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.
In Oklahoma, the State Office of Rural Health
contracts with OSU Cooperative Extension to conduct the economic
impact studies and support a full-time staff member who facilitates
the community engagement process. All Rural Health Works programs
are supported by a Rural Hospital Flexibility (FLEX) grant from
the Health Resources and Services Administration's (HRSA) Office
of Rural Health Policy. |
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
Health
Sector |
Employment |
Multiplier |
Employment
Impact |
Income |
Multiplier |
Income
Impact |
Hospital |
151 |
1.31 |
198 |
$5,557,242 |
1.20 |
$6,679,551 |
Total |
255 |
1.29 |
328 |
$8,143.07 |
1.25 |
$10,185,444 |
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
Economic
Variable |
Direct
Effect |
Secondary
Effect |
Total |
Employment |
30-50 |
9-15 |
39-65 |
Employee
Payroll |
|
|
$1.17
-1.94 million |
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
|