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Economic Impact Study for a Rural Community in VermontMedical facilities have a tremendous medical and economic impact on the county in which they are located. This is especially true with hospitals and large health clinics. They not only employ a number of people, but they also have a generated impact on the larger community from which they are based.
This two-faceted study was conducted to measure the economic impact of two primary health service entities on Lamoille County, Vermont. The study examined the impact of Copley Hospital and Community Health Services of Lamoille Valley. The purpose of the study was to inform the Lamoille County decision makers of the economic importance of these two entities. In many cases, providers must overcome limited financial, organizational, and informational resources to care for populations that require diverse health service needs and come from a large rural geographic area. Understanding the impact of Copley Hospital and Community Health Services of Lamoille Valley on Lamoille County provides support to decision makers in their efforts to develop health care policies and plans and assists in evaluating the need for expansion and/or addition of health services.
The study used IMPLAN economic modeling software. The IMPLAN software was developed in 1993 to quantify the economic effect of changes in a given community. The software uses an input-output model to quantify the local economy and is in current use in 1000+ public and private institutions. An overview of the inputs and outputs considered in the IMPLAN model for Lamoille County is shown in Figure 1.
Figure 1: Visualizing IMPLAN: The model used for the Lamoille County economic impact study
How IMPLAN works
The total impact of a change in the economy consists of direct, indirect, and induced impacts. Direct impacts are the changes in the activities of the impacting industry, such as the closing of a hospital. The impacting business changes its purchases of inputs as a result of the direct impact; in the case of a hospital closing, the hospital stops purchasing supplies. This produces an indirect impact in the other business sectors. Both the direct and indirect impacts change the flow of dollars to the county's households (employees). The households alter their consumption accordingly. The effect of this change in household consumption upon businesses in a county is referred to as an induced impact. The combined impact that an entity has on other business sectors and community households is also called secondary impact.
The IMPLAN software uses multipliers to measure the effects created by an increase or decrease in economic activity. When multipliers are applied to the employment and income data for an entity, the result is its measured impact on the community. The multipliers generated by the software can be used to measure the effect an entity has on the larger community. The ability to quantify this impact may be helpful when making strategic decisions regarding expansion and addition of health services, construction and development activities, workforce expansion, and fundraising and grant writing activities.
The measured impact that Copley Hospital and Community Health Services of Lamoille Valley have on the economy of Lamoille County is considerable. They not only contribute greatly to the medical health of Lamoille County, but also to the economic health of the Lamoille County.
Limitations
The IMPLAN software is recognized for providing accurate and adaptable models of local economic impact. However, other models may result in different multipliers and yield different estimations of the impact of the rural health services providers on the community. Despite differences in specific multipliers, it is clear that these organizations have a community impact beyond their direct employment and salary contribution.
This analysis addresses the economic impact of the rural health organizations, but does not address clinical outcomes for these providers. When developing health care policies and plans, decision-makers must consider both economic impact and provider performance and outcomes.
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