KY Rural Health Works: Connecting Health Care and

Economic Development

www.ca.uky.edu/krhw

Kentucky Rural Health Works

Partners

UK Center for Rural Health

KY State Office of Rural Health

UK Cooperative Extension Service

UK Dept. of Agricultural Economics

Mission Statement

• Increasing Awareness about the Role of Health Care in Economic Development

• Providing Tools for communities to invest in health care as an engine of economic growth

• Conducting applied research to create a solid foundation for policy analysis and educational programming

Awareness Building

Economic Impact of Rural Health Care

– County, regional and State Level• What is the economic impact of the hospital or

other health care providers?– Jobs provided– Income paid– Local purchases of materials and services

How?

• Economic Impact Reports– Radio Spots

– News Releases

– Ad Campaigns

– Public meetings

• Feasibility Studies• Other applied research and training

Public Information

• Economic impact Report maybe the starting point for a media campaign….– Press Release

– Radio Spot

– Roadside Advertising Boards

– Flyers and brochures

– Using information in health and nutrition programming

Providing Tools…

• Feasibility Study Training– Assessing the possibility of adding services,

networking to meet• Health care objectives• Economic development objectives

• Economic Evaluation of:– Preventive care programs– Health care access programs

• Performance Based budgeting– Using budget planning to achieve health care

strategic goals in communities

Examples….

• Demand & Feasibility Studies

• Demand for new Dialysis unit

• Prospective use for new rural health clinic

• Financial Feasibility and Location of new Outpatient surgical unit

• Response to service demands from new county industrial park

Applied Research…

• Economic Analysis of:– EMS (survey)– Telehealth– Consumer expenditure patterns

• State and Federal Level– Economic role of Medicaid and Medicare on rural

community health sectors– State health and economic development planning

Tools for preventive care evaluation…

• Program Evaluation Tools:

Determine whether your program is making an economic impact on communityExamples:

– Cost savings to health care providers

– Economic benefits of a healthier population

– Economic benefit of “Cancer screening program”

Why?

• To add an element to health care decision making in your community

• To alter thinking about economic development in your community

• Promote health network development• Address consumer / patient out

migration

Where?

• Health Council or health groups in community

• Industrial Development Authority• Chamber of Commerce• Fiscal Court• Newspapers, Radio….

NATIONAL HEALTH CARE:

THE BIG PICTURE

Rural Economic Development

Rural Economic Development

• Target– Create jobs

• Tools– Attract new industry– Invest in workforce education and training– Build new health care facilities or develop

healthcare networks, preventive care– Beautify Downtown, invest in tourism

• Evaluation– ‘Was the Tool effective in reaching the Objective– Economic Impact Analysis “IMPLAN”

Health Care can be used to achieve Econ Dev Objectives

• Health Care and Health Education are focused on achieving “Health” targets– Nutritional goals– Quit smoking

• Health Care may also play a role in achieving economic development targets:– Create jobs– Diversify businesses in community “don’t put your eggs

in one basket”

Three Tools to Rural Economic Development

• Invest in:– Human Capital– Physical Capital– Amenities (Public Capital)

• Just Like your stock portfolio– What mix of stocks, bonds, cash do you want?– What mix of human, physical and public capital do

you want your community to invest in?

Economic Development

Jobs bring workers or workers bring jobs

Attract Migrants for Jobs or Train Current Residents?

Investments to Attract Employers or Workers?

Physical Capital

Amenities (Public) Capital

Private Capital

Amenities: public capital

Human Capital

Human Capital

• People– On the Job Training and Formal Education

– Entrepreneurship and Risk Taking

– Influenced by:• Culture of region• Family and friends

– Nurses, allied health professionals, Doctors, Dentists, nursing home employees

Physical Capital

• “Things”– Machinery, Computers, Equipment, Buildings

• Combine physical capital with people “human capital” to produce goods / services

• It’s a lack of “things” that is slowing economic development

• Hospital, Clinic, Ambulances, health equipment

Amenities (Public Capital)

• Environment and Geographical Features– Rivers, lakes, caves, forests,

• Public Events– Festivals

• Public services– Schools– Roads, bridges, water and wastewater, public

safety

Evaluation: Connecting Targets and Tools

• Need to use the right tools to reach your target– Need to use the right prescription for the illness

• Health Care as physical capital– Buildings, equipment– Health care purchases support local business

• Health Care as human and social capital– Nurses, doctors, dentists, allied health prof.– Develop workforce to expand and retain health care

employers

• Health Care as Public Capital– Support industry location, household location

Evaluation: Connecting Targets and Tools

• Financial Measure– Hospital spend money in local community

• Payroll• Goods and Services

• Non-Financial Measures– Health care system helps attract new

business to region– Preventive care helps promote healthy

workforce

Rural Economic Development in Pictures

Target: Create Jobs

Human Capital

Physical Capital

Public Capital

Financial

Non-Financial

Target: Create Jobs

Rural Economic Development in Pictures

Target: Create Jobs

Human Capital: Investing in a

young person’s medical

education

Financial: new doctor’s staff payroll

Non-Financial: attract new employer to town

Target: Create Jobs

Economic Impact Analysis

What is Economic Impact Analysis II…

• Is to measure changes in an economy due to a change in one industry

• A change in one industry e.g. opening or closure can have an impact on jobs and income on other sectors of the economy

• This impact can be measured using what is know as multipliers.

What is Economic Impact Analysis I…..

• Economic Impact Analysis– Is an evaluation model to determine if the

tool is right for the target• Looking forward• Current snapshot

– Tells Us Two things…• Economic impact of the existing health care

sector• Economic impact of expanding or contracting the

health sector

– It Does Not tell Us:• Which tool to use?

Economic Impact Analysis

Multipliers• Industries are linked together by their purchases from

each other

• These linked purchases produce jobs and income to local residents and commuters in the local economy

• For example, hospitals demand goods and services from suppliers, those suppliers in turn demand other goods and services

Economic Impact Analysis: Three Types of Multiplier Effects

• Direct effects: changes in industries to which a final demand change was made

• Indirect effects: changes in other industries as they respond to the new demands of the directly affected industries

• Induced effects: reflects changes in household spending from changes in income due to the changes in production

Health Care’s Local Financial Linkages

– Hospitals, nursing homes, doctors offices, etc… spend money locally

• Local spending creates local jobs and local income• Examples include

– Floral shops– Waste management– Legal and accounting services– Pharmacies

• Some spending is non-local– Medical equipment– consulting

County Hospital Expenditure Pattern

$4,472

$5,391

$5,423

$5,740

$6,790

$7,304

$7,310

$7,505

$7,878

$8,358

$8,592

$8,893

$9,811

$9,988

$10,243

$17,701

$18,742

$28,392

$38,849

$47,302

0 5000 10000 15000 20000 25000 30000 35000 40000 45000 50000

Electric Services

Maintenance and Repair Other Facilities

Detective and Protective Services

Security and Commodity Brokers

Surgical Appliances and Supplies

Services To Buildings

Research- Development & Testing Services

Personnel Supply Services

Communications- Except Radio and TV

U.S. Postal Service

Miscellaneous Plastics Products

Eating & Drinking

Legal Services

Cyclic Crudes- Interm. & Indus. Organic Chem.

Other Business Services

Wholesale Trade

Computer and Data Processing Services

Drugs

Management and Consulting Services

Real Estate

Series2

Series1

Purchases per $m in Nursing home sales

Nursing Home Expenditure Pattern

$4,521

$4,854

$4,886

$4,984

$5,367

$5,527

$5,738

$6,798

$6,912

$7,035

$8,727

$8,770

$9,133

$9,906

$10,513

$11,162

$12,959

$13,053

$20,178

$57,059

0 10000 20000 30000 40000 50000 60000

Laundry- Cleaning and Shoe Repair

Commercial Printing

Banking

Accounting- Auditing and Bookkeeping

Sanitary Services and Steam Supply

Maintenance and Repair Other Facilities

Detective and Protective Services

Eating & Drinking

Communications- Except Radio and TV

Services To Buildings

Legal Services

Computer and Data Processing Services

Management and Consulting Services

Miscellaneous Plastics Products

Personnel Supply Services

Electric Services

Other Business Services

Wholesale Trade

Drugs

Real Estate

Series1

Purchases per $m in Nursing home sales

Economic Impact AnalysisJefferson County Hospitals

Direct Effects

Indirect Effects

Induced Effects

Total Effects

Employment Multiplier

15.12 2.84 5.12 23.12

Output Multiplier

1.00 0.21 0.36 1.57

Income

Multiplier

0.67 0.13 0.24 1.03

Economic Impact AnalysisEstill County Hospitals

Direct Effects

Indirect Effects

Induced Effects

Total Effects

Employment Multiplier

17.76 1.03 3.24 22.03

Output Multiplier

1.00 0.64 0.15 1.22

Income Multiplier

0.62 0.04 0.10 0.8

Policy Implications

Health Care and Econ Dev Targets

• Health Care (acute and Preventive) can…– Promote job growth,

– Produce a healthier and more productive population (higher wages, more competitive firms)

For Health Care

– Recognizing a different role in community– Continuing growth in importance of

medical transfer payments to rural areas– Subsidy or funding support similar to

manufacturing– Role relative to closure or expansion of

facilities– Networking and Telemedicine

For health care….

– Different roles in• Large rural hospital centers• Small rural hospitals• No hospital• Nursing homes play a different role

For economic development officials

• Subsidy and funding support for health care (Why or Why not?)

• Capital access financing• Attracting Rural physicians, dentists and

professionals to shortage areas can be an econ dev policy

• Workforce development and education

For economic development officials

• Local industrial authorities– Supporting medical facilities in industrial

parks

– Seeing primary versus secondary importance of industry

– Support health and nutrition education programs for workforce

Extension Agents Role

• Coordinating a campaign to support the local health care system

• Bridging the divide between health care and economic development in your community

• Providing access to economic impact reports and training

Next Steps…..

• Request an Economic Impact Report• Begin a Dialogue in your community with

health care, economic development officials and community leaders

• A follow-up meeting with Extension Agents at State Conference in January

• A feasibility study training to follow next year

www.ca.uky.edu/krhw