The Economic Impact of the Oklahoma State University...

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The Economic Impact of the Oklahoma State University

Medical Center and Residency Program on the State and

Regional Economies

Prepared by:

Brian Whitacre

Associate Professor & Extension Economist

Oklahoma State University

Email: [email protected]

Lara Brooks

Extension Associate

Oklahoma State University


Chad Landgraf

GIS Specialist

OSU Center for Rural Health


Oklahoma Cooperative Extension Service

513 Ag Hall

Stillwater, OK 74078

Phone: 405-744-9825

Fax: 405-744-9835

February 2013

Report AE-13010

mailto:[email protected]



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Table of Contents Executive Summary ...................................................................................................................................... 3

Introduction ................................................................................................................................................... 6

Research Methodology ................................................................................................................................. 6

Oklahoma State University Medical Center Background ............................................................................. 8

OSUMC Revenues .................................................................................................................................... 9

OSUMC Expenditures ............................................................................................................................ 10

Employment and Salaries Including Residency Program ....................................................................... 12

OSUMC Construction Expenditures ....................................................................................................... 13

Visitor Days and Spending ..................................................................................................................... 13

The Impact of the OSUMC on the Tulsa Metropolitan Area Economy in FY 2012 .................................. 14

The Multiplier Effect .............................................................................................................................. 15

The Economic Impact from Operational Activities Including Residency Program ............................... 15

Economic Impact from Construction Activities ..................................................................................... 17

Economic Impact from Visitor Spending ............................................................................................... 19

Summary of OSUMC Impacts ................................................................................................................ 21

The Economic Impact of OSUMC Residency Graduates ........................................................................... 23

Overview of OSUMC Residency Graduates .......................................................................................... 23

The Multiplier Effect .............................................................................................................................. 31

References ................................................................................................................................................... 34

Appendix A- Review of Literature Relative to Impact Studies .................................................................. 35

Appendix A References .......................................................................................................................... 37

Appendix B- Model and Data Used to Estimate Employment and Income Multipliers ............................. 38

Appendix B References .......................................................................................................................... 41

Appendix C - Total Economic Impact of OSUMC Residents by Congressional District (2004-2012) ..... 42

Appendix D - OSUMC Residency Completers, by Congressional District and Specialty (2004-2012) .... 43

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Executive Summary

This study examines the economic contributions of the Oklahoma State University

Medical Center (OSUMC) in terms of both day-to-day operations and via the production of

osteopathic residents who complete their training at this facility. The economic impacts of the

Medical Center itself are mostly focused on the Tulsa metropolitan area of the state. These

impacts are summarized in three basic categories:

- Operations of OSUMC, including the residency program

- Construction activities associated with OSUMC

- OSUMC visitor spending

Each category generates jobs and income that have a multiplicative effect on the local

economy, as many businesses and residents in the area rely on spending from the medical center

and its employees. These multiplier effects are estimated via a widely-accepted methodology

known as input-output analysis. Using data from OSUMC on number of employees, payroll,

construction spending, and number of visitors to the center, multipliers specific to the Tulsa

metropolitan area create a defendable estimate of the total economic impact that the center has

on annual income and jobs. The findings are summarized for fiscal year 2012 below.

Employment Income Retail Sales Tax Collections

Sector Total Impact Total Impact State Sales Tax

(4.5%) County Sales Tax (0.85%)

City Sales Tax (3.167%)

OSUMC Operations 2,350 $121,369,814 $1,228,869 $232,120 $648,638

Construction 17 $695,376 $7,041 $1,330 $3,716

Visitor Spending 8 $207,757 $2,104 $397 $1,110

Total 2,375 $122,272,947 $1,238,014 $233,847 $653,465

Overall, OSUMC contributes 2,375 jobs and over $120M in income to the Tulsa area

economy. Further, a portion of that income is spent on retail sales in the area, which in turn

generate tax revenue that is paid back to state and local governments. For fiscal year 2012, over

$1.2M in state sales tax collections can be attributed to OSUMC, and over $200K and $600K for

county and city sales tax collections, respectively.

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OSUMC also houses the largest osteopathic residency program in the United States,

where medical students who have finished their Doctor of Osteopathic Medicine (D.O.) degrees

can complete their training before taking jobs in a private practice or hospital. Physicians who

have completed their residencies at OSUMC are free to locate anywhere to find a job, but the

majority (68% since 2004) have opted to stay in Oklahoma. These physicians create jobs and

income where they choose to locate, particularly if they set up a private practice that employs

nurses, medical technicians, or receptionists. This report uses data on the locations of 201

OSUMC residency completers since 2004 that are practicing in Oklahoma to assess the

economic contributions of the physicians the program has produced. Research relating to the

number of jobs created per primary care physician and the percentage of doctors operating their

own private practice is used to generate the direct impact of OSUMC resident graduates.

Multiplier effects are then included to account for secondary impacts of the jobs and income that

the physicians help to create. The total economic impact of OSUMC resident graduates by

Congressional District is summarized below (and in map version on the following page):

Congressional District

1 2 3 4 5 Total

Number of OSUMC Residency Grads 134 28 15 11 13 201

Total Employment Generated 1,763 353 252 144 145 2,656

Total Income Generated $95,081,507 $16,653,263 $10,149,104 $6,732,348 $8,213,161 $136,829,384

Each of the 5 Congressional Districts has benefitted from at least 11 D.O.s who

completed their residency at OSUMC. These physicians have created many jobs and a

significant amount of income in each district, totaling over 2,650 jobs and $135M across the

state. Thus, the economic influence of OSUMC is not simply limited to the Tulsa area, but is

found in communities ranging from Grove to Buffalo to Ardmore. When combined with the

impact of the medical center itself, the economic contributions of OSUMC and its residency

program are quite impressive.

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Introduction

The Oklahoma State University Medical Center (OSUMC) has a substantial health,

education, and economic impact on the surrounding area and across the state. Outside of

providing patient care, the OSUMC houses the largest osteopathic residency program in the

United States. A substantial share of those residents earned their Doctor of Osteopathic

Medicine (D.O.) degrees from the OSU Center for Health Sciences located in Tulsa. The option

to fully complete an osteopathic program (including residency) within the state of Oklahoma

could influence new physicians to practice within the state upon completion of their residency.

These physicians have a considerable economic impact on their respective regions and the state.

The objective of this study is to estimate the impact that the OSUMC has on the

economy. More specifically, the report will:

Present financial data reflecting hospital expenditures and revenue

Present OSUMC employment and payroll data

Measure the economic impacts that OSUMC operation, including the residency

program, construction activities, and visitor spending, have on the Tulsa

metropolitan statistical area through increased: employment, wages, salaries, and

benefits, and retail sales

Measure the economic impact that OSUMC residency graduates have on their

respective Oklahoma congressional districts after completing their residency

program

Research Methodology

This report will be presented in two main sections. The first will quantify the impacts on

jobs and income (wages, salaries, and benefits) created on an annual basis by the OSUMC, its

employees, residents, and visitors. The second section will examine the impacts that previous

OSUMC residents have on the local economies where they choose to practice after completing

their residency program.

A review of previous literature relative to impact (also known as input-output) analysis is

located in Appendix A. Data for this study are from Fiscal Year (FY) 2012. The impacts of the

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Medical Center itself are primarily focused on the Tulsa metropolitan area economy, but also

spill over to the surrounding counties. Much of the revenue is used to hire clinical and

administrative staff and provide residency wages. Most of the income provided directly through

these jobs is spent and re-spent within the local economy, creating additional jobs and income.

As a result, the total number of jobs and the total income attributable to the OSUMC are larger

than the direct number of jobs and income that are reported by the medical center itself.

Revenue not used to hire employees is used to procure goods and services. The impacted

businesses (many of which are located within the Tulsa metropolitan area) use this revenue to

then hire employees, pay salaries, and purchase materials. This additional economic activity is

called the multiplier effect. The economic impacts of the OSUMC will be examined in three

parts:

Operations of the OSUMC, including the residency program

Construction activities

OSUMC visitor spending

To calculate the economic impacts described above, a widely-accepted input-output

model and data known as IMPLAN were used.1 IMPLAN allows for estimation of the direct,

secondary, and total impacts of the OSUMC on the primary impact region including the Tulsa

metropolitan area. The economic impact in this report will be quantified as total employment

including direct, secondary and total jobs and the associated wages, salaries, and benefits.

Detailed information on the model used in this report can be found in Appendix B.

To assess the economic impact of physicians who completed their residency programs at

OSUMC, a list of all residency completers since 2004 was meshed with American Medical

Association Masterfile data to determine the location of physician practices and their associated

specialties. This data suggests that OSUMC keeps an impressive 68% of its residents in the state

of Oklahoma after they have completed their program and begun working as physicians. Studies

on the economic contributions of physicians find that those who work in private practice

generate more local jobs and income than do those who work in hospital settings. Recent data is

used to generate assumptions about the percentage of residency graduates in various specialties

1 IMPLAN stands for Impact Analysis for Planning, and is a software program commonly used for estimating

economic impacts. An overview of the IMPLAN model is found in Appendix B.

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who go on to careers in these different settings. The total economic contribution of these

residency completers is then estimated using a similar IMPLAN-type methodology, and results

are broken out by congressional district.

The following section provides some background information on OSUMC, including

revenues and expenditures for FY 2012. It also discusses the employment and payroll numbers

for 2012, and details other categories that have an economic contribution to the local Tulsa area

such as construction work and visitor spending.

Oklahoma State University Medical Center Background

The OSU Medical Center is located in Tulsa, Oklahoma. Tulsa is the second largest

metropolitan statistical area (MSA) in Oklahoma. The MSA includes the surrounding counties

of Osage, Pawnee, Creek, Rogers, Wagoner, and Okmulgee. OSUMC attracts a large share of

patients from within Tulsa County and the surrounding communities. Figure 1 displays the

Tulsa MSA, which for the purpose of this study will be used as the medical service area.

Figure 1. OSUMC Medical Service Area

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OSUMC Revenues

OSUMC’s operations are funded largely from revenues derived from hospital patient

revenue (86.8%). Total revenue sources by major funding source are shown in Table 1. Total

FY 2012 revenue equaled over $126 million. Figure 2 graphically displays the shares of revenue

sources. Medical education and resident support is the second largest component (5.6 %)

followed by private gifts (2.9%).

Table 1. OSUMC Revenue Sources, FY 2012

Revenue Source Revenue Amount Percent

Hospital Patient Revenue $109,484,997 86.8%

Medical Education/Resident Support $7,091,825 5.6%

Private gifts $3,684,950 2.9%

Auxiliary Enterprises $3,141,562 2.5%

Investment Income $73,779 0.1%

Other Sources $2,666,758 2.1%

Total $126,143,871 100.0% Source: OSUMC

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Hospital Patient Revenue, 86.8%

Medical Education/Resident

Support, 5.6%

Private gifts, 2.9%

Auxiliary Enterprises, 2.5%

Investment Income, 0.1% Other Sources, 2.1%

Figure 2. OSUMC Revenue Sources, FY 2012

OSUMC Expenditures

OSUMC expenditures are presented in Table 2. Employee expenses including wages,

salaries, and benefits comprise the largest share of expenditures with 68.9% of the total. Medical

supplies and printing are the next largest category with 18% of total outlays. OSUMC

expenditures totaled over $129 million in FY 2012. Figure 3 graphically displays expenditures

by major category.

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Table 2. OSUMC Expenditures, FY 2012

Funding Use Expenditure Amount Percent

Employee Expenses $89,156,617 68.9%

Supplies and Printing $23,278,753 18.0%

Insurance $2,791,098 2.2%

Maintenance $2,645,055 2.0%

Equipment $2,327,362 1.8%

Utilities $1,899,629 1.5%

Leases & Rentals $1,148,087 0.9%

Interest on Debt $1,042,625 0.8%

Advertising $205,867 0.2%

Travel $96,101 0.1%

Taxes $96,964 0.1%

Other $4,778,615 3.7%

Total $129,466,773 100.0% Source: OSUMC

Employee Expenses, 68.9%

Supplies and Printing, 18.0%

Insurance, 2.2% Maintenance, 2.0% Equipment, 1.8%

Utilities, 1.5%

Other, 5.7%

Figure 3. OSUMC Expenditures, FY 2012

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Employment and Salaries Including Residency Program

Total employment and descriptions are presented in Table 3. OSUMC employs 1,101

full time employees with 181 part time and 32 contract employees. These groups are further

divided into employment types. Professional employees include physicians and administration.

This category had 439 full time employees with 105 part time and 19 contracted employees.

Staff is defined as health care support positions, including those performing clerical work. In FY

2012, there were 500 full-time staff members with 76 part-time and 13 contracted. Residents are

medical students completing their residency program through OSUMC. In FY 2012, there were

162 residents at the OSUMC.

Table 3. OSUMC Employment Data, FY 2012

Employment Full-Time Part-Time Contract Labor

Professional 439 105 19

Staff 500 76 13

Residents 162 0 0

Total 1,101 181 32 Source: OSUMC

Table 4 displays the payroll details for each employment category described in Table 3.

Payroll is defined as the sum of all wages, salaries, and benefits paid out to employees. Total

payroll equaled $73,557,463 in FY 2012, with payments to professional staff accounting for the

largest share.

Table 4. OSUMC Payroll Data, FY 2012

Employment Wages, Salaries, Benefits

Professional

$38,582,110

Staff

$25,208,553

Residents

$9,766,800

Total $73,557,463 Source: OSUMC

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OSUMC Construction Expenditures

Construction is another important economic activity that is attributable to OSUMC.

While most projects take a limited amount of time, economic impacts still occur from hiring

within the community or hiring labor outside of the community that purchases goods and

services such as food and services from within the community. Rather than outlining

construction projects, total construction costs will be examined to determine fiscal year impacts

instead of individual project impacts.

Table 5 presents the total FY construction expenditures. Construction totals range from

just over $1 million in 2012 to $9.8 million projected in 2013. Note that the 2013 total includes

work on the parking garage associated with OSUMC that will employ a significant amount of

local construction workers.

Table 5. OSUMC Construction Expenditures, FY2011-2013

Fiscal Year Construction Amount

FY 2011

$3,475,658

FY 2012

$1,151,502

FY 2013 (Estimated) $9,800,000

Total $14,427,160 Source: OSUMC

Visitor Days and Spending

OSUMC’s residency program attracts a large number of visitors each year for various

events and activities. With the presence of the residents, the likelihood of family and student

visitors increases dramatically. OSUMC also attracts visitors for alumni and college activities.

In addition, several visitors are brought to the medical center by administrators and faculty to

attend conferences and other meetings associated with the activities of the center.

Each time a non-local visitor comes to the medical center, they spend money at local

restaurants, and often buy gas before they leave. Some visitors stay overnight which also

generates revenue for the local lodging businesses. These are all local expenditures that occur

due to the location of the medical center and the residency program.

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Table 6 presents the annual number of visitors by type along with their estimated daily

spending. It is estimated that OSUMC attracts 3,025 visitors annually with estimated

expenditures of $325,675 that is spent locally.

Table 6. OSUMC Visitors and Spending

Visitor Category Visitors Daily

Spending2 Total Expenditures

Student Visitors/Parent Activities 1,000 $169 $169,000

Alumni Activities 75 $123 $9,225

College Activities 750 $123 $92,250

Faculty and Staff Visitors 1,200 $46 $55,200

Total 3,025 $325,675 Source: OSUMC; U.S. General Services Administration

The Impact of the OSUMC on the Tulsa Metropolitan Area Economy in FY

2012

This section of the report focuses on the economic impact in terms of employment and

income as derived from wages, salaries, and benefits resulting from the presence of OSUMC in

the greater Tulsa metropolitan area.

These activities are divided into the following categories:

OSUMC Operations (Employment and Income)

Construction

Visitor Spending

The direct economic benefits of the OSUMC are substantial (as noted in Tables 3 – 6),

but do not show the complete impact. Secondary economic impacts are created when OSUMC

employees, residents, visitors, construction firms and their employees purchase goods and

services. These secondary benefits are measured by economic multipliers.

2 Visitor expenditures were estimated using U.S. General Services Administration’s lodging and meals and

incidental expense rates for Oklahoma. Faculty and staff visitors are assumed no overnight stays with only daily

meal and incidental expenses. Alumni and college activity visitors are assumed overnight stays with one day of

meal and incidental expenses, and student visitors/parent activities are assumed overnight stays with two days of

meal and incidental expenses

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The Multiplier Effect

To further illustrate the multiplier effect, consider the opening of a new hospital. The

hospital purchases goods and services from other businesses and the dollars flowing to those

businesses increase. Likewise, the hospital will hire employees who in turn purchase goods and

services locally. The purchases of the hospital, its employees and residents will create additional

jobs and wages and salaries throughout the local economy.

A multiplier from an input-output model such as IMPLAN can measure the effect created

by an increase or decrease in economic activity. For example, an employment multiplier of 1.75

indicates that if one job is created by the medical center, then an additional 0.75 job is created in

other businesses due to the medical center, employee, and resident spending. The model

calculates employment (in terms of jobs) and income (in terms of dollars) multipliers. The

multipliers are county-specific due to differences in locally-available goods and services across

counties. The multipliers can be aggregated to multi-county level when economic activity spills

across county borders, as is the case with the Tulsa metropolitan area.

The Economic Impact from Operational Activities Including Residency Program

The economic impact from activities related to operations and the residency program is

presented in Table 7. Direct employment (full and part time and contract labor) and income

(payroll including wages, salaries, and benefits) from operational activities and the residency

program were estimated in the previous section in Tables 3 and 4. These activities are

continuous, thus occurring every year. Total estimated employment was 1,224 employees in FY

2012. This total includes full-time employees (1,101), part-time employees (181), and

contracted employees (32). It is assumed that 2 part-time employees account for 1 full-time

equivalent. The hospital sector employment multiplier for the Tulsa metropolitan statistical area

is 1.92. This means that for every job/resident another 0.92 job is created in other businesses in

the metropolitan area. The secondary employment generated in the Tulsa metropolitan area is

estimated at 1,126 jobs. This generates a total employment impact of 2,350 jobs in the Tulsa

metro area for FY 2012.

Data on the income from employees and residents are also presented in Table 7. Data

provided by OSUMC indicate that total income was $73,557,463 for all employees and residents.

This total includes all wages, salaries, and benefits paid out to employees and residents at

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OSUMC. The hospital sector multiplier for the Tulsa metro area is 1.65. It is applied in the

same manner as the employment multiplier in the sense that for every $1 paid to employees and

residents at the OSUMC, another $0.65 is generated throughout the Tulsa metro area economy

through the purchasing of goods and services. Therefore, the total income impact from the

OSUMC is $121,369,813.95.

Income also impacts retail sales. A concept known as the retail sales capture ratio can be

used to estimate the impact of operational activities on local retail sales. This ratio indicates the

percent of personal income spent on items that generate a sales tax within the Tulsa metro area.

Data from the Oklahoma Tax Commission, Oklahoma Resources Integration General

Information Network System (ORIGINS), and the Bureau of Economic Analysis indicate that

22.5% of the income in the Tulsa metro area is spent at establishments that collect sales tax

within the Tulsa metro area. Given that the total income impact of the OSUMC is $121.3M, the

retail sales capture ratio suggests that $27.3M of that is spent on retail sales locally. The state

collects tax on that money (4.5%), which implies that the economic activity generated by

OSUMC is providing over $1.2M to the state’s budget each year. Similarly, Tulsa county

obtains a share of the money spent on retail sales (0.85%), suggesting that OSUMC contributes

of $200K to the county budget each year. Note that the City of Tulsa accounts for nearly 75% of

retail expenditures that occur within the metro area. The Tulsa city sales tax impact numbers in

Table 7 reflect that assumption. The contribution of OSUMC to the state and local government

revenues should not go unnoticed.

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Table 7. Employment, Income and Retail Sales Impact of the OSUMC, FY 2012

Category Amount

Employment Impact OSU Medical Center Employment

1,224

Hospital Sector Employment Multiplier 1.92 Secondary Employment Impact

1,126

Total Employment Impact

2,350

Income Impact OSU Medical Center Income

$73,557,463

Hospital Sector Income Multiplier 1.65 Secondary Income Impact

$47,812,350

Total Income Impact

$121,369,813

Retail Sales and Sales Tax Impact Retail Sales

$27,308,208

State Sales Tax (4.5%)

$1,228,869

Tulsa County Sales Tax (0.85%)

$232,119

Tulsa City Sales Tax (3.167%)

$648,638

Source: OSUMC; 2011 IMPLAN Data, Minnesota Implan Group Inc.; Oklahoma Tax Commission;

Oklahoma Resources Integration General Information Network System (ORIGINS); Bureau of Economic

Analysis

Economic Impact from Construction Activities

OSUMC spends a significant amount on construction, and that amount is projected to

significantly increase in FY 2013. This impact is often overlooked. It must be noted that these

impacts only occur during the year of construction, and they are not continuous. In FY 2011,

OSUMC spent $3,475,658 on construction projects throughout the year. In FY 2012, $1,151,502

in construction occurred through OSUMC. The projected construction costs for FY 2013 are

$9.8 million (Table 8). From IMPLAN, the Tulsa metro area ratios for employment and wages

generated per million dollars of construction were used to estimate employment and income for

each fiscal year. In FY 2011, the capital investment was estimated to create 28.1 full time jobs

with approximately $1,206,265 in wages, salaries and benefits. The projected construction

expenditures in FY 2013 are estimated to yield 79.3 full time jobs with approximately

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$3,401,198.41 in wages. Dollars invested in construction activities will also have an additional

impact on the local economy.

Table 8. OSUMC Construction Impact

Fiscal Year Construction Amount Employment Wages, Salaries and Benefits

FY 2011 $3,475,658 28.1 $1,206,265

FY 2012 $1,151,502 9.3 $399,641

FY 2013 (Estimated) $9,800,000 79.3 $3,401,198

Source: OSUMC; 2011 IMPLAN Data, Minnesota Implan Group Inc.

Table 9 presents the employment impacts of construction. The construction employment

multiplier of 1.78 indicates that 0.78 jobs will be created in other businesses in the Tulsa metro

area due to construction activities. Those jobs in other businesses are referred to as secondary

jobs. The estimated secondary employment impact for FY 2011 was an additional 21.9 jobs.

The FY 2012 secondary impact yielded 7.3 jobs, and the projected FY 2013 secondary impact

will yield 61.9 jobs from construction activities.

Table 9. OSUMC Construction Impact- Employment Impact

Fiscal Year Direct

Employment

Construction Employment Multiplier

Secondary Employment Impact

Total Employment Impact

FY 2011 28.1 1.78 21.9 50.08

FY 2012 9.3 1.78 7.3 16.59

FY 2013 (Estimated) 79.3 1.78 61.9 141.21

Source: 2011 IMPLAN Data, Minnesota Implan Group Inc.

The impact on income from construction activities is included in Table 10. The

construction impact multiplier is 1.74. Therefore, every $1 of wages and salaries paid to

construction employees generates another $0.74 in income for other businesses in the Tulsa

metro area. The estimated secondary income for FY 2012 is $295,735 while the projected

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secondary income for FY 2013 is $2,156,887. This yields a total income impact of $695,376 in

FY 2012 and a projected total income impact of $5,918,085 in FY 2013.

Table 10. OSUMC Construction Impact- Income Impact

Fiscal Year Direct Income

Construction Income Multiplier

Secondary Income Impact

Total Income Impact

FY 2011 $1,206,266 1.74 $892,637 $2,098,902

FY 2012 $399,642 1.74 $295,735 $695,376

FY 2013 (Estimated) $3,401,198 1.74 $2,516,887 $5,918,085

Source: 2011 IMPLAN Data, Minnesota Implan Group Inc.

The retail sales impact from construction activity income is presented in Table 11. The

same retail expenditures ratio of 22.5% is applied in this section. It is estimated that $7,041 is

generated in state sales tax collections (4.5%) from retail expenditures from FY 2012

construction activity. FY 2013’s construction impact on state sales tax collections is expected to

generate $59,921.

Table 11. Income and Retail Sales Impact of OSUMC from Construction Spending

Fiscal Year Total Income

Impact Retail Sales State Sales

Tax Tulsa County

Sales Tax

City of Tulsa Sales

Tax

FY 2011 $2,098,902 $472,253 $21,251 $4,014 $11,217

FY 2012 $695,376 $156,460 $7,041 $1,330 $3,716

FY 2013 (Estimated) $5,918,085 $1,331,569 $59,921 $11,318 $31,628 Source: OSUMC; 2011 IMPLAN Data, Minnesota Implan Group Inc.; Oklahoma Tax Commission;


Analysis

Economic Impact from Visitor Spending

As noted previously, OSUMC’s residency program attracts many visitors. These visitors

spend dollars that contribute to the local economy. Data in Table 6 estimate that 3,025 visitors

spend $325,675 in FY 2012. These data were converted to jobs and income based on ratios of

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expenditures to jobs and income from IMPLAN. The impact of visitor spending is presented in

Table 12.

Table 12. Employment Income and Retail Sales Impact of OSUMC from Visitor

Spending

Category Amount

Employment Impact Jobs from Visitor Spending

6

Retail Trade and Services Employment Multiplier 1.40 Secondary Employment Impact

2

Total Employment Impact 8

Income Impact Income from Visitor Spending

$125,913

Retail Trade and Services Income Multiplier 1.65 Secondary Income Impact

$81,843

Total Income Impact

$207,757

Retail Sales and Sales Tax Impact Retail Sales

$46,745

State Sales Tax (4.5%)

$2,104

Tulsa County Sales Tax (0.85%)

$397

Tulsa City Sales Tax (3.167%) $1,110

Source: OSUMC; 2011 IMPLAN Data, Minnesota Implan Group Inc.; Oklahoma Tax Commission;


Analysis

Full and part time jobs created in businesses due to OSUMC visitor spending were

estimated at 6. The employment multiplier of 1.40 estimated that 2 secondary jobs were created.

The total impact on employment was 8 jobs generated from visitor spending from OSUMC.

Income generated from visitor spending was estimated at $125,913. The estimated

secondary impact was $81,844 using the retail trade and services sector income multiplier of

1.65. This yielded a total income impact from visitor spending of $207,757. By applying the

retail expenditure ratio of 22.5% as discussed earlier, this income resulted in $46,745 in retail

sales and $2,104 in state sales tax collections.

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Summary of OSUMC Impacts

Table 13 summarizes OSUMC’s total impact as it relates to jobs, income, retail sales and

sales tax collections for FY 2012. The total direct job contribution of OSUMC for FY 2012 was

1,239 jobs. When including the secondary impacts, the total employment impact rises to 2,375.

The direct income activities were estimated at over $74 million, and over $122 million in total

income impact for the Tulsa metro area was generated by the OSUMC’s activity. These dollars

resulted in over $27 million in retail sales and $1.2 million in state sales tax collections for the

year.

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Table 13. Economic Impact of OSUMC on the Tulsa Metropolitan Area and the State of Oklahoma, FY 2012

Employment Income Retail Sales

Sector Direct Employment

Multiplier Total

Impact Direct Income

Multiplier Total Impact Retail Sales State Sales Tax

(4.5%)

County Sales Tax (0.85%)

City Sales Tax

(3.167%)

OSUMC Operations 1,224 1.92 2,350 $73,557,463 1.65 $121,369,814 $27,308,208 $1,228,869 $232,120 $648,638

Construction 9 1.78 17 $399,642 1.74 $695,376 $156,460 $7,041 $1,330 $3,716

Visitor

Spending 6 1.40 8 $125,913 1.65 $207,757 $46,745 $2,104 $397 $1,110

Total 1,239 2,375 $74,083,018 $122,272,947 $27,511,413 $1,238,014 $233,847 $653,465

Source: OSUMC; 2011 IMPLAN Data, Minnesota Implan Group Inc.; Oklahoma Tax Commission; Oklahoma Resources Integration General Information Network System (ORIGINS); Bureau of Economic Analysis

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The Economic Impact of OSUMC Residency Graduates

The previous section of this report detailed the economic impact that OSUMC has on the

Tulsa Metropolitan Statistical Area. The number of jobs and amount of income generated by

OSUMC is quite impressive (Table 13); however, these impacts are generally confined to a

relatively small geographic area of the state. On the other hand, OSUMC residents who

complete their residencies are free to travel to any part of the state (or country) to begin work.

Many choose to operate their own primary care practice, while others become hospitalists or join

an existing practice in their specialty. OSUMC has an impressive track record of keeping

individuals who have completed their residencies in state: since 2004, 201 of 294 graduates

(68%) have remained in Oklahoma.3 Therefore, the residency program at OSUMC has an

economic impact on a much larger area than simply the Tulsa MSA. The OSUMC residency

program contributes to a large number of local economies across the state by providing doctors

who work and create jobs (and income) in those communities.

Overview of OSUMC Residency Graduates

Historical class sizes for residents at OSUMC are shown in Figure 4 below. The total

number of residents has increased steadily since the early 2000s, rising to over 160 for the 2012-

13 year. For the past 4-5 years, the average class size has been around 50 residents.4 This

represents 50 potential doctors that are eligible to start their own practices or join an existing

practice every year, and historical estimates suggest that 34 of them will stay in Oklahoma.

3 A list of all OSUMC residency completers since 2004 was meshed with licensure data from the American Medical

Association Masterfile to determine which completers were actively practicing in Oklahoma. 4 The OSUMC residency program is a 3-year program. 3 classes of around 50 residents equals the 140 – 160 total

residents displayed in Figure 4.

24

Figure 4. OSUMC Resident Class Size by Year (2001 – 2013)

Source: OSUMC

Figure 5 demonstrates the location of OSUMC residency graduates between 2004 and

2012 as they have begun their careers across Oklahoma. As might be expected, many graduates

choose to stay close to their residency location, with a high percentage of graduates staying in

the Tulsa MSA. However, Figure 5 also indicates that OSUMC residency graduates are located

all across Oklahoma – and not just in metropolitan areas. More detailed maps of each of the

Congressional Districts can be found in Appendix D.

0

20

40

60

80

100

120

140

160

180

Tota

l Nu

mb

er o

f R

esi

de

nts

25

Figure 5. OSUMC Resident Graduates (2004-2012) by Practice Location and U.S. Congressional District – All Specialties

26

Table 14 breaks out the 201 resident graduates since 2004 that have stayed in Oklahoma

by Congressional District. While a high percentage (66%) of graduates that stay in Oklahoma

continue to live and work in District 1 (which houses Tulsa), each of the other 4 congressional

districts contains at least 11 D.O.s who completed their residencies at OSUMC.

Table 14. OSUMC Resident Graduates (2004 – 2012): Location by Congressional District

and Specialty


Specialty 1 2 3 4 5 Total

Primary Care

Family Medicine 28 11 9 3 1 52

OBGYN 3 0 2 3 1 9

Pediatrics 13 4 0 1 0 18

Internal Medicine 25 2 2 0 4 33

TOTAL Primary Care 69 17 13 7 6 112

Other

General Surgery 7 2 2 1 0 12

Diagnostic Radiology 9 1 0 0 0 10

Anesthesiology 7 5 0 0 3 15

Emergency Medicine 22 2 0 1 0 25

Ophthalmology 5 0 0 1 1 7

Other 15 1 0 1 3 20

TOTAL Other 65 11 2 4 7 89

TOTAL For District 134 28 15 11 13 201 Source: OSUMC

Table 14 further breaks out the OSUMC residency graduates by specialty. This is of

particular interest for this study because residents with specialties that focus on primary care are

much more likely to start their own practices (as opposed to being employed by a hospital).

These specialties include family medicine, OBGYN, pediatrics, and internal medicine. Other

specialties, such as general surgery, diagnostic radiology, or anesthesiology, are more likely to

be employed at the hospital level. Assumptions about where graduates choose to work will have

an impact on the number of jobs and associated income that they create in their communities.

Several studies have attempted to assess the economic impact of a physician who

operates their own primary care practice. Data from an American Medical Association (2003)

survey suggested that a typical family medical practice physician has three full-time employees,

27

putting the total employment impact of the practice at four jobs. Eilrich et al. (2007) quantified

the wages and salaries associated with these jobs using U.S. Bureau of Labor Statistics data,

coming up with a total of $337,396 in 2012 dollars.5 However, the impact of a physician goes

beyond simply the jobs and income provided at their practice, since the physician is often

responsible for sending patients to the local hospital. This physician support is vital for

maintaining sufficient hospital utilization rates. The Eilrich study carefully documented a

physicians’ impact on the local hospital, citing data which indicates that a typical family

medicine physician generates 134.4 hospital discharges per year. This data was combined with a

recent estimate of net hospital revenue per discharge to come up with the total hospital revenue

that can be attributed to a primary care physician. This revenue is typically used to support

hospital employment and payroll, and data from several Oklahoma hospitals were used to

determine the percentage of all revenues that were spent on wages and salaries. When all of

these factors were applied, the typical primary care physician contributed 12.6 jobs at the local

hospital for a total of $478,018 in income (Eilrich et al, 2007). Overall, then, each primary care

physician that operates their own practice generates 16.6 jobs that provide $848,780 worth of

income to the local area. A summary of these contributions is listed in Table 15 below.

Table 15. Employment and Wages Generated by a Practicing Primary Care Physician

Clinic Employment

4

Wages, Salaries, and Benefits

$337,396

Hospital Employment

12.6

Wages, Salaries, and Benefits

$478,018

Total Employment

16.6

Wages, Salaries, and Benefits $848,780 Source: Eilrich et al., 2007

5 The Eilrich et al. study focuses on rural physicians and uses Oklahoma-specific data for the typical jobs included at

the physician’s practice, which include nurse, medical technician, and receptionist. This study generated their estimates in 2005 dollars; they were converted to 2012 dollars using the Consumer Price Index from the Bureau of Labor Statistics.

28

Not all primary care residency graduates will go on to start their own practices. Some

will join existing private practices, which will not generate as many additional jobs or income,

since the other employees at that practice will be shared among the multiple doctors. In this

case, the economic impact would be limited to the jobs supported at the local hospital through

referrals. The methodology for estimating this impact was laid out above, and resulted in 12.6

jobs and $478,018 in income per doctor. This may be a conservative estimate since bringing

additional doctors into a private practice may require the creation of additional supporting jobs

(nurse, receptionist), but these are not included in our analysis.

Recently, some primary care physicians have begun taking jobs as “hospitalists,” which

means they are employed by a hospital and do not operate their own clinic. Their activities

include patient care, teaching, and research related to hospital care. Survey data (MGMA, 2012)

suggest that the vast majority of hospitalists (90%) specialize in internal medicine, although

some specialize in pediatrics or family practice. Employment as a hospitalist is a growing trend,

and Finarelli (2009) estimates that 12% of primary care physicians worked as hospitalists in

2010. This was an increase from about 7% in 2005. From an economic impact perspective,

however, doctors employed as hospitalists do not create additional jobs in a community as do

physicians employed in private practice. Generally speaking, since they are not hiring workers or

generating hospital visits, a hospitalists’ economic contribution is limited to their own job and

income. In reality, the presence of a hospitalist at a particular location may generate additional

revenue that allows the hospital to increase employment in other areas. However, the hospitalist

is not directly responsible for inpatient or outpatient visits, and deriving an estimate of a

hospitalist’s contribution to revenue apart from other hospital employees is not tractable at best.

For specialties other than primary care (such as general surgery, radiology, or emergency

medicine), employment at a hospital is much more commonplace. Determining the economic

impact of these physicians is again challenging, since they are not directly employing any

workers. At a minimum, however, these physicians can be counted for the contribution that their

own jobs and income make to the local economy. Table 16 provides these estimates by noting

the average wage for physicians in specialties likely to be employed by a hospital, including

hospitalists (Merritt Hawkins, 2012). It is interesting to note that physician salaries for the South

Central region (which includes Oklahoma) are right around the national average (Medscape,

29

2012). Additionally, rural – urban differences in physician salaries are minimal. Median

physician incomes varied by less than $5,000 between rural and urban areas in a recent study

(Reschovsky and Staiti, 2005). Thus, the salaries displayed in Table 16 are a useful

approximation for wages earned by Oklahoma D.O.s.

Table 16. Employment and Wages Generated by a Physician Working for a Hospital

Specialty Jobs Supported Annual Salary

Primary Care

Hospitalist 1 $221,000

Other

General Surgery 1 $350,000

Diagnostic Radiology 1 $335,000

Anesthesiology 1 $334,000

Emergency Medicine 1 $264,000

Ophthalmology 1 $248,000

Other 1 $285,000 Source: Merritt Hawkins, 2012

As noted above, assumptions regarding whether a physician sets up his or her own

practice, or is employed by a hospital, will influence the number of jobs and income that can be

attributed to that physician. Several datasets were used to estimate the percentage of primary

care physicians who work in different type of practices. In particular, data from the 2008 Health

Tracking Physician Survey (ICPSR, 2009) provides over 4,000 observations on physician

specialties and practice type. According to this data, when the analysis is limited to primary care

physicians, approximately 35% work in solo or 2-person practices. Over 50% work for group

practices of 3 or more, and about 12% work for a hospital or medical school. This 12% meshes

well with Finarelli’s (2009) estimate that approximately 12% of primary care physicians will

work as hospitalists. Thus, 35% of OSUMC residency completers who specialized in primary

care are assumed to start their own practice, and create the 16.6 jobs and $848,780 in income

documented in Table 15. 53% of those completers are assumed to join an existing practice, and

help generate 12.6 jobs and $478,016 associated only with the hospital portion of Table 15.

Finally, 12% of OSUMC residency completers will work as hospitalists, contributing only their

own job and salary to the local economy.

30

Each of the non-primary care specialty resident graduates (general surgery, diagnostic

radiology, anesthesiology, emergency medicine, and ophthalmology) is also assumed to work

directly for a hospital. The economic contributions of these physicians are limited to their own

job and salary (Table 16).

Table 17 summarizes the impacts by congressional district by applying these assumptions

to the doctors working in each specialty. Note that for those physicians operating their own

practice, the employment and income impacts are broken into categories for clinic and hospital

(based on the assumptions demonstrated in Table 15) since these groupings will be important

when assessing their linkages to the overall economy. These multiplier effects are reviewed in

the next section.

Table 17. Direct Economic Impacts of OSUMC Residency Completers (2004-2012) by



1 2 3 4 5 TOTAL

EMPLOYMENT Primary Care

Own Practice (35%)

Clinic 96.6 23.8 18.2 9.8 8.4 156.8

Hospital 304.3 75.0 57.3 30.9 26.5 493.9

Join Practice (53%) 460.8 113.5 86.8 46.7 40.1 747.9

Hospitalist (12%) 8.3 2.0 1.6 0.8 0.7 13.4

Other

Hospital-Employed 65.0 11.0 2.0 4.0 7.0 89.0

TOTAL Employment 935.0 225.3 165.9 92.3 82.6 1,501.1

INCOME Primary Care

Own Practice (35%)

Clinic $8,148,113 $2,007,506 $1,535,152 $826,620 $708,532 $13,225,923

Hospital $11,544,135 $2,844,207 $2,174,982 $1,171,144 $1,003,838 $18,738,306

Join Practice (53%) $17,481,118 $4,306,942 $3,293,544 $1,773,447 $1,520,097 $28,375,148

Hospitalist (12%) $1,829,880 $450,840 $344,760 $185,640 $159,120 $2,970,240

Other

Hospital-Employed $19,126,000 $3,518,000 $700,000 $1,147,000 $2,105,000 $26,596,000

TOTAL Income $58,129,246 $13,127,495 $8,048,438 $5,103,851 $5,496,587 $89,905,617

31

Overall, the direct economic impact of these OSUMC residency completers is striking. A

total of 1,500 jobs and nearly $90M in income is generated due to their activity across the state.

While some congressional districts have much larger impacts than others (which is expected

given the distribution of residents), each district can claim at least 80 jobs and $5.5M in income

that are directly attributable to the OSUMC residency program graduates. Further, this data only

represents physicians who have completed the residency program since 2004. OSUMC has a

long history of providing outstanding training to residents, and many of those earlier graduates

are undoubtedly still practicing in Oklahoma – but are not included in this data.

The Multiplier Effect

The previous chapter discussed the multiplier effect that takes place when the direct jobs

and wages generated by OSUMC benefit the community by creating additional jobs and income

in the local economy. For example, purchases made by the hospital from local stores benefit

those local businesses who sell their products, and spending by households who are employed by

the hospital helps a wide variety of local industries such as housing, grocery stores, and retail.

Similarly, the jobs and wages created by residency graduates who are now out working in

various parts of the state have multiplier effects on the economies in which they operate. The

physician’s office will purchase supplies such as equipment, paper, or office furniture, at least

some of which is available locally. The nurse employed by the doctor spends some of her money

at local restaurants, which increases their revenue.6 These multiplier impacts vary by county,

since some counties have more locally available goods and services than others. For the

purposes of this report, multiplier effects are aggregated to congressional districts so that the

impact of the residency program on each district can be observed.

Employment and income multipliers for two distinct sectors are used to assess the total

economic impact of the OSUMC residency completers who have begun working across

Oklahoma. As the tables above have suggested, physicians can work in two distinct setups: a

private practice, or a hospital. The multipliers for employment and income generated from a

physician’s private practice will be different from those associated with a hospital, simply

6 These non-direct economic impacts are known as indirect (in the case of business-to-business activity) and

induced (in the case of household spending activity) effects.

32

because the local purchases and spending patterns of the two entities will be different. Thus,

physicians who choose to work in private practice will have a different multiplicative effect on

the economy than those who choose to work in hospitals. IMPLAN calculates these industry-

specific multipliers at the county level. They are aggregated to congressional district for the

purposes of this report.

Table 18 summarizes the income and employment impacts of the OSUMC residency

graduates across Oklahoma. Appendix C contains more detailed information (including specific

employment and income multipliers) for each of the 5 congressional districts across the state.

Table 18. Total Economic Impact of OSUMC Residency Graduates, 2004 - 12 (Summary)

All Congressional Districts

TOTAL

Direct Multiplier Total

EMPLOYMENT Primary Care

Clinic-based 156.8 1.84 288.4

Hospital-based 1255.3 1.76 2207.3

Other

Hospital-based 89.0 1.80 160.3

TOTAL Employment 1,501.1

2,656.0

INCOME Primary Care

Clinic-based $13,225,923 1.41 $18,617,872

Hospital-based $50,083,694 1.53 $76,412,129

Other

Hospital-based $26,596,000 1.57 $41,799,383

TOTAL Income $89,905,617 $136,829,384

In general, the employment multipliers are quite high for both clinic and hospital-based

operations. On average, each job at a primary care physician’s office generates an additional

0.84 jobs around the local economy. Similarly, each job at the hospital generates an additional

0.77 jobs locally. Note that while the hospital-based multipliers are the same for primary care or

other employment in each congressional district (Appendix C), the aggregate multipliers

displayed in Table 18 may be different due to the weight each category received across different

33

districts. The aggregate income multipliers can be interpreted in a comparable manner: for each

$1 in income created in a primary care physician’s office, an additional $0.41 in income is

generated throughout the local economy.

The total multiplicative effects of both employment and income by the OSUMC

residency program are sizable (Table 18). While the residency program has a substantial impact

on the number of direct jobs (1,501) and income ($90M), these jobs and income drive even more

growth in economies across the state. On whole, OSUMC residency graduates are shown to

contribute over 2,600 jobs and over $135M in income in Oklahoma once indirect and induced

effects are included.

It is worth noting that even the congressional district that benefits the least from the

OSUMC residency program (District 4) still receives substantial economic contributions. More

than 140 jobs and over $6.7M in total economic impact can be attributed to the OSUMC

residency completers in this district. In the most active district (District 1), the total economic

contribution rises to over 1,760 jobs and over $95M. Again, these numbers are only

representative of OSUMC residency completers since 2004, and many other doctors from the

program are undoubtedly still practicing. In today’s economic environment where businesses

contributing 5-6 jobs to the local economy are celebrated, the OSUMC residency program

represents an important component for each of the regional economies across the state.

34

References

American Medical Association. 2003. “Physician Socioeconomic Statistics, 2003 Edition.”

Center for Health Policy Research.

Eilrich, Fred; Doeksen, Gerald; and St. Clair, Cheryl. 2007. “The Economic Impact of a Rural

Primary Care Physician and the Potential Health Dollars Lost to Out-migrating Health

Services.” National Center for Rural Health Works.

Finarellit, Hugo. 2009. “The Hospital Executive Guide’s to Physician Staffing.” Health

Leaders Media. Available at

http://www.healthleadersmedia.com/supplemental/6693_browse.pdf

ICPSR (Inter-University Consortium for Policital and Social Research). 2009. “Health Tracking

Physician Survey, 2008”. Available at

http://www.icpsr.umich.edu/icpsrweb/HMCA/studies/27202

Medical Group Management Association and the Society of Hospital Medicine. 2012. “2012

State of Hospital Medicine Report.” Available at

http://www.hospitalmedicine.org/AM/Template.cfm?Section=Practice_Resources&Template

=/CM/HTMLDisplay.cfm&ContentID=29857

Medscape. 2012. “Physician Compensation Report 2012.” Available at:

http://www.medscape.com/features/slideshow/compensation/2012/public

Merritt Hawkins. 2012. “2012 Compilation of Physician Compensation Surveys.” Available at

http://www.merritthawkins.com/compensation-surveys.aspx

Reschovsky, James and Staiti, Andrea. 2005. “Physician Incomes in Rural and Urban

America.” Center for Studying Health System Change, Issue Brief No. 92

http://www.healthleadersmedia.com/supplemental/6693_browse.pdf

http://www.icpsr.umich.edu/icpsrweb/HMCA/studies/27202

http://www.hospitalmedicine.org/AM/Template.cfm?Section=Practice_Resources&Template=/CM/HTMLDisplay.cfm&ContentID=29857

http://www.hospitalmedicine.org/AM/Template.cfm?Section=Practice_Resources&Template=/CM/HTMLDisplay.cfm&ContentID=29857

http://www.medscape.com/features/slideshow/compensation/2012/public

http://www.merritthawkins.com/compensation-surveys.aspx

35

Appendix A- Review of Literature Relative to Impact Studies

For many years, researchers have been interested in quantifying the benefits, beyond the

provision of degrees, of universities and colleges. One of the first detailed guides to measure the

economic benefits of a college or university to the local community was requested by the

American Council on Education (ACE) in 1968 (Caffrey and Isaacs, 1971). Based on some

previous impact studies, Caffrey and Isaacs (1971) identified four primary groups that generated

economic activity through spending. These four categories were: 1. the college, 2. faculty and

staff, 3. students, and 4. visitors to the college. They developed several models and sub-models

to estimate the spending. These models have provided the foundation for numerous economic

impact studies since and are still being adopted today. For example, the Association of American

Medical Colleges has been measuring the economic impact of their member institutions on the

individual states in which they were located for a number of years. The results are based on

adaptations of the ACE models with the latest study completed in 2006 (Umbach, 2006).

Since the development of the ACE models, technology has simplified the process for

deriving multipliers. The original ACE model depends upon numerous surveys to faculty, staff,

students, local businesses and community residents and relies heavily upon proportional

spending calculations to estimate indirect economic impact. It is a difficult model to implement

and is less applicable to some colleges such as community colleges (Head, 1997). The proportion

of money spent locally can be difficult to estimate. More recently, computer models have been

created utilizing input-output analysis that not only make estimating the multiplier effect more

reasonable, but allow different multipliers to be created for local, regional or state impacts

(Appendix B). Two frequently used computer models are the Regional Input-Output Modeling

System (RIMS II) published by the U.S. Bureau of Economic Analysis and MicroIMPLAN

developed by the United States Forest Service. These computer models have been used to

estimate the impact of universities, medical schools, hospital construction and physician clinics,

just to name a few (Packham, Price and Harris, 2007; Eilrich, Doeksen and St. Clair, 2007;

Doeksen et al., 2005; Wong and Bedroussian, 2006; Fox and Fuji Noe, 2003; Center for

Business Research, L. William Seidman Research Institute, W.P. Carey School of Business

Arizona State University, 2003; Gilmer, Hodgin and Schiflett, 2001; Charney and Pavlakovich,

36

1999). For example, a detailed study estimating the impacts of the University of Nevada School

of Medicine (UNSOM) on the Nevada economy was complete using the IMPLAN model

(Packham, Price and Harris, 2007). The study includes estimates of the employment and payroll

impacts of UNSOM medical education, patient care activities and construction in 2006.In 2001,

the National Association of State Universities and Land-Grant Universities surveyed its members

for their most recent economic impact reports. They published a summary analysis based on data

from 96 member institutions and 10 member university systems (National Association of State

Universities and Land Grant Colleges, 2001).

37

Appendix A References

Caffrey, J. and Isaacs, H., "Estimating the Impact of a College or University on the Local

Economy," American Council on Education, 1971.

"The Contribution of Arizona State University to the Arizona Economy: FY 2002," Center for

Business Research, L. William Seidman Research Institute, W.P. Carey School of Business,

April 2003

Charney, A. and Pavlakovich, V., "The University of Arizona: An Investment in Arizona's and

Pima County's Future: Economic & Revenue Impact Analysis, 1997-98," Eller College of

Business and Public Administration, University of Arizona, Sept. 1999.

Doeksen, G, et al., "The Economic Impact of the New Hospital on the Economy of Drumright,

Creek County Oklahoma," Oklahoma Cooperative Extension Service, Oklahoma State

University, Jan. 2005.

Eilrich, F., Doeksen, G. and St .Clair, C., "The Economic Impact of a Rural Primary Care

Physician and the Potential Health Dollars Lost to Out-migrating Health Services," National

Center for Rural Health Works, Oklahoma State University, Jan. 2007.

Fox, A. and Fuji Noe, G., "Morehouse School of Medicine Economic Impact Study," Office of

Planning and Institutional Research, Morehouse School of Medicine, Feb. 2003.

Gilmer, R., Hodgin, R., and Schiflett, M., "Economic Impact of Texas Medical Center on

Southeast Texas," Houston Business: A Perspective on the Houston Economy, Federal Reserve

Bank of Dallas, Houston Branch, Oct. 2001.

Head, R., "The Economic Impact of Piedmont Virginia Community College upon its Service

Region (1996-1997)", Office of Institutional Research, Piedmont Virginia Community College,

Charlottesville, Virginia, Research Report No. 2-98, Nov. 1997.

National Association of State Universities and Land Grant Colleges, "Shaping the Future: The

Economic Impact of Public Universities," National Association

Packham, J., Price, S. and Harris, T., "The Impact of the University of Nevada School of

Medicine on the Nevada Economy," University Center for Economic Development, University

of Nevada Reno, Nevada Cooperative Extension Service, Technical Report UCED 2006/07-16,

Apr. 2007.

Umbach, T., "The Economic Impact of AAMC-Member Medical Schools and Teaching

Hospitals 2005," Association of American Medical Colleges, Washington D.C., 2006.

Wong, P. and Bedroussian, A., "Economic Benefits of Proposed University of Central Florida

College of Medicine," Milken Institute, Mar. 2006.

38

Appendix B- Model and Data Used to Estimate Employment and Income

Multipliers

A computer spreadsheet that uses state IMPLAN multipliers was developed to enable

community development specialists to easily measure the secondary benefits of the health sector

on a state, regional or county economy. The complete methodology, which includes an aggregate

version, a disaggregate version, and a dynamic version, is presented in Measuring the Economic

Importance of the Health Sector on a Local Economy: A Brief Literature Review and Procedures

to Measure Local Impacts (Doeksen, et al., 1997). A brief review of input-output analysis and

IMPLAN are presented here.

A Review of Input-Output Analysis

Input-output (I/O) (Miernyk, 1965) was designed to analyze the transactions among the

industries in an economy. These models are largely based on the work of Wassily Leontief

(1936). Detailed I/O analysis captures the indirect and induced interrelated circular behavior of

the economy. For example, an increase in the demand for health services requires more

equipment, more labor, and more supplies, which, in turn, requires more labor to produce the

supplies, etc. By simultaneously accounting for structural interaction between sectors and

industries, I/O analysis gives expression to the general economic equilibrium system. The

analysis utilizes assumptions based on linear and fixed coefficients and limited substitutions

among inputs and outputs. The analysis also assumes that average and marginal I/O coefficients

are equal.

Nonetheless, the framework has been widely accepted and used. I/O analysis is useful

when carefully executed and interpreted in defining the structure of a region, the

interdependencies among industries, and forecasting economic outcomes.

The I/O model coefficients describe the structural interdependence of an economy. From

the coefficients, various predictive devices can be computed, which can be useful in analyzing

economic changes in a state, a region or a county. Multipliers indicate the relationship between

some observed change in the economy and the total change in economic activity created

throughout the economy.

39

MicroIMPLAN

MicroIMPLAN is a computer program developed by the United States Forest Service

(Alward, et al., 1989) to construct I/O accounts and models. Typically, the complexity of I/O

modeling has hindered practitioners from constructing models specific to a community

requesting an analysis. Too often, inappropriate U.S. multipliers have been used to estimate local

economic impacts. In contrast, IMPLAN can construct a model for any state, region, county, or

zip code area in the United States by using available state, county, and zip code level data.

Impact analysis can be performed once a regional I/O model is constructed.

Five different sets of multipliers are estimated by IMPLAN, corresponding to five

measures of regional economic activity. These are: total industry output, personal income, total

income, value added, and employment. The total impact of a change in the economy consists of

direct, indirect, and induced impacts. Direct impacts are the changes in the activities of the

impacting industry such as the addition of another physician and corresponding medical staff to

the medical service area. The increased purchases of inputs by the new physician clinic as a

result of the direct impact are the indirect impact on the business sectors.

Two types of multipliers are generated. Type I multipliers measure the impact in terms of

direct and indirect effects. However, the total impact of a change in the economy consists of

direct, indirect, and induced changes. Both the direct and indirect impacts change the flow of

dollars to the state, region, or county’s households. Subsequently, the households alter their

consumption accordingly. The effect of the changes in household consumption on businesses in a

community is referred to as an induced effect. To measure the total impact, a Type II multiplier

is used. The Type II multiplier compares direct, indirect, and induced effects with the direct

effects generated by a change in final demand (the sum of direct, indirect, and induced divided

by direct). IMPLAN also estimates a modified Type II multiplier, called a Type SAM multiplier,

which also includes the direct, indirect, and induced effects. The Type SAM multiplier further

modifies the induced effect to include spending patterns of households based on a breakdown of

households by nine different income groups.

Minnesota IMPLAN Group, Inc. (MIG)

Dr. Wilbur Maki at the University of Minnesota utilized the I/O model and database work

from the U. S. Forest Service’s Land Management Planning Unit in Fort Collins to further

40

develop the methodology and to expand the data sources. Scott Lindall and Doug Olson joined

the University of Minnesota in 1984 and worked with Maki and the model.

As an outgrowth of their work with the University of Minnesota, Lindall and Olson

entered into a technology transfer agreement with the University of Minnesota that allowed them

to form MIG. At first, MIG focused on database development and provided data that could be

used in the Forest Service version of the software. In 1995, MIG took on the task of writing a

new version of the IMPLAN software from scratch. This new version extended the previous

Forest Service version by creating an entirely new modeling system that included creating Social

Accounting Matrices (SAMs) – an extension of input-output accounts, and resulting SAM

multipliers. Version 2 of the new IMPLAN software became available in May of 1999. For more

information about Minnesota IMPLAN Group, Inc., please contact Scott Lindall or Doug Olson

by phone at 651-439-4421 or by email at [email protected] or review their website at

www.implan.com.

http://www.implan.com/

41

Appendix B References

Miernyk, W.H. "The Element of Input-Output Analysis," New York, NY, Random House, 1965.

Doeksen, G.A., Johnson, T. and Willoughby, C., "Measuring the Economic Importance of the

Health Sector on a Local Economy: A Brief Literature Review and Procedures to Measure

Local Impacts, Southern Rural Development Center," SRDC Pub. No. 202, 1997.

Minnesota IMPLAN Group, Inc., "User's Guide, Analysis Guide, Data Guide," IMPLAN

Professional Version 2.0 Social Accounting and Impact Analysis Software, 2nd Ed., Jun 2000.

42

Appendix C - Total Economic Impact of OSUMC Residents by Congressional District (2004-2012)


1 2 3 4 5

Direct Multiplier Total Direct Multiplier Total Direct Multiplier Total Direct Multiplier Total Direct Multiplier Total

EMPLOYMENT

Primary Care

Clinic-based 96.6 2.03 195.8 23.8 1.48 35.2 18.2 1.47 26.7 9.8 1.56 15.3 8.4 1.83 15.4

Hospital-based 773.4 1.87 1,445.4 190.5 1.58 300.2 145.7 1.52 221.9 78.5 1.56 122.3 67.2 1.75 117.5

Other

Hospital-based 65.0 1.87 121.5 11.0 1.58 17.3 2.0 1.52 3.0 4.0 1.56 6.2 7.0 1.75 12.2

TOTAL Employment 935.0 1,762.6 225.3 352.7 165.9 251.7 92.3 143.8 82.6 145.2

INCOME

Primary Care

Clinic-based $8,148,113 1.48 $12,082,837 $2,007,506 1.27 $2,543,109 $1,535,152 1.26 $1,927,383 $826,620 1.29 $1,065,017 $708,532 1.41 $999,526

Hospital-based $30,855,133 1.66 $51,238,034 $7,601,989 1.27 $9,646,164 $5,813,286 1.26 $7,338,111 $3,130,231 1.33 $4,147,556 $2,683,055 1.51 $4,042,264

Other

Hospital-based $19,126,000 1.66 $31,760,636 $3,518,000 1.27 $4,463,990 $700,000 1.26 $883,610 $1,147,000 1.33 $1,519,775 $2,105,000 1.51 $3,171,372

TOTAL Income $58,129,246 $95,081,507 $13,127,495 $16,653,263 $8,048,438 $10,149,104 $5,103,851 $6,732,348 $5,496,587 $8,213,161

43

Appendix D - OSUMC Residency Completers, by Congressional District and Specialty

(2004-2012)

- Congressional District 1





Tulsa

Bixby

Jenks

Coweta

Owasso

Sapulpa

Glenpool

Bartlesville

Broken Arrow

OSUMC Resident Graduates (2004-2012) by Practice Location

1st U.S. Congressional District

© 2013 Oklahoma State University Data Source: OSU Medical Center (2012)

0 10 205

Miles

Map Produced byOSU Center for Rural HealthOSU Center for Health SciencesTulsa, OklahomaJanuary 29, 2013http://ruralhealth.okstate.edu

±

CommunityPrimary Care

Specialties

Other

SpecialtiesTotal

Bartlesville 1 3 4

Bixby 2 0 2

Broken Arrow 4 1 5

Coweta 3 0 3

Glenpool 0 1 1

Jenks 3 1 4

Owasso 5 0 5

Sapulpa 1 0 1

Tulsa 50 59 109

Total 69 65 134

OSUMC Resident Graduates (2004–2012)

by Practice Location & Specialty ChoiceSpecialty Choice Among

OSUMC Resident Graduates

(2004-2012)

Symbols are Scaled Proportionally

to the Total Number of Graduates

Practicing in Each Community

Other

Specialties

Primary Care

Specialties

Tahlequah

MuskogeeSallisaw

Okmulgee

McAlester

Coalgate

Talihina

Durant

Claremore

Grove


2nd U.S. Congressional District


0 30 6015

Miles


±


Specialties

Other

SpecialtiesTotal

Claremore 3 1 4

Coalgate 1 0 1

Durant 2 0 2

Grove 1 1 2

McAlester 2 1 3

Muskogee 2 2 4

Okmulgee 2 0 2

Sallisaw 1 0 1

Tahlequah 2 6 8

Talihina 1 0 1

Total 17 11 28


by Practice Location & Specialty Choice

Specialty Choice Among


(2004-2012)




Other

Specialties

Primary Care

Specialties

Buffalo

Enid

Ponca City

Cleveland

Yukon

Bristow

Chandler

Prague


3rd U.S. Congressional District


0 50 10025

Miles


±


Specialties

Other

SpecialtiesTotal

Bristow 2 0 2

Buffalo 1 0 1

Chandler 1 0 1

Cleveland 1 0 1

Enid 2 1 3

Ponca City 3 1 4

Prague 2 0 2

Yukon 1 0 1

Total 13 2 15





(2004-2012)




Other

Specialties

Primary Care

Specialties

Newcastle

Ardmore

Sulphur

Ada

Chickasha

Norman

Moore

Midwest City


4th U.S. Congressional District


0 20 4010

Miles


±


Specialties

Other

SpecialtiesTotal

Ada 1 0 1

Ardmore 0 1 1

Chickasha 1 0 1

Midwest City 0 1 1

Moore 2 1 3

Newcastle 1 0 1

Norman 1 1 2

Sulphur 1 0 1

Total 7 4 11



Other

Specialties

Primary Care

Specialties



(2004-2012)




Oklahoma City

Edmond


5th U.S. Congressional District


0 10 205

Miles


±


Specialties

Other

SpecialtiesTotal

Edmond 1 0 1

Oklahoma City 5 7 12

Total 6 7 13





(2004-2012)




Other

Specialties

Primary Care

Specialties

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