A Tutorial for Understanding Your Hospital’s Economic and Community Impact ReportHealthcare Association of New York StateApril 2003Overview of Your Facility-Specific Economic Impact Report Your facility-specific report contains three sections: • Economic Impact• Community Benefit Impact• Technical Addendum1Economic Multiplier Defined• Hospital has a direct impact on its economic region through its expenditures.• The regional economic multiplier accounts for the resulting ripple of economic activity throughout the area created by the original hospital expenditure.Economic Multiplier IllustratedHospital spends $50,000 on salariesEmployees receive $50,000 in compensationEmployees spend Employees spend Employees spend $30,000 on housing $15,000 on food $5,000 on clothingConstruction Banks Grocers Farmers Retailers Tailors receives & receive receive & receive receive receive spends & spend spend & spend & spend & spend $25,000 $5,000 $12,000 $3,000 $4,000 $1,0002Economic Multiplier EffectHospital Salary Expenditure: $ 50,000Employees’ Spending – Housing: $ 30,000 Food: $ 15,000 Clothing: $ 5,000Total Spending in Community: $100,000(Regional Economic Multiplier is 2.00 in this case)Bureau of Economic Analysis Regional Economic Multipliers•Part of the U.S. Department of Commerce, BEA offers multipliers based on an input-output economic model•BEA’s multipliers used by both private and public sectors to determine financial impacts. ...
A Tutorial for Understanding
Your Hospital’s Economic and
Community Impact Report
Healthcare Association of New York State
April 2003
Overview of Your Facility-Specific
Economic Impact Report
Your facility-specific report contains
three sections:
• Economic Impact
• Community Benefit Impact
• Technical Addendum
1Economic Multiplier Defined
• Hospital has a direct impact on its economic
region through its expenditures.
• The regional economic multiplier accounts
for the resulting ripple of economic activity
throughout the area created by the original
hospital expenditure.
Economic Multiplier Illustrated
Hospital spends $50,000
on salaries
Employees receive
$50,000 in compensation
Employees spend Employees spend Employees spend
$30,000 on housing $15,000 on food $5,000 on clothing
Construction Banks Grocers Farmers Retailers Tailors
receives & receive receive & receive receive receive
spends & spend spend & spend & spend & spend
$25,000 $5,000 $12,000 $3,000 $4,000 $1,000
2Economic Multiplier Effect
Hospital Salary Expenditure: $ 50,000
Employees’ Spending – Housing: $ 30,000 Food: $ 15,000 Clothing: $ 5,000
Total Spending in Community: $100,000
(Regional Economic Multiplier is 2.00 in this case)
Bureau of Economic Analysis
Regional Economic Multipliers
•Part of the U.S. Department of Commerce,
BEA offers multipliers based on an input-
output economic model
•BEA’s multipliers used by both private
and public sectors to determine financial
impacts.
3Types of Multipliers
• Output
• Earnings
• Employment
Output Multiplier
•Accounts for the total economic activity a
hospital’s expenditures generate.
•Includes the hospital’s own expenditures as
well spending elsewhere in the local
economy--the ripple or multiplier effect of
hospital’s spent dollars.
4Earnings Multiplier
•Accounts for the impact that the hospital has
on the earnings of workers in the economic
area.
•Includes both hospital workers and workers
whose jobs are indirectly supported by the
hospital’s economic activity.
Employment Multiplier
•Accounts for the number of people the
hospital employs.
•Includes the local jobs that are created and
supported because of the economic activity
the hospital generates.
5HANYS’ Report
• Used BEA-defined economic areas, except
for
• Economic areas that include out-of-state
counties.
• We divided up BEA’s New York City region.
ABC Hospital Report – Page 1
Direct and Indirect Impact on Our Community
Jobs 2,098
Economic Impact
Payroll $984,700
Supply Purchases $393,880
Capital Spending $246,175
Total Impact $1,624,755
Taxes
Income
State $38,335
Local $0
Sales
State $20,782
Local $22,944
Total Taxes $82,061
6Impact on Jobs
Direct and Indirect Impact on Our Community
Jobs 2,098
Employment multiplier was used to determine jobs
impact.
Impact on Economy
Direct and Indirect Impact on Our Community
Economic Impact
Payroll $ 984,700
Supply Purchases $ 393,880
Capital Spending $ 246,175
Total Impact $1,624,755
Output multiplier used to determine economic impact.
7Impact on Taxes
Direct and Indirect Impact on Our Community
Taxes
Income
State $38,335
Local $0
Sales
State $20,782
Local $22,944
Total Taxes $82,061
Earnings multiplier used in determining tax impact.
Technical Addendum
A technical addendum is attached to the
economic impact report. It provides
background on economic multipliers and
the sources of data and the methodology
used to determine economic impact.
8Community Benefit
• HANYS encourages you to include
information from your Community
Service Plans to enhance your report.
• Example: Include any programs the
hospital utilizes that add significant
dollars to the local and/or state economy.
Sharing Your Facility-Specific Report
• Hospital’s Board of Directors
• State Legislature
• Members of Congress
• Community Leaders
• Media
9For Additional Information
For questions related to the methodology used in
HANYS’ analysis, please contact Lee Santos,
Principal Analyst I, at (518) 431-7708 or at
lsantos@hanys.org.
For questions related to the content of the report or
the community benefit section of the report, please
contact Sue Ellen Wagner, Director, Community
Health at (518) 431-7837 or at swagner@hanys.org.
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