“How To” Derive the Economic Impact
of the Health Sector
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“How to” Derive the Economic Impact of the Health
Sector
MAIN OBJECTIVE:
Derive the direct economic impact and
total economic impact
of the five health sectors and
the total health sector
Overview
Create the Economic Impact of a Sample County

Derive the data from the IMPLAN program
 Create a Shadow Industry (Hospitals)
 Modify IMPLAN data (Pharmacies)
 Derive the Local Retail Sales Capture Ratio
The Total Economic Impact of the Health Sector
 Use of Health Sector Impact tool in Community
Health Planning
 Mold the model for YOUR STATE
Create the Economic Impact of a Sample County
What we are trying to accomplish:
To complete the Health Sector Impact Table
Sample County
Health Sector Impact on Employment and Income, Retail Sales and Sales Tax
Employment
Health Sectors
Hospitals (492)
Employed
Income
IMPLAN
Type III
Total
Multiplier Impact
Retail Sales
Income
IMPLAN
Type III
Multiplier
Total
Impact
Retail
Sales
1 Cent
Sales Tax
Collection
_____
_____
_____
_____
_____
_____
_____
_____
Physicians, Dentists,
and Other
Professionals (490) _____
_____
_____
_____
_____
_____
_____
_____
Nursing &
Protective Care
(491)
_____
_____
_____
_____
_____
_____
_____
_____
Other Medical &
Health Services
(493)
_____
_____
_____
_____
_____
_____
_____
_____
Pharmacies (455)
_____
_____
_____
_____
_____
_____
_____
_____
Total
_____
_____
_____
_____
_____
_____
Data needed to complete the Health Sector Impact Table:
For all five Health Sectors
NEED:
Type III Employment Multipliers
Type III Income Multipliers
Employment
Personal Income
(Includes employee compensation &
proprietor income)
Data Needed For the Sample County
Local Retail Sales Capture Ratio
(Derived from total personal income and local retail sales
collections)
‘HOW TO” derive the data from the IMPLAN program
START IMPLAN
Select Start <click> 
Select Programs <click> 
Select IMPLAN Professional 2.0 <click> 
Select IMPLAN Professional 2.0 <click> 

BUILD THE STUDY AREA
Select “File” <click> 
Select “New Model” <click> 
Select “File Name” <click> 
Type in the county name as the file name 
<Atoka County> 
Select “Save” <click>    
Select the IMPLAN File
Next Screen Pops Up - "Select Region" 
Select "Drives," Select (CD-ROM Drive) <d:> <click> 
Select "Directory Info Box" <IMPLAN data> <double click> 
Select "Available IMPLAN Data Files" 
Select "County File" <ATOKA> <double click> 
Select "Continue" <click> 

STUDY AREA IS BUILT
WAIT until County Study Area is built 
Study Area is built! OK <click>
CONSTRUCT THE MODEL
Select "Construct Model" <click> 
Select from "Model Construction" Options 
“Advanced” <Next>  <click> 
“Production Functions” <Next>  <click> 
“ByProducts” <Next>  <click> 
“Trade Flows” <Next>  <click> 
“Institutional Transfers” <Next>  <click> 
“Multipliers”
Select ”Type III (CPPM)" <Check box>  
<Next>  <click> 
COMPLETE CONSTRUCTION MODEL
WAIT until Model is constructed
“Model Construction is Complete.” Select "OK"
<click> 
Select "Close" <click> 

REPORT RESULTS (Download Reports)
Select “Reports…” <click> 
Select “1: Study Area” “Output, VA, Employment” <check box> 
To Download, Select "To File" <check box> 
Select “Tab Delimited” <check box> 
Select "Continue" <click> 

"Enter Location to Save Report File" will pop up. 
Select "File Name" Type a file name <Atoka County op va emp> 
Select "Save" <click> 

REPORTS
For next report, download “6. Multipliers” “Labor Income” 

For next report, download “6: Multipliers” “Employment” 

When finished downloading, Select "Close" <click> 

Run State IMPLAN Model
1.
Build a Study Area of the STATE (Follow
Instructions to “Build a Study Area”)
2.
Construct the STATE Model
3.
Report the STATE results
a. Need "Output, VA, Employment” Report ONLY
b. Download results. Name file <OK op va emp>
Summary of data completed from above steps:
Atoka County – Employment – Type III Multipliers - Report
Atoka County – Labor Income – Type III Multipliers - Report
Atoka County – Output, VA, Employment - Report
Oklahoma – Output, VA, Employment - Report
EXCERPTS from the IMPLAN Data Reports:
Atoka County - Type III EMPLOYMENT MULTIPLIERS
for Five Health Sectors
Direct
Indirect Induced Total
Type I
Type III
Sector Effects
Effects Effects Effects Multiplier Multiplier
Miscellaneous Retail
455 42.440136 0.975899 20.029514 63.445549 1.022995
1.494942
Doctors, Dentists and Other Medical Professionals
490 13.558041 3.059330 7.666243 24.283614 1.225647
1.791086
Nursing and Protective Care
491 41.137875 2.270790 20.026114 63.434778 1.055200
1.542004
Hospitals
492 0.000000
0.000000
0.000000
Other Medical and Health Services
493 22.775555 2.469120 11.646356 36.891030 1.108411
1.619764
0.000000
0.000000
0.000000
EXCERPTS from the IMPLAN Data Reports:
Atoka County - Type III LABOR INCOME MULTIPLIERS
for Five Health Sectors
Direct
Indirect Induced Total
Type I
Type III
Sector Effects
Effects Effects Effects Multiplier Multiplier
Miscellaneous Retail
455
0.550883 0.021740 0.312651 0.885274 1.039464
Doctors, Dentists and Other Medical Professionals
490 0.5311031 0.061200 0.119666 0.711969 1.115231
1.607009
1.340548
Nursing and Protective Care
491 0.542267 0.042761 0.312598 0.897627 1.078857 1.655321
Hospitals
492 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000
Other Medical and Health Services
493 0.377285 0.050605 0.181794
0.609684 1.134131
1.615979
EXCERPTS from the IMPLAN Data Reports:
Atoka County - Output, VA, Employment
for Five Health Sectors
Industry
Employee
Industry Output* Employment Compensation*
Other
Indirect
Proprietor Property Business
Total
Income* Income* Tax*
Value Added*
Miscellaneous Retail
455 4.408
187
1.759
0.670
0.554
Doctors, Dentists and Other Medical Professionals
490 4.924
67
2.114
0.501 0.228
Nursing and Protective Care
491 4.659
192
2.121
Hospitals
492 0.000
00
0.000
Other Medical and Health Services
493
6.312
144
1.826
* Millions of Dollars
0.710
3.692
0.031
2.874
0.405
0.079
0.053
2.657
0.000
0.000
0.000
0.000
0.556
0.357
0.049
2.788
EXCERPTS from the IMPLAN Data Reports:
State of Oklahoma - Output, VA, Employment
for Five Health Sectors
Industry
Employee
Industry Output* Employment Compensation*
Proprietor
Income*
Other
Indirect
Property Business
Total
Income*
Tax*
Value Added*
Miscellaneous Retail
455 1,431.035 63,250
226.544
179.903
230.450
1,198.719
Doctors, Dentists and Other Medical Professionals
490 2,870.086 31,765
1,464.537
198.668 145.128
19.546
1,827.879
561.822
Nursing and Protective Care
491
806.178 30,662
399.372
Hospitals
492 2,364.065 42,947
1,255.026
Other Medical and Health Services
493 1,415.471 27,371
517.849
* Millions of Dollars
56.848
14.184
9.504
479.908
170.338
81.166
4.328
1,510.859
90.668
91.325
12.627
712.469
Apply Data to Health Sector Impact Table
Insert the IMPLAN data in the Health Sector
Impact Table, as follows:
Sample County: Atoka County
Health Sector Impact on Employment and Income, Retail Sales and Sales Tax
Employment
Health Sectors
IMPLAN
Type III
Total
Employed Multiplier Impact
Hospitals (492)
Income
Retail Sales
Income
IMPLAN
Type III
Multiplier
1 Cent
Sales Tax
Collections
Total
Impact
Retail
Sales
_____
____
_____
_____
_____
_____
____
_____
67
1.79
_____
$2,615,000
1.34
_____
_____
_____
192
1.54
_____
$2,526,000 1.66
_____
_____
_____
(493)
144
1.62
_____
$2,382,000 1.62
_____
_____
_____
Pharmacies (455)
_____
1.49
_____
_____
1.61
_____
_____
_____
Total
_____
_____
_____
_____
_____
_____
Physicians, Dentists,
and Other
Professionals (490)
Nursing &
Protective Care
(491)
Other Medical &
Health Services
Missing Data
Hospital Sector employment and income
Hospital Sector Type III Multipliers for both employment
and income
Pharmacies (Derived from Sector 455) employment and
income
Create a Shadow Industry (Hospitals - Sector 492)
In other words, develop a hospital sector industry to derive the
Type III multipliers specifically for the missing hospital industry.
From the existing Atoka County Model, create the shadow industry
Start IMPLAN, Select “Open Existing Model,” <click> 
Select “Atoka County” <double click> 

In the IMPLAN model ”Atoka County
Type III Multipliers…" screen 
Select "Edit" "Region Data" “Study Area Data" 
Select "Sectors" - Arrow down to "492: Hospitals" <click> 
All values are currently at -0-. 

From Oklahoma Hospital Utilization Data Reports, actual data
shows:
Atoka County Hospital employment = 120 
Type under "Employment" <120> 
Atoka County Hospital payroll = $2,406,564 
Type in "Employee Compensation" <$2.407> 
(converted to millions) 

(Continued)
To determine the Industry output for the Atoka County Hospital Sector
(Sector 492), use the following formula:
[State of OK Industry Output (Sector 492)/State of OK Employment (Sector 492)]
x Atoka County Employment =
Industry Output for Atoka County Hospital Sector
For Atoka County, calculate as follows:
[2,364,065,000/42,947] x 120 = $6,605,532= $6.606
(Converted to millions)
Type <$6.606> under "Industry Output" 
Select<X> in upper right hand corner of Region Data Screen

(Data from “Oklahoma – Output, VA, Employment” Report)
Screen will pop up "Data has been changed. The model
is invalid until it is rerun!"
Select <OK> 
After inputting the shadow hospital industry (Sector
492), the model must be re-constructed.
Select "Construct Model…" <click> 
Select from "Model Construction" Options  
“Advanced” <Next>  <click> 
“Production Functions” <Next>  <click> 
“ByProducts” <Next>  <click> 
“Trade Flows” <Next>  <click> 
“Institutional Transfers” <Next>  <click> 
“Multipliers”
Select ”Type III (CPPM)" <Check box>  
<Next>  <click> 
WAIT until Model is constructed 
Pop up Box, “Model Construction is Complete.” 
Select "OK" <click> 
Select "Close" <click> 

Report Results
Download Reports for Re-Constructed Atoka County Model for:
Type III Employment Multipliers
Type III Income Multipliers
Information from the Atoka County Revised Reports.
Sector 492 Hospitals - Type III Employment Multiplier = 1.70
Sector 492 Hospitals - Type III Income Multiplier
= 1.47
Also, use the hospital employment and income to complete the
hospital sector information in the Health Sector Impact Table.
Sample County: Atoka County
Health Sector Impact on Employment and Income, Retail Sales and Sales Tax
Employment
Health Sectors
IMPLAN
Type III
Total
Employed Multiplier Impact
Hospitals (492)
120
1.70
Income
Retail Sales
IMPLAN
Type III
Multiplier
Total
Impact
$2,406,564
1.47
_____
Income
Retail
Sales
1 Cent
Sales Tax
Collections
_____
Physicians, Dentists,
and Other
67
1.79
_____
$2,615,000
1.34
_____
_____
_____
192
1.54
_____
$2,121,000 1.66
_____
_____
_____
(493)
144
1.62
_____
$1,826,000 1.62
_____
_____
_____
Pharmacies (455)
_____
1.49
_____
_____
1.61
_____
_____
_____
Total
_____
_____
_____
_____
_____
_____
Professionals (490)
Nursing &
Protective Care
(491)
Other Medical &
Health Services
Modify the IMPLAN data (Pharmacies)
A. Need Employment and Income for Pharmacies
(or Drug stores and proprietary stores)
B. Review Options for finding this data
Data from County Business Patterns 1999 Oklahoma, U.S.
Dept. of Commerce, Economics and Statistics Administration,
Bureau of the Census
Website: <http://www.census.gov/prod/www/abs/cbptotal.html>
NOT ENOUGH DETAIL
Need to find a Federal Depository Library
Complete CD-ROM –
1999 County Business Patterns
OPEN CD-ROM
SELECT LAUNCH BROWSER
The Key to using the Launch Browser is in the
Dimension Menu
Zoom IN
or
Zoom OUT
To analyze the Pharmacies and Drug
Stores Data:
NAICS
CODE
Category
44-45
446
4461
44611
446110
Retail trade
Health & personal care stores
Health & personal care stores
Pharmacies & drug stores
Pharmacies & drug stores
Download from County Business Patterns
446110 NAICS Pharmacies and Drug Stores
GIVEN:
• No. of Pharmacy Establishments by County
• Total No. of Establishments in the State
• Total Employment for the State
• Total Employee Compensation (Payroll) for the State
• All data for selected Counties (larger, more urban)
NEED:
•
Pharmacy Employment by County for ALL Counties
•
Pharmacy Employee Compensation + Proprietor’s
Income by County for ALL Counties
NAICS CODE: 446110 Pharmacies and Drug Stores
ATOKA COUNTY EXAMPLE
1999
Counties
WITH Data
Totals
1999
Counties
WITHOUT Data
Totals
606
460
7,645
6,516
$126,753,000
$108,083,000
146
1,129
$18,760,000
1999
State
Totals
Pharmacies & Drug Stores
No. of Establishments
Employment
Compensation
USE RATIOS TO ESTIMATE COUNTY DATA FOR MISSING
EMPLOYMENT & EMPLOYEE COMPENSATION
EMPLOYMENT
Average
Employment
Per Pharmacy
1,129
146
=
=
Total Employment WITHOUT Data
Total # Pharmacies WITHOUT Data
7.73
Average Number
of Employees
Per Pharmacy
=
USE RATIOS TO ESTIMATE COUNTY DATA FOR MISSING
EMPLOYMENT & EMPLOYEE COMPENSATION
EMPLOYEE COMPENSATION OR PAYROLL
Average
Payroll
Per Pharmacy
$18,670,000
146
=
Total Payroll WITHOUT Data
Total # of Pharmacies WITHOUT Data
=
$127,877
=
Average Payroll
Per Pharmacy
APPLY RATIOS TO ATOKA COUNTY –
Estimated Number of Pharmacy Employees
GIVEN: No. of Pharmacies for Atoka County
=
2
To estimate Number of Pharmacy Employees:
Number of
Atoka County
Pharmacies
x
2
x
15
Average Number
of Employees
Per Pharmacy
7.73
=
=
ESTIMATED
Number of Pharmacy Employees
for Atoka County
APPLY RATIOS TO ATOKA COUNTY –
Estimated Payroll or Employee Compensation
GIVEN: No. of Pharmacies for Atoka County
=
2
To estimate Payroll:
Number of
Atoka County
Pharmacies
x
Average Payroll
Per Pharmacy
2
x
$127,877
$255,754
=
=
ESTIMATED
Payroll
for Atoka County
APPLY RATIOS TO ATOKA COUNTY –
Estimated Proprietor’s Income
GIVEN: No. of Pharmacies for Atoka County
=
2
To estimate Proprietor’s Income:
Number of
Atoka County
Pharmacies
x
2
x
$170,000
Average Proprietor’s Income
Per Pharmacy
$85,000
=
=
ESTIMATED
Proprietor’s Income
for Atoka County
APPLY RATIOS TO ATOKA COUNTY –
Estimated Total Pharmacy Income
To estimate Total Pharmacy Income:
Atoka County
ESTIMATED
Payroll
+
$255,754
+
$425,754
Atoka County
ESTIMATED
Proprietor’s Income
$170,000
=
=
ESTIMATED
Total Pharmacy Income
for Atoka County
Insert the employment and income to the Pharmacy Sector and
calculate the total impacts of the Health Sectors
on the Health Sector Impact Table.
Total Impact = Sector data x Type III multiplier
Sample County: Atoka County
Health Sector Impact on Employment and Income, Retail Sales and Sales Tax
Employment
Health Sectors
IMPLAN
Type III
Employed Multiplier
Income
Total
Impact
Income
IMPLAN
Type III
Multiplier
Retail Sales
Total
Impact
Retail
Sales
1 Cent
Sales Tax
Collections
Hospitals (492)
120
1.70
204
$2,406,564
1.47
$3,537,649
Physicians, Dentists,
and Other
Professionals (490)
67
1.79
120
$2,615,000
1.34
$3,504,100
_____
_____
Nursing &
Protective Care
(491)
192
1.54
296
$2,526,000
1.66
$4,193,160
_____
_____
Other Medical &
Health Services
(493)
144
1.62
233
$2,382,000
1.62
$3,858,840
_____
_____
Pharmacies (455)
__16
1.49
24
$425,753
1.61
$685,463
_____
_____
877
$10,355,317
Total
539
$15,779,212
_____
Derive the Local Retail Sales Capture Ratio
To calculate the amount of retail sales that is produced by the Health
Sector, need to calculate the local retail sales capture ratio.
Total Retail Sales (Sales Subject to Sales Tax)/Total Personal Income =
Local Retail Sales Capture Ratio
Atoka County Local Retail Sales Capture Ratio
For Atoka County,
the Local Retail Sales Capture Ratio = 40.37%
(Retail Sales from OK State Tax Commission, "State Payments to Local
Governments” and Total Personal Income from BEA data.)
Apply Local Retail Sales Capture Ratio
to the Health Sector Impact Table.
Multiply the Local Retail Sales Capture Ratio x
the Total Income Impact for each Sector and sum the total
From the Retail Sales, calculate a 1-cent sales tax,
by multiplying .01 x Retail Sales for each Health Sector,
and sum the total
Insert the retail sales and sales tax in the Health Sector Impact
Table.
The Health Sector Impact Table is complete!!
Sample County: Atoka County
Health Sector Impact on Employment and Income, Retail Sales and Sales Tax
Employment
Health Sectors
Hospitals (492)
IMPLAN
Type III
Employed Multiplier
120
Physicians, Dentists,
and Other
Professionals (490)
67
Nursing &
Protective Care
(491)
192
Income
IMPLAN
Type III
Multiplier
Income
1.70
204
$2,406,564
1.47
$3,537,649 $1,428,149
$14,281
1.79
120
$2,615,000
1.34
$3,504,100 $1,414,605
$14,146
1.54
296
$2,526,000
1.66
$4,193,160 $1,692,779
$16,928
$3,858,840 $1,557,814
$15,578
144
1.62
233
$2,382,000
1.62
Pharmacies (455)
__16
1.49
24
$425,753
1.61
877
$10,355,317
539
Total
Impact
$685,463
Retail
Sales
1 Cent
Sales Tax
Collections
Total
Impact
Other Medical &
Health Services
(493)
Total
Retail Sales
$276,721
$2,767
$15,779,212 $6,370,068
$63,700
The Total Economic Impact of the Health Sector
Use of Health Sector Impact Tool in Community Health
Planning
1.
When working with a specific community,
primary data are used.
2.
The following table is given to the local steering
committee to collect current local data.
3.
The Health Sector Impact Table is then completed
for presentation to the community.
Table 3
Direct Economic Activities of Health Sector
in ___________ Community
Component
Estimated Employees
Estimated Payroll
Hospital (#)
_____
_____
Doctors and Dentists
Physicians (#)
Dentists (#)
Other
_____
____ _
Nursing & Protective Care (#)
_____
____ _
Other Medical & Health Services _____
Home Health Care (#)
County Health Department
____ _
Pharmacies (#)
_____
____ _
TOTALS
_____
____ _
SOURCE: Local survey and estimated from research
Mold the model to fit for YOUR STATE
Process must be modified,
depending on available data in each State.