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Last modified: Thursday, February 16, 2012

Engine for economic growth: Indiana University, IU Health contribute $11.5 billion annually to state economy

Feb. 16, 2012

INDIANAPOLIS -- Indiana University and Indiana University Health generated a combined economic impact of at least $11.5 billion for the state of Indiana and sustained 100,000 jobs during the 2010-11 fiscal year, according to the results of an economic impact study released today, Feb. 16.

Economic Engine

The study, commissioned by the university and conducted by Tripp Umbach, a leading economic development impact analysis firm, examined the direct and indirect spending in Indiana as a result of IU and IU Health. Combined, the university and the health care system generated $5.9 billion in direct economic activity -- spending on goods, services and taxes by the institutions, their employees, students and visitors -- and another $5.6 billion in indirect or induced economic activity by those doing business with IU and IU Health.

The study included economic activity related to all IU campuses and IU Health operations across the state, and the data generated were the result of a "decidedly conservative" methodology followed by Tripp Umbach.

Of the $11.5 billion in total economic impact generated by IU and IU Health in fiscal year 2010-11, $4.9 billion was generated by the university, with $6.6 billion being generated by IU Health. IU generated $2.3 billion in direct economic activity and $2.6 billion in indirect or induced activity, while IU Health generated $3.6 billion in direct economic impact and another $3 billion in indirect or induced spending.

According to the study, IU and IU Health combined to represent 4.5 percent of the total Indiana economy and, when taken together, are the state's largest employer, accounting for 48,147 direct jobs, as well as another 51,844 indirect or induced jobs. When considered separately, IU Health is the state's fourth largest employer with nearly 27,000 direct employees in fiscal 2010-11, while IU was the state's fifth largest employer with more than 21,000 direct workers.

In addition to being a major driver of economic growth in Indiana, IU and IU Health also provide a significant return on taxpayers' investment. For every dollar in state appropriation, the university -- through its operations and by virtue of its strategic partnership with IU Health -- generated $24.91 in economic activity, well above the national average for universities of about $10 and the second highest among all the universities studied by Tripp Umbach.

"It is no surprise to anyone living in this state that Indiana University and IU Health are major economic drivers in Indiana, but this independent analysis provides the most comprehensive examination to date of the extraordinary impact this university and health care system have every year on this great state," said IU President Michael A. McRobbie, who unveiled the results at a press conference on the IUPUI campus of Indiana University this afternoon.

"Whether it's in the form of research spending, employee salaries, the outstanding work done across the state by IU Health facilities, or state and local taxes paid by our employees, Indiana University and IU Health have an enormous direct impact on the economic fortunes of this state on a daily basis. That impact is nearly doubled when the spending of individuals and companies that do business with IU and IU Health is taken into account," McRobbie added.

IU Health: innovative care and far-reaching impact

Indiana University Health is the state's most comprehensive health care system, providing patient care through more than 2.2 million admissions and outpatient visits a year. Eleven IU Health clinical programs are ranked in the top 50 nationally by U.S. News & World Report, and 10 specialty programs at Riley Hospital for Children at IU Health are ranked among the top 30 in the nation.

In addition to accounting for more than 53,000 direct and indirect jobs in Indiana, IU Health operations generated $252 million in direct and indirect state and local tax revenues in fiscal 2010-11, according to Tripp Umbach.

Economic Engine Press Conference

IU Health CEO Daniel F. Evans Jr. comments on the economic impact study.

Print-Quality Photo

"As one of the state's largest employers, we offer a wide range of jobs for Hoosiers, from administrative and service jobs to highly skilled physicians who carry out our work to improve the health of our patients and communities," said Daniel F. Evans Jr., IU Health president and CEO. "We are pleased to see that our statewide health care system also has a positive impact on Indiana's economic health."

Through its partnership with the IU School of Medicine, IU Health comprises more than 500 board-certified or board-eligible physicians working in 70 locations across the state. The IU School of Medicine spent nearly $250 million on medical-related research in fiscal 2010-11, the majority of which are considered "fresh" dollars in that the funding comes from outside the state by organizations such as the National Institutes of Health.

Tripp Umbach also calculated the economic impact of Wishard Hospital and Richard L. Roudebush VA Medical Center, which are affiliated with the IU School of Medicine in Indianapolis. Those impacts, which were not included in the $11.5 billion overall economic impact total, accounted for an additional $2.5 billion in direct and indirect or induced economic activity.

An 'essential' source of human capital

In addition to the economic impact of IU and IU Health, the study pointed out the far-reaching benefits provided by the university in educating the state's students and its "essential" role in meeting Indiana's workforce needs. The largest university in the state, and one of the five largest in the country, IU graduates nearly 20,000 students each year -- about half of whom remain in Indiana and contribute to the state's economy.

Calling IU "a global talent magnet, attracting top students in a wide range of disciplines -- many of whom stay in Indiana upon graduation," the Tripp Umbach study noted that more than half of IU's 530,000 living alumni reside in Indiana, including more than half of the state's physicians, 35 percent of its teachers, 75 percent of its attorneys and 90 percent of its dentists.

Those graduates who remain in Indiana generate substantial incremental income, much of which is spent in the state. For example, each IU graduating class can be expected to generate approximately $17.4 billion in incremental lifetime earnings compared to what they would have earned without a college degree, according to Tripp Umbach. Beyond that, Tripp Umbach estimates that an IU graduate earns, on average, approximately $8,500 a year more than the average college graduate.

Economic Engine Press Conference

Indiana University President Michael A. McRobbie unveils the results of an economic impact study at a press conference on the IUPUI campus.

Print-Quality Photo

"This data show in clear relief that Indiana University continues to offer an outstanding return on the investment made by the residents of this state and provides significant value to the state beyond its economic impact," McRobbie said. "Our graduates, who remain in this state in overwhelming numbers, can be found playing leadership roles in their disciplines and communities in every corner of Indiana, and around the world."

Record research grants and spending pay benefits to Indiana University

IU received $488 million in research and grants during fiscal year 2010-11, with $196 million coming from the NIH and $48 million from the National Science Foundation. The university's research expenditures for the same period were a record $509 million, with nearly half of the spending going for medicine-related research. In addition, faculty members in the arts and sciences disciplines accounted for a combined $80.2 million in research spending.

The total economic impact -- direct and indirect -- of the university's research activities totaled $844 million, according to the study. IU's research operations supported more than 6,500 jobs in fiscal 2010-11, including research professionals, administrators, vendors, suppliers, and laborers needed to build and update research facilities.

In noting the success IU has achieved in creating commercial applications and business opportunities through its research, especially in the life sciences, Tripp Umbach called for the university to maintain its commitment to a strong a growing research faculty.

"With continued high levels of research funding and consequent expenditures, the university will remain a source of thousands of local jobs based on its research funding alone," according to the report.

IU impact felt across the state

The Tripp Umbach report calculated the economic activity generated by each of the IU campuses across the state. IU Bloomington accounted for approximately half of the university's total economic impact, with the campus generating $2.3 billion in economic activity -- split almost evenly between direct and indirect benefits. According to Tripp Umbach's analysis, IU Bloomington supports more than 8,415 direct jobs and 11,947 indirect and induced jobs.

"For nearly two centuries, Indiana University has made a significant positive impact on the state of Indiana, and nowhere is that impact felt more strongly than in Bloomington," said IU Bloomington Interim Provost Lauren Robel. "In addition to being an integral piece of the fabric of life in Bloomington and Southern Indiana, the university continues to be a powerful economic engine for the region. All of us in the IU Bloomington community are committed to growing the university's presence in our hometown."

Indiana University-Purdue University Indianapolis, the university's urban research campus, accounted for $2 billion in economic activity and a total of 18,763 direct and indirect jobs, according to the report. IUPUI has a significant health and life sciences presence, including the IU School of Medicine, and has been recognized as an "up-and-coming" university by U.S. News & World Report.

"A central part of IUPUI's mission is to make contributions to the state's social, cultural and economic development, thus it is gratifying to see the campus' substantial economic impact documented in such clear terms," IUPUI Chancellor Charles R. Bantz said. "Because we are such a vital contributor to Indiana's economy -- particularly in health and life sciences -- we have, as this report makes clear, a responsibility to continue to grow IUPUI's impact in Indianapolis and across the state."

Economic impact of the IU regional campuses ranged from $27.2 million at the IU-Purdue Columbus campus to nearly $164 million at IU-Purdue Fort Wayne. (Only the impact associated with IU's percentage of the degrees awarded was calculated.) A campus-by-campus breakdown of IU's economic impact can be found in the complete Tripp Umbach report, which is available at

About the report

IU commissioned Tripp Umbach in 2011 to produce the economic impact report to provide a comprehensive independent analysis of economic activity associated with the university and IU Health. The cost of the study was $75,000.

Tripp Umbach is the national leader in providing economic impact analysis for universities, health care organizations and academic medical centers. The company has completed more than 150 economic impact studies over the past 20 years, including for a number of other Big Ten universities and IU peer universities, including The Pennsylvania State University, The Ohio State University, the University of Iowa and the University of Washington.

Tripp Umbach was asked to measure the economic, employment and government revenues generated by the university and IU Health, including indirect and induced economic activity. Tripp Umbach used data supplied by IU and IU Health, and its affiliates, and calculated the economic impact using IMPLAN modeling software created by the Minnesota IMPLAN Group.

The economic impact figures used in this report include spending on goods, services and taxes within Indiana by IU, IU Health and individuals and organizations that do business with the university and the health care system. The figures reported by Tripp Umbach represent only economic impact in the state of Indiana. Spending associated with IU and IU Health that occurred outside the state or country was not included.