Introduction

A growing awareness of the important economic impact of the rural health care sector has emerged. In many rural communities, the health sector is one of the largest employers and its payroll injects significant capital into local economies. A typical rural hospital may employ 15 to 20 percent of the local workforce and possess a multimillion dollar payroll. Much of the money paid to health sector employees is then spent in the community, which generates additional local jobs and revenue. The presence of quality health care is a vital component of numerous economic development strategies. Manufacturers and high tech industries are unlikely to locate in an area that does not have adequate access to health care. Health care is also a key factor in attracting and retaining retirees.

Recognizing the need to increase awareness of the crucial economic role of the rural health care sector, Rural Health Works (RHW) formed in 1998 as a partnership between the Health Resource and Services Administration's Office of Rural Health Policy (ORHP), the USDA Cooperative Research, Education, and Extension Service (CSREES), and the Rural Policy Research Institute (RUPRI). The project was headed by Dr. Gerald Doeksen, an Extension Economist at Oklahoma State University in Stillwater, OK. Initially, Rural Health Works began as a pilot project in five States: Kentucky, Missouri, Nevada, Oklahoma, and Pennsylvania. After meeting with success in these States, the project was broadened nationally.

In subsequent years Dr. Doeksen and Rural Health Works staff traveled to 43 States to conduct "Train the Trainer" workshops. These trained participants to use IMPLAN® data to determine the economic impact of health care at the ZIP code, county, regional, and State levels. IMPLAN is an economic impact analysis tool developed by the U.S. Forest Service in the early 1990s and now sold commercially.

While the economic impact studies were the centerpiece of the Rural Health Works process, the project's overall objective was to move beyond economics and actively engage communities to preserve local health systems. The bypass of rural hospitals and providers in favor of large urban centers is a common problem faced by rural providers. Despite contrary evidence, many rural Americans continue to believe that "bigger is better" when it comes to health care. By educating communities about the critical economic importance of the health care sector it is possible to build support and increase the viability of local health care infrastructure.

As awareness of the economic impact of rural health care and Rural Health Works grows, communities are implementing the tools in a variety of ways. Some undergo a formal community engagement process and others use the economic impact data for grant applications. This document profiles three communities that have used Rural Health Works' tools.

Tishomingo, Oklahoma

The town of Tishomingo, Oklahoma, has struggled for years to ensure adequate access to health care. This south Oklahoma community with about 3,100 residents is the Johnston County Seat and the ceremonial capital of the Chickasaw Nation. Tishomingo, with an individual poverty rate of 27.1 percent, is one of Oklahoma's poorest communities. At the same time, the community has demonstrated resilience in its efforts to maintain essential health care services.

Throughout much of the 1980s and 1990s, Johnston County Memorial Hospital struggled to remain open. Its difficulties stemmed from a variety of factors that are typical in most small rural hospitals. Johnston County has a high number of uninsured and underinsured citizens, which requires the hospital to provide large amounts of uncompensated care. A 1999 survey of County residents found that 38 percent of emergency department visits were for routine primary care. The out-migration of Johnston County residents to surrounding communities also has resulted in lost revenue.

To support its struggling hospital, Johnston County residents passed a one-cent sales tax in the early 1990s. While this additional revenue provided the hospital with some financial breathing room, the County's small retail tax base did not generate significant income for the hospital.

In 1998, Oklahoma State University (OSU) Cooperative Extension, with support from the Oklahoma State Office of Rural Health (SORH), began a pilot Rural Health Works initiative in Oklahoma. The State specifically sought to identify struggling rural hospitals that could benefit from Rural Health Works' tools. Oklahoma RHW found it particularly useful to use Rural Health Works in conjunction with hospitals converting to critical access status. Critical Access Hospitals (CAHs) are essential community providers that meet specific criteria, such as a 25 acute-care bed limit and necessary provider status. In turn, CAHs receive cost-based Medicare reimbursement. By coordinating Rural Health Works' activities with CAH conversion, community engagement meetings provide a forum for discussing local health care as well as a venue to address concerns about hospital conversion.

Main Street Tishomingo

Consequently, as Johnston County Memorial was petitioning for CAH status in 1999, OSU Cooperative Extension and the Oklahoma SORH held an initial community meeting to explain the CAH program. At the same time, economists at OSU Cooperative Extension measured the total economic impact of the County's health care infrastructure. Then in November 1999, a telephone survey of 226 Johnston County residents that focused on their perceptions of local health care was conducted.

The economic impact analysis revealed the significant impact of Johnston County's health care sector on its overall economy. The data showed that the County's 294 health care positions generated 134 additional jobs. Consequently, the $7.3 million health care payroll created over $11 million in total income for Johnston County residents. The analysis, referenced in table 1, also measured the estimated local retail sales ($1.9 million) that resulted from healthcare income.

Table 1:
Economic Impact of the Health Sector on Employment and Income in Johnston County, Oklahoma

Health Sector	Employment	Multiplier	Employment Impact	Income	Multiplier	Income Impact
Hospitals	65	1.43	93	$2,160,000	1.35	$2,916,000
Doctors and Dentists	85	1.55	132	$2,822,200	1.43	$4,035,746
Nursing and Protective Care	108	1.41	152	$1,507,900	1.76	$2,653,904
Other Medical and Health Services	25	1.43	36	$450,000	1.77	$796,500
Pharmacies	11	1.39	15	$400,000	1.60	$640,000
Totals	294		428	$7,340,100		$11,042,150

The telephone survey revealed that, while the vast majority (96 percent) of respondents were satisfied with the quality of the local physicians, there was still significant patient out-migration for care. Additionally, only 27 percent felt that there were enough family physicians in Johnston County. Johnston County is currently a designated primary care Health Professional Shortage Area (HPSA). While the majority of those surveyed were satisfied with Johnston County Memorial, they identified several specific areas - such as newer equipment and additional specialty care - in which the hospital could improve. While the desire for advanced equipment and specialty care is understandable, relatively few small rural hospitals can afford to implement these practices. Active community engagement can be a particularly important tool to educate community members about what services rural hospitals are and are not able to provide.

In Tishomingo, the results of the community engagement process were immediate. Approximately 40 individuals attended each of the initial monthly meetings. In order to accommodate the greatest number of local residents, meetings were typically held during the noon lunch break. Very shortly after the initiation of community engagement, the Johnston County Health Care Coalition formed. The coalition was founded as a 501(c)3 non-profit organization dedicated to maintaining and improving health care services for Johnston County residents. Coalition membership consisted of local health care professionals, merchants, county officials, and the president of Murray State University, a two-year public university located in Tishomingo. Meeting attendees worked together to produce a comprehensive health services directory for Johnston County. This 40-page document included all Johnston County health care providers and provided contact information for State and national health care organizations and information hotlines.

Four years after community engagement began, the Health Care Coalition remains active. Since 2000, the group has sponsored annual health fairs that offer local residents a variety of health screening services and provide a forum for local health providers to advertise their services. Participation in this event has increased each year and the coalition plans to make it an annual occurrence. The coalition has also published half page advertisements in the local newspaper listing Johnston County's available healthcare resources and has begun a recent campaign to promote child immunizations.

The overall goal of the coalition's activities is to encourage county residents to take advantage of local health care services so that Johnston County's healthcare industry remains financially viable and available to all residents. Coalition members are aware of the potentially dire health and economic effects that could result from the loss of essential healthcare services.

Though OSU's community engagement efforts successfully increased local awareness of health care issues, the hospital continued to struggle financially. Since the economic impact study was conducted in 1999, two of the four existing physicians have left Johnston County. One left after the hospital discontinued OB services and another after the hospital halted inpatient surgeries. The liability and other associated costs for both services outstripped revenue. However, the loss of both physicians decreased referrals to the hospital and increased patient out-migration. Between 1999 and 2003, the hospital was forced to eliminate 23 positions. By late 2003, its staff had dwindled to 42 full-time employees.

Though a new physician was recruited to Tishomingo, the volume of uncompensated care remained difficult to accommodate. Consequently, the hospital administrator and other community members decided to apply for grant funds to support a Community Health Center. Community Health Centers receive grants from HRSA and provide primary care services on a sliding fee-scale basis to anyone seeking care, regardless of their ability to pay. CHC staff physicians receive liability coverage through the Federal Tort Claims Act, a potentially valuable recruiting tool.

A respiratory therapist at Johnston County Memorial seized the initiative and led the community's effort to obtain a CHC grant. She received substantial support from individual community members, the Johnston County Health Care Coalition, Chickasaw Nation Healthcare, Tishomingo's weekly newspaper, and other local organizations. A CHC is required to be administered by a community board with at least 51 percent of board members who are users of health center services. The community quickly assembled a 15-member board, 80 percent of whom are health center users.

Throughout the application process Tishomingo received strong support from OSU Cooperative Extension. A Rural Health Works community engagement professional continued to attend monthly meetings. The analytic side of Oklahoma Rural Health Works contributed significant support to the application as well by providing the community with demographic, health status, and economic impact data.

Unfortunately, the initial health center application was unsuccessful. However, everyone involved chose to view the first attempt as a learning process. The following year, the written application was refined, data were updated, and new sources of support were obtained. After several years of hard work the Tishomingo community was delighted to learn in 2003 that its CHC application was approved.

While the CHC provides access to primary care for low-income county residents, the community depends on the hospital for a variety of services. Throughout the CHC application process, Johnston County Memorial continued to operate with negative margins. Though the CHC is expected to reduce some of the hospital's indigent care costs, it became apparent to the hospital administrator and board members that it could no longer remain open as a non-profit community hospital. Consequently, in November 2003 Johnston County residents voted to authorize the sale of Johnston County Memorial to a for-profit healthcare organization. As of May 2004, the final details of the sale had not been finalized.

Throughout its involvement in Johnston County, Oklahoma, Rural Health Works met with considerable success and some setbacks. Despite several years of community engagement the hospital was still forced to close as a non-profit community provider. However, the hospital will likely continue to provide services to county residents. If it is eventually forced to close, the CHC might be able to add additional services. It will also continue to draw residents into Tishomingo and thus benefit local businesses and the overall economy.

The important aspect of Tishomingo's story is the ability of organized community engagement and education about the economic importance of health care to build support for local health care services. Though it was not possible to maintain community ownership of the hospital, active community groups did form to support Johnston County health care services. The successful establishment of the CHC is important for two reasons: (1) It increases access to health care for Johnston County's low-income and uninsured residents, and (2) the creation of a local health center board and the community support garnered from the application process can be used to address other potential health care crises that may emerge. Overall, Rural Health Works had a significant positive community impact in Johnston County.

Yerington, Nevada

Yerington (pop. 2,883) is located approximately 1.5 hours southeast of Reno in the heart of Nevada's richest agricultural region in South Lyon County. The northern part of Lyon County borders the population centers of Reno and Carson City and is growing rapidly. However, the population of South Lyon County remains stable and rural. For many years, Yerington's principal employer was a large copper mine. After the mine closed in 1984, the area reverted to an agriculture-dependent economy. The Smith Valley region, of which Yerington is the center, is one of the world's largest onion producers and is well known for its high quality alfalfa hay and garlic.

South Lyon Medical Center in Yerington has experienced its share of financial difficulties. The closure of the copper mine coincided with the transition of Medicare from cost-based hospital reimbursement to a prospective payment system that disadvantaged rural hospitals. The medical center quickly became unprofitable and was purchased by a large Reno-based hospital system. After 5 years, this hospital withdrew from the market with a plan for South Lyon's eventual closure.

However, South Lyon residents quickly took action to preserve their local healthcare infrastructure. A new non-profit governing board formed to take over hospital operations and the District Hospital Board leased the facility to this new body. The resulting two-board structure is somewhat unusual but appears to have served the community well. The hospital currently has 14 acute-care beds and a 40 bed long-term-care unit. While eligible for critical access status, the current payment system remains favorable so the hospital has not undergone conversion.

Table 2:
Economic Impact of the Health Sector on Employment and Income in Lyon County, NV in 1999

In Nevada's Rural Health Works, a University of Nevada-Reno Cooperative Extension team compiles the economic impact statistics for all of the State's hospitals. These numbers were introduced to residents of Yerington in 1999 by representatives from the Nevada SORH. In one day, a series of three meetings were held. The data were first presented at a morning meeting of the hospital's Board of Governors and the Lyon County Commissioners. They were then presented at an afternoon meeting and over dinner to local health care practitioners, industry leaders, economic development staff, health department personnel, and other interested community members. The results of the impact analysis revealed that an additional 29 full-time positions were created from every 100 Lyon County health care jobs. This information caught the attention of the Lyon County economic development director and prompted a discussion among community members of the importance of the health care sector. A year later, in 2000, State Office of Rural Health staff returned and presented an updated version of the economic impact data.

The South Lyon Hospital's administrator believes that the community perceives the hospital as a positive presence, particularly because of its outpatient services and long-term care center. She also believes that awareness of the hospital's economic impact contributes to this overall good will. The administrator acknowledges that the hospital could do additional outreach. An emphasis on the hospital's role as an employer and economic driver would be an important part of this initiative. Though the hospital is currently financially sound, due in part to an adequate community tax base, fiscal status can change rapidly in rural facilities and it may be necessary to rally community support in the future. Currently, a measurable proportion of residents travel to Carson City and Reno to receive some health care services.

In Yerington, and in Nevada as a whole, there have been two important uses of healthcare economic impact data. South Lyon Hospital found information demonstrating its economic impact to be a valuable component of its grant applications. Most recently, Rural Health Works data were used in a successful application for a $250,000 Community Development Block Grant. Statewide, the information played an important role in legislative debates over healthcare expenditures. Similar to many States, Nevada has struggled with recent budget shortfalls. During a 2001 budget battle in the State Legislature, information about the economic impact of health care expenditures in rural Nevada was a key factor in persuading legislators to maintain existing Medicaid reimbursement levels. Overall, Yerington and Nevada residents have found the economic impact data to be useful for a variety of purposes.

McConnelsburg, PA

Fulton County Medical Center (FCMC) is an 82-bed facility located in McConnelsburg, Pennsylvania (pop. 1,073). It includes 25 acute-care beds and a 57-bed nursing home. FCMC converted to critical access status in August 2001. The medical center shares many of the well-documented challenges of providing rural health care services. In particular, it has difficulty recruiting and retaining physicians and other health professionals. Though the hospital is small it provides a number of valuable community services. Twelve different physician specialists rotate through FCMC regularly, and it maintains a staff of three emergency medicine physicians providing around the clock coverage. Due in part to its status as one of the closest hospitals to sections of the heavily traveled Pennsylvania Turnpike, the medical center considers its emergency services to be particularly vital.

The Fulton County staff has recently embarked on an ambitious plan to replace their aging facilities with a new hospital. An important part of obtaining community support for the project, as well as applying for grant funding, has been increasing awareness of the medical center's economic role. With a full-time staff of 260, the hospital is Fulton County's second largest employer.

Table 3:
Summary of Predicted Employment Impacts of a New Hospital in Fulton County

In December 2001, Pennsylvania State University (PSU) Cooperative Extension decided to examine the potential economic impact of new-hospital construction. Their
analysis used an economic impact software program known as CIM-PSU (Community Impact Model - PSU) that also uses IMPLAN data and is based on input-output economic analysis. The study estimated that a newly expanded hospital would employ between 30 and 50 additional full-time staff. However, this does not tell the entire story of the new facility's potential economic impact. A portion of all new employees' income will be spent in Fulton County, thereby generating additional job creation and income growth. The final analysis revealed that the cumulative effect of a new hospital would be between 39 and 65 new jobs, with a total employee compensation of between $1.17 and $1.94 million, as shown in Table 3. For a small rural county (total population 14,261) this is a substantial impact. This analysis does not quantify more elusive economic impacts: the effects of increased quality-of-life and improved health care services on industrial development, tourism, and other economic development strategies.

The medical center's administrator and development staff quickly recognized this information's potential to leverage additional grant funding for the proposed construc-tion project. Realizing that no single grant source would be enough to finance the entire multimillion dollar project, Fulton County Medical Center applied to a variety of Federal, State and local funding organizations. Each application discussed the improved provision of health care services that a new hospital would provide, as well as data on its potential economic effects. To date the FCMC has received a $1 million grant from the Pennsylvania Department of Community and Economic Development for the design and construction of a new building. A $269,000 grant application from the federally funded Appalachian Regional Commission is currently pending, along with an application for a $950,000 grant to the U.S. Commerce Department's Economic Development Administration.

Throughout the project planning process, the hospital's development staff worked closely with the Fulton Industrial Development Association. The Association's executive director wrote letters of support for each of FCMC's grant applications and maintains close contact with hospital staff. The county's principal employer, the heavy equipment manufacturer, JLG Industries, also donated $1 million to support facility construction. Assembling the financial resources for a construction project as ambitious as Fulton County Medical Center's is a daunting task; broad-based community support makes it much easier. Awareness of the project's potential economic impact has helped forge an alliance between the County's health care and industrial development sectors. It is also an important part of building community support for health care improvements. The efforts of FCMC to construct a new hospital illustrate the value of community outreach and the multifaceted importance of health care in rural communities.

Conclusion

The three communities profiled in this report all applied Rural Health Works' tools differently. Tishomingo, Oklahoma, incorporated an economic impact analysis into a comprehensive community outreach effort. As a result of this effort, recognition of the overall importance of the community's healthcare institutions increased and a citizen group formed to promote local health care. The efforts also helped Tishomingo become one of a small number of Oklahoma towns with a CHC.

In Nevada, South Lyon Medical Center used economic impact data to augment grant applications and to build community awareness of the hospital's importance. Economic impact data also helped persuade State legislators to maintain rural health care funding.

In McConnelsburg, Pennsylvania, Rural Health Works' tools were used to build community support and collaboration for new hospital construction. All three communities demonstrate the importance of thriving health care providers and facilities, not only for the health of local residents, but also for the economic vitality of the entire community.

Prepared by Craig Williamson (Truman Fellow) and Joy McGlaun (Truman Fellow) of the Office of Rural Health Policy