Health in Rural Missouri The Economic Impact of Critical Access Hospitals Table of Contents Data Sources 2 Introduc(cid:415) on 3 CAH Distrubu(cid:415) on 4 Cri(cid:415) cal Access Employment Data 5 Overview of Economic Impact Analysis 6 Mul(cid:415) plier Eff ect 6 Output 7 Calcula(cid:415) ng Economic Impact of Missouri CAHs 8 Labor and Income Impact 9 Total Value Added Impacts 9 Missouri CAH Mul(cid:415) pliers and Impacts 10 In Conclusion 11 Sources 12 Data Sources 3 • Data for this report were derived using Impact Analysis for Planning So(cid:332) ware (IMPLAN). • IMPLAN uses mul(cid:415) ple data sources in varying forms to calculate mul(cid:415) pliers and run analyses. • IMPLAN data sources are listed in fi gure 1. • IMPLAN adds value to available data by: Figure 1. IMPLAN Data Sources3 ► Providing es(cid:415) mates for non-disclosed data ► Providing es(cid:415) mates for non-census years IMPLAN Data Sources ► Providing es(cid:415) mates at a fi ner geographic scale (i.e., at North America Industry Classification System the local level) Census County Business Patterns (CBP) ► Providing inter-county trade fl ow data, which allows Mul(cid:415) -Regional I/O analysis U.S. Bureau of Economic Analysis (BEA) ► Reconcilia(cid:415) on of mul(cid:415) ple data sources BEA Regional Economic Accounts (REA) ► Bringing it together in consistent format Bureau of Labor Statistics (BLS) BLS Covered Employment and Wages (CEW) BLS Quarterly Census of Employment and Wages (QCEW) BLA Consumer Expenditure Survey (CES) National Income and Product Accounts (NIPA) 2 Introduction T here is a strong correla(cid:415) on between health care and the economy in many rural areas.6 Health care facili(cid:415) es not only provide health services, they also provide jobs, business and industry growth and a(cid:425) rac(cid:415) on of certain demographics, specifi cally re(cid:415) rees.5 Health care facili(cid:415) es create employment opportuni(cid:415) es directly and indirectly. The presence of good health care is crucial to industry and business leaders when selec(cid:415) ng a loca(cid:415) on for their business. In addi(cid:415) on, the majority of re(cid:415) rees list having access to healthcare as a top priority in choosing a loca(cid:415) on to live.5 As of February 2016, Missouri had 37 Centers for Medicare and Medicaid Services designated as Cri(cid:415) cal Access Hospitals (CAH).1,2 In order to be designated as a CAH, the facility must: • Have 25 or fewer acute care inpa(cid:415) ent beds • Located more than 35 miles from another hospital • Maintain an annual average length of stay of 96 hours or less • Provide 24/7 emergency care services10 Not only are these hospitals crucial in providing (cid:415) mely and convenient health care for rural Missourians, they also provide economic stability. CAHs are o(cid:332) en the largest or second largest employer in a community.5 There is variability in the fi nancial sustainability of CAHs na(cid:415) onwide, leaving some of them vulnerable to closure. Closing CAHs results in health care dispari(cid:415) es and economic decline. When CAHs close, many people lose their jobs leaving them unable to contribute to the economy; tourism decreases; people relocate for be(cid:425) er employment opportuni(cid:415) es and to be closer to healthcare; the loca(cid:415) on is no longer a re(cid:415) ree des(cid:415) na(cid:415) on, etc.5 This report highlights the economic eff ect Missouri CAHs have on their community. • 3 CAH Distribution 8 Figure 2. Missouri CAH Distribution8 Cri(cid:415) cal Access Hospital Figure 2 is a map of the geographical distribu(cid:415) on of CAHs in Missouri. A complete list of the CAHs and coun(cid:415) es are on page 7. Not only are these hospitals crucial in providing (cid:415) mely and convenient health care for rural Missourians, they also provide economic stability. • 4 R uurraall H eeaalltthh Critical Access Employment Data 3 • Employment data was available for 32 of Missouri’s 37 CAHs. • The employment range for the 32 CAHs is between 64 and 462 full and part (cid:415) me employees. • Cass Regional Medical Center in Cass County has the highest. • The average number of employees is 226. • The 5 coun(cid:415) es with the lowest number of CAH employees are listed in Figure 3. • The 5 coun(cid:415) es with the highest number of CAH employees are listed in Figure 4 Figure 3. Counties with Lowest CAH Figure 4. Counties with Highest CAH Employment, 20143 Employment, 20143 120 109 500 463 450 100 400 80 350 300 60 250 40 200 150 20 100 50 0 St. Reynolds Saline Sullivan Atchison 0 Francois Livingston Perry Barry Crawford Cass • 5 Overview of Economic Impact Analysis • The economic impact of CAHs on rural Missouri Figure 5. Healthcare Input/Output Model3 was calculated using an Input/Output model (I/O). (Figure 5)3 Demand • Input/Output analysis measures the circular for behavior of the economy.3 Healthcare ► For example: A demand for health services requires more equipment, more labor, and more supplies, which in turn, requires more Increase in Addi(cid:415) onal labor to produce the supplies. In addi(cid:415) on, employment Healthcare closing a hospital results in a decreased demand of outside Employees sectors of all these factors and a decrease in economic ac(cid:415) vity. • Economic calcula(cid:415) ons are derived using fi ve sets of mul(cid:415) pliers which measure the eff ects created by an Increase in increase or decrease in economic ac(cid:415) vity.3 outside sectors Addi(cid:415) onal to procuce Healthcare • These 5 mul(cid:415) pliers are; total industry output, equipment and Supplies personal income, total income, value added, and supplies employment.3 Multiplier Effect • Mul(cid:415) plier examples: (Figure 6) Figure 6. Multiplier Effect4 ► An employment mul(cid:415) plier of 2.0 indicates that if 1.0 job is created by a new industry (directly) 1.0 addi(cid:415) onal job is created in other sectors due to business and household spending (indirectly).4 ► An income mul(cid:415) plier of 1.70 means that for each dollar of wages paid to a hospital employee, another $0.70 of wages and salaries are generated in another business in the county.4 The total impact of change in an economy consists of direct, indirect, and induced changes.4 ► Direct impact- changes in the ac(cid:415) vity of the focus industry (CAH)4 ► Indirect Impact- The eff ect of local industries buying goods and services from other local industries4 ► Induced Changes- the eff ect of the changes in household consump(cid:415) on on business in a • community4 6 Output The total output is the total economic value of hospital produc(cid:415) on per year in the local economy.4 The average for all 24 CAHs with available data is $30,266,271. Individual CAHs, CAH county, and total output are listed in Figure 7. Parkland Health Center in St. Francois has the lowest generated total output at just over 7 million, and Cass Regional Medical Center had the highest generated total output for 2014 at approximately $64 million.3 The total output is used in calcula(cid:415) ons of total impact on a community which includes, wages, employment counts, and consumer spending; both directly and indirectly. Figure 7. Total Output of Missouri Critical Access Hospital, 20143 Cri(cid:415) cal Access Hospital County Total Output Community Hospital-Fairfax Atchison $13,469,351.48 Cox Monet & Mercy Hospital Cassville Barry $34,786,615.45 Carroll County Memorial Hospital Carroll $21,496,721.03 Cass Regional Medical Center Cass $64,080,378.06 Cedar County Memorial Hospital Cedar $23,038,270.60 Missouri Bap(cid:415) st Sullivan Hospital Crawford $51,124,904.53 Salem Memorial District Hospital Dent $31,990,604.92 Northwest Medical Center Gentry $24,145,650.82 Wright Memorial Hospital Grundy $23,119,844.43 Mercy St. Francis Hospital Howell $16,448,685.66 Lafaye(cid:425) e Regional Health Center Lafaye(cid:425) e $31,297,658.49 Mercy Hospital Aurora Lawrence $31,708,459.02 Mercy Hospital Lincoln Lincoln $56,767,318.62 Pershing Memorial Hospital Linn $21,326,293.53 Hedrick Medical Center Livingston $42,196,927.72 Samaritan Hospital Macon $42,803,827.02 Freeman Neosho Hospital Newton $35,911,058.67 Perry County Memorial Hospital Perry $42,695,018.55 Pike County Memorial Hospital Pike $34,212,595.21 Southeast Health Center of Reynolds Reynolds $8,369,044.78 I-70 Community Hospital Saline $9,670,358.90 Parkland Health Center- Bonne Terre St. Francois $7,055,044.51 Sullivan County Memorial Hospital Sullivan $51,250,205.99 Washington County Memorial Hospital Washington $43,425,674.83 • 7 Calculating the Economic Impact of Missouri CAHs 4 • To determine the economic impact of CAHs on rural communi(cid:415) es, an analysis of the direct economic contribu(cid:415) on of the opera(cid:415) ng ac(cid:415) vi(cid:415) es (CAHs) was conducted, as well as measuring how many jobs and how much income was generated as secondary impacts of CAH opera(cid:415) ons (indirect eff ects). • The direct economic impact was measured by calcula(cid:415) ng individual CAH employment and payroll (wages and salaries plus benefi ts), including proprietor income. • The indirect economic impact was calculated using employment and income mul(cid:415) pliers. • Mul(cid:415) pliers are derived through IMPLAN analyses which have the capability to capture many cycles of re-spending in an economy. • The induced impact is the change in local spending amount due to the direct and indirect eff ects. Money is recirculated through household spending pa(cid:425) erns (re-spending of income) to generate further economic ac(cid:415) vity. • The sum of direct, indirect, and induced eff ects equals the total economic impact of change in the local economy. • Figure 8 is a diagram illustra(cid:415) ng direct, indirect, and induced ac(cid:415) vity. INDUCED INDIRECT DIRECT Off -site DDoowwnnssttrreeaammmm OOnn--ssiittee 88 Labor and Income Impact 3 • Due to the large number of CAHs measured, results Figure 9. Results for Labor and Income3 are displayed as averages and ranges. • Labor and income impact is the measure of the Direct impact on personal incomes, not business revenues or profi ts. • Average: $14,576,916 • Of the average amount of employees for all 32 CAHs, • Range: $2,857,523-$31,208,083 an average of over $14 million is generated in direct wages, salaries, and benefi ts. Lincoln County had the Indirect highest amount of direct payroll generated at over $31 million. • Average: $6,762 • On average an addi(cid:415) onal $6,000 in payroll was generated indirectly (in other sectors of the community). Livingston County had the highest Induced impact at $28,002.05. • Average: $102,751 • The change in local spending (induced eff ect) was an average of $102,751 between the 32 coun(cid:415) es with obtainable data. • The total average impact was over $14.5 million Total dollars of generated payroll due to the direct and indirect wages, salaries, and benefi ts of Missouri Average: $17,245,911 CAH. Lincoln county had the highest total impact Range: $3,491,968 - $36,857,049 overall. (Figure 9). Total Value Added Impacts 3 Figure 10. Results for Total Value Added3 • Total value added consists of employee compensa(cid:415) on, taxes, and opera(cid:415) onal costs, and is the diff erence between an industry's total output and the cost of its inputs (Figure 10). • Total value added is the measure of the increase in local employee wages and local business profi ts, as opposed to labor and income impacts which does not measure business revenue. • The average total direct value added was slightly over $17 million. • The average indirect value added was $8,604.30. • The Induced average for the 32 coun(cid:415) es was $130,599; Livingston County had the highest indirect and induced impacts. • The total impact was over $17 million with a range Total from $3,491,968 to $36,857,049; Lincoln County Average: $14,686,459 hadthe highest direct added value and total value. • Range: $2,921,549 – $31,208,426 9 Missouri CAH Multipliers and Impacts • Mul(cid:415) pliers are numeric summaries generated from the Input/Output model that indicate the change in economic ac(cid:415) vity due to a one-unit direct change. 4 • A Type SAM Mul(cid:415) plier (Social Accoun(cid:415) ng Matrix) was used to calculate employment and income impacts. Type SAM Mul(cid:415) pliers capture the eff ects of direct, indirect, and induced impacts while accoun(cid:415) ng for commu(cid:415) ng, social security, income taxes, and household savings. 4 Figure 11. Diagram of Indirect Employment3 8. . 8 ► The average Type SAM Mul(cid:415) plier for employment is 1.5. This means that for .~... .. every job that is created at a CAH, 0.5 jobs • • • • • • 1111111111111 are created in another industry in that county.3 (Figure 11) *Figure 11 uses a restaurant symbol to represent all indirect industries Figure 12. Diagram of Indirect Income3 ► The average Type SAM Mul(cid:415) plier for income is 1.26, meaning for every $1.00 generated by the CAH, $0.26 is generated in other industries in the economy.3 (Figure 12) 0.26 10