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, MS UK Department of Agricultural Economics Bethany Adams, MHA UK 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 3 nd 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) $ 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)

Multipliers Multiplier Type DirectIndirectInduced Employment Health care jobs Health care supplier jobs Local retail and service jobs related to health care employee spending Income Health 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) Direct Impact of the Health Sector Output Indirect Impact of the Health Sector Output Induced Impact of the Health Sector Output Output Multiplier Total Impact of the Health Sector Output $22,213,680$2,915,827$3,552, $28,682,500

Multiplier Results: Marshall County Hospital Impact on Marshall County Output (Sales) Direct Impact of the Hospital Output Indirect Impact of the Hospital Output Induced Impact of the Hospital Output (Sales) Multiplier Total Impact of the Hospital Output (Sales) $13,182,659$1,720,515$2,571, $17,474,608

Multiplier Results: Marshall County Health Sector Impact on Marshall County Employment Direct Impact of the Health Sector Employment Indirect Impact of the Health Sector Employment Induced Impact of the Health Sector Employment Employment Multiplier Total Impact of the Health Sector Employment 472 Jobs37 Jobs66.2 Jobs Jobs

Multiplier Results: Marshall County Hospital Impact on Marshall County Employment Direct Impact of the Hospital Employment Indirect Impact of the Hospital Employment Induced Impact of the Hospital Employment Employment Multiplier Total Impact of the Hospital Employment 259 Jobs17.8 Jobs42.2 Jobs Jobs

Multiplier Results: Marshall County Health Sector Impact on Marshall County Labor Income Direct Impact of the Health Sector Income Indirect Impact of the Health Sector Income Induced Impact of the Health Sector Income Income Multiplier Total Impact of the Health Sector Income $13,446,837$1,023,981$1,234, $15,705,615

Multiplier Results: Marshall County Hospital Impact on Marshall County Labor Income Direct Impact of the Hospital Income Indirect Impact of the Hospital Income Induced Impact of the Hospital Income Income Multiplier Total Impact of the Hospital Income $7,831,878$600,877$818, $9,250,992

Multiplier Results: Marshall County Hospital Impact on Marshall County Value Added Direct Impact of the Hospital Value Added Indirect Impact of the Hospital Value Added Induced Impact of the Hospital Value Added Value Added Multiplier Total Impact of the Hospital Value Added $8,790,580$998,229$1,645, $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) Victoria Burke, MS (859) x Bethany Adams, MHA (859) x Larry Allen, MA Director, KY State Office of Rural Health For More Information Contact

Kentucky Rural Health Works UK Community & Economic Development UK Center For Rural Health Kentucky State Office of Rural Health For More Information