Lies, Damn Lies and Statistics

Phil Betbeze, for HealthLeaders News , July 23, 2007

A college professor of mine (I was an English and economics major) once told me that one of the simplest ways to get the government to do something for you is to commission an economic impact study. He went on to rail against the rigor involved in many of them, suggesting that statistics could be manipulated in such a way to prove anything a study author set out to prove. His point was similar to that old saying attributed to Benjamin Disraeli that there are three kinds of lies: lies, damn lies and statistics.

Now, I'm not saying there's a single falsehood in the study sent to me by the Tennessee Hospital Association, which claims hospitals had a $7.8 billion impact on the state economy last year. But you can bet that the statistics in the report do nothing but reflect a positive light on hospitals and their economic importance to their communities. I'm sympathetic to the problems hospitals have with shrinking reimbursement, quality and the uninsured, among other issues. And no question, hospitals are important. We're glad to have them there when we have health problems, but what's the point of this study?

The point is to encourage readers to think: Wow, imagine if they just wiped hospitals off the face of the earth? That would mean the loss of 102,000 jobs and $4.6 billion in hospital salaries. Not to mention that $1.4 billion in charity and uncompensated care would be wiped from the books (Extra credit: Is that calculation based on cost or charges?).


I don't know anyone who would dispute the implied conclusion that if hospitals went away, we'd all suffer greatly. But so what? That won't happen. Studies and releases like these are blunt tools aimed at public opinion leaders and legislators, telling them "look how important we are, we have lots of employees" and "you'd better not cut our funding or your support for us in Congress, the state legislature or city council."

Skewed as they are, economic impact studies are a necessary evil and an important tool for advocacy groups like the THA. Studies give us some measure of the reason certain services and industries exist, and argue that they deserve special attention. And like advertising, it's hard to measure their impact, but the studies work. When was the last time your city or state built a convention center or new sports stadium without doing an economic impact study? All I'm saying is that like advertising, it pays to be skeptical.

I have an idea. A few years from now, let's commission an economic impact study to measure the economic impact of economic impact studies? You'll never see it. But that would be a study worth looking at.

Philip Betbeze is finance editor with HealthLeaders magazine. He can be reached at

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