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Healthcare: a promising industry for Kentucky

Healthcare: a promising industry for Kentucky

Healthcare: a promising industry for Kentucky

A changing healthcare landscape will affect Kentucky’s healthcare system and its economy, according to a new study by the College's CEDIK.


The healthcare landscape is changing. The Patient Protection and Affordable Care Act, new mandates for Medicare reimbursement and an aging population all will affect Kentucky’s healthcare system and, in turn, its economy, according to a new study issued by the University of Kentucky’s Community Economic Development Initiative of Kentucky.

“Since the (U.S.) Supreme Court upheld the Affordable Care Act, there likely will be 400,000 Kentuckians that now have access to healthcare who did not before,” said Alison Davis, the initiative’s director and author of the study. “This report is timely, because it provides a comprehensive overview of the current access to healthcare across the commonwealth and projects where expected shortages might occur.”

The report, funded by the Foundation for a Healthy Kentucky, states that approximately 162,000 Kentuckians currently work in the healthcare field. Over the past nine years, the number of healthcare jobs has risen by more than 22,000, a 15.8 percent increase, despite the recession that has suppressed many areas of the economy since 2008. Though those numbers look encouraging on the surface, Davis also found that when comparing Kentucky to other states, the state should have added an additional 10,659 positions within the healthcare industry. This could suggest that there are conditions specific to Kentucky that have hindered the expected increase in jobs, conditions that could include a lack of labor supply, a lack of training for the workforce and changing regulations, among others.

The state’s rural areas generally have witnessed a decline in the workforce, the study’s researchers found, coming to the conclusion that “while it is important to focus on the healthcare institutions themselves, it is also vital to focus on training and educating the future workforce that will work in the healthcare industry.”

The local hospital is often a community’s largest employer, aside from the public school system. Beyond its primary services, its presence can have an important economic impact as an employer, as well as a consumer of goods and services. The Kentucky Hospital Association Economic Impact Study, referred to in CEDIK’s report, found that Kentucky’s hospitals are responsible for generating $2.8 billion in local economic activity from the purchases they and their employees make.

Currently 66 of the 120 counties in the state lie within areas designated by the federal government as Health Professional Shortage Areas or Medically Underserved Area/Population. Physicians and clinics can benefit in several ways by being in an HPSA or MUA, and in fact, Davis found, the designation is one mechanism for recruiting and retaining healthcare professionals. Congress is currently re-examining the criteria for the designation, which could result in some areas of the state losing the label. Considering that a physician can generate approximately $1.7 million in revenue and create 20 jobs, directly and indirectly, a change in designation could seriously impact a local economy.

The Kentucky Healthcare Market Report addresses the impact of low-income insurance programs, as well. As of 2010, there were approximately 660,000 uninsured people living in Kentucky, roughly 15 percent of the population. This percentage is slightly lower than the national average. Of those, 86,700 are under the age of 18. Medicaid is the major health insurance program for the poor in the state, providing health insurance to more than 850,000 low-income Kentuckians. The Kentucky Children’s Health Insurance program provides additional coverage for children who are not eligible for Medicaid. The federal government grants matching funds for Medicaid and KCHIP, providing, as the report argues, “a beneficial effect on both Kentucky’s economy and the health status of its residents.”

As the Affordable Care Act is enacted, it will expand health coverage to 32 million currently uninsured Americans who fall between 133 and 400 percent of the poverty level—those who are currently ineligible for Medicare, Medicaid or otherwise covered by an employer. In Kentucky, the Affordable Care Act willexpand Medicaid coverage to an estimated 231,000 Kentuckians and provide tax credits to purchase health insurance for approximately 221,000 families. Already, 435 Kentucky adults with pre-existing conditions have been able topurchase insurance.

In the report, Davis said, “Clearly we can expect that the demand for healthcare will dramatically increase as many more individuals and families gain access to healthcare.”

When asked what the future held, she responded, “The good news is more Kentuckians will have access to preventive care, and in the long run, they can be healthier. The bad news is that we don’t necessarily have the workforce in place to meet the demand.”

The 2012 Kentucky Healthcare Market Report is available at

Community Development Economics Extension Research

Contact Information

Scovell Hall Lexington, KY 40546-0064