DULUTH — Essentia Health recently released the findings of an economic impact report that found the nonprofit health system drives over $4.5 billion in annual economic activity in the Twin Ports area.
“Economic development is the tide that raises all boats,” said Essentia Health CEO Dr. David Herman. “Any economic impact that you have within a community certainly raises the level of that community from an economic standpoint, and subsequently raises the health outcomes in that community.”
The health system invested $42,500 to hire Northspan, a Duluth-based economic development consulting firm, to conduct the
which compiled data on employment, revenue, spending and charitable contributions to determine Essentia’s economic impact in the community.
“These reports help organizations tell their stories better — understand their reach in ways that they might have even realized,” said Karl Schuettler, vice president of Northspan. “It is one of our largest ones we’ve done.”
Essentia Health-St. Mary’s Medical Center in downtown Duluth has over 300 single-patient rooms.
Dan Williamson / 2023 file / Duluth Media Group
According to Schuettler, such reports can often serve as support for future funding requests or policy goals.
As the top employer in the region, Essentia supports nearly 15,000 jobs in the area, in addition to indirectly supporting over 24,000 jobs throughout Minnesota, Wisconsin and North Dakota.
Every full-time job created at Essentia spurs an additional 0.9 jobs in the community, the report found.
“Those are the dollars that support the school system through property taxes, and the dollars that support the state through income tax,” Herman said.
According to the report, Essentia generates $769 million in annual federal, state and local taxes.
The federal portion of taxes generated is $533 million, representing the income tax paid by Essentia employees, along with indirect and induced effects of corporate income taxes on private vendors and partners of Essentia.
In the same manner, it also generates $168 million in state taxes, $28 million in county taxes, and $39 million for municipalities and other local taxing districts.
A media conference was held Tuesday at Essentia Health-St. Mary’s Medical Center in Duluth. Pictured are One Roof Executive Director Jeff Corey, from left, Northspan Vice President Karl Schuettler, Essentia Health CEO Dr. David Herman and APEX President and CEO Rachel Johnson.
Brielle Bredsten / Duluth Media Group
Each year, the nonprofit health system serves over 600,000 patients and generates $7.69 billion overall economic impact.
“You have your core line of business,” Schuettler said, “but you don’t really understand how these relationships that you build in the community and your employee spending, and how that all filters down and creates these really positive feedback loops of spending.”
Through partnerships with local businesses and support of jobs, the report found that Essentia helps fuel local spending on housing, dining, recreation, hospitality and more.
“Here’s a major employer, the largest employer north of the Twin Cities, that has decided to invest here. It’s an indicator that if this company is choosing to invest here, it’s a great area to invest in,” said Rachel Johnson, president and CEO of APEX. “This should be an inspiration and a catalyst for other businesses to want to join in this region and build up this area.”
The helium industry is one example of an opportunity that came to mind for Johnson, citing
Pulsar Helium’s exploration of deposits discovered in Lake County,
and the relationship between helium and MRI, medical equipment and medical devices.
“The synergy we have with our educational institutions,” Johnson said, “not only career pathway programming, but also investing in technology and biomedical. We have this really interesting combination of natural resources, business and industry merging with health care.”
Annually, Essentia provides $490 million in charity and uncompensated care, workforce education, research and discounts to uninsured patients.
Attendees check out the Essentia Health Fitness Expo, held during Grandma’s Marathon events, at the Duluth Entertainment Conference Center.
Jed Carlson / 2024 file / Duluth Media Group
In 2024, Essentia invested over $1.5 million across 153 local organizations that provide food security, stable housing, mental health resources, child care and healthy youth development.
“This report makes clear that Essentia’s leadership is critical and their impact goes well beyond health care in our community,” Jeff Corey, executive director of One Roof Community Housing, said in a news release. “Through our partnership, we’ve already built 52 units of affordable housing in Duluth’s Hillside Neighborhood at
and we currently have another 72 affordable units planned through
The health care industry also faces challenges that would negatively impact the overall community, Herman said.
More than 60% of Essentia’s patients receive support from government insurance programs such as Medicare or Medicaid.
“Medicare pays about 80% of the cost of care, so if it costs us $1, we get paid 80 cents. Medicaid is closer to 60 cents,” Herman explained.
Also known as
in Minnesota, Medicaid provides coverage to 1.3 million residents. Medicaid faces an estimated loss of up to $1.6 billion annually in state budget cuts.
“There are a lot of changes that could be coming in health care,” Herman said. “We’re a business like anyone else, and when our revenues go down, then we have to make changes within our business model.”
Essentia neurosurgeon Anthony Burrows demonstrates that Mazor surgical robot at a “Meet the Robots” event at Essentia Health-St. Mary’s Medical Center on July 23, 2024.
Wyatt Buckner / File / Duluth Media Group
Labor makes up 60% of Essentia’s expenses. If jobs within the health system are lost, Herman said it has a ripple effect on other family-sustaining jobs in the community.
“This isn’t just about health care. This is about economic health and the health of our communities,” he said.
This story originally contained a misspelling of Northspan. It was updated at 9:02 a.m. Sept. 26 with the proper spelling. The News Tribune regrets the error.
