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The Economic Impact of the Health Sector on the Fairview Regional Medical Center Medical Service Area Hospitals Nursing Homes Physicians, etc. Other Services Pharmacies Oklahoma Office of Rural Health OSU Center for Rural Health Oklahoma Cooperative Extension Service Oklahoma State University April 2011 AE-11009 The Economic Impact of the Health Sector on the Fairview Regional Medical Center Medical Service Area Community Health Engagement Process documents available online at: www.okruralhealthworks.org Lara Brooks, Assistant Extension Specialist, OSU, Stillwater Phone: 405-744-6083, Fax: 405-744-9835, Email: lara.brooks@okstate.edu Brian Whitacre, Assistant Professor and Extension Economist, OSU, Stillwater 405-744-6083 Stan Ralstin, Area Extension Rural Development Specialist, OSU, Enid 580-237-7611 Dana Baldwin, Major County Extension Director, Fairview 580-227-3786 Corie Kaiser, Assistant Director, Oklahoma Center for Rural Health, Oklahoma City 405-840-6500 Val Schott, Director, Oklahoma Center for Rural Health, Oklahoma City 405-840-6500 Oklahoma Office of Rural Health OSU Center for Rural Health Oklahoma Cooperative Extension Service Oklahoma State University April 2011 1 The Economic Impact of the Health Sector on the Fairview Regional Medical Center Medical Service Area Medical facilities have a tremendous medical and economic impact on the community in which they are located. This is especially true with health care facilities, such as hospitals and nursing homes. These facilities not only employ a large number of people and have a significant payroll, but they also draw a large number of people from rural areas that need medical services into the community. The overall objective of this study is to measure the economic impact of the health sector on the Fairview Regional Medical Center medical service area. The specific objectives of this report are to: 1. Review economic trends of the health sector for the U.S. and Major County; 2. Identify the population for the medical service area of Fairview Regional Medical Center; 3. Summarize the direct economic activities of the health sector; 4. Review concepts of community economics and multipliers; and 5. Estimate the secondary and total impacts of the health sector on the Fairview Regional Medical Center medical service area. No recommendations will be made in this report. Health Services and Rural Development The nexus between health care services and rural development is often overlooked. At least three primary areas of commonality exist. A strong health care system can help attract and maintain business and industry growth, and attract and retain retirees. A strong health care system can also create jobs in the local area. The following section looks at how the health care sector impacts these areas. 2 Services that Impact Rural Development Type of Growth Services Important to Attract Growth Industrial and Business Health and Education Retirees Health and Safety Business and Industry Growth Studies have found that quality-of-life (QOL) factors are playing a dramatic role in business and industry location decisions. Among the most significant of the QOL variables are health care services, which are important for at least three reasons. First, as noted by a member of the Board of Directors of a community economic development corporation, the presence of good health and education services is imperative to industrial and business leaders as they select a community for location. Employees and participating management may offer strong resistance if they are asked to move into a community with substandard or inconveniently located health services. Secondly, when a business or industry makes a location decision, it wants to ensure that the local labor force will be productive, and a key factor in productivity is good health. Thus, investments in health care services can be expected to yield dividends in the form of increased labor productivity. The cost of health care services is the third factor that is considered by business and industry in development decisions. Research shows that corporations take a serious look at health care costs in determining site locations. Sites that provide health care services at a lower cost are given higher consideration for new industry than sites with much higher health care costs. 3 Health Services and Attracting Retirees A strong and convenient health care system is important to retirees, a special group of residents whose spending and purchasing can be a significant source of income for the local economy. Many rural areas have environments (e.g., moderate climate and outdoor activities) that enable them to be in a good position to attract and retain retirees. The amount of spending embodied in this population, including the purchasing power associated with Social Security, Medicare, and other transfer payments, is substantial. Additionally, middle and upper income retirees often have substantial net worth. Although the data are limited, several studies suggest health services may be a critical variable that influences the location decision of retirees. For example, one study found that four items were the best predictors of retirement locations: safety, recreational facilities, dwelling units, and health care. Another study found that nearly 60 percent of potential retirees said health services were in the “must have” category when considering a retirement community. Only protective services were mentioned more often than health services as a “must have” service. Health Services and Job Growth A factor important to the success of rural economic development is job creation. The health care sector is an extremely fast growing sector, and based on the current demographics, there is every reason to expect this trend to continue. Data in Table 1 provide selected health expenditures and employment data for the United States. Several highlights from the national data are: In 1970, health care services as a share of the national gross domestic product (GDP) were 7.2 percent. This increased to 16.2 percent in 2008; Per capita health expenditures increased from $356 in 1970 to $7,681 in 2008; 4 Employment in the health sector increased almost 341.0 percent from 1970 to 2008; and Annual increases in employment from 2003 to 2008 ranged from 2.0 percent to 4.0 percent. In addition, the Bureau of Labor Statistics projects substantial increases in health care expenditures from 2010 through 2019. In fact, the U. S. Department of Health and Human Services, Centers for Medicare and Medicaid Services predict that health care expenditures will account for 18.7 percent of GDP by 2016 and increase to 19.6 percent of GDP in 2019. Per capita health care expenditures are projected to increase to $11,625 in 2016 and to $13,653 in 2019. Total health expenditures are projected to increase to $4.5 trillion in 2019. 5 Table 1 United States Health Expenditures and Employment Data 1970-2008; Projected for 2010, 2013, 2016 & 2019 Total Per Capita Health Health Avg. Annual Year Health Health as % Sector Increase in Expenditures Expenditures of GDP Employment Employment ($Billions) ($) (%) (000) (%) 1970 $74.9 $356 7.2% 3,052 a 1980 253.4 1,100 9.1% 5,278 a 7.3% 1990 714.1 2,814 12.3% 7,814 a 4.8% 2000 1,352.9 4,789 13.6% 10,858 a 3.9% 2001 1,469.2 5,150 14.3% 11,188 a 3.0% 2002 1,602.4 5,564 15.1% 11,536 a 3.1% 2003 1,735.2 5,973 15.6% 11,817 b N/A 2004 1,855.4 6,328 15.6% 12,055 b 2.0% 2005 1,982.5 6,701 15.7% 12,314 b 2.1% 2006 2,112.5 7,071 15.8% 12,602 b 2.3% 2007 2,239.7 7,423 15.9% 12,946 b 2.7% 2008 2,338.7 7,681 16.2% 13,469 b 4.0% Projections 2010 2,600.2 8,389 17.5% 2013 3,024.8 9,505 17.3% 2016 3,795.9 11,625 18.7% 2019 4,571.5 13,653 19.6% SOURCES: Bureau of Labor Statistics (www.bls.gov [September 2010]); U.S. Department of Health & Human Services, Centers for Medicare & Medicaid Services, National Health Expenditures 1970-2008 and National Health Expenditure Projections 2009-2019 (http://www.cms.hhs.gov/nationalhealthexpenddata [September 2010]). N/A - Not Available. a Based on Standard Industrial Classification (SIC) codes for health sector employment. b Based on North American Industrial Classification System (NAICS) for health sector employment. 6 Figure 1 illustrates that health services accounted for 16.2% of all national expenditures (as reported by the gross domestic product). This figure also breaks the amount spent on health services into various categories. The largest health service type was hospital care, representing 31.0 percent of the total. The next largest type of health services was physician services with 21.0 percent of the total. Community health centers, home health services, and other medical services are allocated in “other” category, which accounts for 32.0 percent. 7 Major County Economic Trends Data relative to the health sector for Major County are provided in Table 2. Data in Table 2 are from the U. S. Census Bureau County Business Patterns, based on the North American Industry Classification System (NAICS). The table shows employment and payroll for both health services and total county services for Major County. Further, it indicates the percentage of total employment and payroll that health services make up, at the county and state level. This table states how health services have changed over time. It must be noted that for the years of 2007 and 2008 the number of health services employees and their payroll is not available at the county level. This is due to privacy rules and regulations. To compare trends 2006 data will be used since it is the latest exact number available. Health services employment in Major County decreased 4.2 percent from 333 employees in 2001 to 319 employees in 2006 (Table 2). During the same time period, the total county employment increased 3.5 percent. County health services employment as a percent of total county employment decreased from 19.8 percent in 2001 to 18.4 percent in 2006, while the state health services employment as a percent of total state employment increased from 14.3 percent in 2001 to 15.1 percent in 2006. The county saw a decrease of 1.4 percent over this eight year period, while the state grew 1.0 percent. The county health services payroll experienced a different trend compared to employment. Major County’s health services payroll increased 4.6 percent from about $6.4 million in 2001 to $6.7 million in 2006; this compares to an increase of 49.1 percent for the total county payroll (Table 2). State health services payroll as a percent of state payroll increased 0.6 percent from 2001 to 2006. County health services payroll as a percent of total county payroll decreased from 18.0 percent in 2001 to 12.7 percent in 2006. 8 Table 2 Fairview Regional Medical Center Employment and Payroll for County Business Patterns* Major County and the State of Oklahoma Employment Based Health Total Hlth Svcs as a Hlth Svcs as a on Services County % of Total % of Total NAICS1 Employment Employment County Employment State Employment 2001 333 1,678 19.8% 14.3% 2002 315 1,654 19.0% 15.1% 2003 341 1,618 21.1% 15.2% 2004 331 1,701 19.5% 15.4% 2005 308 1,685 18.3% 15.4% 2006 319 1,736 18.4% 15.1% 2007 250-499 2,161 N/A 15.3% 2008 250-499 2,172 N/A 15.3% % Change '01 - '06 -4.2% 3.5% Payroll Based Health Total Hlth Svcs as a Hlth Svcs as as on Services County % of Total % of Total NAICS1 Payroll ($1000s) Payroll ($1000s) County Payroll State Payroll 2001 $6,422 $35,590 18.0% 14.5% 2002 $6,336 $35,066 18.1% 15.2% 2003 $6,535 $35,103 18.6% 15.2% 2004 $6,545 $37,177 17.6% 15.7% 2005 $6,412 $43,488 14.7% 15.5% 2006 $6,719 $53,073 12.7% 15.1% 2007 D $76,135 N/A 15.3% 2008 D $80,804 N/A 15.2% % Change '01 - '06 4.6% 49.1% Source: U.S. Census Bureau, County Business Patterns; 2000-2008 data (www.census.gov [March 2011]). 1 The Health Care and Social Assistance NAICS sector comprises establishments providing health care and social assistance for individuals. The sector includes both health care and social assistance because it is sometimes difficult to distinguish between the boundaries of these two activities. Industries in this sector are arranged on a continuum starting with those establishments providing medical care exclusively, continuing with those providing health care and social assistance, and finally finishing with those providing only social assistance. The services provided by establishments in this sector are delivered by trained professionals. All industries in the sector shared this commonality of process, namely, labor inputs of health practitioners or social workers with the requisite expertise. Many of the industries in the sector are defined based on the educational degree held by the practitioners included in the industry. E- 250-499 paid health care and social assistance employees D- Withheld to avoid disclosing data for individual companies; data are included in higher level totals * Data from County Business Patterns exclude self-employed persons, employees of private households, railroad employees, agricultural production workers, and for most government employees (except for those working in wholesale liquor establishments, retail liquor stores, Federally-chartered savings institutions, Federally-charted credit unions, and hospitals). 9 Basic economic indicators of the Major County economy are illustrated in Table 3. Based on Bureau of Economic Analysis data, the 2008 per capita income for Major County of $32,613 is lower than the per capita income for the state of Oklahoma and the United States. Table 3 Economic Indicators for Major County, the State of Oklahoma and the Nation Indicator County State U.S. Total Personal Income (2008) $232,595,000 $131,070,218,000 $12,238,800,000,000 Per Capita Income (2008) $32,613 $35,969 $40,166 Employment (2009) 4,153 1,636,917 139,877,000 Unemployment (2009) 196 115,855 14,542,000 Unemployment Rate (2009) 4.5% 6.6% 9.3% Employment (December 2010)* 4,047 1,626,928 139,159,000 Unemployment (December 2010)* 179 115,292 13,997,000 Unemployment Rate (December 2010)* 4.2% 6.6% 9.1% Percentage of People in Poverty (2009) 10.6% 16.1% 14.3% Percentage of Under 18 in Poverty (2009) 14.1% 22.1% 20.0% Transfer Dollars (2008) $45,973,000 $23,242,704,000 $1,875,558,000,000 Transfer Dollars as Percentage of 19.8% 17.7% 15.3% Total Personal Income (2008) *County estimates are considered preliminary SOURCES: 2009 Bureau of Labor Statistics; 2008 Bureau of Economic Analysis; 2009 U.S. Census Bureau. According to the Bureau of Labor Statistics, the unemployment rate for Major County was 4.5 percent for 2009, which was lower than the state (6.6 percent) rate and the national (9.3 percent) rate. Moreover, preliminary estimates for December 2010 indicate the unemployment rate for Major County had decreased to 4.2 percent, which was lower than both the state (6.6 10 percent) and the nation (9.1 percent). Also, the number of people employed in Major County decreased 2.6 percent from 2009 to December 2010. This is a common trend across the state. The number of people unemployed in Major County decreased 8.7 percent during that same time period. From the U. S. Census Bureau, the percent of people in poverty in Major County was 10.6 percent in 2009, as compared to 16.1 percent for the state and 14.3 percent nationally. The percentage of people under age 18 in poverty in 2009 followed similar trends, with Major County being lower than the state and the nation. Another economic indicator is the percent of personal income that is from transfer payments. Based on Bureau of Economic Analysis data, Major County had 19.8 percent of total personal income from transfer payments, which is higher than both the state and the nation. Transfer payments represent that portion of total personal income whose source is state and federal funds. These typically include social security, Medicare, and retirement / disability payments. Just like other communities, sales tax collections from retail sales are extremely important, if not vital, to the city of Fairview and Major County. Figure 2 displays the trend of city level taxable sales for Fairview. In nominal terms, Fairview has experienced a significant increase in taxable sales. However, when the CPI is applied, inflation-adjusted taxable retail still appears to have increased slightly in 2005, but experienced a decline in FY 2010 (this is a common trend for the state and nation). Fairview’s retail sales are above average for a community of Fairview’s size (Population 1,000-5,000). As stated earlier, a healthy health sector is vital in rural development efforts. Local health services can also be very beneficial for local retail activity (Brooks and Whitacre, 2010).11 $0.00 $5,000,000.00 $10,000,000.00 $15,000,000.00 $20,000,000.00 $25,000,000.00 $30,000,000.00 $35,000,000.00 $40,000,000.00 $45,000,000.00 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Figure. 2 Taxable Sales for Fairview, Actual and Inflation-Adjusted for 1980-2010 Taxable Sales Inflation-Adjusted 12 Demographic Trends for the Fairview Regional Medical Center Medical Service Area and Major County The Fairview Regional Medical Center medical service area is delineated in Figure 3, which also shows the location of nearby hospitals. The primary medical service area is the immediate area surrounding Fairview including the zip code areas of Fairview, 73737; Aline, 73716; Cleo Springs, 73729; Chester 73838; Isabella, 73747; Longdale, 73755; and Ringwood, 73768. According to the U.S. Census Bureau, the 2000 census population of this primary medical service area was 7,790 (Table 4a). Fairview Regional Medical Center also serves a secondary medical service area, which consists of the zip code areas of Canton, 73724; Carmen, 73726; Helena, 73741; Okeene, 73763; Seiling, 73663; and Waynoka, 73860. According to the U.S. Census Bureau, the 2000 Census population of this secondary medical service area was 7,719 (Table 4a). Since the U. S. Census Bureau only has zip code population for the 2000 census year, another source for more current populations by zip code was researched. ESRI, a company specializing in geographic information systems software, has illustrated zip code populations for the 2000 census year and projected zip code populations for 2010 and projections for 2015. The zip code populations do not match exactly due to a variance in zip code boundaries and based on the methodology for determining population by zip code. However, when comparing the 2000 census and the 2000 ESRI data, total populations for the medical service area do not vary considerably. The ESRI projection of the primary medical service area shows a decrease in population of 4.4 percent from 2000 to 2010 and a projected 6.7 percent decrease from 2000 to 2015 (Table 4a). 13 Table 4b also shows population trends for the state of Oklahoma, Major County, and most of the cities in the primary and secondary medical service area of Fairview Regional Medical Center for the years 1990, 2000, and 2010. The city level estimates are place estimates rather than zip code estimates that were discussed in the previous table. From 1990 to 2000, Major County had a population decrease of 6.33 percent, while the state increased at a rate of 9.70 percent. During the same time period, Longdale (10.32%), Ringwood (7.61%), and Waynoka (4.86%) were the only communities to experience an increase in their population. Aline and Seiling experienced the largest decline in population of 27.46 percent and 15.13 percent, respectively. From 2000 to 2010, Major County saw a population decrease of 4.72 percent; the state experienced an increase of 8.71 percent during this time period. Ringwood (17.22%) and Cleo Springs (3.68%) both experienced an increase from 2000 to 2010. Longdale and Carmen experienced the largest declines in population during this time period with -15.48 percent and 13.63 percent, respectively. When first examining Helena, it appears that the population experienced significant a decrease in 2000 followed by a significant increase in 2010. This could be due to changes in counting institutionalized population during Census years. However, when considering the population across 1990-2010 for Helena, there has been a 34.5 percent increase. It must be noted that place level population estimates were not available for Chester or Isabella. 14 Figure 3 Fairview Regional Medical Center Medical Service Areas City County Hospital No. of Beds Okeene Blaine Okeene Municipal Hospital 17 Watonga Blaine Watonga Municipal Hospital 25 Seiling Dewey Seiling Community Hospital 18 Enid Garfield INTEGRIS Bass Baptist Health Center 183 Enid Garfield INTEGRIS Bass Pavilion 24 Enid Garfield St. Mary’s Regional Medical Center 245 Alva Woods Share Memorial Hospital 25 Woodward Woodward Woodward Regional Hospital 87 Primary Medical Services Area Secondary Medical Services Area 15 Table 4a Population of Fairview Regional Medical Center Medical Service Area Populations Population by Zip Code City 2000 Census 2000 ESRI 2010 ESRI 2015 ESRI Primary Medical Service Area 73737 Fairview 3,587 3,785 3,674 3,610 73716 Aline 544 408 358 339 73729 Cleo Springs 591 550 522 508 73838 Chester 486 462 429 415 73747 Isabella 400 353 329 320 73755 Longdale 901 686 651 636 73768 Ringwood 1,281 1,327 1,274 1,239 Total 7,790 7,571 7,237 7,067 % Change from 2000 ESRI -4.4% -6.7% Secondary Medical Service Area 73724 Canton 1,143 1,142 1,081 1,053 73726 Carmen 600 552 488 463 73741 Helena 1,648 1,717 1,687 1,656 73763 Okeene 1,609 1,644 1,520 1,471 73663 Seiling 1,332 1,613 1,534 1,489 73860 Waynoka 1,387 1,477 1,255 1,182 Total 7,719 8,145 7,565 7,314 % Change from 2000 ESRI -7.1% 11.4% 16 Table 4b Population Trends for Major County and the State of Oklahoma 1990 2000 2010 % Change % Change Population Population Population 1990-2000 2000-2010 State of Oklahoma 3,145,585 3,450,654 3,751,351 9.70% 8.71% Major County 8,055 7,545 7,189 -6.33% -4.72% Population by City Fairview 2,936 2,733 2,579 -6.91% -5.63% Aline 295 214 207 -27.46% -3.27% Cleo Springs 359 326 338 -9.19% 3.68% Chester n/a n/a n/a n/a n/a Isabella n/a n/a n/a n/a n/a Longdale 281 310 262 10.32% -15.48% Ringwood 394 424 497 7.61% 17.22% Canton 632 618 625 -2.22% 1.13% Carmen 459 411 355 -10.46% -13.63% Helena 1,043 443 1,403 -57.53% 216.70% Okeene 1,343 1,240 1,204 -7.67% -2.90% Seiling 1,031 875 860 -15.13% -1.71% Waynoka 947 993 927 4.86% -6.65% Cities Total 9,720 8,587 9,257 SOURCE: Population data from the U.S. Bureau of Census, 1990, 2000; U. S. Bureau of the Census, Population Estimates Branch, 2008; Business Analyst Version 10, ESRI, ESRI 2000 population and 2010 and 2015 projected populations. Tables 5 and 6 provide further details about the demographic trends of Major County. Table 5 presents the breakdown by age group for Major County and the State of Oklahoma from 17 the census years 1990 and 2000 and the 2009 census estimates. The lowest age group, age 0-14, experienced a proportional decrease from 1990-2000 and 2009. The age group of 45-64, however, has seen a dramatic increase over time. In Major County, those age 45-64 made up 20.6 percent of the total population in 1990, and this went up to 29.2 percent in 2009. This same trend holds true for the state of Oklahoma as well. Table 6 shows the race and ethnic group percentages for Major County and the state of Oklahoma for the census years 1990, 2000, and 2010. The state has experienced a significant increase in people of Hispanic origin, increasing from 2.7 percent in 1990 to 8.9 percent in 2010. Major County has experienced this same trend. In 1990, those of Hispanic origin made up 1.6 percent of the population. In 2000, this number increased to 4.0 percent. This number again increased in the 2010 census to 7.5 percent. 18 Table5 Age Groups - for Population Numbers and Percent of Total Population Major County and the State of Oklahoma Major County State of Oklahoma Age Groups Number Percent Number Percent 1990 Census 0-14 1,818 22.6% 702,537 22.3% 15-19 549 6.8% 233,093 7.4% 20-24 323 4.0% 222,766 7.1% 25-44 2,153 26.7% 961,560 30.6% 45-64 1,659 20.6% 601,416 19.1% 65+ 1,553 19.3% 424,213 13.5% Totals 8,055 100.0% 3,145,585 100.0% 2000 Census 0-14 1,481 19.6% 732,907 21.2% 15-19 577 7.6% 269,373 7.8% 20-24 306 4.1% 247,165 7.2% 25-44 1,839 24.4% 975,169 28.3% 45-64 1,877 24.9% 770,090 22.3% 65+ 1,465 19.4% 455,950 13.2% Totals 7,545 100.0% 3,450,654 100.0% 2009 Estimates 0-14 1,380 19.2% 767,758 20.8% 15-19 503 7.0% 256,841 7.0% 20-24 378 5.3% 280,782 7.6% 25-44 1,421 19.8% 957,235 26.0% 45-64 2,101 29.2% 928,472 25.2% 65+ 1,406 19.6% 495,962 13.5% Totals 7,189 100.0% 3,687,050 100.0% SOURCE: U.S. Census Bureau, Census data for 1990 and 2000, estimated population for 2009 (www.census.gov [March 2011]). 19 Table6 Race and Ethnic Groups - for Population Numbers and Percent of Total Population Major County and the State of Oklahoma Major County State of Oklahoma Race/Ethnic Groups Number Percent Number Percent 1990 Census White 7,781 96.6% 2,547,588 81.0% Black 3 0.0% 231,462 7.4% Native American 1 128 1.6% 246,631 7.8% Other 2 11 0.1% 33,744 1.1% Two or more Races 3 NA -- NA -- Hispanic Origin 4 132 1.6% 86,160 2.7% 2000 Census White 7,076 93.8% 2,556,368 74.1% Black 14 0.2% 257,981 7.5% Native American 1 65 0.9% 266,158 7.7% Other 2 7 0.1% 50,594 1.5% Two or more Races 3 80 1.1% 140,249 4.1% Hispanic Origin 4 303 4.0% 179,304 5.2% 2010 Census White 6,629 88.1% 2,706,845 72.2% Black 32 0.4% 277,644 7.4% Native American 1 130 1.7% 321,687 8.6% Other 2 29 0.4% 223,854 6.0% Two or more Races 3 142 1.9% 221,321 5.9% Hispanic Origin 4 565 7.5% 332,007 8.9% SOURCE: U.S. Census Bureau, Census data for 1990 , 2000, and 2010 (www.census.gov [March 2011]). 1 Native American includes American Indians and Alaska Natives. 2 Other is defined as Asian Americans, Native Hawaiians, Pacific Islanders and all others. 3 Two or more races indicate a person is included in more than one race group. 4 Hispanic population is not a race group but rather a description of ethnic origin; Hispanics are included in the five race groups. NA - Not available; 1990 census did not report this category. 20 The Direct Economic Activities The health sector creates employment and payroll impacts, which are important direct economic activities for the Fairview Regional Medical Center service area. The health sector is divided into the following six components: Hospital Physicians, Dentists, and Other Medical Professionals Nursing and Protective Care Home Health Pharmacies Other Medical and Health Services The health sector in Fairview Regional Medical Center medical service area employs 206 full-time equivalent employees and has an estimated payroll of $8,890,871 (Table 7). The health sector in Major County is fairly typical of counties of its size, with a hospital, one dental office, one chiropractor office, one optometrist office, one nursing home, one county health department, one EMS service, one home health service, one hospice service, one behavioral health facility and three pharmacies. The Hospital component provides 67 full-time equivalent jobs with an estimated annual payroll of $3,878,211 (including benefits1). The Physicians, Dentists, and Other Medical Professionals sector employs 13 total full-time equivalent employees with an estimated payroll of $603,524. The Nursing and Protective Care component employs 80 total full-time equivalent employees with an estimated annual payroll of $2,640,000. The Other Medical and Health Services & Pharmacy component which includes one county health department, one home health service, one hospice service, one behavioral health facility, one EMS service and three pharmacies employs 46 total full-time equivalent employees and has an estimated annual payroll of $1,769,136. 1 The ratios for benefits are derived from the 2002 Economic Census Data-Oklahoma Health Care and Social Assistance by industry, U.S. Census Bureau. 21 The health sector is vitally important as both a community employer and a source of income to the community's economy. As demonstrated in Table 7, the health sector employs a large number of residents. Table 7 Direct Economic Activities of the Health Sector in the Fairview Regional Medical Center Medical Service Area Component Full-Time & Part-Time Employment Total Payroll with Benefits Hospital 67 $3,878,211 Includes Fairview Regional Medical Center Physicians, Dentists, & Other Medical Professionals 13 $603,524 Includes one dentist office, one optometrist office, and one chiropractor office Nursing and Protective Care 80 $2,640,000 Includes one nursing home Other Medical & Health Services & Pharmacies 46 $1,769,136 Includes Major County Health Department, Major County EMS, one home health service, one hospice service, and one behavioral health facility Totals 206 $8,890,871 SOURCE: Local survey and estimates from research. These residents, along with businesses in the health sector, purchase a large amount of goods and services from businesses in the Fairview Regional Medical Center medical service area. These impacts are referred to as secondary impacts or benefits to the economy. Before the secondary impacts of the health sector are discussed, the basic concepts of community economics will be reviewed. 22 Basic Concepts of Community Economics and Income and Employment Multipliers Figure 4 illustrates the major flows of goods, services, and dollars of any economy. The foundations of a community's economy are those businesses that sell some or all of their goods and services to buyers outside of the community. Such a business is a basic industry. The two arrows in the upper right portion of Figure 4 represent the flow of products out of, and dollars into, a community. To produce these goods and services for "export" outside the community, the basic industry purchases inputs from outside of the community (upper left portion of Figure 4), labor from the residents or "households" of the community (left side of Figure 4), and inputs from service industries located within the community (right side of Figure 4). Households using their earnings to purchase goods and services from the community’s service industries complete the flow of labor, goods, and services in the community (bottom of Figure 4). It is evident from the relationships illustrated in Figure 4 that a change in any one segment of a community's economy will cause reverberations throughout the entire economic system of the community. HouseholdsIndustryBasicServicesGoods &$LaborInputsProductsInputs$$$$Services$$ Figure 4 Community Economic System 23 Consider, for instance, the closing of a hospital. The services section will no longer pay employees and the dollars flowing into households from these jobs will stop. Likewise, the hospital will not purchase goods from other businesses, and the dollar flow to other businesses will stop. This decreases income in the "households" segment of the economy. Since earnings would decrease, households decrease their purchases of goods and services from businesses within the "services" segment of the economy. This, in turn, decreases the amount of labor and input that these businesses' purchase. Thus, the change in the economic base works its way throughout the entire local economy. The total impact of a change in the economy consists of direct, indirect, and induced impacts. Direct impacts are the changes in the activities of the impacting industry, such as the closing of a hospital. The impacting business, such as the hospital, changes its purchase of inputs as a result of the direct impact. This produces an indirect impact in the business sectors. Both the direct and indirect impacts change the flow of dollars to the community's households. The households alter their consumption accordingly. The effect of this change in household consumption upon businesses in a community is referred to as an induced impact. A measure is needed that yields the effects created by an increase or decrease in economic activity. In economics, this measure is called the multiplier effect. The multipliers used in this report are defined as: “…the ratio between direct employment (or income), or that employment (or income) used by the industry initially experiencing a change in final demand and the direct, indirect, and induced employment (or income).” An employment multiplier of 3.0 indicates that if one job is created by a new industry, 2.0 jobs are created in other sectors due to business (indirect) and household (induced) spending. 24 Secondary Impacts of the Health Sector on the Economy of Fairview Regional Medical Center Medical Service Area Employment and income multipliers for the area have been calculated by use of the IMPLAN model. This model was developed by the U.S. Forest Service2 and allows for the development of multipliers for various sectors of an economy. The employment multipliers for the components of the health sector are shown in Table 8, column 3. The employment multiplier for the Hospital component is 1.33. This indicates that for each job in that component, an additional 0.33 jobs are created throughout the area due to business (indirect) and household (induced) spending. The employment multipliers for the other health sector components are also shown in Table 8, column 3. Applying the employment multipliers to the employment for each component yields an estimate of the impact on the economy (Table 8, columns 2, 3, and 4). For example, the hospital has a direct employment of 67 full-time equivalent employees; applying the employment multiplier of 1.33 to the employment number of 79 brings the total employment impact of the hospital to 89 employees. The Physicians, Dentists, and Other Professionals component employs 13 people; however, the total impact is 15 employees once the multiplier of 1.18 is applied. The Nursing and Protective Care component has a total employment of 87 after the multiplier of 1.09 is applied to the direct employment of 80. The Other Medical and Health Services & Pharmacy component has 46 full-time equivalent employees and an employment multiplier of 1.17, for a total employment impact of 54. The total employment impact of the health sector in the Fairview Regional Medical Center medical service area is estimated to be 245 employees (Table 8, total of column 4). 2 For complete details of model, see [1], [2], and [3]. 25 Table 8 Fairview Regional Medical Center Medical Service Area Health Sector Impact on Employment and Income, and Retail Sales and Sales Tax (1) (2) (3) (4) (5) (6) (7) (8) (9) Employment Income Retail 1 Cent Health Sectors Employed Multiplier Impact Income Multiplier Impact Sales Sales Tax Hospitals 67 1.33 89 $3,878,211 1.14 $4,407,463 $929,534 $9,295 Physicians, Dentists, & Other Medical Professionals 13 1.18 15 $603,524 1.15 $693,721 $146,306 $1,463 Nursing and Protective Care 80 1.09 87 $2,640,000 1.12 $2,960,277 $624,322 $6,243 Other Medical & Health Services & Pharmacies 46 1.17 54 $1,769,136 1.18 $2,086,546 $440,052 $4,401 Total 206 245 $8,890,871 $10,148,006 $2,140,214 $21,402 SOURCE: 2008 IMPLAN database, Minnesota IMPLAN Group, Inc.; Local data for employment, employee compensation and proprietor's income; income estimated based on state average incomes if local data not available * Based on the ratio between Major County retail sales and income (21.09%) – from 2009 County Sales Tax Data and Personal Income Estimates from the Bureau of Economic Analysis. 26 Applying the income multipliers to the income (payroll including benefits) for each of the health sector components yields an estimate of each component’s income impact on the Fairview Regional Medical Center medical service area (Table 8, columns 5, 6, and 7). The income multiplier for the Hospital component is 1.14 (Table 8, column 6). This indicates that for each dollar in that component, an additional 0.14 dollars are created throughout the area due to business (indirect) and household (induced) spending. The Hospital component has a total payroll of $3,878,211; applying the income multiplier of 1.14 brings the total Hospital component income impact to $4,407,463. The income multipliers for the other health sector components are also shown in Table 8, column 6. The Physicians, Dentists, and Other Medical Professionals component has a total income impact of $693,721, based on the application of the income multiplier of 1.15 to the $603,524 payroll. The Nursing and Protective Care component has a multiplier of 1.12 which yields a total income impact of $2,960,277. The Other Medical and Health Services & Pharmacy component has a total payroll of $1,769,136and an income multiplier of 1.18 leading to a total income impact of $2,086,546. The total income impact of the health sector on the economy of the Fairview Regional Medical Center medical service area is projected to be $10,148,006 (Table 8, total of column 7). Income also has an impact on retail sales, and the health sector has its own distinct effect on these retail sales. The local retail sales capture ratio is used to estimate the effect of the health sector on retail sales. This ratio indicates the percentage of personal income spent locally on items that generate local sales tax. If the county ratio between retail sales and income continues as is currently (around 21.09 percent), then direct and secondary retail sales generated by the health sector equals $2,140,214 (Table 8, total of column 8). Each of the components’ income impacts is utilized to determine the retail sales and a one-cent sales tax collection for each component. A one-cent sales tax collection is estimated to generate $21,402 in the Fairview Regional Medical Center medical service area economy as a result of the health sector income 27 impact (Table 8, total of column 9). This estimate is probably low, as many health care employees tend to spend a larger portion of their income in local establishments that collect sales tax. The bottom line is that the health sector in the Fairview Regional Medical Center medical service area not only contributes greatly to the medical health of the community, but also to the economic health of the community. Summary The economic impact of the health sector on the economy of Fairview Regional Medical Center medical service area is tremendous. The health sector employs a large number of residents, similar to a large industrial firm. The secondary impact occurring in the community is extremely large and is a testament to the importance of the health sector. If the health sector increases or decreases in size, the medical health of the community, as well as the economic health of the community, is greatly affected. For the attraction of industrial firms, businesses, and retirees, it is crucial that the area have a quality health sector. The fact that a prosperous health sector also contributes to the economic health of the community is often overlooked. References [1] IMPLAN Professional Version 2.0 Social Accounting & Impact Analysis Software – USER’S GUIDE, ANALYSIS GUIDE, DATA GUIDE, MIG, Minnesota IMPLAN Group, 2nd Edition, June 2000. [2] Palmer, Charles and Eric Siverts, IMPLAN ANALYSIS GUIDE. U.S. Department of Agriculture, Forest Service Land Management Planning Systems Section, Rocky Mountain Forest and Range Experiment Station, Fort Collins, Colorado, 1985. [3] Siverts, Eric, Charles Palmer, Ken Walters, and Greg Alward, IMPLAN USER'S GUIDE, U.S. Department of Agriculture, Forest Service, Systems Application Unit, Land Management Planning, Fort Collins, Colorado, 1983. [4] Brooks, L. and Whitacre, B. E. , Critical Access Hospitals and Retail Activity: An Empirical Analysis in Oklahoma. The Journal of Rural Health, no. doi: 10.1111/j.1748-0361.2010.00336.x
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Okla State Agency |
Oklahoma Cooperative Extension Service |
Okla Agency Code | '012' |
Title | The economic impact of the health sector on the Fairview Regional Medical Center medical service area |
Authors |
Brooks, Lara. Whitacre, Brian. Ralstin, Stan. Baldwin, Dana M. (Dana Marie) Kaiser, Corie. Schott, Val. Oklahoma. Office of Rural Health. Oklahoma Cooperative Extension Service. |
Publisher | Oklahoma Cooperative Extension Service, Oklahoma State University |
Publication Date | 2011-04 |
Publication type | Research Report/Study |
Subject |
Rural health services--Economic aspects--Oklahoma--Major County. Fairview Regional Medical Center (Fairview, Okla.) |
Purpose | The overall objective of this study is to measure the economic impact of the health sector on the Fairview Regional Medical Center medical service area. The specific objectives of this report are to: 1. Review economic trends of the health sector for the U.S. and Major County; 2. Identify the population for the medical service area of Fairview Regional Medical Center; 3. Summarize the direct economic activities of the health sector; 4. Review concepts of community economics and multipliers; and 5. Estimate the secondary and total impacts of the health sector on the Fairview Regional Medical Center medical service area. |
Contents | Health Services and Rural Development; * Business and Industry Growth; * Health Services and Attracting Retirees; * Health Services and Job Growth; Major County Economic Trends; Demographic Trends for the Fairview Regional Medical Center Medical Service Area and Major County; The Direct Economic Activities; Basic Concepts of Community Economics and Income and Employment Multipliers; Secondary Impacts of the Health Sector on the Economy of Fairview Regional Medical Center Medical Service Area; Summary; References |
Notes | (AE-11009); Community Health Engagement Process |
OkDocs Class# | Z2130.3 F172i 2011 |
Digital Format | PDF, Adobe Reader required |
ODL electronic copy | Downloaded from agency website: http://www.okruralhealthworks.org/PDFWEB/AE-11009.pdf |
Rights and Permissions | This Oklahoma state government publication is provided for educational purposes under U.S. copyright law. Other usage requires permission of copyright holders. |
Language | English |
Full text | The Economic Impact of the Health Sector on the Fairview Regional Medical Center Medical Service Area Hospitals Nursing Homes Physicians, etc. Other Services Pharmacies Oklahoma Office of Rural Health OSU Center for Rural Health Oklahoma Cooperative Extension Service Oklahoma State University April 2011 AE-11009 The Economic Impact of the Health Sector on the Fairview Regional Medical Center Medical Service Area Community Health Engagement Process documents available online at: www.okruralhealthworks.org Lara Brooks, Assistant Extension Specialist, OSU, Stillwater Phone: 405-744-6083, Fax: 405-744-9835, Email: lara.brooks@okstate.edu Brian Whitacre, Assistant Professor and Extension Economist, OSU, Stillwater 405-744-6083 Stan Ralstin, Area Extension Rural Development Specialist, OSU, Enid 580-237-7611 Dana Baldwin, Major County Extension Director, Fairview 580-227-3786 Corie Kaiser, Assistant Director, Oklahoma Center for Rural Health, Oklahoma City 405-840-6500 Val Schott, Director, Oklahoma Center for Rural Health, Oklahoma City 405-840-6500 Oklahoma Office of Rural Health OSU Center for Rural Health Oklahoma Cooperative Extension Service Oklahoma State University April 2011 1 The Economic Impact of the Health Sector on the Fairview Regional Medical Center Medical Service Area Medical facilities have a tremendous medical and economic impact on the community in which they are located. This is especially true with health care facilities, such as hospitals and nursing homes. These facilities not only employ a large number of people and have a significant payroll, but they also draw a large number of people from rural areas that need medical services into the community. The overall objective of this study is to measure the economic impact of the health sector on the Fairview Regional Medical Center medical service area. The specific objectives of this report are to: 1. Review economic trends of the health sector for the U.S. and Major County; 2. Identify the population for the medical service area of Fairview Regional Medical Center; 3. Summarize the direct economic activities of the health sector; 4. Review concepts of community economics and multipliers; and 5. Estimate the secondary and total impacts of the health sector on the Fairview Regional Medical Center medical service area. No recommendations will be made in this report. Health Services and Rural Development The nexus between health care services and rural development is often overlooked. At least three primary areas of commonality exist. A strong health care system can help attract and maintain business and industry growth, and attract and retain retirees. A strong health care system can also create jobs in the local area. The following section looks at how the health care sector impacts these areas. 2 Services that Impact Rural Development Type of Growth Services Important to Attract Growth Industrial and Business Health and Education Retirees Health and Safety Business and Industry Growth Studies have found that quality-of-life (QOL) factors are playing a dramatic role in business and industry location decisions. Among the most significant of the QOL variables are health care services, which are important for at least three reasons. First, as noted by a member of the Board of Directors of a community economic development corporation, the presence of good health and education services is imperative to industrial and business leaders as they select a community for location. Employees and participating management may offer strong resistance if they are asked to move into a community with substandard or inconveniently located health services. Secondly, when a business or industry makes a location decision, it wants to ensure that the local labor force will be productive, and a key factor in productivity is good health. Thus, investments in health care services can be expected to yield dividends in the form of increased labor productivity. The cost of health care services is the third factor that is considered by business and industry in development decisions. Research shows that corporations take a serious look at health care costs in determining site locations. Sites that provide health care services at a lower cost are given higher consideration for new industry than sites with much higher health care costs. 3 Health Services and Attracting Retirees A strong and convenient health care system is important to retirees, a special group of residents whose spending and purchasing can be a significant source of income for the local economy. Many rural areas have environments (e.g., moderate climate and outdoor activities) that enable them to be in a good position to attract and retain retirees. The amount of spending embodied in this population, including the purchasing power associated with Social Security, Medicare, and other transfer payments, is substantial. Additionally, middle and upper income retirees often have substantial net worth. Although the data are limited, several studies suggest health services may be a critical variable that influences the location decision of retirees. For example, one study found that four items were the best predictors of retirement locations: safety, recreational facilities, dwelling units, and health care. Another study found that nearly 60 percent of potential retirees said health services were in the “must have” category when considering a retirement community. Only protective services were mentioned more often than health services as a “must have” service. Health Services and Job Growth A factor important to the success of rural economic development is job creation. The health care sector is an extremely fast growing sector, and based on the current demographics, there is every reason to expect this trend to continue. Data in Table 1 provide selected health expenditures and employment data for the United States. Several highlights from the national data are: In 1970, health care services as a share of the national gross domestic product (GDP) were 7.2 percent. This increased to 16.2 percent in 2008; Per capita health expenditures increased from $356 in 1970 to $7,681 in 2008; 4 Employment in the health sector increased almost 341.0 percent from 1970 to 2008; and Annual increases in employment from 2003 to 2008 ranged from 2.0 percent to 4.0 percent. In addition, the Bureau of Labor Statistics projects substantial increases in health care expenditures from 2010 through 2019. In fact, the U. S. Department of Health and Human Services, Centers for Medicare and Medicaid Services predict that health care expenditures will account for 18.7 percent of GDP by 2016 and increase to 19.6 percent of GDP in 2019. Per capita health care expenditures are projected to increase to $11,625 in 2016 and to $13,653 in 2019. Total health expenditures are projected to increase to $4.5 trillion in 2019. 5 Table 1 United States Health Expenditures and Employment Data 1970-2008; Projected for 2010, 2013, 2016 & 2019 Total Per Capita Health Health Avg. Annual Year Health Health as % Sector Increase in Expenditures Expenditures of GDP Employment Employment ($Billions) ($) (%) (000) (%) 1970 $74.9 $356 7.2% 3,052 a 1980 253.4 1,100 9.1% 5,278 a 7.3% 1990 714.1 2,814 12.3% 7,814 a 4.8% 2000 1,352.9 4,789 13.6% 10,858 a 3.9% 2001 1,469.2 5,150 14.3% 11,188 a 3.0% 2002 1,602.4 5,564 15.1% 11,536 a 3.1% 2003 1,735.2 5,973 15.6% 11,817 b N/A 2004 1,855.4 6,328 15.6% 12,055 b 2.0% 2005 1,982.5 6,701 15.7% 12,314 b 2.1% 2006 2,112.5 7,071 15.8% 12,602 b 2.3% 2007 2,239.7 7,423 15.9% 12,946 b 2.7% 2008 2,338.7 7,681 16.2% 13,469 b 4.0% Projections 2010 2,600.2 8,389 17.5% 2013 3,024.8 9,505 17.3% 2016 3,795.9 11,625 18.7% 2019 4,571.5 13,653 19.6% SOURCES: Bureau of Labor Statistics (www.bls.gov [September 2010]); U.S. Department of Health & Human Services, Centers for Medicare & Medicaid Services, National Health Expenditures 1970-2008 and National Health Expenditure Projections 2009-2019 (http://www.cms.hhs.gov/nationalhealthexpenddata [September 2010]). N/A - Not Available. a Based on Standard Industrial Classification (SIC) codes for health sector employment. b Based on North American Industrial Classification System (NAICS) for health sector employment. 6 Figure 1 illustrates that health services accounted for 16.2% of all national expenditures (as reported by the gross domestic product). This figure also breaks the amount spent on health services into various categories. The largest health service type was hospital care, representing 31.0 percent of the total. The next largest type of health services was physician services with 21.0 percent of the total. Community health centers, home health services, and other medical services are allocated in “other” category, which accounts for 32.0 percent. 7 Major County Economic Trends Data relative to the health sector for Major County are provided in Table 2. Data in Table 2 are from the U. S. Census Bureau County Business Patterns, based on the North American Industry Classification System (NAICS). The table shows employment and payroll for both health services and total county services for Major County. Further, it indicates the percentage of total employment and payroll that health services make up, at the county and state level. This table states how health services have changed over time. It must be noted that for the years of 2007 and 2008 the number of health services employees and their payroll is not available at the county level. This is due to privacy rules and regulations. To compare trends 2006 data will be used since it is the latest exact number available. Health services employment in Major County decreased 4.2 percent from 333 employees in 2001 to 319 employees in 2006 (Table 2). During the same time period, the total county employment increased 3.5 percent. County health services employment as a percent of total county employment decreased from 19.8 percent in 2001 to 18.4 percent in 2006, while the state health services employment as a percent of total state employment increased from 14.3 percent in 2001 to 15.1 percent in 2006. The county saw a decrease of 1.4 percent over this eight year period, while the state grew 1.0 percent. The county health services payroll experienced a different trend compared to employment. Major County’s health services payroll increased 4.6 percent from about $6.4 million in 2001 to $6.7 million in 2006; this compares to an increase of 49.1 percent for the total county payroll (Table 2). State health services payroll as a percent of state payroll increased 0.6 percent from 2001 to 2006. County health services payroll as a percent of total county payroll decreased from 18.0 percent in 2001 to 12.7 percent in 2006. 8 Table 2 Fairview Regional Medical Center Employment and Payroll for County Business Patterns* Major County and the State of Oklahoma Employment Based Health Total Hlth Svcs as a Hlth Svcs as a on Services County % of Total % of Total NAICS1 Employment Employment County Employment State Employment 2001 333 1,678 19.8% 14.3% 2002 315 1,654 19.0% 15.1% 2003 341 1,618 21.1% 15.2% 2004 331 1,701 19.5% 15.4% 2005 308 1,685 18.3% 15.4% 2006 319 1,736 18.4% 15.1% 2007 250-499 2,161 N/A 15.3% 2008 250-499 2,172 N/A 15.3% % Change '01 - '06 -4.2% 3.5% Payroll Based Health Total Hlth Svcs as a Hlth Svcs as as on Services County % of Total % of Total NAICS1 Payroll ($1000s) Payroll ($1000s) County Payroll State Payroll 2001 $6,422 $35,590 18.0% 14.5% 2002 $6,336 $35,066 18.1% 15.2% 2003 $6,535 $35,103 18.6% 15.2% 2004 $6,545 $37,177 17.6% 15.7% 2005 $6,412 $43,488 14.7% 15.5% 2006 $6,719 $53,073 12.7% 15.1% 2007 D $76,135 N/A 15.3% 2008 D $80,804 N/A 15.2% % Change '01 - '06 4.6% 49.1% Source: U.S. Census Bureau, County Business Patterns; 2000-2008 data (www.census.gov [March 2011]). 1 The Health Care and Social Assistance NAICS sector comprises establishments providing health care and social assistance for individuals. The sector includes both health care and social assistance because it is sometimes difficult to distinguish between the boundaries of these two activities. Industries in this sector are arranged on a continuum starting with those establishments providing medical care exclusively, continuing with those providing health care and social assistance, and finally finishing with those providing only social assistance. The services provided by establishments in this sector are delivered by trained professionals. All industries in the sector shared this commonality of process, namely, labor inputs of health practitioners or social workers with the requisite expertise. Many of the industries in the sector are defined based on the educational degree held by the practitioners included in the industry. E- 250-499 paid health care and social assistance employees D- Withheld to avoid disclosing data for individual companies; data are included in higher level totals * Data from County Business Patterns exclude self-employed persons, employees of private households, railroad employees, agricultural production workers, and for most government employees (except for those working in wholesale liquor establishments, retail liquor stores, Federally-chartered savings institutions, Federally-charted credit unions, and hospitals). 9 Basic economic indicators of the Major County economy are illustrated in Table 3. Based on Bureau of Economic Analysis data, the 2008 per capita income for Major County of $32,613 is lower than the per capita income for the state of Oklahoma and the United States. Table 3 Economic Indicators for Major County, the State of Oklahoma and the Nation Indicator County State U.S. Total Personal Income (2008) $232,595,000 $131,070,218,000 $12,238,800,000,000 Per Capita Income (2008) $32,613 $35,969 $40,166 Employment (2009) 4,153 1,636,917 139,877,000 Unemployment (2009) 196 115,855 14,542,000 Unemployment Rate (2009) 4.5% 6.6% 9.3% Employment (December 2010)* 4,047 1,626,928 139,159,000 Unemployment (December 2010)* 179 115,292 13,997,000 Unemployment Rate (December 2010)* 4.2% 6.6% 9.1% Percentage of People in Poverty (2009) 10.6% 16.1% 14.3% Percentage of Under 18 in Poverty (2009) 14.1% 22.1% 20.0% Transfer Dollars (2008) $45,973,000 $23,242,704,000 $1,875,558,000,000 Transfer Dollars as Percentage of 19.8% 17.7% 15.3% Total Personal Income (2008) *County estimates are considered preliminary SOURCES: 2009 Bureau of Labor Statistics; 2008 Bureau of Economic Analysis; 2009 U.S. Census Bureau. According to the Bureau of Labor Statistics, the unemployment rate for Major County was 4.5 percent for 2009, which was lower than the state (6.6 percent) rate and the national (9.3 percent) rate. Moreover, preliminary estimates for December 2010 indicate the unemployment rate for Major County had decreased to 4.2 percent, which was lower than both the state (6.6 10 percent) and the nation (9.1 percent). Also, the number of people employed in Major County decreased 2.6 percent from 2009 to December 2010. This is a common trend across the state. The number of people unemployed in Major County decreased 8.7 percent during that same time period. From the U. S. Census Bureau, the percent of people in poverty in Major County was 10.6 percent in 2009, as compared to 16.1 percent for the state and 14.3 percent nationally. The percentage of people under age 18 in poverty in 2009 followed similar trends, with Major County being lower than the state and the nation. Another economic indicator is the percent of personal income that is from transfer payments. Based on Bureau of Economic Analysis data, Major County had 19.8 percent of total personal income from transfer payments, which is higher than both the state and the nation. Transfer payments represent that portion of total personal income whose source is state and federal funds. These typically include social security, Medicare, and retirement / disability payments. Just like other communities, sales tax collections from retail sales are extremely important, if not vital, to the city of Fairview and Major County. Figure 2 displays the trend of city level taxable sales for Fairview. In nominal terms, Fairview has experienced a significant increase in taxable sales. However, when the CPI is applied, inflation-adjusted taxable retail still appears to have increased slightly in 2005, but experienced a decline in FY 2010 (this is a common trend for the state and nation). Fairview’s retail sales are above average for a community of Fairview’s size (Population 1,000-5,000). As stated earlier, a healthy health sector is vital in rural development efforts. Local health services can also be very beneficial for local retail activity (Brooks and Whitacre, 2010).11 $0.00 $5,000,000.00 $10,000,000.00 $15,000,000.00 $20,000,000.00 $25,000,000.00 $30,000,000.00 $35,000,000.00 $40,000,000.00 $45,000,000.00 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Figure. 2 Taxable Sales for Fairview, Actual and Inflation-Adjusted for 1980-2010 Taxable Sales Inflation-Adjusted 12 Demographic Trends for the Fairview Regional Medical Center Medical Service Area and Major County The Fairview Regional Medical Center medical service area is delineated in Figure 3, which also shows the location of nearby hospitals. The primary medical service area is the immediate area surrounding Fairview including the zip code areas of Fairview, 73737; Aline, 73716; Cleo Springs, 73729; Chester 73838; Isabella, 73747; Longdale, 73755; and Ringwood, 73768. According to the U.S. Census Bureau, the 2000 census population of this primary medical service area was 7,790 (Table 4a). Fairview Regional Medical Center also serves a secondary medical service area, which consists of the zip code areas of Canton, 73724; Carmen, 73726; Helena, 73741; Okeene, 73763; Seiling, 73663; and Waynoka, 73860. According to the U.S. Census Bureau, the 2000 Census population of this secondary medical service area was 7,719 (Table 4a). Since the U. S. Census Bureau only has zip code population for the 2000 census year, another source for more current populations by zip code was researched. ESRI, a company specializing in geographic information systems software, has illustrated zip code populations for the 2000 census year and projected zip code populations for 2010 and projections for 2015. The zip code populations do not match exactly due to a variance in zip code boundaries and based on the methodology for determining population by zip code. However, when comparing the 2000 census and the 2000 ESRI data, total populations for the medical service area do not vary considerably. The ESRI projection of the primary medical service area shows a decrease in population of 4.4 percent from 2000 to 2010 and a projected 6.7 percent decrease from 2000 to 2015 (Table 4a). 13 Table 4b also shows population trends for the state of Oklahoma, Major County, and most of the cities in the primary and secondary medical service area of Fairview Regional Medical Center for the years 1990, 2000, and 2010. The city level estimates are place estimates rather than zip code estimates that were discussed in the previous table. From 1990 to 2000, Major County had a population decrease of 6.33 percent, while the state increased at a rate of 9.70 percent. During the same time period, Longdale (10.32%), Ringwood (7.61%), and Waynoka (4.86%) were the only communities to experience an increase in their population. Aline and Seiling experienced the largest decline in population of 27.46 percent and 15.13 percent, respectively. From 2000 to 2010, Major County saw a population decrease of 4.72 percent; the state experienced an increase of 8.71 percent during this time period. Ringwood (17.22%) and Cleo Springs (3.68%) both experienced an increase from 2000 to 2010. Longdale and Carmen experienced the largest declines in population during this time period with -15.48 percent and 13.63 percent, respectively. When first examining Helena, it appears that the population experienced significant a decrease in 2000 followed by a significant increase in 2010. This could be due to changes in counting institutionalized population during Census years. However, when considering the population across 1990-2010 for Helena, there has been a 34.5 percent increase. It must be noted that place level population estimates were not available for Chester or Isabella. 14 Figure 3 Fairview Regional Medical Center Medical Service Areas City County Hospital No. of Beds Okeene Blaine Okeene Municipal Hospital 17 Watonga Blaine Watonga Municipal Hospital 25 Seiling Dewey Seiling Community Hospital 18 Enid Garfield INTEGRIS Bass Baptist Health Center 183 Enid Garfield INTEGRIS Bass Pavilion 24 Enid Garfield St. Mary’s Regional Medical Center 245 Alva Woods Share Memorial Hospital 25 Woodward Woodward Woodward Regional Hospital 87 Primary Medical Services Area Secondary Medical Services Area 15 Table 4a Population of Fairview Regional Medical Center Medical Service Area Populations Population by Zip Code City 2000 Census 2000 ESRI 2010 ESRI 2015 ESRI Primary Medical Service Area 73737 Fairview 3,587 3,785 3,674 3,610 73716 Aline 544 408 358 339 73729 Cleo Springs 591 550 522 508 73838 Chester 486 462 429 415 73747 Isabella 400 353 329 320 73755 Longdale 901 686 651 636 73768 Ringwood 1,281 1,327 1,274 1,239 Total 7,790 7,571 7,237 7,067 % Change from 2000 ESRI -4.4% -6.7% Secondary Medical Service Area 73724 Canton 1,143 1,142 1,081 1,053 73726 Carmen 600 552 488 463 73741 Helena 1,648 1,717 1,687 1,656 73763 Okeene 1,609 1,644 1,520 1,471 73663 Seiling 1,332 1,613 1,534 1,489 73860 Waynoka 1,387 1,477 1,255 1,182 Total 7,719 8,145 7,565 7,314 % Change from 2000 ESRI -7.1% 11.4% 16 Table 4b Population Trends for Major County and the State of Oklahoma 1990 2000 2010 % Change % Change Population Population Population 1990-2000 2000-2010 State of Oklahoma 3,145,585 3,450,654 3,751,351 9.70% 8.71% Major County 8,055 7,545 7,189 -6.33% -4.72% Population by City Fairview 2,936 2,733 2,579 -6.91% -5.63% Aline 295 214 207 -27.46% -3.27% Cleo Springs 359 326 338 -9.19% 3.68% Chester n/a n/a n/a n/a n/a Isabella n/a n/a n/a n/a n/a Longdale 281 310 262 10.32% -15.48% Ringwood 394 424 497 7.61% 17.22% Canton 632 618 625 -2.22% 1.13% Carmen 459 411 355 -10.46% -13.63% Helena 1,043 443 1,403 -57.53% 216.70% Okeene 1,343 1,240 1,204 -7.67% -2.90% Seiling 1,031 875 860 -15.13% -1.71% Waynoka 947 993 927 4.86% -6.65% Cities Total 9,720 8,587 9,257 SOURCE: Population data from the U.S. Bureau of Census, 1990, 2000; U. S. Bureau of the Census, Population Estimates Branch, 2008; Business Analyst Version 10, ESRI, ESRI 2000 population and 2010 and 2015 projected populations. Tables 5 and 6 provide further details about the demographic trends of Major County. Table 5 presents the breakdown by age group for Major County and the State of Oklahoma from 17 the census years 1990 and 2000 and the 2009 census estimates. The lowest age group, age 0-14, experienced a proportional decrease from 1990-2000 and 2009. The age group of 45-64, however, has seen a dramatic increase over time. In Major County, those age 45-64 made up 20.6 percent of the total population in 1990, and this went up to 29.2 percent in 2009. This same trend holds true for the state of Oklahoma as well. Table 6 shows the race and ethnic group percentages for Major County and the state of Oklahoma for the census years 1990, 2000, and 2010. The state has experienced a significant increase in people of Hispanic origin, increasing from 2.7 percent in 1990 to 8.9 percent in 2010. Major County has experienced this same trend. In 1990, those of Hispanic origin made up 1.6 percent of the population. In 2000, this number increased to 4.0 percent. This number again increased in the 2010 census to 7.5 percent. 18 Table5 Age Groups - for Population Numbers and Percent of Total Population Major County and the State of Oklahoma Major County State of Oklahoma Age Groups Number Percent Number Percent 1990 Census 0-14 1,818 22.6% 702,537 22.3% 15-19 549 6.8% 233,093 7.4% 20-24 323 4.0% 222,766 7.1% 25-44 2,153 26.7% 961,560 30.6% 45-64 1,659 20.6% 601,416 19.1% 65+ 1,553 19.3% 424,213 13.5% Totals 8,055 100.0% 3,145,585 100.0% 2000 Census 0-14 1,481 19.6% 732,907 21.2% 15-19 577 7.6% 269,373 7.8% 20-24 306 4.1% 247,165 7.2% 25-44 1,839 24.4% 975,169 28.3% 45-64 1,877 24.9% 770,090 22.3% 65+ 1,465 19.4% 455,950 13.2% Totals 7,545 100.0% 3,450,654 100.0% 2009 Estimates 0-14 1,380 19.2% 767,758 20.8% 15-19 503 7.0% 256,841 7.0% 20-24 378 5.3% 280,782 7.6% 25-44 1,421 19.8% 957,235 26.0% 45-64 2,101 29.2% 928,472 25.2% 65+ 1,406 19.6% 495,962 13.5% Totals 7,189 100.0% 3,687,050 100.0% SOURCE: U.S. Census Bureau, Census data for 1990 and 2000, estimated population for 2009 (www.census.gov [March 2011]). 19 Table6 Race and Ethnic Groups - for Population Numbers and Percent of Total Population Major County and the State of Oklahoma Major County State of Oklahoma Race/Ethnic Groups Number Percent Number Percent 1990 Census White 7,781 96.6% 2,547,588 81.0% Black 3 0.0% 231,462 7.4% Native American 1 128 1.6% 246,631 7.8% Other 2 11 0.1% 33,744 1.1% Two or more Races 3 NA -- NA -- Hispanic Origin 4 132 1.6% 86,160 2.7% 2000 Census White 7,076 93.8% 2,556,368 74.1% Black 14 0.2% 257,981 7.5% Native American 1 65 0.9% 266,158 7.7% Other 2 7 0.1% 50,594 1.5% Two or more Races 3 80 1.1% 140,249 4.1% Hispanic Origin 4 303 4.0% 179,304 5.2% 2010 Census White 6,629 88.1% 2,706,845 72.2% Black 32 0.4% 277,644 7.4% Native American 1 130 1.7% 321,687 8.6% Other 2 29 0.4% 223,854 6.0% Two or more Races 3 142 1.9% 221,321 5.9% Hispanic Origin 4 565 7.5% 332,007 8.9% SOURCE: U.S. Census Bureau, Census data for 1990 , 2000, and 2010 (www.census.gov [March 2011]). 1 Native American includes American Indians and Alaska Natives. 2 Other is defined as Asian Americans, Native Hawaiians, Pacific Islanders and all others. 3 Two or more races indicate a person is included in more than one race group. 4 Hispanic population is not a race group but rather a description of ethnic origin; Hispanics are included in the five race groups. NA - Not available; 1990 census did not report this category. 20 The Direct Economic Activities The health sector creates employment and payroll impacts, which are important direct economic activities for the Fairview Regional Medical Center service area. The health sector is divided into the following six components: Hospital Physicians, Dentists, and Other Medical Professionals Nursing and Protective Care Home Health Pharmacies Other Medical and Health Services The health sector in Fairview Regional Medical Center medical service area employs 206 full-time equivalent employees and has an estimated payroll of $8,890,871 (Table 7). The health sector in Major County is fairly typical of counties of its size, with a hospital, one dental office, one chiropractor office, one optometrist office, one nursing home, one county health department, one EMS service, one home health service, one hospice service, one behavioral health facility and three pharmacies. The Hospital component provides 67 full-time equivalent jobs with an estimated annual payroll of $3,878,211 (including benefits1). The Physicians, Dentists, and Other Medical Professionals sector employs 13 total full-time equivalent employees with an estimated payroll of $603,524. The Nursing and Protective Care component employs 80 total full-time equivalent employees with an estimated annual payroll of $2,640,000. The Other Medical and Health Services & Pharmacy component which includes one county health department, one home health service, one hospice service, one behavioral health facility, one EMS service and three pharmacies employs 46 total full-time equivalent employees and has an estimated annual payroll of $1,769,136. 1 The ratios for benefits are derived from the 2002 Economic Census Data-Oklahoma Health Care and Social Assistance by industry, U.S. Census Bureau. 21 The health sector is vitally important as both a community employer and a source of income to the community's economy. As demonstrated in Table 7, the health sector employs a large number of residents. Table 7 Direct Economic Activities of the Health Sector in the Fairview Regional Medical Center Medical Service Area Component Full-Time & Part-Time Employment Total Payroll with Benefits Hospital 67 $3,878,211 Includes Fairview Regional Medical Center Physicians, Dentists, & Other Medical Professionals 13 $603,524 Includes one dentist office, one optometrist office, and one chiropractor office Nursing and Protective Care 80 $2,640,000 Includes one nursing home Other Medical & Health Services & Pharmacies 46 $1,769,136 Includes Major County Health Department, Major County EMS, one home health service, one hospice service, and one behavioral health facility Totals 206 $8,890,871 SOURCE: Local survey and estimates from research. These residents, along with businesses in the health sector, purchase a large amount of goods and services from businesses in the Fairview Regional Medical Center medical service area. These impacts are referred to as secondary impacts or benefits to the economy. Before the secondary impacts of the health sector are discussed, the basic concepts of community economics will be reviewed. 22 Basic Concepts of Community Economics and Income and Employment Multipliers Figure 4 illustrates the major flows of goods, services, and dollars of any economy. The foundations of a community's economy are those businesses that sell some or all of their goods and services to buyers outside of the community. Such a business is a basic industry. The two arrows in the upper right portion of Figure 4 represent the flow of products out of, and dollars into, a community. To produce these goods and services for "export" outside the community, the basic industry purchases inputs from outside of the community (upper left portion of Figure 4), labor from the residents or "households" of the community (left side of Figure 4), and inputs from service industries located within the community (right side of Figure 4). Households using their earnings to purchase goods and services from the community’s service industries complete the flow of labor, goods, and services in the community (bottom of Figure 4). It is evident from the relationships illustrated in Figure 4 that a change in any one segment of a community's economy will cause reverberations throughout the entire economic system of the community. HouseholdsIndustryBasicServicesGoods &$LaborInputsProductsInputs$$$$Services$$ Figure 4 Community Economic System 23 Consider, for instance, the closing of a hospital. The services section will no longer pay employees and the dollars flowing into households from these jobs will stop. Likewise, the hospital will not purchase goods from other businesses, and the dollar flow to other businesses will stop. This decreases income in the "households" segment of the economy. Since earnings would decrease, households decrease their purchases of goods and services from businesses within the "services" segment of the economy. This, in turn, decreases the amount of labor and input that these businesses' purchase. Thus, the change in the economic base works its way throughout the entire local economy. The total impact of a change in the economy consists of direct, indirect, and induced impacts. Direct impacts are the changes in the activities of the impacting industry, such as the closing of a hospital. The impacting business, such as the hospital, changes its purchase of inputs as a result of the direct impact. This produces an indirect impact in the business sectors. Both the direct and indirect impacts change the flow of dollars to the community's households. The households alter their consumption accordingly. The effect of this change in household consumption upon businesses in a community is referred to as an induced impact. A measure is needed that yields the effects created by an increase or decrease in economic activity. In economics, this measure is called the multiplier effect. The multipliers used in this report are defined as: “…the ratio between direct employment (or income), or that employment (or income) used by the industry initially experiencing a change in final demand and the direct, indirect, and induced employment (or income).” An employment multiplier of 3.0 indicates that if one job is created by a new industry, 2.0 jobs are created in other sectors due to business (indirect) and household (induced) spending. 24 Secondary Impacts of the Health Sector on the Economy of Fairview Regional Medical Center Medical Service Area Employment and income multipliers for the area have been calculated by use of the IMPLAN model. This model was developed by the U.S. Forest Service2 and allows for the development of multipliers for various sectors of an economy. The employment multipliers for the components of the health sector are shown in Table 8, column 3. The employment multiplier for the Hospital component is 1.33. This indicates that for each job in that component, an additional 0.33 jobs are created throughout the area due to business (indirect) and household (induced) spending. The employment multipliers for the other health sector components are also shown in Table 8, column 3. Applying the employment multipliers to the employment for each component yields an estimate of the impact on the economy (Table 8, columns 2, 3, and 4). For example, the hospital has a direct employment of 67 full-time equivalent employees; applying the employment multiplier of 1.33 to the employment number of 79 brings the total employment impact of the hospital to 89 employees. The Physicians, Dentists, and Other Professionals component employs 13 people; however, the total impact is 15 employees once the multiplier of 1.18 is applied. The Nursing and Protective Care component has a total employment of 87 after the multiplier of 1.09 is applied to the direct employment of 80. The Other Medical and Health Services & Pharmacy component has 46 full-time equivalent employees and an employment multiplier of 1.17, for a total employment impact of 54. The total employment impact of the health sector in the Fairview Regional Medical Center medical service area is estimated to be 245 employees (Table 8, total of column 4). 2 For complete details of model, see [1], [2], and [3]. 25 Table 8 Fairview Regional Medical Center Medical Service Area Health Sector Impact on Employment and Income, and Retail Sales and Sales Tax (1) (2) (3) (4) (5) (6) (7) (8) (9) Employment Income Retail 1 Cent Health Sectors Employed Multiplier Impact Income Multiplier Impact Sales Sales Tax Hospitals 67 1.33 89 $3,878,211 1.14 $4,407,463 $929,534 $9,295 Physicians, Dentists, & Other Medical Professionals 13 1.18 15 $603,524 1.15 $693,721 $146,306 $1,463 Nursing and Protective Care 80 1.09 87 $2,640,000 1.12 $2,960,277 $624,322 $6,243 Other Medical & Health Services & Pharmacies 46 1.17 54 $1,769,136 1.18 $2,086,546 $440,052 $4,401 Total 206 245 $8,890,871 $10,148,006 $2,140,214 $21,402 SOURCE: 2008 IMPLAN database, Minnesota IMPLAN Group, Inc.; Local data for employment, employee compensation and proprietor's income; income estimated based on state average incomes if local data not available * Based on the ratio between Major County retail sales and income (21.09%) – from 2009 County Sales Tax Data and Personal Income Estimates from the Bureau of Economic Analysis. 26 Applying the income multipliers to the income (payroll including benefits) for each of the health sector components yields an estimate of each component’s income impact on the Fairview Regional Medical Center medical service area (Table 8, columns 5, 6, and 7). The income multiplier for the Hospital component is 1.14 (Table 8, column 6). This indicates that for each dollar in that component, an additional 0.14 dollars are created throughout the area due to business (indirect) and household (induced) spending. The Hospital component has a total payroll of $3,878,211; applying the income multiplier of 1.14 brings the total Hospital component income impact to $4,407,463. The income multipliers for the other health sector components are also shown in Table 8, column 6. The Physicians, Dentists, and Other Medical Professionals component has a total income impact of $693,721, based on the application of the income multiplier of 1.15 to the $603,524 payroll. The Nursing and Protective Care component has a multiplier of 1.12 which yields a total income impact of $2,960,277. The Other Medical and Health Services & Pharmacy component has a total payroll of $1,769,136and an income multiplier of 1.18 leading to a total income impact of $2,086,546. The total income impact of the health sector on the economy of the Fairview Regional Medical Center medical service area is projected to be $10,148,006 (Table 8, total of column 7). Income also has an impact on retail sales, and the health sector has its own distinct effect on these retail sales. The local retail sales capture ratio is used to estimate the effect of the health sector on retail sales. This ratio indicates the percentage of personal income spent locally on items that generate local sales tax. If the county ratio between retail sales and income continues as is currently (around 21.09 percent), then direct and secondary retail sales generated by the health sector equals $2,140,214 (Table 8, total of column 8). Each of the components’ income impacts is utilized to determine the retail sales and a one-cent sales tax collection for each component. A one-cent sales tax collection is estimated to generate $21,402 in the Fairview Regional Medical Center medical service area economy as a result of the health sector income 27 impact (Table 8, total of column 9). This estimate is probably low, as many health care employees tend to spend a larger portion of their income in local establishments that collect sales tax. The bottom line is that the health sector in the Fairview Regional Medical Center medical service area not only contributes greatly to the medical health of the community, but also to the economic health of the community. Summary The economic impact of the health sector on the economy of Fairview Regional Medical Center medical service area is tremendous. The health sector employs a large number of residents, similar to a large industrial firm. The secondary impact occurring in the community is extremely large and is a testament to the importance of the health sector. If the health sector increases or decreases in size, the medical health of the community, as well as the economic health of the community, is greatly affected. For the attraction of industrial firms, businesses, and retirees, it is crucial that the area have a quality health sector. The fact that a prosperous health sector also contributes to the economic health of the community is often overlooked. References [1] IMPLAN Professional Version 2.0 Social Accounting & Impact Analysis Software – USER’S GUIDE, ANALYSIS GUIDE, DATA GUIDE, MIG, Minnesota IMPLAN Group, 2nd Edition, June 2000. [2] Palmer, Charles and Eric Siverts, IMPLAN ANALYSIS GUIDE. U.S. Department of Agriculture, Forest Service Land Management Planning Systems Section, Rocky Mountain Forest and Range Experiment Station, Fort Collins, Colorado, 1985. [3] Siverts, Eric, Charles Palmer, Ken Walters, and Greg Alward, IMPLAN USER'S GUIDE, U.S. Department of Agriculture, Forest Service, Systems Application Unit, Land Management Planning, Fort Collins, Colorado, 1983. [4] Brooks, L. and Whitacre, B. E. , Critical Access Hospitals and Retail Activity: An Empirical Analysis in Oklahoma. The Journal of Rural Health, no. doi: 10.1111/j.1748-0361.2010.00336.x |
Date created | 2011-09-19 |
Date modified | 2013-02-20 |
OCLC number | 819810877 |
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