Kansas Rural Health Works:The Economic Contribution of

Health Care

John Leatherman

Department of Agricultural Economics

K-State Research and Extension

Kansas Rural Health Works

• National program to help foster sustainable rural health care systems– Active programs in 30-35 states– Supported by Office of Rural Health Policy &

Medicare’s Rural Hospital Flexibility (FLEX) program– Sponsored in Kansas by the Kansas Rural Health

Options Project– Partnership between KDHE Bureau of Local and

Rural Health, KHA, K-State

KRHW Program Objectives

• Help foster sustainable rural community health care system

• Increase awareness of health care importance• Assess citizens’ perceptions of available health

care services• Look for health care needs and services not

currently met

KRHW Program Components

• Local health care economic impact reports• Community engagement process

– Impact analysis to capture community attention; local health care inventory; data analysis and assessment; market analysis and survey; and feasibility studies (outside of the program)

• Participating communities to date– Sherman County; Republic County; Oakley tri-

county; Stafford County; Cloud County; Osborne County; Trego County; Rice County; Wilson County; Columbus; Hoisington; Sheridan County

Importance of Health Care Sector

• Health services and rural development– Major U.S. growth sector

• 9.1% GDP in 1980 ($1,102/person); 16.2% in 2008 ($7,681/person); projected 19.3% by 20198 ($13,387/person)

• Health services employment up 70% from 1990-2008 and 152% since 1980

• Represents 10%-15% employment in most rural counties

– Business location concern• Quality of life; productive workforce; ‘tie-breaker’ location

factor

– Retiree location factor• 60% called quality health care “must have”

Kansas Economy, 2008

Output Labor Income Total IncomeDescription Employment (millions) (millions) (millions)

Agriculture 84,396 $14,893.4 $1,075.3 $5,439.6Mining 20,458 $7,859.4 $1,586.4 $4,251.1Construction 100,203 $12,690.2 $4,478.8 $4,909.3Manufacturing 181,976 $102,918.2 $13,226.7 $20,178.5TIPU 63,648 $12,499.5 $3,684.1 $7,251.9Trade 245,280 $22,192.6 $8,835.9 $14,654.8Service (Other than Health) 659,701 $85,262.7 $24,764.1 $47,245.2Health Services (2010) 184,483 $16,461.5 $8,538.7 $9,938.8Government 300,132 $21,400.2 $15,634.5 $18,832.0Total 1,840,277 $296,177.7 $81,824.4 $132,701.2

Healthcare Highlighted

Output Labor Income Total IncomeDescription Employment (millions) (millions) (millions)

Health and personal care stores 10,365 $677.9 $315.0 $493.2Veterinary services 4,760 $333.6 $131.8 $144.5Offices of health practitioners 38,941 $4,728.1 $2,797.2 $3,244.4Home health care services 7,537 $384.0 $222.2 $281.8Medical labs, outpatient and ambulatory care 12,701 $1,817.1 $651.0 $1,144.5Hospitals 62,446 $6,745.5 $3,245.8 $3,408.5Nursing and residential care facilities 41,398 $1,566.5 $1,090.5 $1,130.2Fitness and recreational sports centers 6,336 $208.8 $85.4 $91.7Total 184,483 $16,461.5 $8,538.7 $9,938.8

Share of Direct Employment

Manufacturing10%

TIPU3%

Trade13%

Service (Other than Health)

37%

Health Services10%

Government16%

Mining1%

Construction5%

Agriculture5%

Share of Total Income

Manufacturing15%

TIPU5%

Trade11%Service (Other

than Health)37%

Health Services7%

Government14%

Agriculture4%

Construction4%

Mining3%

Economic Contribution

• Direct contribution: the value of sales, income, employment in the sector

• Indirect impacts– Business-to-business transactions– Spending labor income (wages, proprietor)

• Each $ attracted/retained creates a “multiplier” effect

Economic Multipliers

Employment ContributionDirect Employment Total

Employment Multiplier EmploymentHealth and personal care stores 10,365 1.33 13,835Veterinary services 4,760 1.36 6,483Offices of health practitioners 38,941 1.73 67,498Home health care services 7,537 1.30 9,765Medical labs, outpatient and ambulatory care 12,701 1.75 22,259Hospitals 62,446 1.67 104,476Nursing and residential care facilities 41,398 1.25 51,542Fitness and recreational sports centers 6,336 1.22 7,726Total 184,483 283,584

Income Contribution

Direct Labor TotalIncome Income Income

(millions) Multiplier (millions)Health and personal care stores $315.0 1.41 $443.0Veterinary services $131.8 1.48 $195.6Offices of health practitioners $2,797.2 1.37 $3,826.3Home health care services $222.2 1.35 $300.8Medical labs, outpatient and ambulatory care $651.0 1.55 $1,008.0Hospitals $3,245.8 1.47 $4,772.8Nursing and residential care facilities $1,090.5 1.33 $1,447.4Fitness and recreational sports centers $85.4 1.61 $137.7Total $8,538.7 $12,131.7

Retail & Public Finance

Retail 6.3%Sales Sales Tax

(millions) (millions)Health and personal care stores $159.967 $10.078Veterinary services $70.633 $4.450Offices of health practitioners $1,381.535 $87.037Home health care services $108.608 $6.842Medical labs, outpatient and ambulatory care $363.948 $22.929Hospitals $1,723.287 $108.567Nursing and residential care facilities $522.596 $32.924Fitness and recreational sports centers $49.703 $3.131Total $4,380.277 $275.957

News Release(November 3, 2006)

Study Shows Health Care ImpactEdwards County, Kan. - A good local health care system may itself be part of the prescription for maintaining a healthy rural economy.

According to the report, the health care sector accounted for an estimated 9.0 percent of Edwards County’s total employment, or about 160 jobs, in 2003, the most recent year for which information was available. Further, the study’s authors calculated economic multipliers for seven health care sectors and estimated that health care directly and indirectly accounted for 234 jobs throughout the county economy. They go on to estimate that these same sectors accounted for more than $4,925,000 in total county income and about $938,000 in county retail sales.

YOUR NAME, YOUR TITLE of YOUR FACILITY, who released copies of the report, said (s)he was somewhat surprised by the overall scale of the existing activity in the county. “I think we tend to take our local health services for granted, just a little,” (s)he said. “We don’t realize how important health care is to the county’s economic wellbeing.”

Meeting HandoutThe Economic Impact of the Health Care Sector

In Ottawa County, KansasThe organization and delivery of health care services have undergone rapid evolution in recent years. For many Americans, the cost of services and access to care are important issues. This certainly is true in many rural areas where communities have struggled to maintain affordable, quality health care systems. The purpose of this project is to provide information resources that may be used to communicate to community leaders and concerned citizens the relative importance of health care to the local economy.

In an effort to generate useful information resources for community and health care leaders, the YOUR FACILITY has partnered with the Kansas Rural Health Options Project (KRHOP) and K-State Research and Extension, to develop this report as a component of the Kansas Rural Health Works program. KRHOP is a partnership of the Office of Local and Rural Health at the Kansas Department of Health and Environment, the Kansas Hospital Association, the Kansas Board of Emergency Medical Services and the Kansas Medical Society. KRHOP is dedicated to assuring quality health care delivery in rural Kansas through the promotion of collaborative systems of care.

The Importanceof the

Health Care Sectorto

Decatur County

XYZ HospitalKansas Rural Health Options Project

K-State Research and Extension

PowerPoint Presentation

KRHW Community Engagement

• Strengthen and enhance the sustainability of rural health care systems

• Community awareness • Information product development• Encourage and allow issues to emerge• Strategize about local action

KRHW Community Engagement

• Community based, not driven by hospital, state or university

• No pre-defined “agenda” to pursue• Local people solving local problems• Community provides energy and commitment,

with input from health care providers• Public represented by community leaders

Community Steering Meetings

• 5 meetings over 3 months• One hour working meetings over lunch• Emphasize development of information products• Summary meeting at conclusion• If issues emerge, work on a community action

plan (they always do)• Follow up as needed

Community Issues/Priorities

• Big Issue– Hospital finance and organization

• Multiple general issues– Community information/education

• Acute issues– Adolescent suicide prevention– Teenage pregnancy– Teen binge drinking– Labor force substance abuse

Closing Thoughts

• KRHW is an opportunity to promote local health care awareness and planning, not simply PR

• Contact:– John Leatherman– 785-532-4492– jleather@k-state.edu

• KRHW: www.krhw.net

www.krhw.net