University and tax break credited for San Francisco's explosive health care growth

Mike Koozmin/The S.F. ExaminerSan Francisco's number of people employed in medical industry jobs grew 10 percent from 2000-09.

Roughly one in five jobs in San Francisco is tied to health care, an industry that pumps $16.7 billion a year into San Francisco’s economy, according to a new study released today.

Industry observers credit the explosive growth of UC San Francisco and The City’s payroll tax exemptions for biotech companies as some of the keys to the local industry’s growing dynamism. The report also credits San Francisco for having top-tier hospitals that attract patients for their state-of-the-art research and clinical practices.

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The study, commissioned by the Hospital Council of Northern and Central California and building on a similar report released last year just about hospitals, gathered the economic impacts of the hospital, biomedical research and medical education spending.

According to the report, nearly 66,000 jobs in The City are directly related to those three industries. Roughly 38,000 more jobs are indirectly created through the health care industry.

The industry buildup — which includes well-known medical centers, top-rated teaching hospitals and industry-leading research facilities — has been decades in the making.

UCSF is a focal point of the biotech research. Just in the past 15 years, UCSF research has tripled in size, spokeswoman Kristen Bole said.

The growth of the new UCSF Mission Bay campus on the southeastern edge of The City has brought publicly funded programs into close proximity with startups, industry giants and venture capital firms to collaborate on work, according to spokesman Kaspar Mossman of the California Institute for Quantitative Biosciences, a state-funded operation that connects academics with private industry.

“It is more than proximity,” Mossman said of collaboration in Mission Bay. “It is about getting people physically connected.”

Several people involved in the biotech industry also touted the importance of The City’s payroll tax exemptions for biotech companies. Before the exemption, there were a few biotech companies here. About a decade later, there are more than 100.

But the growth of the industries is running up against an economic barrier: the high price of real estate. Dennis Conaghan of the San Francisco Center for Economic Development, which works to attract and retain businesses, said that as companies grow they face the challenge of finding affordable space, which is in short supply in San Francisco due to a recovering economy and a boom in the technology industry.

The healthy hospital industry also overlaps with tourism, which is one of the largest industries in The City, supporting 71,403 jobs in 2011, according to the San Francisco Travel Association. Medical conventions created about 4,000 jobs and account for $564 million in economic impacts, according to the report.

“It’s really good to have two really strong industries,” said Jon Ballesteros of the travel association.

The report, which was written by San Francisco State University economics professor Philip King, will be discussed this morning at the Chamber of Commerce’s annual ForecastSF event.

mbillings@sfexaminer.com

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