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The Economic Impact of the Health Sector on the EPIC Medical Center in Eufaula, OK, Medical Service Area Hospitals Nursing Homes Physicians, etc. Other Services Pharmacies Oklahoma State Department of Health Office of Rural Health Oklahoma Cooperative Extension Service Oklahoma State University November 2010 AE-10121 The Economic Impact of the Health Sector on the EPIC Medical Center in Eufaula, OK, 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 Jack Frye, Area Extension Rural Development Specialist, OSU, Ada 580-332-4100 Randell Burris, Dewey County Extension Director, Eufaula 918-689-7772 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 State Department of Health Office of Rural Health Oklahoma Cooperative Extension Service Oklahoma State University November 2010 1 The Economic Impact of the Health Sector on the EPIC Medical Center in Eufaula, OK, 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 EPIC Medical Center in Eufaula, OK medical service area. The specific objectives of this report are to: 1. Review economic trends of the health sector for the U.S. and McIntosh County; 2. Identify the population for the medical service area of EPIC Medical Center in Eufaula, OK; 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 EPIC Medical Center in Eufaula, OK, 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; Employment in the health sector increased almost 341.0 percent from 1970 to 2008; and 4 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 2009 through 2018. 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 18.9 percent of GDP by 2015 and increase to 20.3 percent of GDP in 2018. Per capita health care expenditures are projected to increase to $10,929 in 2015 and to $13,100 in 2018. Total health expenditures are projected to increase to almost $4.4 trillion in 2018. 5 Table 1 United States Health Expenditures and Employment Data 1970-2008; Projected for 2009, 2012, 2015 & 2018 Total Per Capita Health Health Ave. Annual Year Health Health as % Sector Increase in Expenditures Expenditures of GDP Employment Employment ($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 2009 2,509.5 8,160 17.6% 2012 2,930.7 9,282 18.0% 2015 3,541.3 10,929 18.9% 2018 4,353.2 13,100 20.3% SOURCES: Bureau of Labor Statistics (www.bls.gov [January 2010]); 2010 Centers for Medicare & Medicaid Services, National Health Expenditures 1970-2008 and National Health Expenditure Projections 2008-2018 (http://www.cms.hhs.gov/nationalhealthexpenddata [January 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 repeatedly 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 are allocated in “other” category, which accounts for 32.0 percent. 7 McIntosh County Economic Trends Data relative to the health sector for McIntosh 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 McIntosh 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. Health services employment in McIntosh County increased 2.7 percent from 736 employees in 2000 to 756 employees in 2008 (Table 2). During the same time period, the total county employment increased 5.8 percent. County health services employment as a percent of total county employment decreased from 23.5 percent in 2000 to 22.8 percent in 2008, while the state health services employment as a percent of total state employment increased from 14.1 percent in 2000 to 15.3 percent in 2008. The county saw a decrease of 0.7 percent over this eight year period, while the state grew 1.2 percent. The county health services payroll experienced a different trend than employment. McIntosh County’s health services payroll increased 61 percent from about $10.7 million in 2000 to $17.2 million in 2008; this compares to an increase of 51.1 percent for the total county payroll (Table 2). State health services payroll as a percent of state payroll increased 1.2 percent from 2000 to 2008. County health services payroll as a percent of total county payroll increased from 21.4 percent in 2000 to 22.8 percent in 2008. 8 Table 2 EPIC Medical Center Employment and Payroll for County Business Patterns* McIntosh 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 2000 736 3,130 23.5% 14.1% 2001 690 3,111 22.2% 14.3% 2002 773 3,133 24.7% 15.1% 2003 612 3,060 20.0% 15.2% 2004 749 3,254 23.0% 15.4% 2005 822 3,314 24.8% 15.4% 2006 922 3,310 27.9% 15.1% 2007 762 3,037 25.1% 15.3% 2008 756 3,310 22.8% 15.3% % Change '00 - '08 2.7% 5.8% 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 2000 $10,711 $50,068 21.4% 14.0% 2001 $13,892 $56,040 24.8% 14.5% 2002 $14,171 $57,413 24.7% 15.2% 2003 $11,467 $58,068 19.7% 15.2% 2004 $3,481 $61,670 5.6% 15.7% 2005 $14,481 $63,181 22.9% 15.5% 2006 $15,914 $62,221 25.6% 15.1% 2007 $14,824 $66,124 22.4% 15.3% 2008 $17,247 $75,657 22.8% 15.2% % Change '00 - '08 61.0% 51.1% Source: U.S. Census Bureau, County Business Patterns; 2000-2008 data (www.census.gov [July 2010]). 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. * 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 McIntosh County economy are illustrated in Table 3. Based on Bureau of Economic Analysis data, the 2008 per capita income for McIntosh County of $27,232 is lower than the per capita income for the state of Oklahoma and the United States. Table 3 Economic Indicators for McIntosh County, the State of Oklahoma and the Nation Indicator County State U.S. Total Personal Income (2008) $534,535,000 $131,070,218,000 $12,238,800,000,000 Per Capita Income (2008) $27,232 $35,969 $40,166 Employment (2009) 8,252 1,659,607 139,877,000 Unemployment (2009) 718 113,579 14,265,000 Unemployment Rate (2009) 8.0% 6.4% 9.3% Employment (September 2010)* 8,136 1,643,054 139,715,000 Unemployment (September 2010)* 777 113,974 14,140,000 Unemployment Rate (September 2010)* 8.7% 6.5% 9.2% Percentage of People in Poverty (2008) 20.8% 15.7% 13.2% Percentage of Under 18 in Poverty (2008) 32.4% 22.0% 18.2% Transfer Dollars (2008) $186,824,000 $23,242,704,000 $1,875,558,000,000 Transfer Dollars as Percentage of 21.6% 17.7% 15.3% Total Personal Income (2008) *County and State 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 McIntosh County was 8.0 percent for 2009, which was higher than the state (6.4 percent) rate but lower than the national (9.3 percent) rate. Moreover, in September 2010, the unemployment rate for McIntosh County had increased to only 8.7 percent, which was higher than the state (6.5 percent) and 10 lower than the nation (9.2 percent). Also, the number of people employed in McIntosh County decreased 1.4 percent from 2009 to September 2010. This is a common trend across the state. The number of people unemployed increased 8.2 percent during that same time period. From the U. S. Census Bureau, the percent of people in poverty in McIntosh County was 20.8 percent in 2008, as compared to 15.7 percent for the state and 13.2 percent nationally. The percentage of people under age 18 in poverty in 2008 followed similar trends, with McIntosh County being higher 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, McIntosh County had 35 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. Sales tax collections from retail sales are extremely important to the city of Eufaula and McIntosh County. Figure 2 displays the trend of city level sales tax collections for Eufaula. In nominal terms, Eufaula has experienced a significant increase in sales tax collections. However, when the CPI is applied, inflation-adjusted collections still display a significant increase, especially from 1999 to present. Eufaula is a smaller community in Oklahoma that does exceptionally well in sales tax collections. For 2009, Eufaula reported $20 million more in retail sales than the average of cities of similar size (population 2,500-3,000). 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. 11 $0.00 $500,000.00 $1,000,000.00 $1,500,000.00 $2,000,000.00 $2,500,000.00 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 Figure. 2 City Sales Tax Collections for Eufaula, Actual and Inflation-Adjusted for 1980-2009 Actual Inflation-Adjusted12 Demographic Trends for the EPIC Medical Center in Eufaula, OK, Medical Service Area and McIntosh County The EPIC Medical Center in Eufaula, OK, medical service area is delineated in Figure 3. The primary medical service area is the immediate area surrounding Eufaula including the zip code areas of Eufaula, 74432; Checotah, 74426; Council Hill, 74428; and Stidham, 74461. According to the U.S. Census Bureau, the 2000 census population of this primary medical service area was 19,368 (Table 4a). EPIC Medical Center also serves a secondary medical service area, which consists of the zip code areas of Canadian, 74425; Indianola, 74442; Quinton, 74561; and Hanna, 74845. According to the U.S. Census Bureau, the 2000 census population of this secondary medical service area was 4,858 (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 2009 and projections for 2014. 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 an increase in population of 3.8 percent from 2000 to 2009 and a projected 5.8 percent increase from 2000 to 2014 (Table 4a). It should be noted that ESRI estimates were not available for Stidham (74461). Table 4b also shows population trends for the state of Oklahoma, McIntosh County, and numerous cities in the primary and secondary medical service are of EPIC Medical Center for the years 1990, 2000, and 2009. The city level estimates are place estimates rather than zip code 13 estimates that were discussed in the previous table. From 1990 to 2000, McIntosh County had a population increase of 15.95 percent. The state experienced a population growth of 9.70 percent. During the same time period, Hanna and Indianola experienced the largest increase of 34.34 and 11.70 percent, respectively. Many communities also reported a decrease in population. Stidham experienced a decrease of 52.08 percent, and Canadian reported a decline of 8.43 percent during the same time period. From 2000 to 2009, McIntosh County saw another population increase of 1.77 percent. The state of Oklahoma at experienced an increase of 6.85 percent. 14 City County Hospital No. of Beds Stigler Haskell Haskell County Healthcare System 40 Holdenville Hughes Holdenville General Hospital 25 Wilburton Latimer Latimer County General Hospital 33 Eufaula McIntosh EPIC Medical Center 33 Muskogee Muskogee Muskogee Community Hospital, LLC 45 Muskogee Muskogee Muskogee Regional Medical Center 275 Henryetta Okmulgee Henryetta Medical Center 41 Okmulgee Okmulgee Okmulgee Memorial Hospital 66 McAlester Pittsburg McAlester Regional Health Center 171 Figure 3 EPIC Medical Center in Eufaula, OK, Medical Service Area Figure 2 Logan Medical Center Medical Service Area Primary Medical Services Area Secondary Medical Services Area 15 Eufaula experienced the largest increase during this time period of 4.89 percent. Canadian and Council Hill followed with increases of 3.35 percent and 3.10 percent, respectively. Checotah was the only community to report a decline in population. Checotah’s population decreased at a rate of 0.50 percent for the years of 2000-2009. In addition, two communities, Stidham and Hanna reported no change in their population from 2000 to 2009. Table 4a Population of EPIC Medical Center Medical Service Area Populations Population by Zip Code City 2000 Census 2000 ESRI 2009 ESRI 2014 ESRI Primary Medical Service Area 74432 Eufaula 8,900 5,623 5,585 5,610 74426 Checotah 9,237 11,815 12,543 12,875 74428 Council Hill 933 1,029 1,043 1,061 74461 Stidham 298 n/a n/a n/a Total 19,368 18,467 19,171 19,546 % Change from 2000 ESRI 3.8% 5.8% Secondary Medical Service Area 74425 Canadian 813 1,676 1,760 1,805 74442 Indianola 1,187 1,109 145 1,166 74561 Quinton 2,296 4,426 4,605 4,681 74845 Hanna 562 520 512 518 Total 4,858 7,731 7,022 8,170 % Change from 2000 ESRI -9.2% 5.4% 16 Table 4b Population Trends for McIntosh County and the State of Oklahoma 1990 2000 2009 % Change % Change Population Population Population 1990-2000 2000-2009 State of Oklahoma 3,145,585 3,450,654 3,687,050 9.70% 6.85% McIntosh County 16,779 19,456 19,801 15.95% 1.77% Population by City Eufaula 2,652 2,639 2,768 -0.49% 4.89% Checotah 3,290 3,481 3,460 5.81% -0.60% Council Hill 139 129 133 -7.19% 3.10% Stidham 48 23 23 -52.08% 0.00% Canadian 261 239 247 -8.43% 3.35% Indianola 171 191 194 11.70% 1.57% Quinton 1,133 1,071 1,087 -5.47% 1.49% Hanna 99 133 133 34.34% 0.00% Cities Total 7,793 7,906 8,045 SOURCE: Population data from the U.S. Bureau of Census, 1990, 2000; U. S. Bureau of the Census, Population Estimates Branch, 2008; Community Sourcebook of Zip Code Demographics, 23rd Edition, 2008, ESRI, ESRI 2000 census population and 2009 and 2014 projected populations. Tables 5 and 6 provide further details about the demographic trends of McIntosh County. Table 5 presents the breakdown by age group for McIntosh County and the State of Oklahoma from the census years 1990 and 2000 and the 2009 census estimates. The lowest age group, age 0-14, experienced a decrease from 1990-2000 and 2009. The age group of 45-64, however, has seen a consistent increase over time. In McIntosh County, those age 45-64 made up 25.3 percent of the total population in 1990, and this went up to 28.9 percent in 2009. This same trend holds true for the state of Oklahoma as well. 17 Table 6 shows the race and ethnic group percentages for McIntosh County and the state of Oklahoma for the census years 1990 and 2000 and the 2009 census estimates. The state has experienced a significant increase in people of Hispanic origin, increasing from 2.7 percent in 1990 to 8.2 percent in 2009. McIntosh County has experienced this same trend to an extent. In 1990, those of Hispanic origin made up 0.9 percent of the population. In 2000, this number increased to 1.3 percent. This number again increased in the 2009 estimates to 2.1 percent. 18 Table5 Age Groups - for Population Numbers and Percent of Total Population McIntosh County and the State of Oklahoma McIntosh County State of Oklahoma Age Groups Number Percent Number Percent 1990 Census 0-14 3,205 19.1% 702,537 22.3% 15-19 1,120 6.7% 233,093 7.4% 20-24 786 4.7% 222,766 7.1% 25-44 3,809 22.7% 961,560 30.6% 45-64 4,238 25.3% 601,416 19.1% 65+ 3,621 21.6% 424,213 13.5% Totals 16,779 100.0% 3,145,585 100.0% 2000 Census 0-14 3,560 18.3% 732,907 21.2% 15-19 1,307 6.7% 269,373 7.8% 20-24 785 4.0% 247,165 7.2% 25-44 4,340 22.3% 975,169 28.3% 45-64 5,226 26.9% 770,090 22.3% 65+ 4,238 21.8% 455,950 13.2% Totals 19,456 100.0% 3,450,654 100.0% 2009 Estimates 0-14 3,520 17.8% 767,758 20.8% 15-19 1,201 6.1% 256,841 7.0% 20-24 976 4.9% 280,782 7.6% 25-44 4,031 20.4% 957,235 26.0% 45-64 5,723 28.9% 928,472 25.2% 65+ 4,350 22.0% 495,962 13.5% Totals 19,801 100.0% 3,687,050 100.0% SOURCE: U.S. Census Bureau, Census data for 1990 and 2000, estimated population for 2009 (www.census.gov [July 2010]). Table 6 19 Table6 Race and Ethnic Groups - for Population Numbers and Percent of Total Population McIntosh County and the State of Oklahoma McIntosh County State of Oklahoma Race/Ethnic Groups Number Percent Number Percent 1990 Census White 12,674 75.5% 2,547,588 81.0% Black 880 5.2% 231,462 7.4% Native American 1 3,038 18.1% 246,631 7.8% Other 2 37 0.2% 33,744 1.1% Two or more Races 3 NA -- NA -- Hispanic Origin 4 150 0.9% 86,160 2.7% 2000 Census White 14,013 72.0% 2,556,368 74.1% Black 772 4.0% 257,981 7.5% Native American 1 3,129 16.1% 266,158 7.7% Other 2 39 0.2% 50,594 1.5% Two or more Races 3 1,255 6.5% 140,249 4.1% Hispanic Origin 4 248 1.3% 179,304 5.2% 2009 Estimates White 14,073 71.1% 2,611,957 70.8% Black 778 3.9% 285,921 7.8% Native American 1 3,101 15.7% 282,029 7.6% Other 2 43 0.2% 64,009 1.7% Two or more Races 3 1,383 7.0% 141,294 3.8% Hispanic Origin 4 423 2.1% 301,840 8.2% SOURCE: U.S. Census Bureau, Census data for 1990 and 2000, estimated population for 2009 (www.census.gov [July 2010]). 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 EPIC Medical Center in Eufaula, OK, 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 the EPIC Medical Center in Eufaula, OK, medical service area employs 378 full-time and part-time employees and has an estimated payroll of $14,634,575 (Table 7). The health sector in McIntosh County is fairly typical of counties of its size, with a hospital, five physician offices, two dental offices, two chiropractor offices, one optometrist office, two nursing homes, three home health services, one county health department, and two pharmacies. The Hospital component provides 57 full and part-time jobs with an estimated annual payroll of $1,829,947 (including benefits1). The Physicians, Dentists, and Other Medical Professionals sector employs 39 total full and part-time employees with an estimated payroll of $2,998,348. The Nursing and Protective Care component employs 156 total full-time and part-time employees with an estimated annual payroll of $5,017,932. The Other Medical and Health Services component which includes three home health services and one county health department employs 110 total full-time and part-time employees and has an estimated annual payroll of $3,904,476. The Pharmacy component, including two pharmacies, employs 16 full and part-time employees with an annual payroll of $883,872. 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 EPIC Medical Center in Eufaula, OK, Medical Service Area Component Full-Time & Part-Time Employment Total Payroll with Benefits Hospital 57 $1,829,947 Includes EPIC Medical Center, and EPIC Home Health Physicians, Dentists, & Other Medical Professionals 39 $2,998,348 Includes five physician offices, two dental offices, one optometrist office, and two chiropractor offices Nursing and Protective Care 156 $5,017,932 Includes two nursing homes Other Medical & Health Services 110 $3,904,476 Includes three home health services and McIntosh County Health Department Pharmacies 16 $883,872 Includes two pharmacies Totals 378 $14,634,575 SOURCE: Local survey and estimates from research. These residents, along with businesses in the health sector, purchase a large amount of goods and services from businesses in the EPIC Medical Center in Eufaula, OK, medical service area. These impacts are referred to as secondary impacts or benefits to the economy. Before the secondary impacts of the health sector are discussed, the basic concepts of community economics will be reviewed. 22 Basic Concepts of Community Economics and Income and Employment Multipliers Figure 4 illustrates the major flows of goods, services, and dollars of any economy. The foundations of a community's economy are those businesses that sell some or all of their goods and services to buyers outside of the community. Such a business is a basic industry. The two arrows in the upper right portion of Figure 4 represent the flow of products out of, and dollars into, a community. To produce these goods and services for "export" outside the community, the basic industry purchases inputs from outside of the community (upper left portion of Figure 4), labor from the residents or "households" of the community (left side of Figure 4), and inputs from service industries located within the community (right side of Figure 4). Households using their earnings to purchase goods and services from the community’s service industries complete the flow of labor, goods, and services in the community (bottom of Figure 4). It is evident from the relationships illustrated in Figure 4 that a change in any one segment of a community's economy will cause reverberations throughout the entire economic system of the community. HouseholdsIndustryBasicServicesGoods &$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 EPIC Medical Center in Eufaula, OK 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 1.25. This indicates that for each job in that component, an additional 0.25 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 57 full-time and part-time employees; applying the employment multiplier of 1.25 to the employment number of 57 brings the total employment impact of the hospital to 71 employees. The Physicians, Dentists, and Other Professionals component employs 39 people; however, the total impact is 51 employees once the multiplier of 1.31 is applied. The Nursing and Protective Care component has a total employment of 156 after the multiplier of 1.10 is applied to the direct employment of 172. The Other Medical and Health Services component has 110 full-time and part-time employees and an employment multiplier of 1.10, for a total employment impact of 121. The Pharmacies component has a total impact of 16 employees after applying the multiplier of 1.15 to 18. The total employment impact of the health sector in EPIC Medical Center in Eufaula, OK, medical service area is estimated to be 434 employees (Table 8, total of column 4). 2 For complete details of model, see [1], [2], and [3]. 25 Table 8 EPIC Medical Center in Eufaula, OK, 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 57 1.25 71 $1,829,947 1.13 $2,073,164 $543,169 $5,432 Physicians, Dentists, & Other Medical Professionals 39 1.31 51 $2,998,348 1.12 $3,365,010 $881,633 $8,816 Nursing and Protective Care 156 1.10 172 $5,017,932 1.11 $5,585,540 $1,463,412 $14,634 Other Medical & Health Services 110 1.10 121 $3,904,476 1.12 $4,357,382 $1,141,634 $11,416 Pharmacies 16 1.15 18 $883,872 1.13 $1,001,164 $262,305 $2,623 Total 332 434 $14,634,575 $16,382,260 $4,292,152 $42,922 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 McIntosh County retail sales and income (26.20%) – 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 EPIC Medical Center in Eufaula, OK, medical service area (Table 8, columns 5, 6, and 7). The income multiplier for the Hospital component is 1.13 (Table 8, column 6). This indicates that for each dollar in that component, an additional 0.13 dollars are created throughout the area due to business (indirect) and household (induced) spending. The Hospital component has a total payroll of $1,829,947; applying the income multiplier of 1.13 brings the total Hospital component income impact to $2,073,164. 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 $2,998,348, based on the application of the income multiplier of 1.12 to the $3,365,010 payroll. The Nursing and Protective Care component has a multiplier of 1.11 which yields a total income impact of $5,585,540. The Other Medical and Health Services component has a total payroll of $3,904,476 and an income multiplier of 1.12 leading to a total income impact of $4,357,382. The Pharmacies component has a total income impact of $1,001,164 after the multiplier of 1.13 is applied to the direct income of $883,872. The total income impact of the health sector on the economy of EPIC Medical Center in Eufaula, OK, medical service area is projected to be $16,382,260 (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 26.20 percent), then direct and secondary retail sales generated by the health sector equals $4,292,152 (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 27 component. A one-cent sales tax collection is estimated to generate $42,922 in the EPIC Medical Center in Eufaula, OK, medical service area economy as a result of the health sector income 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 EPIC Medical Center in Eufaula, OK, 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 EPIC Medical Center in Eufaula, OK, 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.
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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 EPIC Medical Center in Eufaula, OK, Medical Service Area |
Authors |
Brooks, Lara. Whitacre, Brian. Frye, Jack (V. Jack) Burris, Randell (Randell Wayne), 1958- Kaiser, Corie. Schott, Val. Oklahoma. Office of Rural Health. Oklahoma Cooperative Extension Service. |
Publisher | Oklahoma Cooperative Extension Service, Oklahoma State University |
Publication Date | 2010-11 |
Publication type | Research Report/Study |
Subject |
Rural health--Economic aspects--Oklahoma--McIntosh County. EPIC Medical Center (Eufaula, Okla.) |
Purpose | The overall objective of this study is to measure the economic impact of the health sector on the EPIC Medical Center in Eufaula, OK medical service area. The specific objectives of this report are to: 1. Review economic trends of the health sector for the U.S. and McIntosh County 2. Identify the population for the medical service area of EPIC Medical Center in Eufaula, OK 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 EPIC Medical Center in Eufaula, OK, medical service area |
Contents | Health Services and Rural Development * Business and Industry Growth * Health Services and Attracting Retirees * Health Services and Job Growth; McIntosh County Economic Trends; Demographic Trends for the EPIC Medical Center in Eufaula, OK, Medical Service Area and McIntosh 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 EPIC Medical Center in Eufaula, OK; Summary; References |
Notes | (AE-10121); Community Health Engagement Process |
OkDocs Class# | Z2130.3 E64e 2010 |
Digital Format | PDF, Adobe Reader required |
ODL electronic copy | Downloaded from agency website: http://www.okruralhealthworks.org/PDFWEB/AE-10121.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 EPIC Medical Center in Eufaula, OK, Medical Service Area Hospitals Nursing Homes Physicians, etc. Other Services Pharmacies Oklahoma State Department of Health Office of Rural Health Oklahoma Cooperative Extension Service Oklahoma State University November 2010 AE-10121 The Economic Impact of the Health Sector on the EPIC Medical Center in Eufaula, OK, 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 Jack Frye, Area Extension Rural Development Specialist, OSU, Ada 580-332-4100 Randell Burris, Dewey County Extension Director, Eufaula 918-689-7772 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 State Department of Health Office of Rural Health Oklahoma Cooperative Extension Service Oklahoma State University November 2010 1 The Economic Impact of the Health Sector on the EPIC Medical Center in Eufaula, OK, 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 EPIC Medical Center in Eufaula, OK medical service area. The specific objectives of this report are to: 1. Review economic trends of the health sector for the U.S. and McIntosh County; 2. Identify the population for the medical service area of EPIC Medical Center in Eufaula, OK; 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 EPIC Medical Center in Eufaula, OK, 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; Employment in the health sector increased almost 341.0 percent from 1970 to 2008; and 4 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 2009 through 2018. 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 18.9 percent of GDP by 2015 and increase to 20.3 percent of GDP in 2018. Per capita health care expenditures are projected to increase to $10,929 in 2015 and to $13,100 in 2018. Total health expenditures are projected to increase to almost $4.4 trillion in 2018. 5 Table 1 United States Health Expenditures and Employment Data 1970-2008; Projected for 2009, 2012, 2015 & 2018 Total Per Capita Health Health Ave. Annual Year Health Health as % Sector Increase in Expenditures Expenditures of GDP Employment Employment ($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 2009 2,509.5 8,160 17.6% 2012 2,930.7 9,282 18.0% 2015 3,541.3 10,929 18.9% 2018 4,353.2 13,100 20.3% SOURCES: Bureau of Labor Statistics (www.bls.gov [January 2010]); 2010 Centers for Medicare & Medicaid Services, National Health Expenditures 1970-2008 and National Health Expenditure Projections 2008-2018 (http://www.cms.hhs.gov/nationalhealthexpenddata [January 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 repeatedly 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 are allocated in “other” category, which accounts for 32.0 percent. 7 McIntosh County Economic Trends Data relative to the health sector for McIntosh 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 McIntosh 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. Health services employment in McIntosh County increased 2.7 percent from 736 employees in 2000 to 756 employees in 2008 (Table 2). During the same time period, the total county employment increased 5.8 percent. County health services employment as a percent of total county employment decreased from 23.5 percent in 2000 to 22.8 percent in 2008, while the state health services employment as a percent of total state employment increased from 14.1 percent in 2000 to 15.3 percent in 2008. The county saw a decrease of 0.7 percent over this eight year period, while the state grew 1.2 percent. The county health services payroll experienced a different trend than employment. McIntosh County’s health services payroll increased 61 percent from about $10.7 million in 2000 to $17.2 million in 2008; this compares to an increase of 51.1 percent for the total county payroll (Table 2). State health services payroll as a percent of state payroll increased 1.2 percent from 2000 to 2008. County health services payroll as a percent of total county payroll increased from 21.4 percent in 2000 to 22.8 percent in 2008. 8 Table 2 EPIC Medical Center Employment and Payroll for County Business Patterns* McIntosh 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 2000 736 3,130 23.5% 14.1% 2001 690 3,111 22.2% 14.3% 2002 773 3,133 24.7% 15.1% 2003 612 3,060 20.0% 15.2% 2004 749 3,254 23.0% 15.4% 2005 822 3,314 24.8% 15.4% 2006 922 3,310 27.9% 15.1% 2007 762 3,037 25.1% 15.3% 2008 756 3,310 22.8% 15.3% % Change '00 - '08 2.7% 5.8% 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 2000 $10,711 $50,068 21.4% 14.0% 2001 $13,892 $56,040 24.8% 14.5% 2002 $14,171 $57,413 24.7% 15.2% 2003 $11,467 $58,068 19.7% 15.2% 2004 $3,481 $61,670 5.6% 15.7% 2005 $14,481 $63,181 22.9% 15.5% 2006 $15,914 $62,221 25.6% 15.1% 2007 $14,824 $66,124 22.4% 15.3% 2008 $17,247 $75,657 22.8% 15.2% % Change '00 - '08 61.0% 51.1% Source: U.S. Census Bureau, County Business Patterns; 2000-2008 data (www.census.gov [July 2010]). 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. * 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 McIntosh County economy are illustrated in Table 3. Based on Bureau of Economic Analysis data, the 2008 per capita income for McIntosh County of $27,232 is lower than the per capita income for the state of Oklahoma and the United States. Table 3 Economic Indicators for McIntosh County, the State of Oklahoma and the Nation Indicator County State U.S. Total Personal Income (2008) $534,535,000 $131,070,218,000 $12,238,800,000,000 Per Capita Income (2008) $27,232 $35,969 $40,166 Employment (2009) 8,252 1,659,607 139,877,000 Unemployment (2009) 718 113,579 14,265,000 Unemployment Rate (2009) 8.0% 6.4% 9.3% Employment (September 2010)* 8,136 1,643,054 139,715,000 Unemployment (September 2010)* 777 113,974 14,140,000 Unemployment Rate (September 2010)* 8.7% 6.5% 9.2% Percentage of People in Poverty (2008) 20.8% 15.7% 13.2% Percentage of Under 18 in Poverty (2008) 32.4% 22.0% 18.2% Transfer Dollars (2008) $186,824,000 $23,242,704,000 $1,875,558,000,000 Transfer Dollars as Percentage of 21.6% 17.7% 15.3% Total Personal Income (2008) *County and State 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 McIntosh County was 8.0 percent for 2009, which was higher than the state (6.4 percent) rate but lower than the national (9.3 percent) rate. Moreover, in September 2010, the unemployment rate for McIntosh County had increased to only 8.7 percent, which was higher than the state (6.5 percent) and 10 lower than the nation (9.2 percent). Also, the number of people employed in McIntosh County decreased 1.4 percent from 2009 to September 2010. This is a common trend across the state. The number of people unemployed increased 8.2 percent during that same time period. From the U. S. Census Bureau, the percent of people in poverty in McIntosh County was 20.8 percent in 2008, as compared to 15.7 percent for the state and 13.2 percent nationally. The percentage of people under age 18 in poverty in 2008 followed similar trends, with McIntosh County being higher 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, McIntosh County had 35 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. Sales tax collections from retail sales are extremely important to the city of Eufaula and McIntosh County. Figure 2 displays the trend of city level sales tax collections for Eufaula. In nominal terms, Eufaula has experienced a significant increase in sales tax collections. However, when the CPI is applied, inflation-adjusted collections still display a significant increase, especially from 1999 to present. Eufaula is a smaller community in Oklahoma that does exceptionally well in sales tax collections. For 2009, Eufaula reported $20 million more in retail sales than the average of cities of similar size (population 2,500-3,000). 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. 11 $0.00 $500,000.00 $1,000,000.00 $1,500,000.00 $2,000,000.00 $2,500,000.00 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 Figure. 2 City Sales Tax Collections for Eufaula, Actual and Inflation-Adjusted for 1980-2009 Actual Inflation-Adjusted12 Demographic Trends for the EPIC Medical Center in Eufaula, OK, Medical Service Area and McIntosh County The EPIC Medical Center in Eufaula, OK, medical service area is delineated in Figure 3. The primary medical service area is the immediate area surrounding Eufaula including the zip code areas of Eufaula, 74432; Checotah, 74426; Council Hill, 74428; and Stidham, 74461. According to the U.S. Census Bureau, the 2000 census population of this primary medical service area was 19,368 (Table 4a). EPIC Medical Center also serves a secondary medical service area, which consists of the zip code areas of Canadian, 74425; Indianola, 74442; Quinton, 74561; and Hanna, 74845. According to the U.S. Census Bureau, the 2000 census population of this secondary medical service area was 4,858 (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 2009 and projections for 2014. 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 an increase in population of 3.8 percent from 2000 to 2009 and a projected 5.8 percent increase from 2000 to 2014 (Table 4a). It should be noted that ESRI estimates were not available for Stidham (74461). Table 4b also shows population trends for the state of Oklahoma, McIntosh County, and numerous cities in the primary and secondary medical service are of EPIC Medical Center for the years 1990, 2000, and 2009. The city level estimates are place estimates rather than zip code 13 estimates that were discussed in the previous table. From 1990 to 2000, McIntosh County had a population increase of 15.95 percent. The state experienced a population growth of 9.70 percent. During the same time period, Hanna and Indianola experienced the largest increase of 34.34 and 11.70 percent, respectively. Many communities also reported a decrease in population. Stidham experienced a decrease of 52.08 percent, and Canadian reported a decline of 8.43 percent during the same time period. From 2000 to 2009, McIntosh County saw another population increase of 1.77 percent. The state of Oklahoma at experienced an increase of 6.85 percent. 14 City County Hospital No. of Beds Stigler Haskell Haskell County Healthcare System 40 Holdenville Hughes Holdenville General Hospital 25 Wilburton Latimer Latimer County General Hospital 33 Eufaula McIntosh EPIC Medical Center 33 Muskogee Muskogee Muskogee Community Hospital, LLC 45 Muskogee Muskogee Muskogee Regional Medical Center 275 Henryetta Okmulgee Henryetta Medical Center 41 Okmulgee Okmulgee Okmulgee Memorial Hospital 66 McAlester Pittsburg McAlester Regional Health Center 171 Figure 3 EPIC Medical Center in Eufaula, OK, Medical Service Area Figure 2 Logan Medical Center Medical Service Area Primary Medical Services Area Secondary Medical Services Area 15 Eufaula experienced the largest increase during this time period of 4.89 percent. Canadian and Council Hill followed with increases of 3.35 percent and 3.10 percent, respectively. Checotah was the only community to report a decline in population. Checotah’s population decreased at a rate of 0.50 percent for the years of 2000-2009. In addition, two communities, Stidham and Hanna reported no change in their population from 2000 to 2009. Table 4a Population of EPIC Medical Center Medical Service Area Populations Population by Zip Code City 2000 Census 2000 ESRI 2009 ESRI 2014 ESRI Primary Medical Service Area 74432 Eufaula 8,900 5,623 5,585 5,610 74426 Checotah 9,237 11,815 12,543 12,875 74428 Council Hill 933 1,029 1,043 1,061 74461 Stidham 298 n/a n/a n/a Total 19,368 18,467 19,171 19,546 % Change from 2000 ESRI 3.8% 5.8% Secondary Medical Service Area 74425 Canadian 813 1,676 1,760 1,805 74442 Indianola 1,187 1,109 145 1,166 74561 Quinton 2,296 4,426 4,605 4,681 74845 Hanna 562 520 512 518 Total 4,858 7,731 7,022 8,170 % Change from 2000 ESRI -9.2% 5.4% 16 Table 4b Population Trends for McIntosh County and the State of Oklahoma 1990 2000 2009 % Change % Change Population Population Population 1990-2000 2000-2009 State of Oklahoma 3,145,585 3,450,654 3,687,050 9.70% 6.85% McIntosh County 16,779 19,456 19,801 15.95% 1.77% Population by City Eufaula 2,652 2,639 2,768 -0.49% 4.89% Checotah 3,290 3,481 3,460 5.81% -0.60% Council Hill 139 129 133 -7.19% 3.10% Stidham 48 23 23 -52.08% 0.00% Canadian 261 239 247 -8.43% 3.35% Indianola 171 191 194 11.70% 1.57% Quinton 1,133 1,071 1,087 -5.47% 1.49% Hanna 99 133 133 34.34% 0.00% Cities Total 7,793 7,906 8,045 SOURCE: Population data from the U.S. Bureau of Census, 1990, 2000; U. S. Bureau of the Census, Population Estimates Branch, 2008; Community Sourcebook of Zip Code Demographics, 23rd Edition, 2008, ESRI, ESRI 2000 census population and 2009 and 2014 projected populations. Tables 5 and 6 provide further details about the demographic trends of McIntosh County. Table 5 presents the breakdown by age group for McIntosh County and the State of Oklahoma from the census years 1990 and 2000 and the 2009 census estimates. The lowest age group, age 0-14, experienced a decrease from 1990-2000 and 2009. The age group of 45-64, however, has seen a consistent increase over time. In McIntosh County, those age 45-64 made up 25.3 percent of the total population in 1990, and this went up to 28.9 percent in 2009. This same trend holds true for the state of Oklahoma as well. 17 Table 6 shows the race and ethnic group percentages for McIntosh County and the state of Oklahoma for the census years 1990 and 2000 and the 2009 census estimates. The state has experienced a significant increase in people of Hispanic origin, increasing from 2.7 percent in 1990 to 8.2 percent in 2009. McIntosh County has experienced this same trend to an extent. In 1990, those of Hispanic origin made up 0.9 percent of the population. In 2000, this number increased to 1.3 percent. This number again increased in the 2009 estimates to 2.1 percent. 18 Table5 Age Groups - for Population Numbers and Percent of Total Population McIntosh County and the State of Oklahoma McIntosh County State of Oklahoma Age Groups Number Percent Number Percent 1990 Census 0-14 3,205 19.1% 702,537 22.3% 15-19 1,120 6.7% 233,093 7.4% 20-24 786 4.7% 222,766 7.1% 25-44 3,809 22.7% 961,560 30.6% 45-64 4,238 25.3% 601,416 19.1% 65+ 3,621 21.6% 424,213 13.5% Totals 16,779 100.0% 3,145,585 100.0% 2000 Census 0-14 3,560 18.3% 732,907 21.2% 15-19 1,307 6.7% 269,373 7.8% 20-24 785 4.0% 247,165 7.2% 25-44 4,340 22.3% 975,169 28.3% 45-64 5,226 26.9% 770,090 22.3% 65+ 4,238 21.8% 455,950 13.2% Totals 19,456 100.0% 3,450,654 100.0% 2009 Estimates 0-14 3,520 17.8% 767,758 20.8% 15-19 1,201 6.1% 256,841 7.0% 20-24 976 4.9% 280,782 7.6% 25-44 4,031 20.4% 957,235 26.0% 45-64 5,723 28.9% 928,472 25.2% 65+ 4,350 22.0% 495,962 13.5% Totals 19,801 100.0% 3,687,050 100.0% SOURCE: U.S. Census Bureau, Census data for 1990 and 2000, estimated population for 2009 (www.census.gov [July 2010]). Table 6 19 Table6 Race and Ethnic Groups - for Population Numbers and Percent of Total Population McIntosh County and the State of Oklahoma McIntosh County State of Oklahoma Race/Ethnic Groups Number Percent Number Percent 1990 Census White 12,674 75.5% 2,547,588 81.0% Black 880 5.2% 231,462 7.4% Native American 1 3,038 18.1% 246,631 7.8% Other 2 37 0.2% 33,744 1.1% Two or more Races 3 NA -- NA -- Hispanic Origin 4 150 0.9% 86,160 2.7% 2000 Census White 14,013 72.0% 2,556,368 74.1% Black 772 4.0% 257,981 7.5% Native American 1 3,129 16.1% 266,158 7.7% Other 2 39 0.2% 50,594 1.5% Two or more Races 3 1,255 6.5% 140,249 4.1% Hispanic Origin 4 248 1.3% 179,304 5.2% 2009 Estimates White 14,073 71.1% 2,611,957 70.8% Black 778 3.9% 285,921 7.8% Native American 1 3,101 15.7% 282,029 7.6% Other 2 43 0.2% 64,009 1.7% Two or more Races 3 1,383 7.0% 141,294 3.8% Hispanic Origin 4 423 2.1% 301,840 8.2% SOURCE: U.S. Census Bureau, Census data for 1990 and 2000, estimated population for 2009 (www.census.gov [July 2010]). 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 EPIC Medical Center in Eufaula, OK, 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 the EPIC Medical Center in Eufaula, OK, medical service area employs 378 full-time and part-time employees and has an estimated payroll of $14,634,575 (Table 7). The health sector in McIntosh County is fairly typical of counties of its size, with a hospital, five physician offices, two dental offices, two chiropractor offices, one optometrist office, two nursing homes, three home health services, one county health department, and two pharmacies. The Hospital component provides 57 full and part-time jobs with an estimated annual payroll of $1,829,947 (including benefits1). The Physicians, Dentists, and Other Medical Professionals sector employs 39 total full and part-time employees with an estimated payroll of $2,998,348. The Nursing and Protective Care component employs 156 total full-time and part-time employees with an estimated annual payroll of $5,017,932. The Other Medical and Health Services component which includes three home health services and one county health department employs 110 total full-time and part-time employees and has an estimated annual payroll of $3,904,476. The Pharmacy component, including two pharmacies, employs 16 full and part-time employees with an annual payroll of $883,872. 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 EPIC Medical Center in Eufaula, OK, Medical Service Area Component Full-Time & Part-Time Employment Total Payroll with Benefits Hospital 57 $1,829,947 Includes EPIC Medical Center, and EPIC Home Health Physicians, Dentists, & Other Medical Professionals 39 $2,998,348 Includes five physician offices, two dental offices, one optometrist office, and two chiropractor offices Nursing and Protective Care 156 $5,017,932 Includes two nursing homes Other Medical & Health Services 110 $3,904,476 Includes three home health services and McIntosh County Health Department Pharmacies 16 $883,872 Includes two pharmacies Totals 378 $14,634,575 SOURCE: Local survey and estimates from research. These residents, along with businesses in the health sector, purchase a large amount of goods and services from businesses in the EPIC Medical Center in Eufaula, OK, medical service area. These impacts are referred to as secondary impacts or benefits to the economy. Before the secondary impacts of the health sector are discussed, the basic concepts of community economics will be reviewed. 22 Basic Concepts of Community Economics and Income and Employment Multipliers Figure 4 illustrates the major flows of goods, services, and dollars of any economy. The foundations of a community's economy are those businesses that sell some or all of their goods and services to buyers outside of the community. Such a business is a basic industry. The two arrows in the upper right portion of Figure 4 represent the flow of products out of, and dollars into, a community. To produce these goods and services for "export" outside the community, the basic industry purchases inputs from outside of the community (upper left portion of Figure 4), labor from the residents or "households" of the community (left side of Figure 4), and inputs from service industries located within the community (right side of Figure 4). Households using their earnings to purchase goods and services from the community’s service industries complete the flow of labor, goods, and services in the community (bottom of Figure 4). It is evident from the relationships illustrated in Figure 4 that a change in any one segment of a community's economy will cause reverberations throughout the entire economic system of the community. HouseholdsIndustryBasicServicesGoods &$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 EPIC Medical Center in Eufaula, OK 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 1.25. This indicates that for each job in that component, an additional 0.25 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 57 full-time and part-time employees; applying the employment multiplier of 1.25 to the employment number of 57 brings the total employment impact of the hospital to 71 employees. The Physicians, Dentists, and Other Professionals component employs 39 people; however, the total impact is 51 employees once the multiplier of 1.31 is applied. The Nursing and Protective Care component has a total employment of 156 after the multiplier of 1.10 is applied to the direct employment of 172. The Other Medical and Health Services component has 110 full-time and part-time employees and an employment multiplier of 1.10, for a total employment impact of 121. The Pharmacies component has a total impact of 16 employees after applying the multiplier of 1.15 to 18. The total employment impact of the health sector in EPIC Medical Center in Eufaula, OK, medical service area is estimated to be 434 employees (Table 8, total of column 4). 2 For complete details of model, see [1], [2], and [3]. 25 Table 8 EPIC Medical Center in Eufaula, OK, 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 57 1.25 71 $1,829,947 1.13 $2,073,164 $543,169 $5,432 Physicians, Dentists, & Other Medical Professionals 39 1.31 51 $2,998,348 1.12 $3,365,010 $881,633 $8,816 Nursing and Protective Care 156 1.10 172 $5,017,932 1.11 $5,585,540 $1,463,412 $14,634 Other Medical & Health Services 110 1.10 121 $3,904,476 1.12 $4,357,382 $1,141,634 $11,416 Pharmacies 16 1.15 18 $883,872 1.13 $1,001,164 $262,305 $2,623 Total 332 434 $14,634,575 $16,382,260 $4,292,152 $42,922 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 McIntosh County retail sales and income (26.20%) – 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 EPIC Medical Center in Eufaula, OK, medical service area (Table 8, columns 5, 6, and 7). The income multiplier for the Hospital component is 1.13 (Table 8, column 6). This indicates that for each dollar in that component, an additional 0.13 dollars are created throughout the area due to business (indirect) and household (induced) spending. The Hospital component has a total payroll of $1,829,947; applying the income multiplier of 1.13 brings the total Hospital component income impact to $2,073,164. 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 $2,998,348, based on the application of the income multiplier of 1.12 to the $3,365,010 payroll. The Nursing and Protective Care component has a multiplier of 1.11 which yields a total income impact of $5,585,540. The Other Medical and Health Services component has a total payroll of $3,904,476 and an income multiplier of 1.12 leading to a total income impact of $4,357,382. The Pharmacies component has a total income impact of $1,001,164 after the multiplier of 1.13 is applied to the direct income of $883,872. The total income impact of the health sector on the economy of EPIC Medical Center in Eufaula, OK, medical service area is projected to be $16,382,260 (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 26.20 percent), then direct and secondary retail sales generated by the health sector equals $4,292,152 (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 27 component. A one-cent sales tax collection is estimated to generate $42,922 in the EPIC Medical Center in Eufaula, OK, medical service area economy as a result of the health sector income 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 EPIC Medical Center in Eufaula, OK, 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 EPIC Medical Center in Eufaula, OK, 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. |
Date created | 2011-09-19 |
Date modified | 2013-02-22 |
OCLC number | 819810459 |
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