Economic Impact of Marshall County Hospital

Economic Impact of Marshall County Hospital

KY Rural Health Works Program

Eric A. Scorsone, Ph.D.UK Department of Agricultural Economics

UK Cooperative Extension Service

Victoria Burke, MSUK Department of Agricultural Economics

Bethany Adams, MHAUK Center for Rural Health

KY State Office of Rural Health

Introduction: Health Care & the KY Economy

Health care services: “engine” of growth in rural KY

1980’s – health care industry earnings represented 6.7% of all industry earnings

1990’s – health care industry earning increased to 12.3% in KY

Health care is 3nd largest industry category in KY trailing only manufacturing and state/local government

Medical transfer payments represent ~10% of KY’s personal income

Health Care in National Economy

Why are health care services growing so quickly?

Response to increasing levels of retirement & medical transfer payments (Demographics)

Retirement-based personal income is fastest source of income growth in rural areas

• 1990 – represented 4.1%

• 1999 – represented 6.2% Non-Wage income growing at twice the rate

of wage based income

Marshall County Economy

Diversified group of industries in Marshall County• Manufacturing – 192 million dollars

• Service Sector – 68 million dollars

• Government – 53 million dollars

• Retail – 41 million dollars

• Marshall County Health Care System – Represents nearly 22.4% of the service sector

– Health Care industry - 15 million dollars

– However, this does not include the full economic impact of the health care sector…

Economic Prosperity is Based on Two Factors

• Export industry: sell to customers or businesses from outside the community

–External dollars allow a community to purchase a wider variety of goods & services

–A community must attract & retain export industries

–Social Security & Medicare dollars are part of export industry

• Retain Local Income–Provide goods and services locally for consumers

and businesses

4 Major Roles for Health Care in Community Economic Development

1. Economic base industry attracts external dollars • Health care attracts external dollars into the community

from outside the local area

2. The Hospital and health care employees are purchasers of local goods and services

• keeps local dollars at home

3. Identifies & addresses supply-demand gaps• Are there health services that can be provided locally

where people are currently leaving the community?

4. A factor to business recruitment & retention• attracts & retains local industries & companies• promotes a healthy and productive workforce

Medicare and Medicaid Payments to Marshall County Residents (Thousands)

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001 S10

10000

20000

30000

40000

50000

60000

$

Years

Economic Impact: A Basic Introduction

Inflows: export (external) dollars coming into a community Expands size & strength of local economy Examples: federal and state expenditures,

tourism

Outflows: Leakages out from the local economy Does not create local jobs or local income Example: non-local purchases of good &

services such as receiving medical care in another county or urban area.

Economic Impact of Health Care is Dependent on Several Factors

• Local & non-local purchases

• Health care professionals are local consumers

• Hospital expenditures & hospital employee expenditures are called multiplier effects

• Multiplier represents recycling of local dollars & income

Methodology & Data

• Input-output model used to examine economic impact

• Bureau of Economic Analysis Data used to examine Marshall County industry sectors

• Hospital financial data

• Data was obtained from IMPLAN model (2000) & Bureau Of Economic Analysis Data (BEA 2000)

MultipliersMultiplier

TypeDirect Indirect Induced

Employment Health care

jobsHealth care supplier jobs

Local retail and service jobs related to health care

employee spending

IncomeHealth care employee

income

Health care supplier employee income

Local retail and service income related to health care employee spending

Sales or Output

Health care revenue

Health care supplier revenue

Local retail and service revenue related to health care employee spending

Value Added

Hospital returns to labor,

management and ownership

Hospital supplier returns to labor,

management and ownership

Local retail and service returns to labor,

management and ownership

Multiplier Results: Marshall County Health Sector Impact

on Marshall County Output (Sales)

DirectImpactof the

Health SectorOutput

IndirectImpactof the

Health Sector Output

InducedImpactof the

Health Sector Output

OutputMultiplier

TotalImpactof the

Health Sector Output

$22,213,680 $2,915,827 $3,552,992 1.30 $28,682,500

Multiplier Results: Marshall County Hospital Impact on

Marshall County Output (Sales)

DirectImpactof the

HospitalOutput

IndirectImpactof the

HospitalOutput

InducedImpactof the

HospitalOutput

Output(Sales)

Multiplier

TotalImpactof the

HospitalOutput(Sales)

$13,182,659 $1,720,515 $2,571,433 1.33 $17,474,608

Multiplier Results: Marshall County Health Sector Impact

on Marshall County Employment

DirectImpactof theHealth Sector

Employment

IndirectImpactof theHealth Sector

Employment

InducedImpactof the

Health SectorEmployment

Employment Multiplier

TotalImpactof theHealth Sector

Employment

472 Jobs 37 Jobs 66.2 Jobs 1.23 575.3 Jobs

Multiplier Results: Marshall County Hospital Impact on

Marshall County Employment

DirectImpactof the

HospitalEmployment

IndirectImpactof the

HospitalEmployment

InducedImpactof the

HospitalEmployment

Employment Multiplier

TotalImpactof the

HospitalEmployment

259 Jobs 17.8 Jobs 42.2 Jobs 1.23 319 Jobs

Multiplier Results: Marshall County Health Sector Impact

on Marshall County Labor Income

DirectImpactof the

Health SectorIncome

IndirectImpactof theHealth SectorIncome

InducedImpactof theHealth SectorIncome

Income Multiplier

TotalImpactof theHealth SectorIncome

$13,446,837 $1,023,981 $1,234,797 1.17 $15,705,615

Multiplier Results: Marshall County Hospital Impact on

Marshall County Labor Income

DirectImpactof the

HospitalIncome

IndirectImpactof the

HospitalIncome

InducedImpactof the

HospitalIncome

Income Multiplier

TotalImpactof the

HospitalIncome

$7,831,878 $600,877 $818,236 1.18 $9,250,992

Multiplier Results: Marshall County Hospital Impact on

Marshall County Value Added

DirectImpactof the

HospitalValue Added

IndirectImpactof the

HospitalValue Added

InducedImpactof the

HospitalValue Added

Value Added Multiplier

TotalImpactof the

HospitalValue Added

$8,790,580 $998,229 $1,645,540 1.30 $11,434,348

Summary: Marshall County Health Care Sector

• The local health care sector represents 5% of jobs and nearly 3% of personal income in Marshall County

• Compares favorably with Manufacturing Construction, Wholesale & Retail

• This economic impact is likely to grow larger over the coming decade

• Economic activities of Marshall County hospital & its employees created:–319 local jobs,

–17.4 million in local revenues,

–9.2 million dollars in labor income,

–11 million in valued added in Marshall County

• ~ 4.3 percent of the local jobs in Marshall County are dependent upon Marshall County Hospital

Summary: Marshall County Hospital

Next Steps…. Promote enhanced economic

development role for health care

Connect Health Care Professionals with Economic Development & Chamber of Commerce Officials by:

• Forming a Leadership Task Force under Chamber of Commerce

• Undertaking a Business Retention and Expansion Program (BRE) to assess needs and challenges for health care providers in Marshall County

–Volunteer Visitors would interview 30 health care businesses in Marshall County

Eric A. Scorsone, Ph.D.(859) 257-7257

Email: escorson@uky.edu

Victoria Burke, MS(859) 257-7272 x 246

Email: vkburk0@uky.edu

Bethany Adams, MHA(859) 257-7272 x 246

Email: badam2@uky.edu

Larry Allen, MADirector,

KY State Office of Rural Health1-800-851-7512

Email: lalle2@uky.edu

For More Information Contact

Kentucky Rural Health Works www.ca.uky.edu/KRHW

UK Community & Economic Development www.ca.uky.edu/CED/index.html

UK Center For Rural Healthwww.mc.uky.edu/ruralhealth

Kentucky State Office of Rural Healthwww.mc.uky.edu/ruralhealth/SORH/default.htm

For More Information