HEALTH CARE AND HUMAN SERVICES POLICY, RESEARCH, AND CONSULTING - WITH REAL-WORLD PERSPECTIVE.

Estimating the Economic Impact of HRSA OHRP Outreach and Network Development Grantees

Carol J. Simon, PhD

September 2009

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ORHP EIA Project Purpose

Purpose: measure the economic impact of ORHP grantees in their communities: ORHP grants as “Mini-Stimulus” packages How have Grantees used funds? What is the impact of that spending on job

growth and economic activity Target: the 3rd and 4th year Rural Outreach and

Network Development program grantees EI Team:

The Lewin Group The University of Washington Rural Health Research

Center Mark Doescher & Sue Skillman

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Goal– a tool for estimating Economic Impact (EI)

Deliverable: easy-to-use formulas to measure Economic Impact Separate versions for Outreach program and the Network

Development program grantees

Formulas will be utilized by current & future grantees to demonstrate the potential long term impact of programmatic investment on rural communities

Demonstrating economic impact can be a vehicle for sustaining funding and support

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What Is An Economic Impact Analysis?

Economic Impact analysis tracks the reach of program dollars

Translates project-specific impacts into community-wide effects Jobs created Spending that supports local businesses and

taxes Impact of new or expanded services on the well-

being of the population Bottom line: every dollar invested by

HRSA creates more than a dollar’s worth of value in the community

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Type of economic impacts

Direct impacts are measured by the new health & community services and the number of jobs that are generated by grantee activities (e.g., wages, salaries and benefits paid directly to grant-supported employees)

Indirect impacts are the result of a “second round” of spending that occurs when the grantees purchase goods and services from local businesses

Induced impacts occur when employees of the grantees and of the firms that sell goods and services to the grantees in turn spend their earnings on local goods and services. This effect multiplies the initial program effects.

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Framework for Economic Impact Analysis

HRSA Program Support Dollars

Rural grantees

Direct impact

Employment

Ind

irect

imp

act

Health services

Local Spending on goods

and services

Spending multiplied$

$

New programs, sources of support

$

Community factors and economic environment

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Why It Is Important to Conduct EIA for ORHP Grantees?

Used to demonstrate program value and argue for on-going support

Help understand the timing and extent of program impacts in the community

Build the business case to other funders and attract new financial and in-kind resources that can leverage the reach of HRSA dollars

Identify high-performing grantees and understand best practices

Benchmark grantee performance against expected norms

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Steps in Development of the EIA Formulas & Models

Select study sample Review grantee documentation Contact program grantees and collect information

Jobs, spending to provide services, infrastructure investment, community impact area

Data organization Estimate the multiplier model Apply to grantees Estimate the long term increase in jobs, spending and

economic activity in the community

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Sample of Grantees

Study Sample Selection Criteria used in selecting 3rd and 4th year grantees

Assured geographic representation Assured adequate numbers of HIT, Network, and

Outreach grantees Assured representation of all major issue areas

identified by ORHP and grantees 3rd year grantees recommended by ORHP and program

staff 20 as the total (15 Outreach, 4 Network Development, and 1

HIT)

Selected 20 4th year grantees 13 Outreach, 4 Network Development and 3 HIT

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Characteristics of Contacted Grantees by Covered Issue Areas

Issue Areas # of GranteesObesity / Chronic Illness 9Access to Healthcare Services 6Health Promotion / Outreach 8Behavioral/ Mental Health 5Oral Healthcare 4EMS 2Quality Improvement 7Patient Safety 1Pharmacy Services 2Other 3

Note: Some grantees may have multiple issue areas to cover.

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Grantee Characteristics

geographic representation

12

11

10

3

Midwest Northeast South West

grantee program

7

429

Network HIT Outreach

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Key Data Needs-- overview

Program and project information: Spending: HRSA & co-funded spending

Health care services Educational services IT Infrastructure

Employment Clinical Administrative Technical

Co-funding and in-kind support Grantee Information:

Program activities Number and location of sites

Community information: Service area Economic, political and social environment

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Key Data Needs- detail

Program and project information: HRSA grant and program; primary objectives, funding, budget/spending on staff and labor, expenditures on health services, expenditures on infrastructure (type), number and types of health services provided, FTE staff and functions, information on new services or expanded functions made possible by the grant.

Grantee Information: Grantee size (FTE, $) and type (e.g. health center, provider organization, research organization, etc), number and location of sites, affiliations with larger/parent/network organizations, other relevant HRSA funding, other funding supporting grant activities, taxes paid.

Community information: Name and size of community, location, demographic and economic descriptive information. Community and environment factors affect the size of economic impacts, and “multipliers” (i.e. the extent to which local activity multiplies in the local economy and health sector).

Grantee contact information: from the directory of grantees, grantee profile, annual reports, and ORHP web sites.

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Data Collection: Documentation Review and Data Capturing Protocol Development

Review HRSA program documents Application, non-competing renewal, sustainability assessments,

profiles

Prepare data capture protocols for interviews Flexibly organize data across grantees involved in a wide range

of activities (e.g., health promotion, disease management, access to care)

Easy and informative Feed into Excel-based database Examine different economic impacts as well as the pathways by

which the initiatives affect the community and region Respond to grantee questions

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Data Collection: Contact Program Grantees

Develop contact strategy for phone interviews with grantees

ORHP sent introductory message

Interview protocol offer structured scripts and guidance on the

conversation with grantees

Schedule and implement phone interviews

Phone calls took place between late December 2008 and April

2009

Grantees were exceptionally enthusiastic and supportive –

excellent collaboration in data collection (thank you!)

37 out of 40 completed: good representation across

geography and program type

Data availability: Percentage of grantees able to access various types of data

92%86% 86% 89%

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Lessons Learned from Data Collection

Key lessons learned Some programs evolved from what was proposed in the

grantee’s initial grant application Considerable variation in the way that grantees documented

finances required flexibility in identifying types of spending

Important elements & success factors Recognize variability among grantees with regard to how they

count the services they deliver Probes and examples helpful

Service area is key: many grantees need assistance conceptualizing and measuring their “reach”

Differentiate in-community versus outside spending Track donated and in-kind services and discounts Identify in-kind services from partnerships

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Observations -- 2

Network Development grantees were often fundamentally different in their staffing practices many Networks had no direct employees, only contractors

or consultants. Network Development grantees were at times challenged to

define their respective service areas. Some Network grantees may cover “all rural areas in the state”, yet have offices in just one area, which could make balanced EIA formulations challenging.

some grantees that are in the process of expanding their network boundaries to neighboring states.

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Observations & Feedback

Information on spending and employment were good: Either provided in the interview or were fairly easily

obtained/verified from accounting staff. Qualitative support to the numbers was in abundance. Grantees

could generally speak in terms of hard numbers and qualitative context for their service communities.

Conversely, in-kind items and donated services (both estimations of value and systematic tracking) often were less frequently reported as, for many grantees, this was not a need, and thus the resources were not put into tracking.

Some grantees did not systematically track figures on training done by staff, or health and/or other services provided Some did not maintain systematic tracking of total visits versus

unduplicated visits, or non-direct services provided (e.g., referrals). Difficult to construct this information retrospectively

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Observations -- 3

Outreach grantees that are part of a county health department could capitalize on in-kind or shared labor labor provided by staff and executives (e.g., directors and

coordinators) who were compensated in-part or in total by other funding sources, leaving more HRSA dollars available for other program activities.

However, with so many funding sources, these grantees sometimes thought more in terms of the global project instead of individual funding sources.

Increasingly, all programs noted they were relying on supplies and equipment from national vendors, as many rural areas are limited in retail offerings. This puts many grantees at a disadvantage for positively impacting their area’s local economy.

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Observations -- 4

Internal Grantee Barriers Staff turnover and internal shifting of responsibilities affected

a few of the grantees and makes data collection and overall management more challenging.

Data Collection Issues that are Likely to Persist Many grantees are short staffed and the project directors and

coordinators may wear multiple hats for purposes of grant administration as well as within their parent organizations.

Many grantees only thoroughly track and report what is absolutely necessary.

Variability in program expenses from year to year will likely persist, as grantees’ needs change and priorities shift during implementation.

Allocation of HRSA funding versus supplemental funding will continue to be a struggle as grantees continue to often pool their resources.

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Recommendations for Future EIA Related Data Collections

It will be useful to provide clear data collection guidelines at the implementation of the grants

It may also be helpful to make technical support available for these tasks

Engage grantee personnel who have good knowledge on the EIA relevant aspects

Grantees’ operating programs or networks within existing organizations (e.g., a health department, hospital, state hospital association), appear to have the advantage of being able to capitalize on existing economies of scale.

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EIA Formula Model Development

Application of multipliers to the collected grantee data Summarize direct impacts of grantee initiatives on local

employment, spending, and service provision Apply multipliers of the selected Input-Output model to the

summarized data Calculate direct and indirect economic impacts

Develop user-friendly formulas for future grantees Populate formula model using the EIA study results Test model fit by comparing the predicted impact value

against the actual data of the sample grantees Apply coefficients to develop formulas for future grantees Add user-friendly interface to model to enhance user

convenience (*optional)

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Example to Demonstrate the Economic Impact Calculation

Grantee example

Hypothetical Network Development Grantee

Multipliers/Community

Missouri community

Data organization & simplified calculations

Use sample simplified (disguised) data that was collected from documentation review and grantee interviews

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Sample Data Summary – Show-me State Network Grantee

3-year Budget 1-year Budget NoteTotal of HRSA designated fund 591,000$ 197,000$ Personnel 177,300$ 59,100$ Equipment/supplies 3,000$ 1,000$ Contract 393,600$ 131,200$ Contract locally 100% Other 17,100$ 5,700$ Supplemental fund 340,590$ 113,530$ TOTAL FUND 931,590$ 310,530$

CommunityServed Geographic Area State of MontanaPopulation 56,396Employment Paid FTE 2.3 Volunteer FTE 7Total FTE 9.3

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Grantee & Community Characteristics

The size and geographic reach of the grantee’s service area affects the multiplier: larger areas –> higher multiplier

Unpaid, volunteer labor and in-kind services are important to many grantees: underestimating these can lead to an understatement of the impact

Community Characteristics: rural areas outside Kansas City

Population in communities where operate

56,000

Grantee Employment

Paid 2.3

Volunteer 7.0

Total 9.3

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Investment multiplies as it moves thru the community

Each dollar of investment by HRSA Creates direct program

jobs, services & $$$ Creates indirect (multiplied)

value as the new employees spend in the community

The more the community spends locally, the larger the multiplier

Can feedback to create new support for HRSA grantees

Jobs,

Services

$$$

HRSA Grant to

Community Organization

Spur

local

economic

activity

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The “multiplier” measures how many times new dollars recycle in a local community

Example: HRSA grantee spends $311,000 in their first year

Creates $726K in local economic value

Of which $223,00 in in the form of increased wages and earnings

Multipliers are specific to the industry and the size of the service area – health care has an above average “multiplier” effect (2.33)

Multiplier

x(grantee spending)

= Economic Impact

“Output”

2.3369 X 311,000 $726,000

“Earnings”

0.71 X 311,000 $223,000

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The “multiplier” measures how many new jobs are ultimately created from expanded economic activity

Example: HRSA grantee hires 2.3 FTEs But attracts an additional 7.0

volunteer FTE in administration

Total employment = 9.3 FTE Jobs multiplier for technology

services = 2.4031 For administrative services

= 1.102 Volunteer labor is important! Multipliers are specific to the

industry and the size of the service area – health care has an above average “multiplier” effect

Multiplier

X new hires

= Economic Impact, new jobs

“tech Jobs”

2.4031 X 2.3 5.527

“admin jobs”

1.102

X 7.0 (volunteer) 7.714

Total new jobs 13.241

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Grantee Activities create significant community value

Each dollar invested results in over 2 new dollars of value in this example Health care and technology have high multiplier values Expanding the service area increases value

Cautions: Need to be realistic about “reach”: understand, but don’t

overestimate impact area Understand the functions and effort provided by volunteers,

co-funding and in-kind support

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Next Steps

Calculate economic impact values for the sampled grantees

Build the multiplier model Develop a template tool that grantees can use:

Inputs: Grantee activities & focus: health care, education,

network infrastructure Jobs & classification Spending by type of spending Geographic area served

Excel-based tool to calculate impacts

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THANK YOU!

We are extremely grateful to the HRSA Outreach and Network Development grantees who have worked with us on this project.

~we couldn’t do it with out your time and effort!

The EI Team at the Lewin Group and University of Washington Rural Health Research Center