“How To” Derive the Economic Impactof the Health Sector

Community

Pharmacies

Doctors &Other Professionals

Other Medical Services

Hospitals

Nursing Home

“How to” Derive the Economic Impact of the Health Sector

MAIN OBJECTIVE:

Derive the direct economic impact and total economic impact of the five health sectors and the total health sector

Overview

Create the Economic Impact of a Sample County

Derive the data from the IMPLAN program

Create a Shadow Industry (Hospitals)

Modify IMPLAN data (Pharmacies)

Derive the Local Retail Sales Capture Ratio

The Total Economic Impact of the Health Sector

Use of Health Sector Impact tool in Community

Health Planning

Mold the model for YOUR STATE

Create the Economic Impact of a Sample County

What we are trying to accomplish:

To complete the Health Sector Impact Table

Sample CountyHealth Sector Impact on Employment and Income, Retail Sales and Sales Tax

Employment Income Retail SalesIMPLAN IMPLAN 1 Cent Type III Total Type III Total Retail Sales Tax

Health Sectors Employed Multiplier Impact Income Multiplier Impact Sales Collection

Hospitals (492) _____ _____ _____ _____ _____ _____ _____ _____

Physicians, Dentists, and Other Professionals (490) _____ _____ _____ _____ _____ _____ _____ _____

Nursing & Protective Care (491) _____ _____ _____ _____ _____ _____ _____ _____

Other Medical & Health Services (493) _____ _____ _____ _____ _____ _____ _____ _____

Pharmacies (455) _____ _____ _____ _____ _____ _____ _____ _____

Total _____ _____ _____ _____ _____ _____

Data needed to complete the Health Sector Impact Table:

For all five Health Sectors

NEED: Type III Employment MultipliersType III Income MultipliersEmploymentPersonal Income (Includes employee compensation & proprietor income)

Data Needed For the Sample County

Local Retail Sales Capture Ratio

(Derived from total personal income and local retail sales collections)

‘HOW TO” derive the data from the IMPLAN program

START IMPLAN

Select Start <click>

Select Programs <click>

Select IMPLAN Professional 2.0 <click>

Select IMPLAN Professional 2.0 <click>

BUILD THE STUDY AREA

Select “File” <click>

Select “New Model” <click>

Select “File Name” <click>

Type in the county name as the file name

<Atoka County>

Select “Save” <click>

Select the IMPLAN File

Next Screen Pops Up - "Select Region"

Select "Drives," Select (CD-ROM Drive) <d:> <click>

Select "Directory Info Box" <IMPLAN data> <double click>

Select "Available IMPLAN Data Files"

Select "County File" <ATOKA> <double click>

Select "Continue" <click>

STUDY AREA IS BUILT

WAIT until County Study Area is built Study Area is built! OK <click>

CONSTRUCT THE MODEL

Select "Construct Model" <click> Select from "Model Construction" Options

“Advanced” <Next> <click> “Production Functions” <Next> <click> “ByProducts” <Next> <click> “Trade Flows” <Next> <click> “Institutional Transfers” <Next> <click> “Multipliers”

Select ”Type III (CPPM)" <Check box>

<Next> <click>

COMPLETE CONSTRUCTION MODEL

WAIT until Model is constructed “Model Construction is Complete.” Select "OK"

<click>

Select "Close" <click>

REPORT RESULTS (Download Reports)

Select “Reports…” <click>

Select “1: Study Area” “Output, VA, Employment” <check box>

To Download, Select "To File" <check box> Select “Tab Delimited” <check box> Select "Continue" <click>

"Enter Location to Save Report File" will pop up.

Select "File Name" Type a file name <Atoka County op va emp> Select "Save" <click>

REPORTS

For next report, download “6. Multipliers” “Labor Income”

For next report, download “6: Multipliers” “Employment”

When finished downloading, Select "Close" <click>

Run State IMPLAN Model

1. Build a Study Area of the STATE (Follow Instructions to “Build a Study Area”)

2. Construct the STATE Model

3. Report the STATE results

a. Need "Output, VA, Employment” Report ONLY

b. Download results. Name file <OK op va emp>

Summary of data completed from above steps:

Atoka County – Employment – Type III Multipliers - Report

Atoka County – Labor Income – Type III Multipliers - Report

Atoka County – Output, VA, Employment - Report

Oklahoma – Output, VA, Employment - Report

EXCERPTS from the IMPLAN Data Reports:

Atoka County - Type III EMPLOYMENT MULTIPLIERS for Five Health Sectors

Direct Indirect Induced Total Type I Type III

Sector Effects Effects Effects Effects MultiplierMultiplier

Miscellaneous Retail 455 42.440136 0.975899 20.029514 63.445549 1.022995

1.494942

Doctors, Dentists and Other Medical Professionals 490 13.558041 3.059330 7.666243 24.283614 1.225647

1.791086

Nursing and Protective Care491 41.137875 2.270790 20.026114 63.434778 1.055200

1.542004

Hospitals492 0.000000 0.000000 0.000000 0.000000 0.000000

0.000000

Other Medical and Health Services493 22.775555 2.469120 11.646356 36.891030 1.108411

1.619764

EXCERPTS from the IMPLAN Data Reports:

Atoka County - Type III LABOR INCOME MULTIPLIERS for Five Health Sectors

Direct Indirect Induced Total Type I Type III

Sector Effects Effects Effects Effects MultiplierMultiplier

Miscellaneous Retail 455 0.550883 0.021740 0.312651 0.885274 1.039464

1.607009

Doctors, Dentists and Other Medical Professionals 490 0.5311031 0.061200 0.119666 0.711969 1.115231

1.340548

Nursing and Protective Care491 0.542267 0.042761 0.312598 0.897627 1.078857

1.655321

Hospitals492 0.000000 0.000000 0.000000 0.000000 0.000000

0.000000

Other Medical and Health Services493 0.377285 0.050605 0.181794 0.609684 1.134131

1.615979

EXCERPTS from the IMPLAN Data Reports:

Atoka County - Output, VA, Employment for Five Health Sectors

Other IndirectIndustry Employee Proprietor Property Business Total

Industry Output* Employment Compensation* Income* Income* Tax* Value Added*

Miscellaneous Retail455 4.408 187 1.759 0.670 0.554 0.710 3.692

Doctors, Dentists and Other Medical Professionals490 4.924 67 2.114 0.501 0.228 0.031 2.874

Nursing and Protective Care 491 4.659 192 2.121 0.405 0.079 0.053 2.657

Hospitals492 0.000 00 0.000 0.000 0.000 0.000 0.000

Other Medical and Health Services493 6.312 144 1.826 0.556 0.357 0.049 2.788

* Millions of Dollars

EXCERPTS from the IMPLAN Data Reports:

State of Oklahoma - Output, VA, Employment for Five Health Sectors

Other IndirectIndustry Employee Proprietor Property Business Total

Industry Output* Employment Compensation* Income* Income* Tax* Value Added*

Miscellaneous Retail455 1,431.035 63,250 561.822 226.544 179.903 230.450

1,198.719

Doctors, Dentists and Other Medical Professionals490 2,870.086 31,765 1,464.537 198.668 145.128 19.546

1,827.879

Nursing and Protective Care 491 806.178 30,662 399.372 56.848 14.184 9.504

479.908

Hospitals492 2,364.065 42,947 1,255.026 170.338 81.166 4.328

1,510.859

Other Medical and Health Services493 1,415.471 27,371 517.849 90.668 91.325 12.627

712.469

* Millions of Dollars

Apply Data to Health Sector Impact Table

Insert the IMPLAN data in the Health Sector Impact Table, as follows:

Sample County: Atoka CountyHealth Sector Impact on Employment and Income, Retail Sales and Sales Tax

Employment Income Retail Sales IMPLAN IMPLAN 1 Cent Type III Total Type III Total Retail Sales Tax

Health Sectors Employed Multiplier Impact Income Multiplier Impact Sales Collections

Hospitals (492) _____ ____ _____ _____ ____ _____ _____ _____

Physicians, Dentists, and Other

Professionals (490) 67 1.79 _____ $2,615,000 1.34 _____ _____ _____

Nursing & Protective Care

(491) 192 1.54 _____ $2,526,000 1.66 _____ _____ _____

Other Medical & Health Services

(493) 144 1.62 _____ $2,382,000 1.62 _____ _____ _____

Pharmacies (455) _____ 1.49 _____ _____ 1.61 _____ _____ _____

Total _____ _____ _____ _____ _____ _____

Missing Data

Hospital Sector employment and income

Hospital Sector Type III Multipliers for both employment and income

Pharmacies (Derived from Sector 455) employment and income

Create a Shadow Industry (Hospitals - Sector 492)

In other words, develop a hospital sector industry to derive the Type III multipliers specifically for the missing hospital industry.

From the existing Atoka County Model, create the shadow industry

Start IMPLAN, Select “Open Existing Model,” <click> Select “Atoka County” <double click>

In the IMPLAN model ”Atoka County

Type III Multipliers…" screen Select "Edit" "Region Data" “Study Area Data"

Select "Sectors" - Arrow down to "492: Hospitals" <click>

All values are currently at -0-.

From Oklahoma Hospital Utilization Data Reports, actual data shows:

Atoka County Hospital employment = 120

Type under "Employment" <120>

Atoka County Hospital payroll = $2,406,564

Type in "Employee Compensation" <$2.407>

(converted to millions)

(Continued)

To determine the Industry output for the Atoka County Hospital Sector (Sector 492), use the following formula:

[State of OK Industry Output (Sector 492)/State of OK Employment (Sector 492)]

x Atoka County Employment =

Industry Output for Atoka County Hospital Sector

For Atoka County, calculate as follows:

[2,364,065,000/42,947] x 120 = $6,605,532= $6.606 (Converted to millions)

Type <$6.606> under "Industry Output" Select<X> in upper right hand corner of Region Data Screen

(Data from “Oklahoma – Output, VA, Employment” Report)

Screen will pop up "Data has been changed. The model is invalid until it is rerun!"

Select <OK>

After inputting the shadow hospital industry (Sector 492), the model must be re-constructed.

Select "Construct Model…" <click> Select from "Model Construction" Options

“Advanced” <Next> <click> “Production Functions” <Next> <click> “ByProducts” <Next> <click>

“Trade Flows” <Next> <click> “Institutional Transfers” <Next> <click>

“Multipliers”

Select ”Type III (CPPM)" <Check box>

<Next> <click>

WAIT until Model is constructed

Pop up Box, “Model Construction is Complete.”

Select "OK" <click>

Select "Close" <click>

Report Results

Download Reports for Re-Constructed Atoka County Model for:

Type III Employment MultipliersType III Income Multipliers

Information from the Atoka County Revised Reports.

Sector 492 Hospitals - Type III Employment Multiplier = 1.70

Sector 492 Hospitals - Type III Income Multiplier = 1.47

Also, use the hospital employment and income to complete the hospital sector information in the Health Sector Impact Table.

Sample County: Atoka CountyHealth Sector Impact on Employment and Income, Retail Sales and Sales Tax

Employment Income Retail Sales IMPLAN IMPLAN 1 Cent Type III Total Type III Total Retail Sales Tax

Health Sectors Employed Multiplier Impact Income Multiplier Impact Sales Collections

Hospitals (492) 120 1.70 $2,406,564 1.47 _____ _____

Physicians, Dentists, and Other

Professionals (490) 67 1.79 _____ $2,615,000 1.34 _____ _____ _____

Nursing & Protective Care

(491) 192 1.54 _____ $2,121,000 1.66 _____ _____ _____

Other Medical & Health Services

(493) 144 1.62 _____ $1,826,000 1.62 _____ _____ _____

Pharmacies (455) _____ 1.49 _____ _____ 1.61 _____ _____ _____

Total _____ _____ _____ _____ _____ _____

Modify the IMPLAN data (Pharmacies)

A. Need Employment and Income for Pharmacies (or Drug stores and proprietary stores)

B. Review Options for finding this data

Data from County Business Patterns 1999 Oklahoma, U.S. Dept. of Commerce, Economics and Statistics Administration, Bureau of the Census

Website: <http://www.census.gov/prod/www/abs/cbptotal.html>

NOT ENOUGH DETAIL

Need to find a Federal Depository Library

Complete CD-ROM – 1999 County Business Patterns

OPEN CD-ROM

SELECT LAUNCH BROWSER

The Key to using the Launch Browser is in the

Dimension Menu

Zoom IN

or

Zoom OUT

To analyze the Pharmacies and Drug Stores Data:NAICSCODE Category

44-45 Retail trade

446 Health & personal care stores

4461 Health & personal care stores

44611 Pharmacies & drug stores

446110 Pharmacies & drug stores

Download from County Business Patterns

446110 NAICS Pharmacies and Drug Stores

GIVEN:

• No. of Pharmacy Establishments by County

• Total No. of Establishments in the State

• Total Employment for the State

• Total Employee Compensation (Payroll) for the State

• All data for selected Counties (larger, more urban)

NEED:

• Pharmacy Employment by County for ALL Counties

• Pharmacy Employee Compensation + Proprietor’s Income by County for ALL Counties

  NAICS CODE: 446110 Pharmacies and Drug Stores

   ATOKA COUNTY EXAMPLE

1999 1999

1999 Counties Counties

Pharmacies & Drug Stores State WITH Data WITHOUT Data

Totals Totals Totals

No. of Establishments 606 460 146Employment 7,645 6,516

1,129

Compensation $126,753,000 $108,083,000 $18,760,000

USE RATIOS TO ESTIMATE COUNTY DATA FOR MISSING EMPLOYMENT & EMPLOYEE COMPENSATION

AverageEmployment =Per Pharmacy

Total Employment WITHOUT DataTotal # Pharmacies WITHOUT Data

=

1,129 146

= 7.73 Average Number of Employees Per Pharmacy

EMPLOYMENT

USE RATIOS TO ESTIMATE COUNTY DATA FOR MISSING EMPLOYMENT & EMPLOYEE COMPENSATION

Average Payroll =Per Pharmacy

Total Payroll WITHOUT Data Total # of Pharmacies WITHOUT Data

=

$18,670,000 146

= $127,877Average Payroll Per Pharmacy

EMPLOYEE COMPENSATION OR PAYROLL

APPLY RATIOS TO ATOKA COUNTY –Estimated Number of Pharmacy Employees

GIVEN: No. of Pharmacies for Atoka County = 2

To estimate Number of Pharmacy Employees:

Number ofAtoka County Pharmacies

xAverage Number of Employees Per Pharmacy

=

2 x 7.73 =

15 ESTIMATEDNumber of Pharmacy Employees for Atoka County

APPLY RATIOS TO ATOKA COUNTY –Estimated Payroll or Employee Compensation

GIVEN: No. of Pharmacies for Atoka County = 2

To estimate Payroll:

Number ofAtoka County Pharmacies

xAverage Payroll Per Pharmacy =

2 x $127,877 =

$255,754 ESTIMATED Payroll for Atoka County

APPLY RATIOS TO ATOKA COUNTY –Estimated Proprietor’s Income

GIVEN: No. of Pharmacies for Atoka County = 2

To estimate Proprietor’s Income:

Number ofAtoka County Pharmacies

xAverage Proprietor’s Income Per Pharmacy =

2 x $85,000 =

$170,000 ESTIMATEDProprietor’s Income for Atoka County

APPLY RATIOS TO ATOKA COUNTY –Estimated Total Pharmacy Income

To estimate Total Pharmacy Income:

Atoka County ESTIMATED Payroll

+ Atoka County ESTIMATED Proprietor’s Income

=

$255,754 $170,000 =

$425,754 ESTIMATEDTotal Pharmacy Income for Atoka County

+

Insert the employment and income to the Pharmacy Sector and

calculate the total impacts of the Health Sectors

on the Health Sector Impact Table.

Total Impact = Sector data x Type III multiplier

Sample County: Atoka CountyHealth Sector Impact on Employment and Income, Retail Sales and Sales Tax

Employment Income Retail Sales IMPLAN IMPLAN 1 Cent Type III Total Type III Total Retail Sales Tax

Health Sectors Employed Multiplier Impact Income Multiplier Impact Sales Collections

Hospitals (492) 120 1.70 204 $2,406,564 1.47 $3,537,649 _____

Physicians, Dentists, and Other Professionals (490) 67 1.79 120 $2,615,000 1.34 $3,504,100 _____ _____

Nursing & Protective Care (491) 192 1.54 296 $2,526,000 1.66 $4,193,160 _____ _____

Other Medical & Health Services (493) 144 1.62 233 $2,382,000 1.62 $3,858,840 _____ _____

Pharmacies (455) __16 1.49 24 $425,753 1.61 $685,463 _____ _____

Total 539 877 $10,355,317 $15,779,212

Derive the Local Retail Sales Capture Ratio

To calculate the amount of retail sales that is produced by the Health Sector, need to calculate the local retail sales capture ratio.

Total Retail Sales (Sales Subject to Sales Tax)/Total Personal Income = Local Retail Sales Capture Ratio

Atoka County Local Retail Sales Capture Ratio

For Atoka County, the Local Retail Sales Capture Ratio = 40.37%

(Retail Sales from OK State Tax Commission, "State Payments to Local Governments” and Total Personal Income from BEA data.)

Apply Local Retail Sales Capture Ratio to the Health Sector Impact Table.

Multiply the Local Retail Sales Capture Ratio x the Total Income Impact for each Sector and sum the total

From the Retail Sales, calculate a 1-cent sales tax, by multiplying .01 x Retail Sales for each Health Sector,

and sum the total

Insert the retail sales and sales tax in the Health Sector Impact Table.

The Health Sector Impact Table is complete!!

Sample County: Atoka CountyHealth Sector Impact on Employment and Income, Retail Sales and Sales Tax

Employment Income Retail Sales IMPLAN IMPLAN 1 Cent Type III Total Type III Total Retail Sales Tax

Health Sectors Employed Multiplier Impact Income Multiplier Impact Sales Collections

Hospitals (492) 120 1.70 204 $2,406,564 1.47 $3,537,649 $1,428,149 $14,281

Physicians, Dentists, and Other Professionals (490) 67 1.79 120 $2,615,000 1.34 $3,504,100 $1,414,605 $14,146Nursing & Protective Care (491) 192 1.54 296 $2,526,000 1.66 $4,193,160 $1,692,779 $16,928

Other Medical & Health Services (493) 144 1.62 233 $2,382,000 1.62 $3,858,840 $1,557,814 $15,578 Pharmacies (455) __16 1.49 24 $425,753 1.61 $685,463 $276,721 $2,767

Total 539 877 $10,355,317 $15,779,212 $6,370,068 $63,700

The Total Economic Impact of the Health Sector

Use of Health Sector Impact Tool in Community Health Planning

1. When working with a specific community, primary data are used.

2. The following table is given to the local steering committee to collect current local data.

3. The Health Sector Impact Table is then completedfor presentation to the community.

Table 3Direct Economic Activities of Health Sector

in ___________ Community

Component Estimated Employees Estimated Payroll

Hospital (#) _____ _____

Doctors and Dentists _____ ____ _ Physicians (#)

Dentists (#) Other

Nursing & Protective Care (#) _____ ____ _

Other Medical & Health Services _____ ____ _ Home Health Care (#) County Health Department

Pharmacies (#) _____ ____ _

TOTALS _____ ____ _

SOURCE: Local survey and estimated from research

Mold the model to fit for YOUR STATE

Process must be modified, depending on available data in each State.