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The Economic Impact of the Fairfax, Hominy, and Newkirk Community Health Centers Hospitals Nursing Homes Physicians, etc. Other Services Pharmacies Oklahoma State Department of Health Office of Rural Health Oklahoma Cooperative Extension Service Oklahoma State University April 2010 AE-10006 The Economic Impact of the Fairfax, Hominy, and Newkirk Community Health Centers 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 Stan Ralstin, Area Extension Rural Development Specialist, OSU, Enid 580-237-7677 Richard Rexwinkle, Osage County Extension Director, Pawhuska 918-287-4170 Larry Klump, Kay County Extension Directory, Newkirk 580-362-3194 Corie Kaiser, Health Consultant, Oklahoma Center for Rural Health, Oklahoma City 405-945-9197 Val Schott, Director, Oklahoma Center for Rural Health, Oklahoma City & Tulsa 405-945-9197 Oklahoma State Department of Health Office of Rural Health Oklahoma Cooperative Extension Service Oklahoma State University April 2010 1 The Economic Impact of the Fairfax, Hominy, and Newkirk Community Health Centers 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 community health centers. 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 Fairfax, Hominy, and Newkirk Community Health Centers on the areas that they serve. The specific objectives of this report are to: 1. Review economic trends of the health sector for the U.S. and Osage and Kay Counties; 2. Identify population for the medical service area of Fairfax, Hominy, and Newkirk Community Health Centers; 3. Summarize the direct economic activities of the community health centers; 4. Review concepts of community economics and multipliers; and 5. Estimate the secondary and total impacts of the Fairfax, Hominy, and Newkirk Community Health Centers. 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 2007; Per capita health expenditures increased from $356 in 1970 to $7,421 in 2007; 4 Employment in the health sector increased almost 324.0 percent from 1970 to 2007; and Annual increases in employment from 2003 to 2007 ranged from 2.0 percent to 2.7 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. F by type o percent o percent o for 32.0 p Figure 1 illus of health serv of the total. of the total. percent. strates 2008 vice. The la The next lar Community health expen argest health rgest type of health cente 6 nditures by p service type f health serv ers are alloca percent of gr e was hospita vices was phy ated in “othe ross domesti al care, repre ysician servi er” category ic product an esenting 31. ices with 21 , which acco nd 0 .0 ounts 7 Osage and Kay Counties Economic Trends Data relative to the health sector for Osage and Kay Counties are provided in Tables 2a and 2b. Data in Tables 2a and 2b are from the U. S. Census Bureau County Business Patterns, based on the North American Industry Classification System (NAICS). The table is based on employment and payroll for both health services and total county services and health services as a percent of total county services for Osage and Kay Counties. Also, health services for the state of Oklahoma are illustrated as a percent of total state employment and payroll for comparison to the county data. This table states how health services have changed over time. Health services employment in Osage County increased 9.8 percent from 614 employees in 2000 to 674 employees in 2007 (Table 2). During the same time period, the total county employment also increased 23.9 percent. County health services employment as a percent of total county employment decreased from 14.5 percent in 2000 to 12.9 percent in 2007, 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 2007. The county saw a decrease of 1.6 percent over this seven year period, while the state grew by1.2 percent. The county health services payroll experienced significant increases over time. Osage County’s health services payroll increased 24.8 percent from about $9.2 million in 2000 to about $11.4 million in 2007; this compares to an increase of 56.8 percent for the total county payroll (Table 2a). During this same time period, the state health services payroll increased from 14.0 percent to 15.3 percent. County health services payroll as a percent of total county payroll decreased from 10.9 percent in 2000 to 8.7 percent in 2007. Kay County experienced a 13.6 percent increase in healthcare employment from 2000 to 2007. However, total county employment experienced a decrease of 10.1 percent during the 8 same time period. Health services employment as a percent of total county employment increased 2.7 percent from 2000 to 2007 (Table 2b). Kay County healthcare payroll also experienced an increase of 30.3 percent from nearly $44.7 million in 2000 to $58.2 million in 2007. Kay County total county payroll increased 12.4 percent during the same time period. Health services payroll as a percent of total county payroll increased 1.5 percent which is greater than the state (1.3 percent) (Table 2b). These numbers all suggest that in total, the health sector is very important to the economies of Osage and Kay Counties. Later in this report, we will quantify the role that the community health centers have played in benefitting the economy. 9 Table 2a Fairfax and Hominy Community Health Centers Employment and Payroll for County Business Patterns* Osage 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 614 4,233 14.5% 14.1% 2001 647 4,117 15.7% 14.3% 2002 679 3,413 19.9% 15.1% 2003 626 3,420 18.3% 15.2% 2004 622 3,318 18.7% 15.4% 2005 528 3,521 15.0% 15.4% 2006 571 4,256 13.4% 15.1% 2007 674 5,243 12.9% 15.3% % Change '00 - '07 9.8% 23.9% 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 $9,153.00 $84,005.00 10.9% 14.0% 2001 $10,304.00 $84,224.00 12.2% 14.5% 2002 $10,047.00 $61,635.00 16.3% 15.2% 2003 $9,816.00 $64,841.00 15.1% 15.2% 2004 $10,327.00 $66,194.00 15.6% 15.7% 2005 $9,845.00 $79,664.00 12.4% 15.5% 2006 $11,328.00 $97,710.00 11.6% 15.1% 2007 $11,423.00 $131,729.00 8.7% 15.3% % Change '00 - '07 24.8% 56.8% Source: U.S. Census Bureau, County Business Patterns; 2000-2007 data (www.census.gov [April 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). 10 Table 2b Newkirk Community Health Center Employment and Payroll for County Business Patterns* Kay 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 1,914 18,433 10.4% 14.1% 2001 1,847 18,268 10.1% 14.3% 2002 2,325 18,922 12.3% 15.1% 2003 2,232 16,172 13.8% 15.2% 2004 1,960 16,140 12.1% 15.4% 2005 2,190 17,238 12.7% 15.4% 2006 2,183 17,265 12.6% 15.1% 2007 2,175 16,576 13.1% 15.3% % Change '00 - '07 13.6% -10.1% 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 $44,692.00 $481,024.00 9.3% 14.0% 2001 $45,527.00 $529,319.00 8.6% 14.5% 2002 $50,895.00 $544,562.00 9.3% 15.2% 2003 $50,821.00 $432,722.00 11.7% 15.2% 2004 $50,443.00 $479,879.00 10.5% 15.7% 2005 $55,404.00 $552,196.00 10.0% 15.5% 11 2006 $58,503.00 $581,781.00 10.1% 15.1% 2007 $58,230.00 $540,621.00 10.8% 15.3% % Change '00 - '07 30.3% 12.4% Source: U.S. Census Bureau, County Business Patterns; 2000-2007 data (www.census.gov [April 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). Basic economic indicators of the Osage County and Kay County economy are illustrated in Tables 3a and 3b. Based on Bureau of Economic Analysis data, the 2007 per capita income for Osage County of $30,350 is lower than the per capita income for the state of Oklahoma and the United States. The per capita income for Kay County was $33,621 which was also lower than Oklahoma and the United States (Table 3b). Table 3a Economic Indicators for Osage County, the State of Oklahoma and the Nation Indicator County State U.S. Total Personal Income (2007) $1,378,877,000 $126,272,950,000 $11,634,322,000,000 Per Capita Income (2007) $30,350 $34,997 $38,615 Employment (2008) 19,291 1,681,854 145,362,000 Unemployment (2008) 854 66,562 8,924,000 12 Unemployment Rate (2008) 4.2% 3.8% 5.8% Employment (February 2010) 18,530* 1,638,235 137,203,000 Unemployment (February 2010) 1,737* 128,660 15,991,000 Unemployment Rate (February 2010) 8.6%* 7.3% 10.4% Percentage of People in Poverty (2008) 13.1% 15.7% 13.2% Percentage of Under 18 in Poverty (2008) 19.8% 22.0% 18.2% Transfer Dollars (2007) $233,524,000 $21,218,050,000 $1,712,794,000,000 Transfer Dollars as Percentage of 16.9% 16.8% 14.7% Total Personal Income (2007) *Employment data for Osage County for February 2010 should be considered preliminary SOURCES: 2010 Bureau of Labor Statistics; 2010 Bureau of Economic Analysis; 2010 U.S. Census Bureau. Table 3b Economic Indicators for Kay County, the State of Oklahoma and the Nation Indicator County State U.S. Total Personal Income (2007) $1,536,853,000 $126,272,950,000 $11,634,322,000,000 Per Capita Income (2007) $33,621 $34,997 $38,615 13 According to the Bureau of Labor Statistics, the unemployment rate for Osage County was 4.2 percent for 2008, which was the higher than the state (3.8 percent) but lower than the national (5.8 percent) rates. Kay County experienced a similar trend of a 3.6 percent unemployment rate which was lower than both the state and the nation. Moreover, in February 2010, the preliminary unemployment rate estimate for Osage County had increased to 8.6 percent, which was higher than the state (7.3 percent) but lower than the nation (10.4 percent). Preliminary estimates for Kay County indicate that the unemployment rate has increased to 9.2 percent in February. This places Kay County above the state rate and below the national unemployment rate. However, the number of people employed in Osage County decreased 4 percent from 2008 to February 2010, while the number of people unemployed increased 103 Employment (2008) 23,816 1,681,854 145,362,000 Unemployment (2008) 857 66,562 8,924,000 Unemployment Rate (2008) 3.6% 3.8% 5.8% Employment (February 2010) 21,288* 1,638,235 137,203,000 Unemployment (February 2010) 2,146* 128,660 15,991,000 Unemployment Rate (February 2010) 9.2%* 7.3% 10.4% Percentage of People in Poverty (2008) 17.2% 15.7% 13.2% Percentage of Under 18 in Poverty (2008) 26.0% 22.0% 18.2% Transfer Dollars (2007) $305,450,000 $21,218,050,000 $1,712,794,000,000 Transfer Dollars as Percentage of 19.9% 16.8% 14.7% Total Personal Income (2007) *Employment data for Kay County for February 2010 should be considered preliminary SOURCES: 2010 Bureau of Labor Statistics; 2010 Bureau of Economic Analysis; 2010 U.S. Census Bureau. 14 percent during that same time period. The number of people employed in Kay County decreased 11 percent during the same time period, and the number of unemployed increased 150 percent. The unemployment and employment estimates from February 2010 are considered preliminary. From the U. S. Census Bureau, the percent of people in poverty in Osage County was 13.1 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 Osage County being lower than both the state but higher than the nation. The percentage of people in poverty in Kay County was 17.2 percent which is higher than both the state and the nation, and the percentage of people under the age of 18 in poverty was 26.0 percent which is also higher than both the state and the nation as well. Another economic indicator is the percent of personal income that is from transfer payments. Based on Bureau of Economic Analysis data, Osage County had 16.9 percent of total personal income from transfer payments, which is higher than both the state and the nation. Kay County had 19.9 percent of personal income from transfer payments. 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. A growing concern across the country is the number of uninsured. Figure 2 displays the percentage of uninsured individuals per county under the age of 65. This percentage includes both sexes and all income levels. Osage and Kay Counties are both in the 20-25 percent range of uninsured under the age of 65. This is comparable to the state percentage of 21.0 percent. 15 16 ADAIR ALFALFA ATOKA BECKHAM BLAINE BRYAN CANADIAN CARTER CHEROKEE CHOCTAW CLEVELAND COMANCHE COTTON CRAIG CUSTER DELAWARE DEWEY ELLIS GARFIELD GRADY GRANT GREER HARMON HARPER JACKSON JEFFERSON KAY KIOWA LATIMER LOVE MAYES MURRAY MUSKOGEE NOBLE NOWATA OKLAHOMA OKMULGEE OSAGE OTTAWA PAWNEE PAYNE PUSHMATAHA ROGER MILLS ROGERS SEQUOYAH STEPHENS TILLMAN TULSA WAGONER WASHITA WOODS WOODWARD WASHINGTON SHALL MAR-MAJOR KINGFISHER TEXAS BEAVER LOGAN CREEK LINCOLN OKFUSKEE McINTOSH CADDO MCCLAIN GARVIN SEMINOLE POTTA-WATOMIE HUGHES PITTSBURG HASKELL LE FLORE COAL JOHNSTON PONTOTOC MCCURTAIN CIMARRON 20-25% Figure 2. Percentage Uninsured by County for All Income Levels Under 65 Years of Age, 2006 17-20% 25-30% 30-35% SOURCE: US Census Bureau, 2009 35% and over State Percentage Uninsured‐ 21.0% 20.8% 23.3% 17 Demographic Trends for the Fairfax, Hominy, and Newkirk Community Health Centers Medical Service Area and Osage and Kay Counties The Fairfax, Hominy, and Newkirk Community Health Centers medical service area is delineated in Figure 3. The primary medical service area is the immediate area surrounding these clinics which is most of Kay and Osage Counties. The population for Kay and Osage counties is delineated in Table 4. Both Kay and Osage Counties experienced an increase in their population from 1990 to 2000. Kay County only reported a 0.5 percent increase while Osage County experienced an increase of 6.7 percent. From the years of 2000-2009, Osage County reported an increase of 1.38 percent, and Kay County had a decrease of 4.1 percent. The state of Oklahoma experienced an increase of 9.7 percent from 1990-2000 and 5.56 percent from 2000- 2009. 18 City County Hospital No. of Beds Ponca City Kay Ponca City Medical Center 140 Perry Noble Perry Memorial Hospital 26 Fairfax Osage Fairfax Memorial Hospital 15 Pawhuska Osage Pawhuska Hospital, Inc 25 Cleveland Pawnee Cleveland Area Hospital 14 Figure 3 Fairfax, Hominy, and Newkirk Community Health Centers Medical Service Area Primary Medical Services Area 19 Table 4 Population for Kay County, Osage County, and Oklahoma 1990 2000 2009 % Change % Change Population Population Population 1990-2000 2000-2009 State of Oklahoma 3,145,585 3,450,654 3,642,361 9.70% 5.56% Kay County 48,056 48,080 46,110 0.05% -4.10% Osage County 41,645 44,437 45,051 6.70% 1.38% SOURCE: Population data from the U.S. Bureau of Census, 1990, 2000; U. S. Bureau of the Census, Population Estimates Branch, 2009 Tables 5 (a and b) and 6 (a and b) provide further details about the demographic trends of Osage and Kay Counties. Tables 5a and 5b presents the breakdown by age group for Osage and Kay Counties and the State of Oklahoma from the census years 1990 and 2000 and the 2008 census estimates. The lowest age group, age 0-14, experienced a decrease from 1990-2000 and 2008 on both the state and county level for both counties. The age group of 45-64, however, has seen a consistent increase over time. In Osage County, those age 45-64 made up 20.8 percent of the total population in 1990, and this went up to 25.4 percent in 2008. Kay County also experienced an increase from 19.5 percent in 1990 to 27.3 percent in 2008. This same trend holds true for the state of Oklahoma as well. Tables 6a and 6b shows the race and ethnic group percentages for Osage and Kay County and the state of Oklahoma for the census years 1990 and 2000 and the 2008 census estimates. The state has experienced a significant increase in people of Hispanic origin, increasing from 2.7 percent in 1990 to 7.6 percent in 2008. Osage and Kay Counties have experienced a similar trend. In 1990, those of Hispanic origin made up 1.6 percent of the Osage County population and 1.8 percent of the Kay County Population. In 2000, this number 20 increased to 2.1 percent for Osage County and 4.3 percent for Kay. This number again increased in the 2008 estimates to 2.7 percent for Osage County and 5.9 percent for Kay County. 21 Table 5a Age Groups - for Population Numbers and Percent of Total Population Osage County and the State of Oklahoma Osage County State of Oklahoma Age Groups Number Percent Number Percent 1990 Census 0-14 9,609 23.1% 702,537 22.3% 15-19 2,974 7.1% 233,093 7.4% 20-24 2,107 5.1% 222,766 7.1% 25-44 12,585 30.2% 961,560 30.6% 45-64 8,674 20.8% 601,416 19.1% 65+ 5,696 13.7% 424,213 13.5% Totals 41,645 100.0% 3,145,585 100.0% 2000 Census 0-14 9,523 21.4% 732,907 21.2% 15-19 3,376 7.6% 269,373 7.8% 20-24 2,229 5.0% 247,165 7.2% 25-44 12,205 27.5% 975,169 28.3% 45-64 11,297 25.4% 770,090 22.3% 65+ 5,807 13.1% 455,950 13.2% Totals 44,437 100.0% 3,450,654 100.0% 2008 Estimates 0-14 8,011 17.6% 753,870 20.7% 15-19 3,135 6.9% 251,880 6.9% 20-24 3,045 6.7% 270,201 7.4% 25-44 11,748 25.8% 957,085 26.3% 45-64 13,417 29.5% 918,688 25.2% 65+ 6,133 13.5% 490,637 13.5% Totals 45,489 100.0% 3,642,361 100.0% SOURCE: U.S. Census Bureau, Census data for 1990 and 2000, estimated population for 2008 (www.census.gov [April 2010]). 22 Table 5b Age Groups - for Population Numbers and Percent of Total Population Kay County and the State of Oklahoma Kay County State of Oklahoma Age Groups Number Percent Number Percent 1990 Census 0-14 10,780 22.4% 702,537 22.3% 15-19 3,233 6.7% 233,093 7.4% 20-24 2,597 5.4% 222,766 7.1% 25-44 13,700 28.5% 961,560 30.6% 45-64 9,354 19.5% 601,416 19.1% 65+ 8,392 17.5% 424,213 13.5% Totals 48,056 100.0% 3,145,585 100.0% 2000 Census 0-14 10,360 21.5% 732,907 21.2% 15-19 3,872 8.1% 269,373 7.8% 20-24 2,702 5.6% 247,165 7.2% 25-44 12,034 25.0% 975,169 28.3% 45-64 10,958 22.8% 770,090 22.3% 65+ 8,154 17.0% 455,950 13.2% Totals 48,080 100.0% 3,450,654 100.0% 2008 Estimates 0-14 9,598 21.0% 753,870 20.7% 15-19 3,285 7.2% 251,880 6.9% 20-24 2,782 6.1% 270,201 7.4% 25-44 10,020 22.0% 957,085 26.3% 45-64 12,464 27.3% 918,688 25.2% 65+ 7,483 16.4% 490,637 13.5% Totals 45,632 100.0% 3,642,361 100.0% SOURCE: U.S. Census Bureau, Census data for 1990 and 2000, estimated population for 2008 (www.census.gov [April 2010]). 23 Table 6a Race and Ethnic Groups - for Population Numbers and Percent of Total Population Osage County and the State of Oklahoma Osage County State of Oklahoma Race/Ethnic Groups Number Percent Number Percent 1990 Census White 30,703 73.7% 2,583,512 82.1% Black 4,148 10.0% 233,801 7.4% Native American 1 6,054 14.5% 252,420 8.0% Other 2 80 0.2% 75,852 2.4% Two or more Races 3 n/a n/a n/a n/a Hispanic Origin 4 660 1.6% 86,160 2.7% 2000 Census White 29,380 66.1% 2,721,554 78.9% Black 4,773 10.7% 264,235 7.7% Native American 1 6,299 14.2% 275,558 8.0% Other 2 129 0.3% 50,686 1.5% Two or more Races 3 2,916 6.6% 138,621 4.0% Hispanic Origin 4 940 2.1% 179,304 5.2% 2008 Estimates White 29,899 65.7% 2,600,115 71.4% Black 4,827 10.6% 280,290 7.7% Native American 1 6,318 13.9% 278,659 7.7% Other 2 212 0.5% 63,856 1.8% Two or more Races 3 3,021 6.6% 140,821 3.9% Hispanic Origin 4 1,212 2.7% 278,620 7.6% SOURCE: U.S. Census Bureau, Census data for 1990 and 2000, estimated population for 2008 (www.census.gov [April 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. n/a - Not available; 1990 census did not report this category 24 Table 6b Race and Ethnic Groups - for Population Numbers and Percent of Total Population Kay County and the State of Oklahoma Kay County State of Oklahoma Race/Ethnic Groups Number Percent Number Percent 1990 Census White 42,552 88.5% 2,583,512 82.1% Black 854 1.8% 233,801 7.4% Native American 1 3,555 7.4% 252,420 8.0% Other 2 244 0.5% 75,852 2.4% Two or more Races 3 n/a n/a n/a n/a Hispanic Origin 4 851 1.8% 86,160 2.7% 2000 Census White 39,687 82.5% 2,721,554 78.9% Black 850 1.8% 264,235 7.7% Native American 1 3,504 7.3% 275,558 8.0% Other 2 273 0.6% 50,686 1.5% Two or more Races 3 1,721 3.6% 138,621 4.0% Hispanic Origin 4 2,045 4.3% 179,304 5.2% 2008 Estimates White 36,247 79.4% 2,600,115 71.4% Black 892 2.0% 280,290 7.7% Native American 1 3,695 8.1% 278,659 7.7% Other 2 333 0.7% 63,856 1.8% Two or more Races 3 1,784 3.9% 140,821 3.9% Hispanic Origin 4 2,681 5.9% 278,620 7.6% SOURCE: U.S. Census Bureau, Census data for 1990 and 2000, estimated population for 2008 (www.census.gov [April 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. n/a - Not available; 1990 census did not report this category 25 The Direct Economic Activities The health sector creates employment and payroll impacts, which are important direct economic activities for the Fairfax, Hominy, and Newkirk Community Health Centers service area. The health sector is typically 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 For the purpose of this report, only the community health centers will be examined. Therefore, all three will be represented in the Physicians, Dentists, and Other Medical Professionals sector. The total of the three clinics employs 47 FTEs with a total direct payroll of $1,714,075. The Fairfax Clinic that opened January 1, 2006, employs 28 FTEs with an annual payroll of $1,191,005. Hominy’s Clinic that opened in May of 2007 employs 11 FTEs with an annual payroll of $345,410. The Newkirk Clinic is the newest clinic, opening in July 2009. This clinic employs 8 FTEs with an annual payroll of $177,660. 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. These residents, along with businesses in the health sector, purchase a large amount of goods and services from businesses in the Fairfax, Hominy, and Newkirk Community Health Centers 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. 26 Table 7 Direct Economic Activities of the Health Sector in the Fairfax, Hominy, and Newkirk Community Health Centers Medical Service Area Component Full-Time & Part- Time Employment Total Payroll with Benefits Fairfax Clinic 28 $1,191,005 Includes one DO, one PA, one Dentist one Psychiatrist, and one Psychologist Hominy Clinic Includes one DO, one PA, and one CMW/ARNP 11 $345,410 Newkirk Clinic 8 $177,660 Includes one DO and one ARNP Totals 47 $1,714,075 SOURCE: Local survey and estimates from research. 27 Basic Concepts of Community Economics and Income and Employment Multipliers Figure 3 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 3 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 3), labor from the residents or "households" of the community (left side of Figure 3), and inputs from service industries located within the community (right side of Figure 3). 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 3). It is evident from the relationships illustrated in Figure 3 that a change in any one segment of a community's economy will cause reverberations throughout the entire economic system of the community. Households Industry Basic Services Goods & $ Labor Inputs Products Inputs $ $ $ $ Services $ Figure 3 $ Community Economic System 28 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. 29 Secondary Impacts of the Health Sector on the Economy of Fairfax, Hominy, and Newkirk Community Health Centers 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 Service1 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 Physicians, Dentists, and Other Medical Professionals component is 1.33 for Osage County and 1.45 for Kay County. This indicates that for each job in that component, an additional 0.33 jobs are created throughout the area due to business (indirect) and household (induced) spending in Osage County. Similarly, each job associated with the CHC creates and additional 0.45 jobs in Kay County. 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 component of Physicians, Dentists, and Other Medical Professionals for the Fairfax Clinic has a direct employment of 28 full-time and part-time employees; applying the employment multiplier of 1.33 to the employment number of 28 brings the total employment impact of the hospital to 37 employees. The same method is used for the Hominy clinic where a total impact of 15 employees is observed after applying the multiplier of 1.33 to the direct number of 11 employees. The Newkirk Clinic follows the same method; however, the multiplier of 1.45 is used for Kay County. Therefore, the total employment impact for the Newkirk Clinic is 12 employees. The total employment impact of the health sector in Fairfax, Hominy, and Newkirk 1 For complete details of model, see [1], [2], and [3]. 30 Community Health Centers medical service area is estimated to be 63 employees (Table 8, total of column 4). 31 Table 8 Fairfax, Hominy, and Newkirk Community Health Centers 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 Fairfax Clinic1 28 1.33 37 $1,191,005 1.13 $1,342,263 $154,629* $1,546* Hominy Clinic1 11 1.33 15 $345,410 1.13 $389,277 $44,845* $448* Newkirk Clinic1 8 1.45 12 $177,660 1.27 $225,095 $66,426* $664* Total 47 63 $1,714,075 $1,956,635 $265,899* $2,659* 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 1 Multipliers for the Physicians, Dentists, and Other Medical Professionals Component were used. * Based on the ratio between Osage County retail sales and income (11.52%) and Kay County retail sales and income (29.51%) – from 2009 County Sales Tax Data and 2007 Personal Income Estimates from the Bureau of Economic Analysis. 32 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 Fairfax, Hominy and Newkirk Community Health Centers medical service area (Table 8, columns 5, 6, and 7). The income multiplier for the Physicians, Dentists, and Other Medical Professionals component is 1.13 for Osage County and 1.27 for Kay County (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 in Osage County. Also, each dollar spent for salary payments to CHC employees in Kay County generates another 27 cents throughout the economy. The Fairfax Clinic has a total income impact of $1,342,263 after applying the multiplier of 1.13 to the direct payroll of $1,191,005. The Hominy Clinic has a total income impact of $389,277 after the proper multiplier is applied. The Newkirk Clinic has a total income impact of $225,095 after the Kay County Physicians, Dentists, and Other Medical Professionals multiplier of 1.27 is applied to the direct payroll of $177,660. The total income impact of the health sector on the economy of Fairfax, Hominy, and Newkirk Community Health Centers medical service area is projected to be $1,956,635 (Table 8, total of column 7). Income also has an impact on retail sales, and CHCs in this report have their 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 it has in the past several years (around 11.52 percent for Osage County and 29.51 percent for Kay County), then direct and secondary retail sales generated by the CHCs equals $265,899 (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 component. A one-cent sales tax collection is estimated to generate $2,659 in the Fairfax, Hominy, and Newkirk Community Health Centers medical service area economy as a result of the health sector income 33 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 Fairfax, Hominy, and Newkirk Community Health Centers not only contributes greatly to the medical health of the community, but also to the economic health of the community. Summary The economic impact on the economy of Fairfax, Hominy, and Newkirk Community Health Centers 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. 34 [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 Fairfax, Hominy, and Newkirk community health centers |
Authors |
Brooks, Lara. Whitacre, Brian. Frye, Jack (V. Jack) Ralstin, Stan. Rexwinkle, Richard I. (Richard Ivan) Klumpp, Larry A. Kaiser, Corie. Schott, Val. Oklahoma. Office of Rural Health. Oklahoma Cooperative Extension Service. |
Publisher | Oklahoma Cooperative Extension Service, Oklahoma State University |
Publication Date | 2010-04 |
Publication type | Research Report/Study |
Subject |
Rural health services--Economic aspects--Oklahoma--Kay County. Rural health services--Economic aspects--Oklahoma--Osage County. Fairfax Medical Facilities, Inc. Robert Clark Family Health Center (Fairfax, Okla.) Hominy Family Health Center (Hominy, Okla.) Newkirk Family Health Center (Newkirk, Okla.) |
Purpose | The overall objective of this study is to measure the economic impact of the health sector on the Fairfax, Hominy, and Newkirk Community Health Centers on the areas that they serve. The specific objectives of this report are to: 1. Review economic trends of the health sector for the U.S. and Osage and Kay Counties; 2. Identify population for the medical service area of Fairfax, Hominy, and Newkirk Community Health Centers; 3. Summarize the direct economic activities of the community health centers; 4. Review concepts of community economics and multipliers; and 5. Estimate the secondary and total impacts of the Fairfax, Hominy, and Newkirk Community Health Centers. |
Contents | Health Services and Rural Development * Business and Industry Growth * Health Services and Attracting Retirees * Health Services and Job Growth; Osage and Kay Counties Economic Trends; Demographic Trends for the Fairfax, Hominy, and Newkirk Community Health Centers Medical Service Area and Osage and Kay Counties; The Direct Economic Activities; Basic Concepts of Community Economics and Income and Employment Multipliers; Secondary Impacts of the Health Sector on the Economy of Fairfax, Hominy, and Newkirk Community Health Centers; Summary; References |
Notes | (AE-10006); Community Health Engagement Process |
OkDocs Class# | Z2130.3 F167h 2010 |
Digital Format | PDF, Adobe Reader required |
ODL electronic copy | Downloaded from agency website: http://www.okruralhealthworks.org/PDFWEB/AE-10006.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 Fairfax, Hominy, and Newkirk Community Health Centers Hospitals Nursing Homes Physicians, etc. Other Services Pharmacies Oklahoma State Department of Health Office of Rural Health Oklahoma Cooperative Extension Service Oklahoma State University April 2010 AE-10006 The Economic Impact of the Fairfax, Hominy, and Newkirk Community Health Centers 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 Stan Ralstin, Area Extension Rural Development Specialist, OSU, Enid 580-237-7677 Richard Rexwinkle, Osage County Extension Director, Pawhuska 918-287-4170 Larry Klump, Kay County Extension Directory, Newkirk 580-362-3194 Corie Kaiser, Health Consultant, Oklahoma Center for Rural Health, Oklahoma City 405-945-9197 Val Schott, Director, Oklahoma Center for Rural Health, Oklahoma City & Tulsa 405-945-9197 Oklahoma State Department of Health Office of Rural Health Oklahoma Cooperative Extension Service Oklahoma State University April 2010 1 The Economic Impact of the Fairfax, Hominy, and Newkirk Community Health Centers 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 community health centers. 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 Fairfax, Hominy, and Newkirk Community Health Centers on the areas that they serve. The specific objectives of this report are to: 1. Review economic trends of the health sector for the U.S. and Osage and Kay Counties; 2. Identify population for the medical service area of Fairfax, Hominy, and Newkirk Community Health Centers; 3. Summarize the direct economic activities of the community health centers; 4. Review concepts of community economics and multipliers; and 5. Estimate the secondary and total impacts of the Fairfax, Hominy, and Newkirk Community Health Centers. 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 2007; Per capita health expenditures increased from $356 in 1970 to $7,421 in 2007; 4 Employment in the health sector increased almost 324.0 percent from 1970 to 2007; and Annual increases in employment from 2003 to 2007 ranged from 2.0 percent to 2.7 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. F by type o percent o percent o for 32.0 p Figure 1 illus of health serv of the total. of the total. percent. strates 2008 vice. The la The next lar Community health expen argest health rgest type of health cente 6 nditures by p service type f health serv ers are alloca percent of gr e was hospita vices was phy ated in “othe ross domesti al care, repre ysician servi er” category ic product an esenting 31. ices with 21 , which acco nd 0 .0 ounts 7 Osage and Kay Counties Economic Trends Data relative to the health sector for Osage and Kay Counties are provided in Tables 2a and 2b. Data in Tables 2a and 2b are from the U. S. Census Bureau County Business Patterns, based on the North American Industry Classification System (NAICS). The table is based on employment and payroll for both health services and total county services and health services as a percent of total county services for Osage and Kay Counties. Also, health services for the state of Oklahoma are illustrated as a percent of total state employment and payroll for comparison to the county data. This table states how health services have changed over time. Health services employment in Osage County increased 9.8 percent from 614 employees in 2000 to 674 employees in 2007 (Table 2). During the same time period, the total county employment also increased 23.9 percent. County health services employment as a percent of total county employment decreased from 14.5 percent in 2000 to 12.9 percent in 2007, 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 2007. The county saw a decrease of 1.6 percent over this seven year period, while the state grew by1.2 percent. The county health services payroll experienced significant increases over time. Osage County’s health services payroll increased 24.8 percent from about $9.2 million in 2000 to about $11.4 million in 2007; this compares to an increase of 56.8 percent for the total county payroll (Table 2a). During this same time period, the state health services payroll increased from 14.0 percent to 15.3 percent. County health services payroll as a percent of total county payroll decreased from 10.9 percent in 2000 to 8.7 percent in 2007. Kay County experienced a 13.6 percent increase in healthcare employment from 2000 to 2007. However, total county employment experienced a decrease of 10.1 percent during the 8 same time period. Health services employment as a percent of total county employment increased 2.7 percent from 2000 to 2007 (Table 2b). Kay County healthcare payroll also experienced an increase of 30.3 percent from nearly $44.7 million in 2000 to $58.2 million in 2007. Kay County total county payroll increased 12.4 percent during the same time period. Health services payroll as a percent of total county payroll increased 1.5 percent which is greater than the state (1.3 percent) (Table 2b). These numbers all suggest that in total, the health sector is very important to the economies of Osage and Kay Counties. Later in this report, we will quantify the role that the community health centers have played in benefitting the economy. 9 Table 2a Fairfax and Hominy Community Health Centers Employment and Payroll for County Business Patterns* Osage 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 614 4,233 14.5% 14.1% 2001 647 4,117 15.7% 14.3% 2002 679 3,413 19.9% 15.1% 2003 626 3,420 18.3% 15.2% 2004 622 3,318 18.7% 15.4% 2005 528 3,521 15.0% 15.4% 2006 571 4,256 13.4% 15.1% 2007 674 5,243 12.9% 15.3% % Change '00 - '07 9.8% 23.9% 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 $9,153.00 $84,005.00 10.9% 14.0% 2001 $10,304.00 $84,224.00 12.2% 14.5% 2002 $10,047.00 $61,635.00 16.3% 15.2% 2003 $9,816.00 $64,841.00 15.1% 15.2% 2004 $10,327.00 $66,194.00 15.6% 15.7% 2005 $9,845.00 $79,664.00 12.4% 15.5% 2006 $11,328.00 $97,710.00 11.6% 15.1% 2007 $11,423.00 $131,729.00 8.7% 15.3% % Change '00 - '07 24.8% 56.8% Source: U.S. Census Bureau, County Business Patterns; 2000-2007 data (www.census.gov [April 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). 10 Table 2b Newkirk Community Health Center Employment and Payroll for County Business Patterns* Kay 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 1,914 18,433 10.4% 14.1% 2001 1,847 18,268 10.1% 14.3% 2002 2,325 18,922 12.3% 15.1% 2003 2,232 16,172 13.8% 15.2% 2004 1,960 16,140 12.1% 15.4% 2005 2,190 17,238 12.7% 15.4% 2006 2,183 17,265 12.6% 15.1% 2007 2,175 16,576 13.1% 15.3% % Change '00 - '07 13.6% -10.1% 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 $44,692.00 $481,024.00 9.3% 14.0% 2001 $45,527.00 $529,319.00 8.6% 14.5% 2002 $50,895.00 $544,562.00 9.3% 15.2% 2003 $50,821.00 $432,722.00 11.7% 15.2% 2004 $50,443.00 $479,879.00 10.5% 15.7% 2005 $55,404.00 $552,196.00 10.0% 15.5% 11 2006 $58,503.00 $581,781.00 10.1% 15.1% 2007 $58,230.00 $540,621.00 10.8% 15.3% % Change '00 - '07 30.3% 12.4% Source: U.S. Census Bureau, County Business Patterns; 2000-2007 data (www.census.gov [April 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). Basic economic indicators of the Osage County and Kay County economy are illustrated in Tables 3a and 3b. Based on Bureau of Economic Analysis data, the 2007 per capita income for Osage County of $30,350 is lower than the per capita income for the state of Oklahoma and the United States. The per capita income for Kay County was $33,621 which was also lower than Oklahoma and the United States (Table 3b). Table 3a Economic Indicators for Osage County, the State of Oklahoma and the Nation Indicator County State U.S. Total Personal Income (2007) $1,378,877,000 $126,272,950,000 $11,634,322,000,000 Per Capita Income (2007) $30,350 $34,997 $38,615 Employment (2008) 19,291 1,681,854 145,362,000 Unemployment (2008) 854 66,562 8,924,000 12 Unemployment Rate (2008) 4.2% 3.8% 5.8% Employment (February 2010) 18,530* 1,638,235 137,203,000 Unemployment (February 2010) 1,737* 128,660 15,991,000 Unemployment Rate (February 2010) 8.6%* 7.3% 10.4% Percentage of People in Poverty (2008) 13.1% 15.7% 13.2% Percentage of Under 18 in Poverty (2008) 19.8% 22.0% 18.2% Transfer Dollars (2007) $233,524,000 $21,218,050,000 $1,712,794,000,000 Transfer Dollars as Percentage of 16.9% 16.8% 14.7% Total Personal Income (2007) *Employment data for Osage County for February 2010 should be considered preliminary SOURCES: 2010 Bureau of Labor Statistics; 2010 Bureau of Economic Analysis; 2010 U.S. Census Bureau. Table 3b Economic Indicators for Kay County, the State of Oklahoma and the Nation Indicator County State U.S. Total Personal Income (2007) $1,536,853,000 $126,272,950,000 $11,634,322,000,000 Per Capita Income (2007) $33,621 $34,997 $38,615 13 According to the Bureau of Labor Statistics, the unemployment rate for Osage County was 4.2 percent for 2008, which was the higher than the state (3.8 percent) but lower than the national (5.8 percent) rates. Kay County experienced a similar trend of a 3.6 percent unemployment rate which was lower than both the state and the nation. Moreover, in February 2010, the preliminary unemployment rate estimate for Osage County had increased to 8.6 percent, which was higher than the state (7.3 percent) but lower than the nation (10.4 percent). Preliminary estimates for Kay County indicate that the unemployment rate has increased to 9.2 percent in February. This places Kay County above the state rate and below the national unemployment rate. However, the number of people employed in Osage County decreased 4 percent from 2008 to February 2010, while the number of people unemployed increased 103 Employment (2008) 23,816 1,681,854 145,362,000 Unemployment (2008) 857 66,562 8,924,000 Unemployment Rate (2008) 3.6% 3.8% 5.8% Employment (February 2010) 21,288* 1,638,235 137,203,000 Unemployment (February 2010) 2,146* 128,660 15,991,000 Unemployment Rate (February 2010) 9.2%* 7.3% 10.4% Percentage of People in Poverty (2008) 17.2% 15.7% 13.2% Percentage of Under 18 in Poverty (2008) 26.0% 22.0% 18.2% Transfer Dollars (2007) $305,450,000 $21,218,050,000 $1,712,794,000,000 Transfer Dollars as Percentage of 19.9% 16.8% 14.7% Total Personal Income (2007) *Employment data for Kay County for February 2010 should be considered preliminary SOURCES: 2010 Bureau of Labor Statistics; 2010 Bureau of Economic Analysis; 2010 U.S. Census Bureau. 14 percent during that same time period. The number of people employed in Kay County decreased 11 percent during the same time period, and the number of unemployed increased 150 percent. The unemployment and employment estimates from February 2010 are considered preliminary. From the U. S. Census Bureau, the percent of people in poverty in Osage County was 13.1 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 Osage County being lower than both the state but higher than the nation. The percentage of people in poverty in Kay County was 17.2 percent which is higher than both the state and the nation, and the percentage of people under the age of 18 in poverty was 26.0 percent which is also higher than both the state and the nation as well. Another economic indicator is the percent of personal income that is from transfer payments. Based on Bureau of Economic Analysis data, Osage County had 16.9 percent of total personal income from transfer payments, which is higher than both the state and the nation. Kay County had 19.9 percent of personal income from transfer payments. 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. A growing concern across the country is the number of uninsured. Figure 2 displays the percentage of uninsured individuals per county under the age of 65. This percentage includes both sexes and all income levels. Osage and Kay Counties are both in the 20-25 percent range of uninsured under the age of 65. This is comparable to the state percentage of 21.0 percent. 15 16 ADAIR ALFALFA ATOKA BECKHAM BLAINE BRYAN CANADIAN CARTER CHEROKEE CHOCTAW CLEVELAND COMANCHE COTTON CRAIG CUSTER DELAWARE DEWEY ELLIS GARFIELD GRADY GRANT GREER HARMON HARPER JACKSON JEFFERSON KAY KIOWA LATIMER LOVE MAYES MURRAY MUSKOGEE NOBLE NOWATA OKLAHOMA OKMULGEE OSAGE OTTAWA PAWNEE PAYNE PUSHMATAHA ROGER MILLS ROGERS SEQUOYAH STEPHENS TILLMAN TULSA WAGONER WASHITA WOODS WOODWARD WASHINGTON SHALL MAR-MAJOR KINGFISHER TEXAS BEAVER LOGAN CREEK LINCOLN OKFUSKEE McINTOSH CADDO MCCLAIN GARVIN SEMINOLE POTTA-WATOMIE HUGHES PITTSBURG HASKELL LE FLORE COAL JOHNSTON PONTOTOC MCCURTAIN CIMARRON 20-25% Figure 2. Percentage Uninsured by County for All Income Levels Under 65 Years of Age, 2006 17-20% 25-30% 30-35% SOURCE: US Census Bureau, 2009 35% and over State Percentage Uninsured‐ 21.0% 20.8% 23.3% 17 Demographic Trends for the Fairfax, Hominy, and Newkirk Community Health Centers Medical Service Area and Osage and Kay Counties The Fairfax, Hominy, and Newkirk Community Health Centers medical service area is delineated in Figure 3. The primary medical service area is the immediate area surrounding these clinics which is most of Kay and Osage Counties. The population for Kay and Osage counties is delineated in Table 4. Both Kay and Osage Counties experienced an increase in their population from 1990 to 2000. Kay County only reported a 0.5 percent increase while Osage County experienced an increase of 6.7 percent. From the years of 2000-2009, Osage County reported an increase of 1.38 percent, and Kay County had a decrease of 4.1 percent. The state of Oklahoma experienced an increase of 9.7 percent from 1990-2000 and 5.56 percent from 2000- 2009. 18 City County Hospital No. of Beds Ponca City Kay Ponca City Medical Center 140 Perry Noble Perry Memorial Hospital 26 Fairfax Osage Fairfax Memorial Hospital 15 Pawhuska Osage Pawhuska Hospital, Inc 25 Cleveland Pawnee Cleveland Area Hospital 14 Figure 3 Fairfax, Hominy, and Newkirk Community Health Centers Medical Service Area Primary Medical Services Area 19 Table 4 Population for Kay County, Osage County, and Oklahoma 1990 2000 2009 % Change % Change Population Population Population 1990-2000 2000-2009 State of Oklahoma 3,145,585 3,450,654 3,642,361 9.70% 5.56% Kay County 48,056 48,080 46,110 0.05% -4.10% Osage County 41,645 44,437 45,051 6.70% 1.38% SOURCE: Population data from the U.S. Bureau of Census, 1990, 2000; U. S. Bureau of the Census, Population Estimates Branch, 2009 Tables 5 (a and b) and 6 (a and b) provide further details about the demographic trends of Osage and Kay Counties. Tables 5a and 5b presents the breakdown by age group for Osage and Kay Counties and the State of Oklahoma from the census years 1990 and 2000 and the 2008 census estimates. The lowest age group, age 0-14, experienced a decrease from 1990-2000 and 2008 on both the state and county level for both counties. The age group of 45-64, however, has seen a consistent increase over time. In Osage County, those age 45-64 made up 20.8 percent of the total population in 1990, and this went up to 25.4 percent in 2008. Kay County also experienced an increase from 19.5 percent in 1990 to 27.3 percent in 2008. This same trend holds true for the state of Oklahoma as well. Tables 6a and 6b shows the race and ethnic group percentages for Osage and Kay County and the state of Oklahoma for the census years 1990 and 2000 and the 2008 census estimates. The state has experienced a significant increase in people of Hispanic origin, increasing from 2.7 percent in 1990 to 7.6 percent in 2008. Osage and Kay Counties have experienced a similar trend. In 1990, those of Hispanic origin made up 1.6 percent of the Osage County population and 1.8 percent of the Kay County Population. In 2000, this number 20 increased to 2.1 percent for Osage County and 4.3 percent for Kay. This number again increased in the 2008 estimates to 2.7 percent for Osage County and 5.9 percent for Kay County. 21 Table 5a Age Groups - for Population Numbers and Percent of Total Population Osage County and the State of Oklahoma Osage County State of Oklahoma Age Groups Number Percent Number Percent 1990 Census 0-14 9,609 23.1% 702,537 22.3% 15-19 2,974 7.1% 233,093 7.4% 20-24 2,107 5.1% 222,766 7.1% 25-44 12,585 30.2% 961,560 30.6% 45-64 8,674 20.8% 601,416 19.1% 65+ 5,696 13.7% 424,213 13.5% Totals 41,645 100.0% 3,145,585 100.0% 2000 Census 0-14 9,523 21.4% 732,907 21.2% 15-19 3,376 7.6% 269,373 7.8% 20-24 2,229 5.0% 247,165 7.2% 25-44 12,205 27.5% 975,169 28.3% 45-64 11,297 25.4% 770,090 22.3% 65+ 5,807 13.1% 455,950 13.2% Totals 44,437 100.0% 3,450,654 100.0% 2008 Estimates 0-14 8,011 17.6% 753,870 20.7% 15-19 3,135 6.9% 251,880 6.9% 20-24 3,045 6.7% 270,201 7.4% 25-44 11,748 25.8% 957,085 26.3% 45-64 13,417 29.5% 918,688 25.2% 65+ 6,133 13.5% 490,637 13.5% Totals 45,489 100.0% 3,642,361 100.0% SOURCE: U.S. Census Bureau, Census data for 1990 and 2000, estimated population for 2008 (www.census.gov [April 2010]). 22 Table 5b Age Groups - for Population Numbers and Percent of Total Population Kay County and the State of Oklahoma Kay County State of Oklahoma Age Groups Number Percent Number Percent 1990 Census 0-14 10,780 22.4% 702,537 22.3% 15-19 3,233 6.7% 233,093 7.4% 20-24 2,597 5.4% 222,766 7.1% 25-44 13,700 28.5% 961,560 30.6% 45-64 9,354 19.5% 601,416 19.1% 65+ 8,392 17.5% 424,213 13.5% Totals 48,056 100.0% 3,145,585 100.0% 2000 Census 0-14 10,360 21.5% 732,907 21.2% 15-19 3,872 8.1% 269,373 7.8% 20-24 2,702 5.6% 247,165 7.2% 25-44 12,034 25.0% 975,169 28.3% 45-64 10,958 22.8% 770,090 22.3% 65+ 8,154 17.0% 455,950 13.2% Totals 48,080 100.0% 3,450,654 100.0% 2008 Estimates 0-14 9,598 21.0% 753,870 20.7% 15-19 3,285 7.2% 251,880 6.9% 20-24 2,782 6.1% 270,201 7.4% 25-44 10,020 22.0% 957,085 26.3% 45-64 12,464 27.3% 918,688 25.2% 65+ 7,483 16.4% 490,637 13.5% Totals 45,632 100.0% 3,642,361 100.0% SOURCE: U.S. Census Bureau, Census data for 1990 and 2000, estimated population for 2008 (www.census.gov [April 2010]). 23 Table 6a Race and Ethnic Groups - for Population Numbers and Percent of Total Population Osage County and the State of Oklahoma Osage County State of Oklahoma Race/Ethnic Groups Number Percent Number Percent 1990 Census White 30,703 73.7% 2,583,512 82.1% Black 4,148 10.0% 233,801 7.4% Native American 1 6,054 14.5% 252,420 8.0% Other 2 80 0.2% 75,852 2.4% Two or more Races 3 n/a n/a n/a n/a Hispanic Origin 4 660 1.6% 86,160 2.7% 2000 Census White 29,380 66.1% 2,721,554 78.9% Black 4,773 10.7% 264,235 7.7% Native American 1 6,299 14.2% 275,558 8.0% Other 2 129 0.3% 50,686 1.5% Two or more Races 3 2,916 6.6% 138,621 4.0% Hispanic Origin 4 940 2.1% 179,304 5.2% 2008 Estimates White 29,899 65.7% 2,600,115 71.4% Black 4,827 10.6% 280,290 7.7% Native American 1 6,318 13.9% 278,659 7.7% Other 2 212 0.5% 63,856 1.8% Two or more Races 3 3,021 6.6% 140,821 3.9% Hispanic Origin 4 1,212 2.7% 278,620 7.6% SOURCE: U.S. Census Bureau, Census data for 1990 and 2000, estimated population for 2008 (www.census.gov [April 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. n/a - Not available; 1990 census did not report this category 24 Table 6b Race and Ethnic Groups - for Population Numbers and Percent of Total Population Kay County and the State of Oklahoma Kay County State of Oklahoma Race/Ethnic Groups Number Percent Number Percent 1990 Census White 42,552 88.5% 2,583,512 82.1% Black 854 1.8% 233,801 7.4% Native American 1 3,555 7.4% 252,420 8.0% Other 2 244 0.5% 75,852 2.4% Two or more Races 3 n/a n/a n/a n/a Hispanic Origin 4 851 1.8% 86,160 2.7% 2000 Census White 39,687 82.5% 2,721,554 78.9% Black 850 1.8% 264,235 7.7% Native American 1 3,504 7.3% 275,558 8.0% Other 2 273 0.6% 50,686 1.5% Two or more Races 3 1,721 3.6% 138,621 4.0% Hispanic Origin 4 2,045 4.3% 179,304 5.2% 2008 Estimates White 36,247 79.4% 2,600,115 71.4% Black 892 2.0% 280,290 7.7% Native American 1 3,695 8.1% 278,659 7.7% Other 2 333 0.7% 63,856 1.8% Two or more Races 3 1,784 3.9% 140,821 3.9% Hispanic Origin 4 2,681 5.9% 278,620 7.6% SOURCE: U.S. Census Bureau, Census data for 1990 and 2000, estimated population for 2008 (www.census.gov [April 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. n/a - Not available; 1990 census did not report this category 25 The Direct Economic Activities The health sector creates employment and payroll impacts, which are important direct economic activities for the Fairfax, Hominy, and Newkirk Community Health Centers service area. The health sector is typically 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 For the purpose of this report, only the community health centers will be examined. Therefore, all three will be represented in the Physicians, Dentists, and Other Medical Professionals sector. The total of the three clinics employs 47 FTEs with a total direct payroll of $1,714,075. The Fairfax Clinic that opened January 1, 2006, employs 28 FTEs with an annual payroll of $1,191,005. Hominy’s Clinic that opened in May of 2007 employs 11 FTEs with an annual payroll of $345,410. The Newkirk Clinic is the newest clinic, opening in July 2009. This clinic employs 8 FTEs with an annual payroll of $177,660. 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. These residents, along with businesses in the health sector, purchase a large amount of goods and services from businesses in the Fairfax, Hominy, and Newkirk Community Health Centers 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. 26 Table 7 Direct Economic Activities of the Health Sector in the Fairfax, Hominy, and Newkirk Community Health Centers Medical Service Area Component Full-Time & Part- Time Employment Total Payroll with Benefits Fairfax Clinic 28 $1,191,005 Includes one DO, one PA, one Dentist one Psychiatrist, and one Psychologist Hominy Clinic Includes one DO, one PA, and one CMW/ARNP 11 $345,410 Newkirk Clinic 8 $177,660 Includes one DO and one ARNP Totals 47 $1,714,075 SOURCE: Local survey and estimates from research. 27 Basic Concepts of Community Economics and Income and Employment Multipliers Figure 3 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 3 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 3), labor from the residents or "households" of the community (left side of Figure 3), and inputs from service industries located within the community (right side of Figure 3). 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 3). It is evident from the relationships illustrated in Figure 3 that a change in any one segment of a community's economy will cause reverberations throughout the entire economic system of the community. Households Industry Basic Services Goods & $ Labor Inputs Products Inputs $ $ $ $ Services $ Figure 3 $ Community Economic System 28 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. 29 Secondary Impacts of the Health Sector on the Economy of Fairfax, Hominy, and Newkirk Community Health Centers 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 Service1 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 Physicians, Dentists, and Other Medical Professionals component is 1.33 for Osage County and 1.45 for Kay County. This indicates that for each job in that component, an additional 0.33 jobs are created throughout the area due to business (indirect) and household (induced) spending in Osage County. Similarly, each job associated with the CHC creates and additional 0.45 jobs in Kay County. 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 component of Physicians, Dentists, and Other Medical Professionals for the Fairfax Clinic has a direct employment of 28 full-time and part-time employees; applying the employment multiplier of 1.33 to the employment number of 28 brings the total employment impact of the hospital to 37 employees. The same method is used for the Hominy clinic where a total impact of 15 employees is observed after applying the multiplier of 1.33 to the direct number of 11 employees. The Newkirk Clinic follows the same method; however, the multiplier of 1.45 is used for Kay County. Therefore, the total employment impact for the Newkirk Clinic is 12 employees. The total employment impact of the health sector in Fairfax, Hominy, and Newkirk 1 For complete details of model, see [1], [2], and [3]. 30 Community Health Centers medical service area is estimated to be 63 employees (Table 8, total of column 4). 31 Table 8 Fairfax, Hominy, and Newkirk Community Health Centers 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 Fairfax Clinic1 28 1.33 37 $1,191,005 1.13 $1,342,263 $154,629* $1,546* Hominy Clinic1 11 1.33 15 $345,410 1.13 $389,277 $44,845* $448* Newkirk Clinic1 8 1.45 12 $177,660 1.27 $225,095 $66,426* $664* Total 47 63 $1,714,075 $1,956,635 $265,899* $2,659* 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 1 Multipliers for the Physicians, Dentists, and Other Medical Professionals Component were used. * Based on the ratio between Osage County retail sales and income (11.52%) and Kay County retail sales and income (29.51%) – from 2009 County Sales Tax Data and 2007 Personal Income Estimates from the Bureau of Economic Analysis. 32 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 Fairfax, Hominy and Newkirk Community Health Centers medical service area (Table 8, columns 5, 6, and 7). The income multiplier for the Physicians, Dentists, and Other Medical Professionals component is 1.13 for Osage County and 1.27 for Kay County (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 in Osage County. Also, each dollar spent for salary payments to CHC employees in Kay County generates another 27 cents throughout the economy. The Fairfax Clinic has a total income impact of $1,342,263 after applying the multiplier of 1.13 to the direct payroll of $1,191,005. The Hominy Clinic has a total income impact of $389,277 after the proper multiplier is applied. The Newkirk Clinic has a total income impact of $225,095 after the Kay County Physicians, Dentists, and Other Medical Professionals multiplier of 1.27 is applied to the direct payroll of $177,660. The total income impact of the health sector on the economy of Fairfax, Hominy, and Newkirk Community Health Centers medical service area is projected to be $1,956,635 (Table 8, total of column 7). Income also has an impact on retail sales, and CHCs in this report have their 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 it has in the past several years (around 11.52 percent for Osage County and 29.51 percent for Kay County), then direct and secondary retail sales generated by the CHCs equals $265,899 (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 component. A one-cent sales tax collection is estimated to generate $2,659 in the Fairfax, Hominy, and Newkirk Community Health Centers medical service area economy as a result of the health sector income 33 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 Fairfax, Hominy, and Newkirk Community Health Centers not only contributes greatly to the medical health of the community, but also to the economic health of the community. Summary The economic impact on the economy of Fairfax, Hominy, and Newkirk Community Health Centers 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. 34 [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 | 2013-02-25 |
OCLC number | 819810468 |
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