1

Health Care Employees’ Contributions to the Economy of a Rural State: A study based on the Nebraska Rural Health

Works Project

Roslyn Fraser, MA

Section on Health Services Research and Rural Health Policy Analysis

Department of Preventive and Societal Medicine

2

Acknowledgements

Li-Wu Chen, PhD Keith Mueller, PhD

Liyan Xu, MS; Brian Hesford, MA

Catherine E. Leo, BA

All rural communities who collaborate in the process

3

Background: the Nebraska Rural Health Works Project

• Measures the economic impact of the health care sector on the economy of rural communities

• Used by hospitals, government, state hospital association, state office of rural health

• Economic impact analysis performed using IMPLAN software and data

4

Economic Impact Analysis

• Software: IMPLAN model

• Database: IMPLAN’s State Data (NE)

• Other Data: Community Health System Assessment Survey, Nebraska Hospital Association employee and payroll data

• Components: Employment, Income, and Economic Output

5

The Economic Impact of Health Care by Sub-sector

Community

Pharmacies

Doctors &Other Professionals

Other Medical Services

Hospitals

Nursing Home

6

The Economic Impact of the Health Care Sector on Employment in Nebraska, 2002

41,097 Jobs from:

105 Hospitals

+ + + =

36,576 Jobs

Industry Specific Impact

10,542 Jobs

17,029 Jobs

7,890 Jobs

104,796 Jobs

in the Health Care Sector of

Nebraska

+ + + =

1.89 Multiplier

1.41 Multiplier

1.72 Multiplier

2.14 Multiplier

1.36 Multiplier

25,713 Jobs from:

176 Nursing Care Facilities

139 Residential Mental Health, Retardation, or Substance Abuse Facilities

40 Other Residential Care Facilities

23,651 Jobs from:

900 Physician Offices

766 Dentist Offices

690 Offices of Other Health Practitioners

65 Home Health Care Services

120 Community Care Facilities for the Elderly

132 Outpatient Care Centers

30 Medical and Diagnostic Laboratories

44 Other Ambulatory Health Care Services

Industry Specific Impact

Employment in the Health Care Sector in Nebraska

J obs Created in Other Sectors of the Economy in Nebraska

74,706 Jobscreated in other

sectors of economy in Nebraska

1.71 Multiplier

* Pharmacy employment and income figures are from U.S. Census County Business Patterns, 2000. Multipliers are from 2000 IMPLAN Miscellaneous Retail Industry. Sources: IMPLAN Data 2000. Minnesota IMPLAN Group, Inc. 2003. U.S. Census Bureau County Business Patterns, 2000. http://www.census.gov/prod/www/abs/cbptotal.html. American Hospital Association Annual Survey Database: Fiscal Year 2000. Health Forum, LLC. 2002.

Aggregated Impact of Health

Care Sector

6,921 Jobs from:

7,414 Jobs from:

412 Pharmacies*

+

2,669 Jobs

+

7

What is a multiplier?

Multipliers measure the total change throughout the economy

from a one unit change for a given sector.

8

The Economic Impact of the Health Care Sector In Nebraska, 2002*

• One job created in the health care sector of Nebraska would lead to the creation of an additional 0.71 job in other sectors of the state’s economy.

• One dollar of income earned in the health care sector of Nebraska would lead to an additional $0.46 of income earned in other sectors of the state’s economy.

• One dollar of output created in the health care sector of Nebraska would lead to an additional $0.91 of output created in other sectors.

* Not all of the government owned health care facilities were accounted for in the analysis, therefore these figures may understate the total number of employees and total income for the health sector in Nebraska.

Sources: IMPLAN Data 2002. Minnesota IMPLAN Group, Inc. 2003. U.S. Census Bureau County Business Patterns, 2002. http://www.census.gov/prod/www/abs/cbptotal.html. U.S. Bureau of the Census. Census 2002, Summary File 3. http://factfinder.census.gov/bf/_lang=en_vt_name=DEC_2002_SF3_U_DP3_geo_id=04000US31.html

Nebraska Center for Rural Health Research Page 2

9

Components of the Multiplier

1. direct effects – Initial spending

2. indirect effects– Businesses buying and selling to one

another

3. induced effects– Household spending of income earned from

the direct and indirect effects

10

SAM Multiplier

• Social Account Matrix (SAM)

direct effect + indirect effect + induced effect

direct effect

– Adjusts household spending patterns based on different income groups

– Automatically accounts for payroll taxes and commuting

– Accounts for household to household transactions

11

We measured the contribution of health care employees to the

economy using the induced effect portion of type SAM multipliers.

12

Results of statewide analysis

• Induced effects of the health care sector for statewide analysis are the highest of any sector – This is true for all three multipliers: employment,

income, and output

(induced effect: the component of the multiplier that represents household spending of income earned, adjusted for payroll taxes, commuting, and spending patterns based on income levels)

13

Results of local analyses

• Induced effects of the health care sector for county-level analyses rank second above all other sectors in almost all of the communities we have studied.

• This means employees of the health care sector are more likely to impact the local economy positively by spending earned income locally.

14

Overall Job Creation, Nebraska 2002 (Direct and Indirect Impact)

449,143

275,958

274,998

213,962

208,858

196,235

63,104

216,873

541,807

170,683

Services

Manufacturing

Health

Retail Trade

FIRE

AFFH

Government and non-NAICs

Construction

Transportation, Warehousing, and Utilities

Information

15

Overall Income Earned, Nebraska 2002 (Direct and Indirect Impact, in Millions)

$15,730.55

$14,597.18

$9,862.20

$7,892.95

$7,343.76

$7,116.65

$6,649.26

$5,020.25

$5,782.02

Manufacturing

Services

Health

Retail Trade

Government and non-NAICs

FIRE

Transportation, Warehousing, and Utilities

Construction

AFFH

16

Output Produced by Industry, Nebraska 2002 (Direct and Indirect Impact, in Millions)

$64,973

$37,283

$26,239

$24,702

$20,830

$20,532

$18,782

$17,182

$21,872

Manufacturing

Services

AFFH

FIRE

Health

Government and non-NAICs

Retail Trade

Transportation, Warehousing, and Utilities

Construction

17

Overall Contribution to the Gross State Product, Nebraska 2002 (Direct and Indirect Impact, in Millions)

$24,983.53

$20,481.86

$15,054.91

$13,553.91

$13,323.25

$13,013.28

$10,305.97

$9,763.41

$8,040.23

Manufacturing

Services

Government and non-NAICs

FIRE

Retail Trade

Health

Transportation, Warehousing,and Utilities

AFFH

Construction

18

Implications

• Rural economic development

• Amenities and opportunities

• Attracts other parts of the economic engine

• Meeting the needs of changing demographics

19

Thank you.

Roslyn Fraser, MADepartment of Preventive and Societal Medicine

University of Nebraska Medical Center984350 Nebraska Medical Center

Omaha, Nebraska 68198-4350

Office (402) 559-1981Fax (402) 559-7259rfraser@unmc.edu