A Tutorial for Understanding Your Hospital s Economic and Community Impact Report. Healthcare Association of New York State April 2003

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1 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

2 Economic 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 $30,000 on housing Employees spend $15,000 on food Employees spend $5,000 on clothing Construction receives & spends $25,000 Banks receive & spend $5,000 Grocers receive & spend $12,000 Farmers receive & spend $3,000 Retailers receive & spend $4,000 Tailors receive & spend $1,000

3 Economic Multiplier Effect Hospital Salary Expenditure: $ 50,000 Employees Spending Housing: $ 30,000 Employees Spending Food: $ 15,000 Employees Spending 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 inputoutput economic model BEA s multipliers used by both private and public sectors to determine financial impacts.

4 Types 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.

5 Earnings 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.

6 HANYS 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

7 Impact 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.

8 Impact 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.

9 Community 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

10 For Additional Information For questions related to the methodology used in HANYS analysis, please contact Lee Santos, Principal Analyst I, at (518) or at 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) or at