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: [email protected]
Victoria Burke, MS(859) 257-7272 x 246
Email: [email protected]
Bethany Adams, MHA(859) 257-7272 x 246
Email: [email protected]
Larry Allen, MADirector,
KY State Office of Rural Health1-800-851-7512
Email: [email protected]
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