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: IMPLANs 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

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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 states 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 states 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 Minnesota IMPLAN Group, Inc U.S. Census Bureau County Business Patterns, U.S. Bureau of the Census. Census 2002, Summary File 3. 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.

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15 Overall Income Earned, Nebraska 2002 (Direct and Indirect Impact, in Millions) $15, $14, $9, $7, $7, $7, $6, $5, $5, 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

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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, MA Department of Preventive and Societal Medicine University of Nebraska Medical Center Nebraska Medical Center Omaha, Nebraska Office (402) Fax (402)