Effect of insurance crisis on state economy debated

Steve Kanigher and Ed Koch

Wednesday, July 3, 2002 | 11:14 a.m.

Nevada's medical malpractice insurance dilemma could slow the state's economic recovery by reducing the number of new jobs in the health-care industry, one local economic analyst says.

However, economists and business leaders say that while health-care setbacks like the closure of the UMC Trauma Center today will have some impact, it is too early to tell the extent. It's not clear whether the closure will be temporary or long term.

Some noted that the politics of the matter -- whether Gov. Kenny Guinn calls a special session of the Legislature soon and whether the doctors prevail on tort reform for malpractice lawsuits -- could play a role in whether the trauma center remains shut or reopens soon.

Jeremy Aguero, a principal with Applied Analysis, a Las Vegas economic consulting firm, predicted that the 4.8 percent increase in new health-care jobs in Nevada from May 2001 through May 2002 could be cut in half over the next year.

Aguero said his company has already advised one client who is thinking about building a medical office building in Southern Nevada to delay that decision until there is resolution of the medical liability issue. He said his firm also represents a manufacturer who is concerned about coming to town while the issue persists.

"I don't think you could measure the depth of the economic impact if we have a mass exodus of health-care professionals leaving the state," Aguero said.

If there has been an exodus of health-care professionals from Nevada, it hasn't shown up on economic data, such as that supplied by the federal Bureau of Labor Statistics and state Employment, Training and Rehabilitation Department, he said.

"To get a full picture, we have to look at factors like what percentage of employees (at the trauma center) will be eligible for unemployment and job placement assistance," said Joe Reel, an economist for the state Employment, Training and Rehabilitation Department said.

"It is too soon to tell whether they won't find immediate employment elsewhere. And jobs like doctors and nurses are skilled occupations. They will not be seeking training for other fields," Reel said.

"I would almost suspect there would be more of an economic impact if the (UMC) burn unit were to shut down, because it is so facility-specific. Other hospitals handle trauma, but only one deals with burns."

Still, Reel said, the closure of any major medical facility and a medical malpractice crisis are enough to affect any economy because health care is a major issue. "How great it is? That's an interesting question," he said.

Bill Bible, president of the Nevada Resort Association, says that people relocating to Nevada look at a number of "quality of life issues -- taxes, education, health. And what is happening now with local health care definitely is a negative."

Bible said resort owners have heard from employees complaining about the lack of available obstetric/gynocology care and that the closure of the trauma center "is another dislocation of our health-care system."

"This has the potential of having a very big impact on us," Virginia Valentine, senior vice president of governmental affairs for the Las Vegas Chamber of Commerce and former Las Vegas city manager, agreed. "There is the issue of businesses attracting new employees and retaining existing employees, because health care is an important quality of life issue. Then there is the issue of trying to bring new businesses to Las Vegas."

Bible said that whether a special session is called in the near future and whether "the political process grinds forward" undoubtedly will play role in whether the closure of the UMC trauma center is temporary or long term.

"Pleas to the doctors (from government officials) fell on deaf ears yesterday," Bible said. "Will it be a domino effect in the health-care industry? I hope not."

Aguero said that the health-care sector, which had 54,500 jobs as of last year and is one of the state's fastest-growing industries, can expect to take a hit over the next year if the insurance dilemma isn't resolved.

"You could start seeing the trickle-down effect by the end of the summer," he said.

He said part of the slowdown in the growth of the health-care sector has to do with economic impacts from the Sept. 11 terrorist attacks.

Nevada's health-care industry generates $5 billion in economic activity annually, Aguero said. For every dollar spent in the health-care industry, $1.59 of total economic activity is generated, he said. The average Nevada health-care worker earns $54,620 annually, about 35 percent higher than the state average, he said.