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Economists: Carilion's economic impact pegged at $3.2 billion a year

Economists: Carilion's economic impact pegged at $3.2 billion a year

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Carilion Clinic on Wednesday released a study by UVa’s Weldon Cooper Center for Public Service that evaluated the health system’s economic impact on Virginia in 2018.

Economists said Carilion Clinic contributed more than $3.2 billion to the state’s economy and supported nearly 24,000 jobs in 2018, the year before the health system announced a $1 billion expansion.

Carilion’s impact accounted for nearly 10% of the Roanoke metropolitan statistical area’s $17 billion gross domestic product that year.

Carilion on Wednesday released an economic impact study by the University of Virginia’s Weldon Cooper Center for Public Service that evaluated its direct contribution to the economy through wages and purchases, along with the trickle-down effect of the spending by its employees and the businesses that Carilion supports.

The study noted that most of Carilion’s revenue comes from outside the region through private insurers and the government’s Medicare and Medicaid plans, but that much of the revenue is spent within Carilion’s service area.

Carilion is Virginia’s largest private employer west of Richmond and has a $1 billion annual payroll. It employed 13,317 people during its 2018 fiscal year and contracted with another 4,100 Virginians as vendors. The report said employee spending supported another 6,300 jobs.

This is the first economic impact study that Carilion has commissioned.

“We made the transition to a clinic 10 years ago, and obviously there has been a lot of change since then. It was just a gathering of information, and thinking about what kind of impact we have now and using it to some extent as a baseline to where we are heading,” said CEO Nancy Agee.

Agee talked about Carilion’s growth from the corporate suite at Riverside 1, a building on the site of a former brownfield that now houses Carilion medical buildings and the medical school and research institute it founded with Virginia Tech.

“It’s not just the capital projects,” she said. “We have brought in over 600 specialists and subspecialists. We’ve seen our employment base grow by 5,000.”

Carilion last year announced a $1 billion capital expansion. Agee said Carilion has yet to place a figure on the number of jobs that will be created through the growth.

“As the study pointed out, for every 10 jobs Carilion has, we create an additional eight jobs,” she said. “You think about the families and what they do. They buy or rent houses. They buy food. They support education. They support public utilities and transportation.

“All of that has a ripple effect to the economy, and the more that grows, other businesses grow from that.”

Carilion’s largest economic impact occurs in the Roanoke Valley, where it employs 10,215 workers and generates about $1.45 billion in patient revenue. Its next highest economic impact is in the New River Valley with 2,780 jobs.

The report is a snapshot of Carilion’s impact for 2018, and while it mentions Carilion’s partnerships with Virginia Tech and Radford University, it does not place a monetary value on those endeavors.

The Weldon Cooper Center two years ago looked at expected growth of the Virginia Tech Carilion health sciences campus and said the effect on the state’s economy would grow from $214 million to $465.2 million annually within eight years.

The growth was pegged to the addition of a second building for the research institute that alone is expected to create 828 new jobs and generate $150 million in additional spending by 2026.

That study held static Carilion’s employment and investments, and it did not factor in the potential for undergraduate growth by Tech or Radford University Carilion.

Since then, Carilion has announced it will spend $1 billion on capital projects in the next few years that includes expanding Roanoke Memorial Hospital and building a new psychiatric center and parking garage. It also is moving many of its services for children to Tanglewood Mall and is planning a cancer center.

“What a significant impact this institution has, and then you know what’s on the horizon because they aren’t stopping. They’re continually moving and it’s only going to get greater,” said Beth Doughty, executive director of the Roanoke Regional Partnership.

“Carilion Clinic is kind of the heartbeat for all that’s going in, in the life-bio sector,” she said, and it “sets this community up on a platform for the new economy, for innovation and growth in the technology sector.”

The Weldon Cooper report predicts Carilion’s building projects during the next four years will create 664 construction jobs and spin off more than 1,615 other jobs.

Doughty said real estate developers are looking at projects, and efforts are underway to encourage more entrepreneurial efforts to create services to the growing workforce and their families.

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