive population and saving costs that would have otherwise been spent on treatment, thus liberating them for use on other developmental purposes. However, being a labour-intensive industry, it also contributes by providing employment for a significant section of the working-age population. At local level, in addition to the general benefits mentioned above, it comes in the form of attracting significant government and external investment to the area, and providing a market for local goods and services. It also helps to ‘keep health dollars at home’by ensuring that locals are treated within their area and thus retaining their health expenditure within their own economy. Yet, the economic impact of the health care industry is still under-estimated the world over, Uganda inclusive. Until recently, most studies of economic impact concentrated on the contribution of activities other than health care (Scorsone 2001; Scorsone 2002) and as such, there are few articles available to be reviewed about healthcare. Although healthcare contributes to economic growth, some studies have not found it to be among the leading causes of rural economic growth. In a study of rural USA, presence of healthcare services was not perceived by the respondents to be even one of the top 25 causes of rural economic growth (Aldrich and Kusmin 1997). This study in Lacor was therefore done to try to identify and highlight the economic contribution of St. Mary’s Lacor Hospital to the war-torn Gulu region of northern Uganda, which contribution though quietly perceived, has never been quantified and, as such, appears to have been ignored. By the economic impact of an organisation on an area, we refer to the influence of that organization on the local economy in terms of the level of economic activity generated as a result of the presence of that organisation. This could be the amount of money it injects into the area from its budget, the employment it provides, the goods and services it consumes from the area thus providing a market for them, the money it attracts to the area from the government, donors and researchers, and its role in the attraction and retention of businesses and other gainful economic activity in that area. The net economic impact of such an organisation is, therefore, the expansion or contraction of an area’s economy. This should, however, be distinguished from the gross economic effects due to mere influence on the jobs, businesses or incomes (Weisbrod and Weisbrod 1997). The diagram below shows a model of the interaction between an industry like a healthcare institution producing health care and the community, containing other industries and households. The institution absorbs inputs from outside the local economy and uses some from the local economy to produce its products. Its products are consumed by the local community and beyond. The institution may also make expenditures and investments outside the local economy as shown in this second model. Economic impact studies try to measure the direct, indirect and induced effects of an institution on the economy. The institution’s direct expenditure, such as when a hospital pays its local staff, is a direct input into the local economy. Purchase of goods and contracted services from the local area such as office and medical supplies, kitchen, cleaning and laundry supplies, masonry etc. is an indirect input. When the employees of the health care institution and those of its suppliers of goods and services get and spend their money in the local economy, this is an induced impact on that economy due to the presence of that institution. Thus, initial expenditures in the health sector cause a ripple of expenditures in the economy, the so-called ‘ripple effect’. The health sector and hospitals in particular are regarded by many a policy maker as economic ‘black boxes’, merely absorbing resources with, in most cases, no light on how they spend them or as ‘bottomless black holes’ consuming resources on end. Rarely are they seen as “economic boosters” or ‘productive’ entities. In reality, however, the health sector leads to the creation and thriving of support business and payment of taxes around it (Philippakos et al. 2002). That is not to mention the economic impact that is gained by the local economy when the people are treated and gain energy to produce or the gains due to the cost of illness and death saved by receiving health education on health promotion and prevention of illness or actually being treated or rehabilitated in the hospital. Apart from health care provision at various levels, Lacor hospital makes similar economic contributions to the area of Gulu District.