1. Issue 5
The Health Care Sector in Orange County
by Luis Nieves-Ruiz, AICP
Introduction
For the past several months, the healthcare sector has been one of the few industries that continue
to add jobs, despite the economic downturn. This has led the sector to be considered “recession
proof.” The Central Florida area is projected to add more jobs in this sector with the development of
the “Medical City” in Lake Nona, which will include the Nemours Children’s Hospital, a new
Veteran’s Hospital, and the University of Central Florida (UCF) medical school. These new facilities
would be near the Sanford-Burnham Institute facility, a top biotech research facility in the areas of
diabetics and cardiovascular diseases. The agglomeration of these facilities within the Lake Nona
area has been seen as the catalyst for the creation of a life science cluster in Orange County.
The current impact of the life science and health care sectors in Orange County’s economy is
small. However, in recent years, local life science employment has been outpacing the national
average by 38 percent (Milken Institute, 2007). As the County focuses on business and
employment growth within these two fields, it is important to understand these sectors’ components
and characteristics. Competition in these areas is expanding at the national and global levels. For
example, over 40 states have initiatives to promote the development of biotechnology, and several
economic development agencies have listed biotechnology as one of its targets for economic
development.
This issue of the Economic Research Initiative discusses the current state of the health care and
biotechnology sectors, two different, but related, industries in Orange County. The method used to
analyze both sectors is the location quotient comparison for all sectors comprising the local health
care industry. Location quotients measure economic specialization by comparing the local economy
(Orange County) with a reference economy (the United States). Basic industries, those that export
most of their output, have a location quotient higher than 1. This analysis is followed by an
establishment search using the InfoUSA establishment database to find where health care
businesses are concentrated.
Health Care Sector
The healthcare sector is comprised of four industries: Ambulatory Health Services (NAICS 621),
Hospitals (NAICS 622), Nursing and Residential Care Facilities (NAICS 623), and Social
Assistance (NAICS 624) establishments. Ambulatory Health Services establishments provide direct
and indirect ambulatory services to patients. Services within this sector include physicians, mental
health specialists, dentists, and other health practitioners. It also includes other outpatient medical
services, such as ambulances, medical laboratories, and home health care services. Hospitals
primarily provide medical, diagnostic, treatments services, and accommodation services to
inpatients. They also provide inpatient services that require specialized facilities and equipment.
Nursing and Residential Care Facilities provide a variety of medical services and residential care
for its residents, including residential facilities for the elderly and mentally disabled and substance
abuse facilities. Finally, Social Assistance establishments provide a variety of social services, such
as child care, family services, and relief services.
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2. The InfoUSA database had a total of 3,397 establishments within the Health Care and Social
Assistance Sector that employed 82,774 people (Exhibit 1). These are large numbers, but no sector
had a location quotient approaching 1, which suggests that the health care sector is not a basic
industry in Orange County. This was surprising, because Orlando Health Center and Florida Center
are two of the County’s largest employers. This situation, however, is not exclusive to Orange
County, as most jurisdictions across the United States also have low location quotients in the health
care sector. Nelson (2009) noted that the benefits of hospitals to the local economy go beyond
employment. They also are large purchasers of goods and services, provide spaces for innovation,
and help to attract other amenities to the community. Research hospitals also attract Medicare
funding to a local economy by bringing patients from other regions.
Exhibit 1: Characteristics of the Health Care Sector in Orange County
NAICS Code Location Number of Estimated Number
Quotient Establishments of Employees
621 Ambulatory Health 0.75 2,518 26,763
Services
622 Hospitals 0.91 56 39,873
623 Nursing and Residential 0.54 136 7,395
Care
624 Social Assistance 0.48 687 8,743
Source: InfoUSA, Location Quotient Calculator 2009
Location Quotients are based on 2008 employment numbers.
International medical tourism is also another avenue used by most hospitals that could be considered
an export activity. Locally, Orlando Health serves more than 6,000 international patients every year
(Keller, 2009). Our area also attracts medical conferences. The area hosted more than 215 medical
meetings with 170,000 attendees in 2008. It is hard to quantify the economic impact of these
activities, especially when our area receives over 40 million visitors annually.
There are two types of hospital facilities: General Medical and Surgical Hospitals (NAICS 62211) and
Specialty Hospitals (NAICS 62231). Orange County has 25 General Hospital facilities that employed
39,085 people in 2008. The County has six Specialty Hospitals, all of them oncology clinics that
employ about 454 people. The professional expertise of these institutions is extremely important,
because they help to differentiate Orange County’s health care industry from others at the national
level.
Healthcare High Tech
Although they do not provide any direct service to patients, high technology companies are becoming
an important part of the health care sector. Medical high tech establishments can be classified into
two main groups: manufacturers of medicine and medical devices and laboratory and research
establishments. Pharmaceutical and Medicine Manufacturing (NAICS 3254), Electronic Instruments
Manufacturing (3345), and Medical Equipment and Supplies (NAICS 3391) are in the first category.
Establishments within these industries produce drugs, medical instruments, and diagnostic
equipment used by hospitals and doctor’s offices. These sectors have low location quotients, and
between them, employ less than 1,000 people (Exhibit 2). Pharmaceutical manufacturing is one of
the sectors linked to the burgeoning biotechnology sector, and the County’s limited representation in
this sector may be an indicator that biotechnology is not an established sector within the local
economy. Electromedical Apparatus manufacturing had the highest location quotient of all medical
manufacturing industries.
Two medical high technology sectors had location quotients higher than 1: Medical and Diagnostic
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3. Labs (NAICS 6215) and Scientific and Research Development Services (NAICS 5417). InfoUSA data
depict 98 establishments that had more than 2,300 employees (Exhibit 3).
Exhibit 2: Medical Manufacturing Establishments in Orange County
NAICS Code Location Number of Estimated Number of
Quotient Establishments Employees
3254 Pharmaceutical and ND 3 34
Medicine Manufacturing
3345 Electromedical 0.76 5 51
Apparatus Manufacturing
3391 Medical Equipment 0.32 75 511
and Supplies
Source: InfoUSA, Location Quotient Calculator 2009
Location Quotient based on 2008 Average Employment
Records were adjusted to show only establishments directly related to health care and bio technology.
ND-Not Disclosable because of the low number of establishments
The Medical and Diagnostic Labs sector includes all establishments providing analytic or diagnostic
services to the medical profession or to patients who are referred by a medical practitioner. These firms
either analyze bodily fluids or produce patient images. The Diagnostic Imaging Center (NAICS 621512)
sector in Orange County is particularly strong with a location quotient of 1.96. Examples of these
imaging centers are establishments that provide CT Scans, MRI, and X-ray laboratories.
Exhibit 3: Laboratory Establishments in Orange County
NAICS Code Location Number of Estimated
Quotient Establishments Number of
Employees
54171 Scientific Research 1.22 16 579
and Development Services
6215 Medical and Diagnostic 1.26 82 1,815
Labs
Source: InfoUSA, Location Quotient Calculator 2009
Location Quotient based on 2008 Average Employment
Records were cleaned to show only establishments directly related to health care and bio tech.
Establishments within the Scientific Research and Development Services (NAICS 54171) sector
conduct original investigation or apply their research findings to create new products or services. This
sector, together with the Pharmaceutical and Medicine manufacturing sector, comprises what is often
called the biotechnology sector. However, few of the local research establishments do biological
research. Most of the local research laboratories specialize on environmental sciences, energy
generation, and optics.
Another sector that may prove to be important for the local biotechnology industry is Blood and Organ
Banks (NAICS 621991). These establishments collect, store, and distribute blood and blood products
and body organs. There are ten of these locations in the County, and they employed over 300 people
in 2008. The professional expertise and lab experience of the workers within this industry could be
helpful to the support of the local biotechnology industry. Currently, this sector employs about 300
people and has a location quotient of 1.51.
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4. Medical Wholesale
The last sector studied was medical suppliers, which distribute specialized equipment for laboratories,
hospitals, and medical offices. These include establishments within the Medical, Dental, and Hospital
Equipment Supplies (NAICS 42345), Ophthalmic Goods Merchant Wholesalers (NAICS 42346), and
Other Professional Equipment and Supplies (NAICS 42349) sectors. The Medical Equipment
Wholesale sector had the highest location quotient at 1.38 and employs over 1,300 people. These high
numbers confirm the importance of the medical sector as a purchaser of goods and services in the local
economy.
Cluster Development
On a national level, economic development theory and site selection initiatives continue to focus on the
development and enhancement of industry “clusters” as indicators of successful economic
diversification and high-quality employment. However, the low location quotients of most of Orange
County’s health care sectors indicate that there likely is not yet an established cluster in our area.
Moreover, it was very difficult to discern areas of concentration of medical services, because the
facilities (hospitals, ambulatory services, medical high tech establishments, and wholesale suppliers)
are spread throughout the County, which has a total land area of hundreds of square miles. The aging
of the population and suburbanization trends in Orange County may have contributed to the
proliferation of medical facilities throughout the County.
Because of the location of health care facilities all through the County, staff made the decision to study
only the agglomerations of medical services anchored by a large hospital or clinic. The assumption is
that large institutions would attract more suppliers and ancillary medical services near their location.
The results of this analysis are portrayed on Exhibit 4 on the next page.
Using this assumption, there are three major areas of concentration of health care activity in Orange
County. Orange Avenue could be referred to as the major health care corridor in Orange County, as two
of the agglomeration areas are located here. The first is located along South Orange Avenue and is
comprised of 8 hospitals and clinics, 317 ambulatory establishments, 27 medical high tech
establishments, and 7 wholesale establishments. Over 22,000 people work within this area. Orlando
Regional Healthcare hospital, one of the largest County employers, anchors this agglomeration. This
hospital provides surgical, medical, rehabilitative, and emergency care services and has the area’s only
Level One Trauma Center, a specialized service for critical injuries. There are also other general
medical and surgical hospitals, including the Arnold Palmer Children’s Hospital, the Nemours clinic
(children hospitals), and the Winnie Palmer Hospital (obstetrics and gynecological services). Also
located here is the MD Anderson Cancer Center, which performs clinical cancer research and is
creating a tissue bank (www.orlandohealth.com).
The second Orange Avenue agglomeration is anchored by the Florida Hospital complex near Winter
Park, which includes a general hospital, a children’s hospital, and an oncology center. This hospital
complex employs over 16,000 people. This area has 12 medical high tech establishments, including
three medical laboratories, two research and development laboratories, four medical laboratories, one
diagnostic imaging center, and two blood and organ banks. With about 350 employees, the Florida
Pathology Lab is the largest in the area. The area also has three medical wholesale establishments and
153 ambulatory service establishments. Both Florida Hospital and Orlando Regional Heath Care are
also teaching hospitals, which increase their importance for the community.
The third area of concentration is located in Ocoee and is anchored by two hospitals/clinics on West
Colonial Drive, Health Central and Ocoee Family Medical Center. It also includes five medical high tech
establishments, including two medical laboratories, one research laboratory, a surgical appliance lab,
and a diagnostic imaging center. It also includes two wholesale establishments and 87 ambulatory
establishments.
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5. Conclusions
Based on this research, there are some small agglomerations within Orange County that could be
strengthened to help the overall development of the health care sector in Orange County. The Lake
Nona “Medical City” area may resemble or surpass these corridors in the future, but there will also be
some major differences. The addition of the UCF Medical School is expected to bring additional
resources and research funds to the area. Moreover, the Veteran’s and Nemours Hospitals will
probably bring special programs that are not currently available in Orange County. The three
institutions will partner with the Burnham Institute to help increase the amount of clinical research done
in our area. Developing a local life science cluster will be challenging, but at the same time, it will help
to diversify the local economy.
Exhibit 4: Concentration of Medical Services in Orange County
Source: InfoUSA 2009
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6. References
Bureau of Labor Statistics, U.S. Department of Labor. 2007 Location Quotient Statistics for Orange County,
Orlando MSA, and State of Florida. Retrieved on December 20, 2009 from http://data.bls.gov
LOCATION_QUOTIENT/servlet/lqc.ControllerServlet
Corthright, Joseph and Mayer, Heike (2002) Signs of Life: The Growth of Biotechnology Centers in the U.S. The
Brookings Institution of Urban and Metropolitan Policy [electronic version]
Devol. R.C. Klowden K., Bedroussian A and Benjamin Y. North America’s High Tech Economy: The Geography
of Knowledge-Based Industries. Milken Institute.
Executive Office of the President, Office of Management and Budget. (2007). North American Industry
Classification System United States 2007. Lanham: Bernan
InfoUSA Database License Group. (2009). Orange County Business Leads Report .
Keller, A. Medical Tourism in Thriving. Florida Trend. Originally published on March 1, 2009. Retrieved from
http://floridatrend.com/article.asp?page=1&aid=50631 on February 8, 2010.
Nelson, Marla. Are Hospitals an Export Industry? Empirical Evidence from Five Lagging Regions. Economic
Development Quarterly. Volume 23. Number 3. August 2009 [electronic version]
Orlando Regional Health Care Website (www.orlandohealth.com).
Wong, P. & Bedrousssian, A. (2006) Economic Benefits of Proposed University of Central Florida College of
Medicine. Milken Institute [electronic version]
Orange County Growth Management Department
Planning Division
Research & Intergovernmental Coordination Section
Post Office Box 1393 Issue Month of Publication
Orlando, FL 32802-1393
Economic Research Initiative March
Telephone: 407.836.5600 Conclusions
Fax: 407.836.5862
E-Mail: planning@ocfl.net
ECONOMIC OUTLOOK FEBRUARY 2010