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.

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

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.

ComponentEmployeesPayroll HospitalSubtotal Physicians, Dentists and Other Professionals Physicians (2) 20.0 $590,670 Dentists (2) 8.0$322,244 Optometrists (2) 6.5$309,200 Chiropractors (1) 2.0$80,000 Subtotal Nursing Homes and Protective Care (2) Subtotal Other Medical & Health Services Home Health Care (4) County Health Department DME Suppliers Subtotal 35.0$583, $232, $267,200 Pharmacies (3) Subtotal TOTALS Local Data Needed for Health Sector Impact Analysis Atoka County, Oklahoma $6,755, $1,302, $1,272, $697, $2,400, $1,083,453

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

Health SectorEmployment ComponentsEmploymentMultiplierImpact Hospital Physicians & Dentists Nursing & Protective Facilities Other Medical & Health Services Pharmacies TOTALS in Atoka County, Oklahoma Economic Impact of the Health Sector on Employment

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

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

Summary of Research Studies  Direct and secondary health sector employment from 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  Direct health sector employment from percent of all employees

Health Services Promote Job Growth

Example: The Medicaid Program on Alaska’s Economy

Economic Impact of the Medicaid Program on Alaska’s Economy Medicaid Expenditures 1.Each dollar spent is 26 cents State and 74 cents Federal. 2Each dollar the State spends attracts $2.83 Federal dollars. Total Federal and State Expenditures = $574.5 M Total State General Funds = $150.1 M Medicaid Dollar 26 cents State 74 cents Federal One State Dollar 2.83 Federal Dollars Total Business Spending generated throughout Alaska’s Economy from Medicaid Program $1.011 Billion

Jobs 9,002 Income $346.2 M 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 Division & Contract Employee Spending Jobs 94 Income $2.2 M Health Care Providers Spending Jobs 3,559 Income $114.3 M TOTAL IMPACT ON JOBS AND INCOME of the Medicaid Program on Alaska’s Economy

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.

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

Summary of Application I.Impact of Health Sector on Economy II.Impact of Programs at State Level I.Medicaid II.Hospitals III.National Corp Physicians

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

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

Analyze Economic Feasibility of Health Services Identified in Community Engagement Process

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

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

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

Rural Health Works National Website: