Economic Impact of the Health Care Industry on Communities

1. Economic Impact of the Health Care Industry on Communities By: Gerald A. Doeksen, Ph.D. Regents Professor, Oklahoma Cooperative Extension Service Oklahoma State University September 20, 2004 Presentation at the National Public Policy Education Conference, September 19-22, 2004 in St. Louis, Missouri.

2. Economic Impacts of the Health Care Industry on Communities Overall Objective: To demonstrate the importance of the health sector to the rural economy and To discuss what community leaders can do to improve primary health care

3. More specifically: 1. Measure the total impact of the health sector on a community’s economy; 2. Illustrate the importance of the health sector for industrial growth; 3. Illustrate the importance of the health sector for retirement growth; 4. Discuss and demonstrate what community leaders can do to maintain and promote their health sector; and 5. Review a community health planning process.

4. Local Data Needed for Health Sector Impact Analysis Atoka County, Oklahoma Component Employees Payroll 97.0 $2,400,000 Hospital Subtotal Physicians, Dentists and Other Professionals $590,670 20.0 Physicians (2) 8.0 $322,244 Optometrists (2) Dentists (2) 6.5 $309,200 Chiropractors (1) 2.0 $80,000 36.5 $1,302,114 Subtotal Nursing Homes and Protective Care (2) 92.0 $1,272,000 Subtotal Other Medical & Health Services Home Health Care (4) 35.0 $583,333 County Health Department 11.0 $232,920 DME Suppliers 12.5 $267,200 58.5 $1,083,453 Subtotal 19.0 $697,500 Pharmacies (3) Subtotal 303.0 $6,755,067 TOTALS

5. Inputs $ Products $ Basic Overview of Community Economic System Industry $ $ Labor Inputs Goods & Services Households Services $ $ $

6. 97.0 1.70 165 36.5 1.79 65 92.0 1.54 142 58.5 1.62 95 19.0 1.49 28 303.0 495 Economic Impact of the Health Sector on Employment in Atoka County, Oklahoma Health Sector Employment Components Employment Multiplier Impact Hospital Physicians & Dentists Nursing & Protective Facilities Other Medical & Health Services Pharmacies TOTALS

7. $2,400,000 1.47 $3,528,000 $1,302,114 1.34 $1,744,833 $1,272,000 1.66 $2,111,520 $1,083,453 1.62 $1,755,194 $697,500 1.61 $1,122,975 $6,755,067 $10,262,522 Economic Impact of the Health Sector on Income in Atoka County, Oklahoma Health Sector Income Components Income Multiplier Impact Hospital Physicians & Dentists Nursing & Protective Facilities Other Medical & Health Services Pharmacies TOTALS

8. Employment, Income, Retail Sales, and Sales Tax Collections Resulting from the Health Sector in Atoka County, Oklahoma Health Sector Employment Income Retail 3 Cent Components Impact Impact Sales Sales Tax Hospital 165 $3,528,000 $1,179,040 $11,790 Physicians & Dentists 65 $1,744,833 $583,114 $5,831 Nursing & Protective Facilities 142 $2,111,520 $705,659 $7,057 Other Medical & Health Services 95 $1,755,194 $586,577 $5,866 $3,753 Pharmacies 28 $1,122,975 $375,293 TOTALS 495 $10,262,522 $3,429,683 $34,297

9. Summary of Research Studies  Direct health sector employment from 10-15 percent of all employees  Direct and secondary health sector employment from 15-20 percent of all employees  Hospital often second largest employer in community  Hospital and nursing homes employ large numbers  Employment multipliers ranged from 1.30 to 1.81  Income multipliers ranged from 1.46 to 1.87

10. Health Services Promote Job Growth

12. Health Services Attract Retirees Health Services Attract Retirees

13. Example: The Medicaid Program on Alaska’s Economy

19. Economic Impact of the Medicaid Program on Alaska’s Economy Medicaid Dollar 26 cents State 74 cents Federal One State Dollar 2.83 Federal Dollars • Medicaid Expenditures • Each dollar spent is 26 cents State and 74 cents Federal. • Each dollar the State spends attracts $2.83 Federal dollars. • Total Federal and State Expenditures = $574.5 M • Total State General Funds = $150.1 M Total Business Spending generated throughout Alaska’s Economy from Medicaid Program $1.011 Billion

20. DIRECT IMPACT on Jobs and Income Division and Contract Employees Jobs 191 Income $9.9 M Expenditures for Health Care Services Jobs 5,158 Income $219.8 M INDUCED & INDIRECT IMPACT on the Alaska Economy due to employee and business spending Health Care Providers Spending Jobs 3,559 Income $114.3 M Division & Contract Employee Spending Jobs 94 Income $2.2 M TOTAL IMPACT ON JOBS AND INCOME of the Medicaid Program on Alaska’s Economy Jobs 9,002 Income $346.2 M

21. Economic Impact of the Medicaid Program on Alaska’s Economy In summary, Alaska’s investment of $150 million in State General Fund expenditures for the Medicaid program created over 9,000 jobs and more than $346 million income in Alaska.

22. Models can measure impact at:   • Zip Code Level • County Level • Regional Level • State Level • National Level

23. Summary of Application • Impact of Health Sector on Economy • Impact of Programs at State Level • Medicaid • Hospitals • National Corp Physicians

24. What Can We Do? •  Help educate consumers and providers •  Help community leaders plan their • health delivery system: •  Community Engagement Process •  Needs Assessment •  Feasibility Studies Overview of Community Engagement Process

25. Initiating Group Getting Started Community Facilitator Resource Team Steering Committee Develop Plan Community Reviews Plan Revise Plan Implement Action Plan Follow-up & Continuation Publicity Task Force Inventory Task Force Survey Task Force Data & Info Task Force Overview of Community Engagement Process

27. Analyze Economic Feasibilityof Health Services Identified in Community Engagement Process

28. Basic Methodology for Analyzing an Issue STEPS I. Estimate Needs II. Project Costs A. Capital or Start-up B. Annual Operating III. Estimate Revenue IV. If Doesn’t Break Even, Other Sources of Funds

29. Available Budget Studies from • Oklahoma Cooperative Extension Service • Primary Care Physician • Obstetrics/Gynecology Physician • Pediatrician • Emergency Medical Services (Basic and Advanced) • First Responder Systems • Outpatient Rehabilitation • Adult Day Services • Kidney Dialysis • Assisted Living Facilities • Federally Qualified Health Centers (FQHCs) – • Primary Care Physician • Dentist

30. Budget Studies • Under Construction • Rural Health Clinics • Specialty Physicians • Federally Qualified Health Centers (FQHCs) • Pharmacy • Mental • CT Scan • Teleradiology • Ultrasound-Echo System

31. Rural Health Works National Website: www.ruralhealthworks.org