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by Al Lauzon and Cameron McCordic

economic development
Systems theorist Donella Meadows
makes the case that, if you change
the goal of a system, you change
the system and how actors perceive
“reality.” In many ways, this is the
essence of what Ben Okri, a Nigerian
storyteller meant when he said that, if
you change your story, you might very
well change your life. One of the ar-
eas where we are trying to change our
story is with regard to the healthcare
system. Escalating healthcare costs in
the context of a fscally constrained
economy means we are looking for
ways to improve the effciency and ef-
fectiveness of the healthcare system.
The Health/Economy Connection
As Don Drummond notes in his re-
port, the healthcare system in Ontario
is not so much a system as a series of
disjointed systems.
1
And, while this may
be true, it is also true that the healthcare
system is also a subsystem of a larger
system – the economic system. The
healthcare system (however we defne
it), makes signifcant economic contri-
butions. And, the public expenditure on
healthcare is also an investment that fa-
cilitates economic development through
maintaining a healthy workforce, and
job creation both within and beyond
the healthcare sector. It is also essential
infrastructure for attracting new busi-
nesses to a community or region.
2
One part of the healthcare system
that receives an inordinate amount of
AL LAUZON is currently a Profes-
sor in the School of Environmental
Design and Rural Development,
University of Guelph. His current
research interests are social inno-
vation and community economic
development, issues in rural
youth, and capacity development.
He can be reached at <allauzon@uoguelph.ca>.
CAMERON MCCORDIC is a PhD
candidate in Environment and
Resource Studies at the University
of Waterloo. His current research
interests are in the social and eco-
logical implications of resource
inequity. Cameron can be reached
at <c2mccord@uwaterloo.ca>.
Contributions of
Physician Recruitment to
Regional Economic Development
Case of Windsor/Essex, Ontario
attention is physicians. As Drummond
noted in his report, physicians and other
practitioners account for 26.6 percent of
the 2010-2011 healthcare spending in
Ontario. And, while Drummond makes
the case that perhaps we do not use
physicians as effciently as they could
be used, Canada still does not measure
up to OECD countries in terms of phy-
sician-to-patient ratios and seems to be
falling further behind; Canada currently
has 2.6 physicians per 1,000 population,
ranking 26th out of 28 developed coun-
tries who have publicly-funded health-
care systems.
This fnding was echoed by the Fra-
ser Institute that in March 2011 warned
that the doctor shortage in Canada is
expected to worsen. And, despite the
centrality of physicians to a vibrant
healthcare system (and, we would also
argue, to a vibrant economy), the de-
bate over who has responsibility for
physician recruitment continues: Is it a
provincial responsibility or a regional/
community responsibility? Since both
levels of governments face constrained
fscal resources, it would be safe to as-
sume that, when both parties are asked
the question, they point their fngers at
the other.
In the August 2011 issue of Munici-
pal World, the question was asked: Why
would municipalities spend money on
physician recruitment? The article sug-
gested that physician recruitment is a
strategic economic investment for com-
munities/regions, pointing to pertinent
research literature.
3
This article will
examine a specifc case – Windsor/Es-
sex, Ontario – and estimate the return
on investment for the communities who
invested their fscal resources in sup-
porting physician recruitment.
Case of Windsor/Essex
As noted above, Canada fairs poorly
in the physician to population ratio;
Windsor/Essex fairs even worse with a
ratio of 1.18/1,000 population. In 2003,
1 See the Commission on the Reform of On-
tario’s Public Services report, 2012.
2 Allan C. Lauzon, “Handout or Strategic In-
vestment: Why Would Municipalities Spend
Money on Physician Recruitment?” Municipal
World, August 2011, pp. 35-37.
3 Ibid.
April 2013 Municipal World 17
the City of Windsor and County of Es-
sex established the Regional Physician
Recruitment Offce for Windsor/Essex
(RPROWE). In the fve years prior to the
establishment of RPROWE, Windsor/
Essex had a net loss of nine to 12 physi-
cians annually, with passive recruitment
netting eight to 11 physicians annually.
County physician attrition rates remained
stable at 20 per year. In fact, Maclean’s
magazine had identifed Windsor/Essex
as having one of the poorest physician/
population ratios in the country.
In response to this worsening situa-
tion, the city and county decided to fund
an offce whose exclusive mandate would
be physician recruitment. In January
2003, a two-person offce was established
and staffed by a physician recruiter and an
administrative assistant with a budget of
slightly more than $200,000 per year. Be-
tween 2003 and August 2011, RPROWE
recruited 284 physicians to Windsor/Es-
sex. In this article, we propose to estimate
the return on investment for physician
recruitment for Windsor/Essex between
the years 2004-2010.
Return on Investment for
Physician Recruitment
To estimate the return on invest-
ment for physician recruitment, we
first used the average physician sala-
ries for each specialty by accessing
the data from the ICES report Pay-
ments to Ontario Physicians from the
Ministry of Health and Long-Term
Care for 1992/93 to 2009/10. The
total Windsor/Essex recruited physi-
cian income from the ministry was
estimated by applying the annual sal-
ary for each specialty to each recruit.
Hence, we only took into consider-
ation payments they received from
the ministry and did not consider
other revenue streams. Table 1 pro-
vides an overview of physician pay-
ments made to recruited physicians
in the year of their recruitment. Table
2 provides an overview of estimated
accumulative payments made to re-
cruited physicians from 2004-2010.
As we can see from Table 2 the ac-
cumulated payments made to recruited
physicians between 2004/2010 was
$181,386,700. This, in our opinion,
constitutes a signifcant infux of capi-
tal into the regional economy.
While physician payments consti-
tute a signifcant infux of capital into
the regional economy, it also gener-
ates jobs and additional regional capi-
tal in the form of income. Using an
employment multiplier of 1.79 from
the research literature and the assump-
tion that, on average, each physician
employs three staff members, we esti-
mate that between 2004 and 2010 the
recruited physicians generated an ad-
ditional 754 jobs in the region.
In terms of additional income, we
used a multiplier of 1.34 from the
research literature and estimate that
an additional income of $61,671,478
was generated (excluding the wages
of physician staff) in the region.
In addition to the above eco-
nomic benefits, physicians also
generate rental income for landlords
throughout the region. Assuming
each physician needs approximately
1,000 square feet of office space,
and an average price of $13.50 per
square foot for office space, rental
income would generate an additional
$9,004,500 of capital in the regional
economy for the period of 2004-
2010. These estimates do not include
office space renovation or construc-
tion of new office space, which it
has been reported to be significant.
Nor do they include housing that 199
physicians would require.
If we now consider total revenue
generated (excluding office renova-
tions/construction, real estate and
jobs generated), it is estimated that
physician recruitment generated
$252,062,678 in the regional econ-
omy. The total RPROWE budget for
2004-2010 was $1,269,557. Hence,
we estimate that every dollar spent
on physician recruitment by the re-
gion generated an additional $198.54
in the regional economy. This, we
would argue, is a significant return
on investment.
Table 1
Estimated MOHLTC Payments
Made to Recruited Physicians
Estimated Total
MOHLTC Payments
Made to Physicians
Number of
Physicians
Recruited
Total 199
28
30
35
36
31
39
$56,200,500
$11,763,800
$ 9,992,800
$ 9,825,500
$10,034,700
$ 7,479,600
$ 7,104,100
Year
2009/10
2008/09
2007/08
2006/07
2005/06
2004/05
Table 2
Estimated Accumulated MOHLTC Payments
Made to Recruited Physicians
Estimated Total
MOHLTC Payments
Made to Physicians
Number of
Physicians
Recruited
Total
18 Municipal World April 2013
Conclusions
Recognizing that the numbers
presented in this case are estimates,
rather than actual returns, and the
limitations this entails, it still illus-
trates the role that physician recruit-
ment plays in regional economies.
Given the estimated return on invest-
ment of this case study, policy mak-
ers and governing officials – both
provincial and local/regional – need
to broaden their view of healthcare
beyond the idea of access to health-
care to give consideration to its role
in regional economies.
As we write a new story for health-
care, we need to ensure that we pay
attention to a main subplot, the econ-
omy; this, we would argue, is impera-
tive. And, if we consider the health-
care system from the determinants of
health perspective, it becomes clearer
why this subplot becomes increas-
ingly important. As the Senate Com-
mittee on Population Health noted,
the healthcare system accounts for
25 percent of the health outcomes
while socio-economic factors account
for 50 percent of health outcomes.
4

And, while it is obvious that physi-
cians play a vital role in maintaining
a vibrant healthcare system, they also
play a role in maintaining a vibrant
regional economy, which makes sig-
nifcant contributions to health in
communities and regions.
As noted in the August 2011 arti-
cle, the economic role the healthcare
systems play in rural/small communi-
ties and rural regions is perhaps even
more important to their economic
health and well-being than larger ur-
ban areas. In this sense, Meadows is
prescient in challenging us to extract
ourselves from our silos, advising us
to follow a system wherever it leads.
5

When we get out of our silos and
follow the trail of physician recruit-
ment, we see its impacts on providing
timely access to healthcare, but also
as being a source of significant eco-
nomic development. To paraphrase
Ben Okri, if we change our story of
healthcare and perhaps even change
our lives, then we need to make sure
the new healthcare story has an eco-
nomic subplot. MW
April 2013 Municipal World 19