Economic Impact of Clark County Hospital

1. Economic Impact of Clark County Hospital Prepared by: KY Rural Health Works Program Eric A. Scorsone, Ph.D. UK College of Agriculture Department of Agricultural Economics Victoria Burke, MS UK College of Agriculture Department of Agricultural Economics Bethany Adams, BSMT UK Center for Rural Health KY Rural Hospital Flexibility Program

2. Introduction: Health Care & the KY Economy Health care services: “engine” of growth in rural KY • 1980’s – health care industry earnings represented 6.7% of all industry earnings • 1990’s – health care industry earning increased to 12.3% in KY • Health care is 3nd largest industry category in KY trailing only manufacturing and state/local government • Medical transfer payments represent 10% of KY’s personal income

3. Health Care in National Economy

4. Clark County Economy Diversified group of industries • Manufacturing – 156 million dollars • Transportation – 55 million dollars • Retail – 50 million dollars • Service sector – 100 million dollars • Clark County Health Care – nearly 36% of the service sector (36 million)

5. Why are health care services growing so quickly? Response to increasing levels of retirement & medical transfer payments (Demographics) • Retirement-based personal income is fastest source of income growth in rural areas • 1990 – represented 4.1% • 1999 – represented 6.2% • Non-Wage income growing at twice the rate of wage based income

6. 4 major roles for health care in community economic development • Economic base industry attracting external dollars • Hospitals and health care employees are purchasers of local goods and services • Identifying & addressing supply-demand gaps • A factor to recruit businesses and workers

7. Economic prosperity is based on export or basic industries Export or basic industry: sell to customers or businesses from outside the community • External dollars allow a community to purchase a wider variety of goods & services • A community must attract & retain export or basic industries to prosper • Social Security & Medicare dollars are part of the economic base of the community

8. Medicare and Medicaid Payments to Clark County Residents (1969 – 2001)

9. Economic Impact: A Basic Introduction Inflows:external dollars coming into a community • Expands size & strength of local economy • Examples: federal and state expenditures, tourism Outflows:Leakages out from the local economy • Does not create local jobs or local income • Examples: non-local purchases of good & services such as receiving medical care in another county or urban area.

10. Economic impact of health care is dependent on several factors • Local & non-local purchases • Health care professionals are local consumers • Hospital expenditures & hospital employee expenditures are called multiplier effects • Multiplier represents recycling of local dollars & income

11. Methodology & Data • Input-output model used to examine economic impact • Bureau Of Economic Analysis Data used to examine Clark County industry sectors • Data was Obtained from IMPLAN model (2000) & Bureau Of Economic Analysis Data (BEA 2000)

12. Employment & Income Multipliers Employment multipliers: • For each job in health care, an additional job (s) is created in other industries • Clark County employment multiplier is (1.4) Income multipliers: • For each dollar of income in health care, an additional dollar (s) of income is created in other industries • Clark County income multiplier is (1.3)

13. Results: Employment Impact Multipliers Employment multiplier effect for Clark County Health Care industry • 1,200 (approx) jobs in health care • 509 additional jobs are created due to employment in health care industry • Total – 1,709 jobs in Clark County are directly or indirectly tied to Clark County Health Care system

14. Results: Income Impact Multipliers • Clark County Health Care income is estimated to be $42 million • Spillover of Health Care income on other local industries is estimated to be nearly $13 million • Total income impact is estimated at $55 million

15. Summary • Clark County Health Care creates 1,709 local jobs, • Local private economy – Clark County Health Care represents nearly 12.5% of income • Compares favorably with Manufacturing Construction, Wholesale & Retail local services • This economic impact is likely to grow larger over the coming decade

16. Next Steps… • Undertake a Business Retention and Expansion Program (BRE) to assess needs and challenges for health care providers in Clark County • Form a Leadership Task Force under Chamber of Commerce • Volunteer Visitors would interview 30 health care businesses in Clark County • Promote enhanced economic development role for health care