TECHNICAL REPORT
UCED 2013/14-01
The Impact of Tahoe Forest Hospital
on the Local Economy
UNIVERSITY OF NEVADA, RENO
The Impact of Tahoe Forest Hospital
on the Local Economy
Eugenia A. Larmore,
Thomas R. Harris
Brian P. Bonnenfant
and
John F. Packham
Eugenia A. Larmore is a Research Assistant in the University Center for Economic Development
and Department of Economics at the University of Nevada, Reno.
Thomas R. Harris is a Professor in the Department of Economics and Director of the University
Center for Economic Development at the University of Nevada, Reno.
Brian P. Bonnenfant is a Project Manager in the Center for Regional Studies, College of
Business at the University of Nevada, Reno.
John F. Packham is the Director of Health Policy Research, Office of Statewide Initiatives,
University of Nevada School of Medicine
August 2013
UNIVERSITY
OF NEVADA
RENO
The University of Nevada, Reno is an Equal Opportunity/Affirmative Action employer and does not discriminate on the basis
of race, color, religion, sex, age, creed, national origin, veteran status, physical or mental disability, and in accordance with
university policy, sexual orientation, in any program or activity it operates. The University of Nevada employs only United
States citizens and aliens lawfully authorized to work in the United States.
This publication, The Impact of Tahoe Forest Hospital on the
Local Economy, was published by the University Center for
Economic Development in the Department of Economics at the
University of Nevada, Reno. Funding for this publication was
provided by Tahoe Forest Hospital. This publication's statements,
findings, conclusions, recommendations, and/or data represent
solely the findings and views of the authors and do not necessarily
represent the views of the Medicare Rural Hospital Flexibility
Program, the Federal Office of Rural Health Policy, U.S.
Department of Commerce, the Economic Development
Administration, University of Nevada, Reno, or any reference
sources used or quoted by this study. Reference to research
projects, programs, books, magazines, or newspaper articles does
not imply an endorsement or recommendation by the authors
unless otherwise stated. Correspondence regarding this document
should be sent to:
Thomas R. Harris, Director
University Center for Economic Development
University of Nevada, Reno
Department of Economics
Mail Stop 204
Reno, Nevada 89557
Phone: 775/784-1681
UCED
University of Nevada, Reno
Nevada Cooperative Extension
Department of Resource Economics
Introduction
The primary purpose of this report is to document the contribution of Tahoe Forest Hospital
(TFH) to the local economy of Truckee, California and surrounding counties of Placer, El
Dorado and Nevada. Data presented in this report reveal that the hospital has a substantial
impact on income, employment, and sales tax revenue in the Tahoe Forest Hospital District
(TFHD) – a contribution often overlooked in public policy discussions of health care costs,
access to care, and community benefits. The hospital plays a critical role in local economic
development by creating jobs and income for local residents through the normal hospital
operations. The hospital is also responsible for generating employment and income in other
businesses in the Truckee area.
Utilizing data provided by Tahoe Forest Hospital, the analysis presented in this report indicates
that the Hospital spent $69.7 million locally on operations in the fiscal year 2012. When the
expenditures by other businesses as a result of the hospital are included in the analysis, the
Hospital generated a total of $97.6 million in spending in the District. Additionally, the hospital
employed 564 individuals living in the District in FY 2012. When the employment created by
other businesses as a result of the hospital is included in the analysis, the Hospital generated and
supported a total of 864 jobs in the District. Similarly, the Hospital generated $38.6 million in
labor income for the year FY 2012. When the income created by other businesses as a result of
the Hospital is included in the analysis, the Hospital was responsible for $46.3 million in labor
income for its employees and those employed in other businesses in the District.
In addition to hospital operations expenditures, the Hospital also spent $36.9 million locally on
construction in FY 2012, which generated a total of $50.5 million in expenditures throughout the
District. The construction employed 351 individuals living in the region. Including the
employment created by other businesses as a result of Hospital construction in the analysis, a
total of 471 jobs were generated and supported in the District. Hospital construction created
$18.0 million in labor income in FY 2012. When the labor income generated by other businesses
as a result of the Hospital construction is included in the analysis, the Hospital was responsible
for $22.1 million in labor income for District residents.
As local and state policymakers consider the medical and health care priorities for rural areas,
they should bear in mind the importance of hospitals to local and regional economies. As this
report demonstrates, TFH provides much more than necessary medical care and services. The
jobs, income, and economic benefits created in other businesses, as well as sales tax revenue
generate by all sectors represent additional contributions to economic well-being in the TFHD.
Finally, the hospital’s investment in high technology, capital improvements, and new
construction continues to generate additional income and employment for the district’s economy.
This report – The Impact of Tahoe Forest Hospital on the Local Economy – was prepared for the
citizens, community leaders, and health care providers of the Tahoe Forest Hospital District by
the Nevada Rural Health Works Program. This program is a joint research and policy analysis
project of the Nevada Office of Rural Health at the University of Nevada School of Medicine,
Nevada Cooperative Extension, and the Center for Economic Development at the University of
Nevada, Reno. Over the past decade, Nevada Rural Health Works Program has provided local
1
and state leaders with the information and assistance needed to make the best possible decisions
about the role of hospitals and the health sector in economic development. Research undertaken
by the Nevada Rural Health Works Program includes community health care needs assessments,
budget studies and feasibility assessments, community health planning, market demand studies,
and economic impact analysis.
The Impact of Tahoe Forest Hospital on the Local Economy is divided into three sections. The
first section briefly discusses the role of the health sector in rural economic development,
highlighting the financial and non-financial linkages between the health sector and the rest of the
local economy. The second section provides an overview of the demographic and economic
context of the Tahoe Forest Hospital District. The third section discusses the health care industry
within the District in the context of other District industries.
The fourth, and final, section demonstrates the direct and indirect economic impact of Tahoe
Forest Hospital on jobs and labor in the local economy. Utilizing an economic impact model
developed specifically for the health care industry, this report provides estimates of the direct
economic contribution of hospital operating activity, as well as the indirect or secondary income
and employment impacts in other businesses resulting from hospital activity. The jobs and
income generated in other business are estimated with employment and income multipliers
derived for the hospital’s service area. The report also contains an appendix that summarizes the
model and data used to estimate employment and income multipliers.
For the purposes of this study, the District includes the following zip codes:
Zip Code
96160
96161
96162
96145
96143
96146
96140
96148
96141
95728
95724
96142
Town/Area
Truckee
Truckee
Truckee
Tahoe City
Kings Beach
Olympic Valley
Carnelian Bay
Tahoe Vista
Homewood
Soda Springs
Soda Springs
Tahoma
County
Nevada
Nevada
Nevada
Placer
Placer
Placer
Placer
Placer
Placer
Nevada
Nevada
El Dorado
A map of the District, generated by the ESRI Business Analyst Online database is shown below.
2
Map of Tahoe Forest Hospital District
3
SECTION 1: RURAL HEALTH CARE AND LOCAL ECONOMIC DEVELOPMENT
Over the past couple of decades, the health sector has become an important engine of economic
growth in Truckee and rural areas of California. The health sector includes hospitals, clinics, and
physician practices, as well as nursing homes, pharmacies, and other providers of medical
services and products. The premise of this report is that rural communities and leaders need to
improve their understanding of the importance of the health sector to the local economy,
including the amount of jobs and income it provides, directly and indirectly, and its role in
generating additional employment and income to the residents in the Truckee area. The nexus
between health care services and rural development is typically overlooked. A couple of
fundamental areas of commonality exist. First, a strong health care system can attract and
maintain business and job growth, and “keeping health care dollars at home.” Second, the
existence of quality health care services is a key factor in attracting and retaining retirees.
Local Business and Job Growth
Research has documented the important role of quality-of-life factors in business and industry
location decisions. A key quality-of-life factor is the availability and quality of health care
services. The availability of health care services is important for a couple of reasons. First,
employees and management may offer strong resistance if they are asked to move into a
community with substandard or inconveniently located health services. Second, any business or
industry making a location decision wants to ensure that the local labor force will be productive,
and a key factor in productivity is good health. Thus, investments in health care services yield
dividends in the form of increased labor productivity. And, the rising cost of health care services
is a key factor considered by business and industry in location decisions. The existence of health
care services locally can lower health care costs for business and their employees and provide
value-added services for firms such as occupational health.
In general, payroll and employment in California’s health care sector, including rural regions of
the state such as Truckee and the Tahoe Forest Hospital service area, have grown consistently
over the past thirty years. Moreover, the principal demographic factors driving increased demand
for hospital care and other health care services – population growth and population aging – are
projected to increase substantially over the next two decades.
Health Services and Attracting Retirees
A strong and convenient health care system is important to retirees, a special group of residents
whose spending and purchasing is a significant source of income for the local economy. Many
rural areas have environments (e.g., good climate and outdoor activities) that enable them to be
in a good position to attract and retain retirees. The amount of spending by retirees, including the
purchasing power associated with Social Security, Medicare, and other transfer payments, is
substantial. Additionally, middle- and upper-income retirees often have substantial net worth.
Several studies have indicated that the availability of quality health services, along with safety,
housing, and recreation opportunities, was a key predictor of retirement location considerations.
In general, like worker, retirees are more likely to choose a retirement location that has access to
quality health care.
4
“Keeping Local Health Care Dollars at Home”
In summary, the existence of a strong health care system plays a critical role in local economic
development by attracting business, industry and retirees, as well as generating jobs and income
in its own right. However, the most important economic role the health sector plays in local
economic development is “keeping local health care dollars at home.” There are many sources of
local health care dollars including commercial and private insurance, Medicare, Medicaid and
other transfer payments, and consumer out-of-pocket payments to health care providers and
businesses. If these expenditures leave the community (e.g., individuals who travel to
Sacramento or Reno for medical care that could be obtained Truckee at Tahoe Forest Hospital),
they represent a real loss of potential jobs and income to local residents. In other words,
payments for health care services and goods outside of the local community not only affect the
health services sector, the “leakage” of those dollars out of the community has repercussions for
the entire local economy.
Health care employers and employees are important purchasers of goods and services supporting
local business and industry. In Truckee and most other rural areas of the Sierra Nevada,
employees in the health service sector realize higher than average wages and are an important
segment in local household consumption. Hospitals and other health sector establishments are
also important purchasers of local goods and services, such as laundry and waste management,
essential to the provision of health care. In summary, the health sector and other businesses that
comprise the local economy mutually support one another through purchases and sales. As such,
the strength and vitality of the health services sector is a key component of local economic
development. The remainder of this report documents the importance of Tahoe Forest Hospital
as an economic engine in its own right and highlights the specific economic contributions of the
hospital to other local businesses.
5
SECTION 2: DEMOGRAPHIC AND ECONOMIC CONTEXT OF THE TAHOE FOREST HOSPITAL
DISTRICT
This section discusses the social and economic characteristics of the Tahoe Forest Hospital
District.
The majority of the characteristics described in this analysis were developed by the Economic
Modeling Specialists, Inc. (EMSI) using data from the state of Nevada Department of
Employment, Training, and Rehabilitation; the U.S. Bureau of Labor; Regional Economic
Information System data from the U.S. Department of Commerce, Bureau of Economic
Analysis; and occupational staffing patterns from the Occupational Employment Statistics.
Additionally, data was obtained from the Environmental Systems Research Institute (ESRI).
ESRI is a company that produces Geographical Information System (GIS) software that relies on
input data for mapping various development scenarios. Several types of data are used in this
software including recent census and projected socioeconomic data. This dataset is one of the
most comprehensive and reliable datasets that report a wide variety of demographic
characteristics. This dataset is used mainly to show future projections for economic and
demographic characteristics of the region.
Demographic Characteristics
Social characteristics describe the Tahoe Forest Hospital District region.
population/households, age, race, and educational attainment.
This includes
Population
The District’s 2013 population of 38,600 represented a 3.9% increase in population over the past
five years. This is lower than the 4.9% population increase for the State of California during the
same period. Overall, the District represents 0.1% of total State population.1 According to
ESRI, District population is projected to increase by 2.3% by 2017.2
Race
Approximately 71.6% of the District’s population is White, Non-Hispanic, following by White,
Hispanic (18.4%), Two or More Races, Non-Hispanic (2.5%) and others.
1
2
EMSI, 2013.
ESRI Demographic and Income Profile.
6
Graph 1: Race Demographics-Region-2013
Source: EMSI, 2013.
Table 1. Percent of Population by Race-Region, State and US-2011
Race
White, Non-Hispanic
Black, Non-Hispanic
American Indian or Alaskan Native, Non-Hispanic
Asian, Non-Hispanic
Native Hawaiian or Pacific Islander, Non-Hispanic
Two or More Races, Non-Hispanic
White, Hispanic
Black, Hispanic
American Indian or Alaskan Native, Hispanic
Asian, Hispanic
Native Hawaiian or Pacific Islander, Hispanic
Two or More Races, Hispanic
Total
Region
72.9%
0.9%
1.2%
2.3%
0.2%
2.7%
17.6%
0.2%
0.8%
0.2%
0.1%
0.8%
100.0%
State
39.7%
5.8%
0.4%
13.0%
0.4%
2.5%
34.2%
0.8%
1.2%
0.6%
0.1%
1.1%
100.0%
US
63.4%
12.3%
0.7%
4.8%
0.2%
1.9%
14.7%
0.8%
0.5%
0.2%
0.1%
0.5%
100.0%
ESRI estimates the percentage of White residents is decreasing in the District, from 88.4% of
total population in 2010 to 87.5% in 2012 and further to 85.3% in 2017. The population of
residents of Hispanic origin (any race) is expected to increase from 19.5% in 2010 to 22.9% in
2017.3
Age
The majority of the District’s population (58.9%) are between the ages of 20 and 59, with the
highest percentage in the 40 to 59 age group (30.2%). This is similar to 2006 age data, when the
40 to 59 age range also had the highest percentage of population (33.7%). The biggest change
between 2006 and 2013 was in the 60 to 79 age range, which increased from 13.2% of total
population to 17.2%.
3
ESRI Demographic and Income Profile.
7
Graph 2: Age Demographics-Region-2013
Source: EMSI, 2013.
Table 2. Percent of Population by Age-Region, State and US-2011
Age
Under 5 years
5 to 9 years
10 to 14 years
15 to 19 years
20 to 24 years
25 to 29 years
30 to 34 years
35 to 39 years
40 to 44 years
45 to 49 years
50 to 54 years
55 to 59 years
60 to 64 years
65 to 69 years
70 to 74 years
75 to 79 years
80 to 84 years
85 years and over
Total
Region
5.6%
5.8%
5.5%
5.6%
6.0%
7.8%
7.3%
6.9%
7.5%
7.4%
8.5%
8.1%
7.3%
4.5%
2.8%
1.6%
1.0%
0.7%
100.0%
State
6.7%
6.7%
6.8%
7.3%
7.6%
7.4%
7.0%
6.7%
7.0%
7.0%
6.9%
6.1%
5.1%
3.6%
2.7%
2.1%
1.6%
1.7%
100.0%
US
6.5%
6.5%
6.6%
6.9%
7.1%
6.8%
6.6%
6.3%
6.8%
7.1%
7.2%
6.5%
5.7%
4.1%
3.1%
2.4%
1.9%
1.8%
100.0%
The median age for the hospital region was 38.9 in 2012, a slight increase from 38.6 in 2010.
The median age is expected to increase further by 2017 to 39.2.4
4
ESRI Demographic and Income Profile.
8
Educational Attainment
According to data provided by ESRI, approximately 71.7% of total regional population have
some college education. Approximately 49.6% of total population have at least an Associate’s
degree, 40.4% have a Bachelor’s degree and 9.14% have at least a Master’s degree.5
The graph shows fewer residents in the region attend and/or complete high school. This is
because more of them then attend some type of college and even more receive at least a
Bachelor’s degree. Overall, 58.6% of all California residents have some college education,
compared to 71.7% in the region.
Graph 3: Educational Attainment-Region, State, and US-2005-2009
Source: ESRI ACS Population Summary 2005-2009.
5
ESRI ACS Population Summary 2005-2009.
9
Economic Characteristics
Economic characteristics of communities and counties of the District and the region describe the
key economic factors that contribute to an area’s economic viability. These factors can assist
with economic development efforts and can provide a basis to how a specific industry will adapt
or help grow a community. For the purpose of this study economic characteristics are defined
as: housing units, median and average home value, median household income, average
household income, per capita income, industry employment and payroll, and District’s major
employers. Also included is medical expenditure data provided by ESRI to understand the
demand for medical services within the District.
Housing Characteristics
There were 31,943 housing units in the District in 2012, a 1.16% increase over 2010. The
number of units is expected to increase by another 1.73% by 2017, to 32,029.
Of these housing units, there were a total of 12,641 occupied residential units in the region in
2012, a 0.28% increase over 2010. ESRI projects the number of units will increase to 13,063 in
2017, an increase of 3.34%. Approximately 62.4% (7,883) of these units were owner occupied
in 2012; this percentage is expected to increase to 63.5% by 2017.
The 1.03% increase in the number of owner occupied household units in the region between
2012 and 2017 is higher than the projected national increase of 0.91% for the same time period.
The median housing unit value in 2012 was $310,170, projected to increase by 19.2% by 2017,
to $369,798. The average housing unit value was $386,154 in 2012, projected to increase by
12.3% to $433,824.6
Income Characteristics
The median income for the households in the District is estimated at $67,486 in 2012. This is
higher than the median household income for the State of $57,385. Regional median household
income is expected to increase by 11.0% by 2017 to $74,932.
6
ESRI Housing Profile.
10
Graph 4: 2012 Household Income Breakdown
2012 Household Income
$35K - $49K
13.6%
$25K - $34K
7.3%
$15K - $24K
5.6%
$50K - $74K
22.3%
<$15K
6.3%
$200K+
6.3%
$150K - $199K
6.3%
$75K - $99K
14.9%
$100K - $149K
17.6%
Source: ESRI Demographic and Income Profile.
Table 3. Percent of Population by Household Income-Region, State and US-2011
Household Income
Less than $10,000
$10,000 to $14,999
$15,000 to $19,999
$20,000 to $24,999
$25,000 to $29,999
$30,000 to $34,999
$35,000 to $39,999
$40,000 to $44,999
$45,000 to $49,999
$50,000 to $59,999
$60,000 to $74,999
$75,000 to $99,999
$100,000 to $124,999
$125,000 to $149,999
$150,000 to $199,999
$200,000 or more
Region
5.5%
2.4%
1.6%
5.9%
3.3%
3.0%
6.9%
4.8%
4.3%
6.5%
10.8%
15.1%
6.4%
9.7%
4.5%
9.5%
State
5.3%
5.2%
4.7%
4.8%
4.7%
4.6%
4.4%
4.4%
4.0%
7.8%
10.0%
12.8%
9.1%
5.8%
6.2%
6.3%
US
7.4%
5.6%
5.3%
5.5%
5.4%
5.3%
5.0%
4.9%
4.4%
8.3%
10.4%
12.3%
7.7%
4.4%
4.2%
4.0%
Average household income for the region is estimated at $86,680 in 2012 and is projected to
increase by 11.8% to $96,872 in 2017. The 2012 average household income for the region is
higher than the State average household income of $79,842.
11
Regional per capita income is estimated at $35,469 in 2012, projected to increase by 12.8% to
$40,022 in 2017. The 2012 per capita income for the region is also higher than the State income
of $27,699.7
Industry Characteristics
According to ESRI, the Truckee Tahoe Hospital District had a total of 17,000 jobs in 2013. Of
these, the highest number of jobs, 25.5% of total, are in the Accommodation and Food Services
Industry. The Government industry has the second highest number of jobs at 12.9% of total,
followed by the Entertainment, and Recreation industry at 12.0% of total.
Graph 5: 2013 Jobs by Industry-District, State and US
25.0%
20.0%
15.0%
District
State
US
10.0%
5.0%
0.0%
Source: EMSI, 2013.
7
ESRI Demographic and Income Profile.
12
The Health Care and Social Assistance industry is another large industry in the District, making
up approximately 7.1% of total employment with 1,212 employees. However, this is not
necessarily an accurate description of the health care services provided in the area as some of the
health care employees are classified in other industries, including the Government and Other
Services.
The Utilities industry has the highest average earnings in the District with $157,522. This is
followed by the Mining, Quarrying, Oil and Gas Extraction industry with earnings of $99,139
and the Management of Companies and Enterprises industry, with $98,404. The Health Care
and Social Assistance industry had average earnings of $79,418 in 2013. This is still higher than
the average earnings for the entire District in 2013 of $46,100.
Graph 6: 2013 Average Earnings by Industry-Tahoe Forest Hospital District
Source: EMSI, 2013.
13
According to EMSI, the top employers in the District in 2013 were Boreal Ridge Corporation,
Squaw Valley Ski Corporation, Tahoe Forrest Hospital District, Soda Springs Ski and Snow
Tubing Area, and Clearcapital.com, Inc.
Between 2006 and 2011, the three highest growing industries (in terms of employment) were the
Hotels (except Casino Hotels) and Motels industry, the Skiing Facilities industry and HMO
Medical Centers. The fastest declining industries during this period were Site Preparation
Contractors, Offices of Real Estate Agents and Brokers, and New Single-Family Housing
Construction industries.
The above fastest growing industries (Hotels and Motels, Skiing Facilities, and HMO Medical
sectors) fall into the largest major industries in the District as shown in Graph 5 above. The
Hotels and Motels industry is part of the Accommodation and Food Services industry, which in
2013 made up 25.5% of total District employment. The Skiing Facilities industry is part of the
Arts, Entertainment and Recreation industry, which in 2013 made up a total of 12.0% of total
District employment. The HMO Medical Centers industry is part of the larger Health Care and
Social Assistance industry, which makes up 7.1% of total District employment.
In terms of occupations, the highest growing occupations between 2006 and 2011 were Maids
and Housekeeping Cleaners, Landscaping and Groundskeeping Workers, and Amusement and
Recreation Attendants. The fastest declining occupations were First-Line Supervisors of
Construction Trades and Extraction Workers, Construction Laborers and Carpenters.
14
SECTION 3: OVERVIEW OF THE HEALTH CARE INDUSTRIES
The health care industry is an important industry within the District’s boundaries. It will
continue to be so as the relatively affluent population of the District continues to age. ESRI
estimates the percent of total population within the District ages 65 and older will increase from
9.6% to 11.3% between 2012 and 2017, driving up demand for medical services.8
ESRI estimates the Spending Potential Index for the District at 122. The Spending Potential
Index (SPI) is household-based, and represents the amount spent for a product or service relative
to a national average of 100. This score of 122 indicates residents of the District spend more on
health care services than the national average.
Some of the highest index numbers for the District’s residents are for Nonprescription Vitamins
(SPI of 140), Convalescent or Nursing Home Care (133), Other Medical Services9 (133),
Medical Equipment for General Use (132) and Dental Services (130).
On average, households spend $5,173 per household per year on health care, including medical
and health insurance expenditures. The total health care expenditure in 2012 by the District’s
households on health care services was $65.4 million. Of this, 45% ($29.2 million) is spent on
medical care and 55% ($36.2 million) on health insurance. 10
The remainder of this section compares the health care industry in the District with other
industries in the District based on performance and employment-driven location quotient data.
Performance Comparison
Regional industries can be compared and analyzed using industry input-output models. The
IMPLAN software and data (Minnesota IMPLAN Group, Inc.) enables construction of regional
input-output models for any area in the United States. The IMPLAN model incorporates a
technique originally developed by Harvard University that quantifies the interaction between
industries and industry sub-sectors within an economy.
The IMPLAN model is based on the economic and demographic information maintained by
federal agencies including the Bureau of Economic Analyses, US Census Bureau, and Bureau of
Labor Statistics. The IMPLAN model database also draws from secondary economic data at the
county level from a variety of public sources.
The IMPLAN model maintains different industrial classifications compared to the federallydefined NAICS (North American Industry Classification System) codes. The IMPLAN model
converts the 1,170 NAICS-coded industries into 440 industries that IMPLAN maintains and
models after aggregating selected industries.
8
ESRI Medical Expenditures.
Includes Topicals, Dressings, Supportive and Convalescent Medical Equipment, Rental of Medical Equipment for
General Use, and Rental of Supportive and Convalescent Medical Equipment.
10
ESRI Medical Expenditures.
9
15
As a result, IMPLAN codes and definitions of industry categories are different from the codes
and definitions maintained by the federal government. Nevertheless, the industry categories
maintained by IMPLAN still provide the economic details so that industries can be compared
and analyzed. The IMPLAN database provides output, employment, employee compensation,
and total income data for each IMPLAN sector.
The Health Care and Social Assistance industry is typically classified using the two-digit North
American Industrial Classification System (NAICS) code of 62. The NAICS industry
classification system (created by the federal NAFTA agreement) is a hierarchy system that uses
between two digits for broad industries and six digits for the most detailed industry
classifications. The health care super-sector (NAICS = 62) contains 39 two-digit industry
classifications. The table below provides a bridge between the NAICS code and the IMPLAN
code, which is used in this section.
NAICS
Code
6211-3
6216
6214-5,
6219
622
623
6244
6241
6242-3
IMPLAN
Code
IMPLAN Description
394
Offices of physicians, dentists, and other health practitioners
395
Home health care services
Medical and diagnostic labs and outpatient and other ambulatory
396
care services
397
Hospitals
398
Nursing and residential care facilities
399
Child day care services
400
Individual and family services
Community food, housing, and other relief services, including
401
rehabilitation services
As the Tahoe Forest Hospital is a public entity, its employees and operations are classified as a
governmental enterprise, rather than a health care one. Hospital operations are currently
classified under the Governmental industry (NAICS 90) along with other non-health related
governmental enterprises. In order to review the impact of the Hospital and other health-care
related industries, data in the IMPLAN model was manually adjusted to remove all Hospitalrelated employment and operating data from the Governmental industry (IMPLAN 437
Employment and payroll only (state & local govt, non-education)) to the Hospital industry
(IMPLAN 397 Hospitals).
Table 4 shows the top 25 industrial sectors in the District region in terms of total output. Output
is defined by IMPLAN as “the value of industry production”. The table shows the Real Estate
Establishments sector generates the highest amount of output in the region. Of the health care
industries, two are shown in the top 25 sectors based on total output (highlighted in yellow).
These industries include Hospitals (which includes the Tahoe Forest Hospital) and Offices of
Physicians, dentists and Other Health Practitioners.
16
Table 4. Top 25 Industries by Total Output
Industry
Code
0
360
413
32
411
361
397
36
410
39
369
438
409
354
394
38
324
388
338
34
432
37
351
333
366
437
Description
Total
Real estate establishments
Food services and drinking places
Natural gas distribution
Hotels and motels, including casino hotels
Imputed rental activity for owner-occupied dwellings
Hospitals (Adjusted)
Construction of other new nonresidential structures
Other amusement and recreation industries
Maintenance and repair construction of nonresidential structures
Architectural, engineering, and related services
Employment and payroll only (state & local govt, education)
Amusement parks, arcades, and gambling industries
Monetary authorities and depository credit intermediation activities
Offices of physicians, dentists, and other health practitioners
Construction of other new residential structures
Retail Stores - Food and beverage
Services to buildings and dwellings
Scenic and sightseeing transportation and support activities for transportation
Construction of new nonresidential commercial and health care structures
Other state and local government enterprises
Construction of new residential permanent site single- and multi-family structures
Telecommunications
Transport by rail
Lessors of nonfinancial intangible assets
Employment and payroll only (state & local govt, non-education) (Adjusted)
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Output
3,254,406,852
641,643,555
208,649,460
189,394,073
183,761,856
144,802,948
141,642,807
101,578,491
97,679,771
82,758,873
66,612,869
63,763,920
62,113,003
53,259,384
51,002,884
49,709,766
49,443,165
46,852,386
45,736,412
41,278,168
36,409,737
36,149,136
35,632,622
33,975,342
28,619,970
28,366,039
Table 5 reports the top 25 sectors in the region based on employment. The health care industries
again represent two industries in the top 25 sectors by employment, Offices of Physicians,
Dentists, and Other Health Practitioners and Hospitals.
17
Table 5. Top 25 Industries by Employment
Industry
Code
0
360
413
411
410
397
338
36
438
369
388
39
324
409
437
394
425
38
34
375
384
328
330
323
37
368
Description
Employment
Total
29,064.8
Real estate establishments
3,973.7
Food services and drinking places
3,624.4
Hotels and motels, including casino hotels
1,658.9
Other amusement and recreation industries
1,615.2
Hospitals (Adjusted)
1,038.0
Scenic and sightseeing transportation and support activities for transportation
1,003.4
Construction of other new nonresidential structures
930.0
Employment and payroll only (state & local govt, education)
918.0
Architectural, engineering, and related services
900.2
Services to buildings and dwellings
881.8
Maintenance and repair construction of nonresidential structures
864.3
Retail Stores - Food and beverage
734.0
Amusement parks, arcades, and gambling industries
657.8
Employment and payroll only (state & local govt, non-education) (Adjusted)
568.0
Offices of physicians, dentists, and other health practitioners
494.2
Civic, social, professional, and similar organizations
449.8
Construction of other new residential structures
408.9
Construction of new nonresidential commercial and health care structures
403.1
Environmental and other technical consulting services
392.3
Office administrative services
320.6
Retail Stores - Sporting goods, hobby, book and music
299.9
Retail Stores - Miscellaneous
267.2
Retail Stores - Building material and garden supply
260.2
Construction of new residential permanent site single- and multi-family structures
242.4
Accounting, tax preparation, bookkeeping, and payroll services
212.2
Table 6 summarizes the region’s top 25 industrial sectors in terms of employee compensation.
IMPLAN defines employee compensation as the total payroll cost of the employee paid by the
employer. This includes, wage and salary, all benefits (eg, health, retirement, etc) and employer
paid payroll taxes (e.g. employer side of social security, unemployment taxes, etc).
The same two health care cluster industries fall into the top 25 sectors by employee
compensation, Offices of Physicians, Dentists, and Other Health Practitioners and Hospitals.
18
Table 6. Top 25 Industries by Employee Compensation
Industry
Code
0
397
413
438
411
410
360
437
36
39
324
32
439
394
409
369
425
432
34
388
333
323
384
38
375
440
Description
Total
Hospitals (Adjusted)
Food services and drinking places
Employment and payroll only (state & local govt, education)
Hotels and motels, including casino hotels
Other amusement and recreation industries
Real estate establishments
Employment and payroll only (state & local govt, non-education) (Adjusted)
Construction of other new nonresidential structures
Maintenance and repair construction of nonresidential structures
Retail Stores - Food and beverage
Natural gas distribution
Employment and payroll only (federal govt, non-military)
Offices of physicians, dentists, and other health practitioners
Amusement parks, arcades, and gambling industries
Architectural, engineering, and related services
Civic, social, professional, and similar organizations
Other state and local government enterprises
Construction of new nonresidential commercial and health care structures
Services to buildings and dwellings
Transport by rail
Retail Stores - Building material and garden supply
Office administrative services
Construction of other new residential structures
Environmental and other technical consulting services
Employment and payroll only (federal govt, military)
Employee
Compensation
$ 794,032,297
$ 73,404,556
$ 67,561,852
$ 54,997,559
$ 46,979,492
$ 46,715,801
$ 35,254,574
$ 28,366,039
$ 27,243,307
$ 26,715,744
$ 25,078,516
$ 25,005,764
$ 22,839,680
$ 18,419,334
$ 18,247,070
$ 17,385,687
$ 16,869,949
$ 15,091,417
$ 11,785,866
$ 11,069,124
$
9,962,429
$
8,900,875
$
8,615,278
$
8,370,915
$
8,331,160
$
8,317,886
Table 7 shows the top 25 industrial sectors by output per employee, which measures productivity
of an industry per employee. There are no health care industries in the top 25 in the region. The
lack of health care industries in this category indicates that the health care industries are laborforce intensive with relatively small profit margins.
19
Table 7. Top 25 Industries by Output per Employee
Industry
Code
0
115
366
116
138
243
133
32
170
177
31
178
237
66
347
284
190
28
294
240
141
351
222
203
238
239
13
Output/
Output
Employment Employee
Total
$ 3,254,406,852
29,064.8 $ 111,971
Petroleum refineries
$
1,294,926
0.1 $ 11,819,886
Lessors of nonfinancial intangible assets
$ 28,619,970
13.2 $ 2,167,792
Asphalt paving mixture and block manufacturing
$
854,108
0.6 $ 1,344,839
Soap and cleaning compound manufacturing
$
3,723,766
2.9 $ 1,275,787
Semiconductor and related device manufacturing
$
5,746
0.0 $ 1,258,392
Pharmaceutical preparation manufacturing
$
1,197,722
1.1 $ 1,120,178
Natural gas distribution
$ 189,394,073
175.5 $ 1,079,471
Iron and steel mills and ferroalloy manufacturing
$
6,184
0.0 $ 1,062,239
Copper rolling, drawing, extruding and alloying
$
5,525
0.0 $ 1,043,470
Electric power generation, transmission, and distribution
$
2,129,749
2.3 $ 914,919
Nonferrous metal (except copper and aluminum) rolling, drawing, extruding and$alloying4,786
0.0 $ 835,020
Telephone apparatus manufacturing
$
23,819
0.0 $ 823,722
Coffee and tea manufacturing
$
92,673
0.1 $ 751,586
Sound recording industries
$
11,528
0.0 $ 718,840
Aircraft manufacturing
$
212,179
0.3 $ 673,592
Metal can, box, and other metal container (light gauge) manufacturing
$
670,515
1.0 $ 655,514
Drilling oil and gas wells
$
7,506,269
11.6 $ 648,922
All other transportation equipment manufacturing
$
98,518
0.2 $ 595,792
Audio and video equipment manufacturing
$
356,723
0.6 $ 594,070
All other chemical product and preparation manufacturing
$
2,499
0.0 $ 588,608
Telecommunications
$ 35,632,622
62.7 $ 568,050
Turbine and turbine generator set units manufacturing
$
284,119
0.5 $ 558,579
Farm machinery and equipment manufacturing
$
236,314
0.4 $ 555,592
Broadcast and wireless communications equipment manufacturing
$
7,639,433
14.1 $ 542,042
Other communications equipment manufacturing
$
8,223,274
16.3 $ 505,705
Poultry and egg production
$
315,907
0.6 $ 493,879
Description
The regional average of output per employee is $111,971. Table 8 compares the productivity of
all health care industries to that of the average regional productivity (highlighted in yellow).
Only two health care industries exceed the average regional productivity. The remaining
industries fall below the average productivity number.
Table 8. Industry Output per Employee Compared to Regional Average
Industry
Code
396
397
0
394
395
401
399
400
Description
Medical and diagnostic labs and outpatient and other ambulatory care services
Hospitals (Adjusted)
Total
Offices of physicians, dentists, and other health practitioners
Home health care services
Community food, housing, and other relief services, including rehabilitation services
Child day care services
Individual and family services
Output/
Output
Employment Employee
$ 11,380,564
74.4 $ 152,946
$ 141,642,807
1,038.0 $ 136,457
$ 3,254,406,852
29,064.8 $ 111,971
$ 51,002,884
494.2 $ 103,206
$
261,666
4.5 $
58,264
$
956,195
18.1 $
52,793
$
2,513,535
67.2 $
37,426
$
780,291
23.0 $
33,920
Table 9 shows the region’s top 25 industrial sectors by employee compensation per employee.
No health care industry ranks in the top 25 industries.
20
Table 9. Top 25 Industries by Employee Compensation per Employee
Industry
Code
0
115
439
239
257
32
116
333
431
88
237
133
243
392
107
238
31
170
432
138
178
100
429
99
134
284
Employee
Compensation/
Compensation Employment
Employee
Total
$ 794,032,297
29,064.8 $
27,319
Petroleum refineries
$
30,966
0.1 $
282,652
Employment and payroll only (federal govt, non-military)
$ 22,839,680
107.5 $
212,405
Other communications equipment manufacturing
$ 3,008,409
16.3 $
185,007
Software, audio, and video media for reproduction
$
3,637
0.0 $
166,481
Natural gas distribution
$ 25,005,764
175.5 $
142,523
Asphalt paving mixture and block manufacturing
$
84,733
0.6 $
133,416
Transport by rail
$ 9,962,429
78.4 $
127,136
State and local government electric utilities
$ 1,786,802
14.2 $
125,597
Men's and boys' cut and sew apparel manufacturing
$
9,054
0.1 $
125,209
Telephone apparatus manufacturing
$
3,414
0.0 $
118,065
Pharmaceutical preparation manufacturing
$
124,174
1.1 $
116,135
Semiconductor and related device manufacturing
$
529
0.0 $
115,845
Private junior colleges, colleges, universities, and professional schools
$
434
0.0 $
113,945
Paperboard container manufacturing
$
20,309
0.2 $
101,863
Broadcast and wireless communications equipment manufacturing
$ 1,390,523
14.1 $
98,662
Electric power generation, transmission, and distribution
$
227,955
2.3 $
97,927
Iron and steel mills and ferroalloy manufacturing
$
561
0.0 $
96,273
Other state and local government enterprises
$ 15,091,417
159.1 $
94,852
Soap and cleaning compound manufacturing
$
273,991
2.9 $
93,871
Nonferrous metal (except copper and aluminum) rolling, drawing, extruding $
522
0.0 $
91,081
Wood container and pallet manufacturing
$
16,476
0.2 $
90,842
Other Federal Government enterprises
$
122,716
1.4 $
90,392
Wood windows and doors and millwork manufacturing
$
132,858
1.5 $
90,300
In-vitro diagnostic substance manufacturing
$
102,357
1.1 $
90,097
Aircraft manufacturing
$
27,369
0.3 $
86,888
Description
Table 10 compares the compensation per employee of health care cluster industries to that of the
average regional compensation (highlighted in yellow). There are three health care industries
whose employee compensation per employee exceeds the regional average, the Hospitals,
Medical and Diagnostic Labs and Outpatient and Other Ambulatory Care Services, and Offices
of Physicians, Dentists and Other Health Practitioners industries.
Table 10. Industry Employee Compensation per Employee Compared to Regional Average
Industry
Code
397
396
394
0
401
395
400
399
Employee
Compensation/
Compensation Employment
Employee
Hospitals (Adjusted)
$ 73,404,556
1,038.0 $
70,717
Medical and diagnostic labs and outpatient and other ambulatory care
$ 4,225,732
74.4 $
56,791
Offices of physicians, dentists, and other health practitioners
$ 18,419,334
494.2 $
37,272
Total
$ 794,032,297
29,064.8 $
27,319
Community food, housing, and other relief services, including rehabilitation services
$
491,839
18.1 $
27,155
Home health care services
$
114,039
4.5 $
25,393
Individual and family services
$
409,816
23.0 $
17,815
Child day care services
$ 1,003,648
67.2 $
14,944
Description
Health Services and Job Growth
A factor important to the success of economic development is job creation. The national health
care sector is an important and growing sector which is expected to continue to grow with
increasing incomes, political changes, and aging population Data in Table 11 provide selected
health expenditures and employment data for the United States.
21
Table 11. United States Health Expenditures and Employment Data-1970-2010; Projected
for 2015-2021
Year
1970
Per Capita
Average
Total Health
Health Sector
Health
Health as %
Annual
Expenditures
Employment
Expenditures of GDP (% )
Increase in
($Billions)
(000s)
($)
Employment
$74.90
$356
7.20%
3,052
--
1980
255.8
1,110
9.20%
5,278
7.30%
1990
724.3
2,854
12.50%
7,814
4.80%
2000
1,377.20
4,878
13.80%
14,109
8.10%
2001
1,494.10
5,241
14.50%
14,535
3.00%
2002
1,636.40
5,687
15.40%
14,900
2.50%
2003
1,774.30
6,114
15.90%
15,472
3.80%
2004
1,900.00
6,488
16.00%
15,815
2.20%
2005
2,029.10
6,868
16.10%
16,025
1.30%
2006
2,162.40
7,251
16.20%
16,451
2.60%
2007
2,297.10
7,628
16.40%
16,798
2.10%
2008
2,403.90
7,911
16.80%
17,217
2.50%
2009
2,495.80
8,149
17.90%
17,531
1.80%
2010
2,593.60
8,402
17.90%
13,777
1.70%
2015
3,307.60
10,272
18.20%
2017
3,723.30
11,360
18.40%
2019
4,207.30
12,618
18.90%
2021
4,781.00
14,103
19.60%
Projections
Source: “The Economic Impact of the Health Sector on the Atoka County Medical Center
Medical Service Area,” Oklahoma Cooperative Extension Service Oklahoma State University,
July 2013.
The table shows that the national health care sector saw employment gains since 1970 and
through the recent recession, while many sectors lost employment. Additionally, health care
expenditures as percent of GDP are expected to continue to increase faster than the growth in
GDP, forecasting a future of growth for the sector.
The U. S. Department of Health and Human Services, Centers for Medicare and Medicaid
Services predict that health care expenditures will account for 18.2 percent of GDP by 2015 and
increase to 19.6 percent of GDP in 2021. Per capita health care expenditures are projected to
increase to $10,272 in 2015 and to $14,103 in 2021. Total health expenditures are projected to
increase to nearly $4.8 trillion in 2021.
22
Location Quotients
Location quotients (LQ) show which industries within a region are more strongly represented
than they are in the nation as a whole. An industry’s location quotient of greater than 1.0
indicates the region is more specialized in that industry than the nation and is likely producing
for export as well as local consumption. The greater the LQ value the greater the specialization
of the industry in the region compared to the nation.
Industry specialization is also measured by comparing five-year trends of location quotients.
The specialization of industries change over time and it is possible that highly specialized
industries may be actually decreasing in their specialization. Likewise, non-specialized
industries may become more specialize over time. Tables 12 and 13 below summarize the
location quotient results by NAICS code for all industries in the District region in 2006 and
2011. It should be noted, similar to the IMPLAN data, EMSI employment data has been
adjusted to reflect Tahoe Forest Hospital employment in the Health Care and Social Assistance
industry, rather than the Government industry.
Table 12. Location Quotient by NAICS Code-201111
NAICS
11 Agriculture, Forestry, Fishing and Hunting
21 Mining, Quarrying, and Oil and Gas Extraction
22 Utilities
23 Construction
31 Manufacturing
42 Wholesale Trade
44 Retail Trade
48 Transportation and Warehousing
51 Information
52 Finance and Insurance
53 Real Estate and Rental and Leasing
54 Professional, Scientific, and Technical Services
55 Management of Companies and Enterprises
Administrative and Support and Waste
56
Management and Remediation Services
61 Educational Services (Private)
62 Health Care and Social Assistance (Adjusted)
71 Arts, Entertainment, and Recreation
72 Accommodation and Food Services
81 Other Services (except Public Administration)
90 Government (Adjusted)
99 Unclassified Industry
Total
11
County
% of County
National
% of National
Employment Employment in Employment Employment in
by Sector
Sector
by Sector
Sector
68
0.40%
1,160,311
0.90%
32
0.19%
730,048
0.56%
106
0.63%
549,922
0.42%
1,664
9.85%
5,473,044
4.23%
502
2.97%
11,701,501
9.04%
141
0.83%
5,545,802
4.29%
1,358
8.04%
14,666,625
11.33%
81
0.48%
4,055,639
3.13%
68
0.40%
2,674,852
2.07%
199
1.18%
5,506,638
4.26%
699
4.14%
1,909,774
1.48%
573
3.39%
7,672,567
5.93%
39
0.23%
1,914,543
1.48%
Location
Quotient
0.45
0.34
1.48
2.33
0.33
0.19
0.71
0.15
0.19
0.28
2.80
0.57
0.16
470
2.78%
7,711,123
5.96%
0.47
177
1,767
2,182
4,613
492
1,576
89
16,896
1.05%
10.46%
12.91%
27.30%
2.91%
9.33%
0.53%
2,545,941
16,489,393
1,922,644
11,371,959
4,408,735
21,225,392
173,741
129,410,194
1.97%
12.74%
1.49%
8.79%
3.41%
16.40%
0.13%
0.53
0.82
8.69
3.11
0.85
0.57
3.92
EMSI, 2013.
23
Table 13. Location Quotient by NAICS Code-2006
NAICS
11 Agriculture, Forestry, Fishing and Hunting
21 Mining, Quarrying, and Oil and Gas Extraction
22 Utilities
23 Construction
31 Manufacturing
42 Wholesale Trade
44 Retail Trade
48 Transportation and Warehousing
51 Information
52 Finance and Insurance
53 Real Estate and Rental and Leasing
54 Professional, Scientific, and Technical Services
55 Management of Companies and Enterprises
Administrative and Support and Waste
56
Management and Remediation Services
61 Educational Services (Private)
62 Health Care and Social Assistance (Adjusted)
71 Arts, Entertainment, and Recreation
72 Accommodation and Food Services
81 Other Services (except Public Administration)
90 Government (Adjusted)
99 Unclassified Industry
Total
County
% of County
National
% of National
Employment Employment in Employment Employment in
by Sector
Sector
by Sector
Sector
78
0.46%
1,160,179
0.90%
47
0.28%
616,598
0.48%
159
0.94%
546,522
0.42%
3,586
21.22%
7,602,149
5.87%
628
3.72%
14,111,163
10.90%
246
1.46%
5,885,194
4.55%
1,541
9.12%
15,370,039
11.88%
145
0.86%
4,204,514
3.25%
83
0.49%
3,040,576
2.35%
278
1.65%
6,003,200
4.64%
745
4.41%
2,158,863
1.67%
645
3.82%
7,361,563
5.69%
29
0.17%
1,785,257
1.38%
531
149
1512
1,564
4,451
502
1,613
1
18,533
3.14%
0.88%
8.95%
9.26%
26.34%
2.97%
9.55%
0.01%
8,322,860
2,207,199
14,709,028
1,901,194
11,123,421
4,364,889
21,114,577
244,950
133,833,935
Location
Quotient
0.51
0.58
2.23
3.61
0.34
0.32
0.77
0.26
0.21
0.35
2.64
0.67
0.12
6.43%
0.49
1.71%
11.37%
1.47%
8.60%
3.37%
16.32%
0.19%
0.52
0.79
6.30
3.06
0.88
0.59
0.03
“Growth-share matrix” graphs can be developed to show which industries are more specialized
than the nation and whether they are increasing or decreasing in their degree of specialization. A
growth-share matrix separates industries into four categories of clusters:




Stars-Star industries are those whose ratio of employment in the region is larger than that
in the nation and whose ratio of employment has increased over the five year period
relative to the nation. Star industries are specialized compared to the nation and are
becoming more specialized.
Mature-Mature industries are those whose ratio of employment in the region is larger
than that in the nation and whose ratio of employment has decreased over the five year
period relative to the nation. Mature industries are still specialized compared to the
nation, but are becoming less specialized.
Emerging-Emerging industries are those whose ratio of employment in the region is less
than that in the nation, but whose ratio of employment has increased over the five year
period relative to the nation. These clusters are less specialized compared to the nation,
but some of the emerging industries may become specialized in the future.
Transforming-Transforming industries are those whose ratio of employment in the
region is less than that in the nation and whose ratio of employment has decreased over
the five year period relative to the nation. These clusters are less specialized in the
region, and are unlikely to become specialized in the future.
On the x-axis (5-Year LQ Change), the dividing line between Mature/Transforming (negative
change) and Stars/Emerging (positive change) industries is the zero percent line. On the y-axis
24
(LQ 2011), the dividing line between Mature/Stars (not specialized) and Transforming/Emerging
(specialized) industries is the 1.0 line. The Star industries are the most favorable; therefore, the
industries in the upper-right quadrant of the growth-share matrix graphs reflect the most
specialized industries.
A growth-share matrix graph was produced for the industries within the District. It should be
noted the graph does not show the Arts, Entertainment and Recreation industry, which, with the
location quotient of 8.7 made the graphing of other industries difficult. This is a significant
STAR industry for the region, showing both a location quotient of almost 9 times the national
average and a 38% increase in its employment between 2006 and 2011.
The graph shows the Accommodation and Food Services and Real Estate and Rental and Leasing
industries are the other two major STARS for the District. The Health Care and Social
Assistance sector is an EMERGIN sector, increasing its location quotient by 4% between 2006
and 2011 but continuing to have a quotient below 1.0.
25
Graph 7. Growth-Share Matrix For Region’s Industries (excluding Arts, Entertainment and Recreation
4.00
MATURE
11-Agriculture, Forestry,
Fishing and Hunting
STARS
21-Mining, Quarrying, and Oil
and Gas Extraction
22-Utilities
3.50
23-Construction
31-Manufacturing
3.00
42-Wholesale Trade
44-Retail Trade
2.50
48-Transportation and
Warehousing
2.00
LQ 2011
51-Information
52-Finance and Insurance
53-Real Estate and Rental and
Leasing
54-Professional, Scientific, and
Technical Services
1.50
55-Management of Companies
and Enterprises
56-Administrative and Waste
Management Services
1.00
TRANSFORMING
61-Educational Services
(Private)
62-Health Care and Social
Assistance
EMERGING
0.50
71-Arts, Entertainment, and
Recreation
72-Accommodation and Food
Services
81-Other Services (except
Public Administration)
-50%
-40%
-30%
-20%
-10%
0%
LQ Change
10%
26
20%
30%
40%
0.00
50%
90-Government
SECTION 4: IMPACT OF TAHOE FOREST HOSPITAL ON THE LOCAL ECONOMY
The Multiplier Effect
The impact of hospital expenditures and hospital employee expenditures are called multiplier
effects. Multiplier effects are a simplified and compact way of representing these effects on the
local economy. The multiplier is interpreted as the impact of a one-unit change in sales,
employment, or income that results in a corresponding total impact on sales, employment, or
income in the larger economy. In essence, the multiplier represents the recycling of dollars and
income in a specified geographic unit, such as the Tahoe Forest Hospital service area. This
recycling creates new job opportunities and higher wages for individuals.
There are three types of multiplier effects based on the type of economic impact analysis
undertaken: direct, indirect, and induced. These types are illustrated in Table 14 below. The
direct multiplier effect is based on an industry’s initial economic impact on the region’s
economy. For example, if a hospital has revenue of $5 million, then this figure becomes the
direct economic impact on the community. The indirect multiplier effect is based on industry-toindustry transactions only. For example, the hospital sector purchases local laundry, food, and
other contracted services. However, the indirect multiplier effect does not include the effect of
hospital-sector employee spending on retail and service sectors such as housing, groceries, and
real estate. Alternatively, the induced multiplier effect includes both the industry-to-industry
transactions and household purchases, including employee spending. The total economic impact
is defined as the direct plus indirect and induced economic impacts.
Table 14. Hospital Related Economic Impact Multipliers
Type of
Multiplier
Direct
Indirect
Induced
Hospital
Expenditures
Hospital Supplier
Expenditures
Local retail &
service expenditures
related to hospital
spending
Employment
Multiplier
Hospital jobs
Hospital supplier
jobs
Local retail and
service jobs related
to hospital employee
spending
Income
Multiplier
Hospital employee
income
Hospital supplier
employee income
Local retail and
service income
related employee
spending
Output
Multiplier
The direct, indirect, and induced multiplier effects can be classified as output, employment and
income multipliers. An output multiplier of 2.0 indicates that if one dollar is spent by the
1
hospital, an additional dollar is spent in other sectors due to business and household spending.
An employment multiplier of 2.0 indicates that if one job is created in the health care sector, 1.0
additional job is created in other sectors due to business and household spending. Likewise, an
income multiplier of 2.0 indicates that for every dollar of income created in the health sector, an
additional dollar of income is created in other sectors due inter-industry spending by health
businesses and employees. The measurement of multiplier effects, the input-output model, and
IMPLAN data utilized in this report are explained in Appendix A.
The Impact of Tahoe Forest Hospital on Regional Expenditures
Table 15 summarizes the impact of Tahoe Forest Hospital on expenditures in the regional
economy utilizing the most current IMPLAN output multipliers and expenditure data provided
by Tahoe Forest Hospital. Table 11 reveals that TFH spent $69.7 million locally on operations
in the fiscal year (FY) 2012. Applying the IMPLAN output multiplier of 1.40 for the hospital
sector, the total expenditures created by the Hospital’s operations spending is estimated at $97.6
million. In other words, the Hospital generated an additional $28.0 million through induced and
indirect economic activity during FY 2012.
Table 15 also highlights the sectors impacted by the hospital expenditures. For example,
operations expenditures by the Hospital created an additional $9.0 million in spending by the
Real Estate and Rental industry.
Table 15. Impact of Tahoe Forest Hospital on Regional Expenditures
Sector
Agriculture, Forestry, Fishing & Hunting
Mining
Utilities
Construction
Manufacturing
Wholesale Trade
Retail Trade
Transportation & Warehousing
Information
Finance & Insurance
Real Estate & Rental
Professional, Scientific & Technical Services
Management of Companies
Administrative & Waste Services
Educational Services
Health & Social Services
Arts--Entertainment & Recreation
Accommodation & Food Services
Other Services
Government & non-NAICS
Total
District Expenditures Impacts (Dollars)
Indirect
Induced
Direct Impact
Impact
Impact
Total Impact
$
$
446 $
3,170 $
3,617
15,451
24,944
40,395
217,297
288,676
505,973
271,685
202,511
474,196
530,347
168,015
698,361
149,830
297,086
446,916
157,995
2,109,884
2,267,879
372,642
315,170
687,812
382,471
380,095
762,566
592,593
1,405,727
1,998,320
4,437,214
4,587,077
9,024,291
970,953
540,004
1,510,957
485,436
43,460
528,896
1,008,071
262,881
1,270,952
840
209,107
209,947
69,650,858
848,042
2,808,954
73,307,855
50,581
404,571
455,153
436,926
1,473,425
1,910,352
295,340
767,433
1,062,773
180,742
267,926
448,668
$ 69,650,858 $ 11,404,904 $ 16,560,116 $ 97,615,878
2
The Impact of Tahoe Forest Hospital on Regional Employment
Table 16 summarizes the impact of Tahoe Forest Hospital on local employment utilizing the
most current IMPLAN employment multipliers and employment data provided by Tahoe Forest
Hospital. Table 16 reveals that 564 individuals living in the District were employed by the
Hospital in the fiscal year 2012. Applying the IMPLAN employment multiplier of 1.53 for the
hospital sector, the total number of local jobs created and supported by the Hospital is estimated
at 864. In other words, the Hospital generated an additional 300 jobs through induced and
indirect economic activity during FY 2012.
Table 16 also highlights the sectors gaining the additional jobs created by the Hospital. For
example, the Hospital supported 41 new jobs in the Retail Trade industry.
Table 16. Impact of Tahoe Forest Hospital on Regional Employment
Sector
Agriculture, Forestry, Fishing & Hunting
Mining
Utilities
Construction
Manufacturing
Wholesale Trade
Retail Trade
Transportation & Warehousing
Information
Finance & Insurance
Real Estate & Rental
Professional, Scientific & Technical Services
Management of Companies
Administrative & Waste Services
Educational Services
Health & Social Services
Arts--Entertainment & Recreation
Accommodation & Food Services
Other Services
Government & non-NAICS
Total
District Employment Impacts (Jobs)
Direct
Indirect
Induced
Total
Impact
Impact
Impact
Impact
0
0
0
0
0
0
0
1
1
4
2
6
1
1
2
1
3
4
3
38
41
6
6
12
1
1
2
4
7
11
35
10
45
15
8
23
3
0
4
25
6
31
0
8
8
564
7
30
601
1
8
9
9
31
40
5
16
22
1
2
3
564
123
177
864
The Impact of Tahoe Forest Hospital on Regional Labor Income
Table 17 documents the labor income impact of Tahoe Forest Hospital utilizing the most current
IMPLAN income multipliers and data provided by the Hospital. In FY 2012, the total labor
income created by the Hospital in the region was $38.6 million. Applying the IMPLAN income
3
multiplier of 1.20 for the hospital sector, the total labor income created by the Hospital is
estimated at $46.3 million. In other words, the Hospital generated an additional $7.8 million in
labor income through induced and indirect economic activity during FY 2012.
Table 17 provides a detailed breakdown of the sectors gaining the additional labor income
generated by the Hospital. For example, the $38.6 million in labor income created an additional
$551,000 in labor income in the Professional, Scientific, and Technical Services industry.
Table 17. Impact of Tahoe Forest Hospital on Regional Labor Income
Sector
Agriculture, Forestry, Fishing & Hunting
Mining
Utilities
Construction
Manufacturing
Wholesale Trade
Retail Trade
Transportation & Warehousing
Information
Finance & Insurance
Real Estate & Rental
Professional, Scientific & Technical Services
Management of Companies
Administrative & Waste Services
Educational Services
Health & Social Services
Arts--Entertainment & Recreation
Accommodation & Food Services
Other Services
Government & non-NAICS
Total
District Expenditures Impacts (Dollars)
Indirect
Induced
Direct Impact
Impact
Impact
Total Impact
$
$
132 $
664 $
796
214
344
558
30,142
42,324
72,466
140,961
94,890
235,851
90,202
27,959
118,161
36,892
73,150
110,042
69,690
903,024
972,714
181,281
81,313
262,594
63,827
59,311
123,138
124,540
246,704
371,244
329,757
106,730
436,487
368,682
181,831
550,513
225,043
20,148
245,191
479,108
112,605
591,713
256
92,088
92,344
38,575,933
419,774
1,549,410
40,545,117
11,785
126,427
138,212
148,903
517,677
666,580
174,335
444,233
618,568
66,733
111,240
177,973
$ 38,575,933 $ 2,962,257 $ 4,792,072 $ 46,330,262
The Impact of Construction at Tahoe Forest Hospital on Regional Expenditures
In addition to hospital operations spending, Tahoe Forest Hospital had substantial expenditures
on new construction and remodeling in FY 2012. Table 18 summarizes the impact of
construction expenditures of the Hospital on the regional economy utilizing the most current
IMPLAN output multipliers and data provided by Tahoe Forest Hospital.
Table 18 reveals that the Hospital spent $36.9 million within the region on construction in FY
2012. Applying the IMPLAN output multiplier of 1.37 for the construction sector, the total
expenditures created by Hospital construction is estimated at $50.5 million. In other words, the
Hospital generated an additional $13.6 million through induced and indirect economic activity
during FY 2012.
4
Table 18 also highlights the sectors impacted by the construction expenditures. For example,
construction expenditures by the Hospital created an additional $2.6 million in spending by the
Real Estate and Rental industry.
Table 18. Impact of Construction at Tahoe Forest Hospital on Regional Expenditures
Sector
Agriculture, Forestry, Fishing & Hunting
Mining
Utilities
Construction
Manufacturing
Wholesale Trade
Retail Trade
Transportation & Warehousing
Information
Finance & Insurance
Real Estate & Rental
Professional, Scientific & Technical Services
Management of Companies
Administrative & Waste Services
Educational Services
Health & Social Services
Arts--Entertainment & Recreation
Accommodation & Food Services
Other Services
Government & non-NAICS
Total
District Expenditures Impacts (Dollars)
Indirect
Induced
Direct Impact
Impact
Impact
Total Impact
$
$
4,917 $
1,508 $
6,425
27,436
11,797
39,233
67,225
136,265
203,490
36,859,085
86,327
98,780
37,044,192
210,947
79,901
290,848
146,332
140,181
286,513
143,510
1,030,561
1,174,071
246,639
154,770
401,409
268,995
180,135
449,131
441,053
689,857
1,130,909
361,525
2,235,979
2,597,504
2,803,808
260,969
3,064,777
46,143
20,969
67,112
202,617
128,165
330,783
846
105,277
106,123
40
1,356,564
1,356,604
36,767
198,341
235,108
262,023
709,903
971,926
191,187
377,711
568,898
36,046
127,962
164,008
$ 36,859,085 $ 5,584,385 $ 8,045,595 $ 50,489,065
The Impact of Construction at Tahoe Forest Hospital on Regional Employment
Table 19 summarizes the impact of construction at the Hospital on regional employment utilizing
the most current IMPLAN employment multipliers and data provided by Tahoe Forest Hospital.
Table 19 reveals that 351 construction employees living in the District were employed by the
hospital in FY 2012.
Applying the IMPLAN employment multiplier of 1.34 for the construction sector, the total
number of regional jobs created and supported by construction at the Hospital is estimated at
471. In other words, construction at the Hospital supported an additional 121 jobs through
induced and indirect economic activity during FY 2012.
Table 19 also highlights the sectors gaining the additional jobs created by the Hospital
construction. For example, Hospital construction supported 15 jobs in the Accommodation &
Food Services sector.
5
Table 19. Impact of Construction at Tahoe Forest Hospital on Regional Employment
Sector
Agriculture, Forestry, Fishing & Hunting
Mining
Utilities
Construction
Manufacturing
Wholesale Trade
Retail Trade
Transportation & Warehousing
Information
Finance & Insurance
Real Estate & Rental
Professional, Scientific & Technical Services
Management of Companies
Administrative & Waste Services
Educational Services
Health & Social Services
Arts--Entertainment & Recreation
Accommodation & Food Services
Other Services
Government & non-NAICS
Total
District Employment Impacts (Jobs)
Direct
Indirect
Induced
Total
Impact
Impact
Impact
Impact
0
0
0
0
0
0
0
0
0
351
1
1
352
1
0
1
1
1
2
2
14
16
3
2
5
0
0
1
1
3
4
2
3
5
35
3
38
0
0
0
4
2
6
0
3
3
0
11
11
1
3
4
4
11
15
3
6
9
0
1
1
351
57
63
471
The Impact of Construction at Tahoe Forest Hospital on Regional Labor Income
Table 20 documents the labor income impact of construction at the Tahoe Forest Hospital in FY
2012, utilizing the most current IMPLAN income multipliers and data provided by the Hospital.
In FY 2012, the total labor income created by the Hospital construction was $18.0 million.
Applying the IMPLAN income multiplier of 1.23 for the construction sector, the total labor
income created by the construction at the Hospital is estimated at $22.1 million. In other words,
construction at the Hospital generated an additional $4.1 million in labor income through
induced and indirect economic activity during FY 2012.
Table 20 provides a detailed breakdown of the sectors gaining the additional labor income
generated by construction at the Hospital. For example, the $18.0 million in labor income
created an additional $1.1 million in labor income in the Professional, Scientific, and Technical
Services industry.
6
Table 20. Impact of Construction at Tahoe Forest Hospital on Regional Labor Income
Sector
Agriculture, Forestry, Fishing & Hunting
Mining
Utilities
Construction
Manufacturing
Wholesale Trade
Retail Trade
Transportation & Warehousing
Information
Finance & Insurance
Real Estate & Rental
Professional, Scientific & Technical Services
Management of Companies
Administrative & Waste Services
Educational Services
Health & Social Services
Arts--Entertainment & Recreation
Accommodation & Food Services
Other Services
Government & non-NAICS
Total
District Expenditures Impacts (Dollars)
Indirect
Induced
Direct Impact
Impact
Impact
Total Impact
$
$
2,212 $
319 $
2,531
606
163
770
9,123
19,999
29,122
18,014,418
45,139
46,211
18,105,768
49,542
13,315
62,857
36,031
34,516
70,547
63,300
441,077
504,377
59,981
39,803
99,784
40,637
28,165
68,802
75,458
120,597
196,054
42,319
50,192
92,511
1,038,398
87,881
1,126,280
21,391
9,721
31,112
92,842
54,902
147,744
258
46,859
47,117
19
748,212
748,231
11,221
61,850
73,071
87,728
249,432
337,160
116,939
218,574
335,513
17,605
53,217
70,822
$ 18,014,418 $ 1,810,750 $ 2,325,006 $ 22,150,174
Conclusion
The output, employment and labor income data presented in this report document the tremendous
contribution of Tahoe Forest Hospital to the local economy. The data and analysis presented in
this report indicates that:

Tahoe Forest Hospital spent $69.7 million locally on operations in FY 2012. When the
expenditures by other businesses as a result of the Hospital are included in the analysis,
the hospital directly and indirectly generated a total of $97.6 million in spending in the
Hospital District.

Tahoe Forest Hospital employed 564 individuals living in the District in FY 2012. When
the employment created by other businesses as a result of the hospital is included in the
analysis, the hospital directly and indirectly generated and supported a total of 864 jobs in
the District.

Tahoe Forest Hospital generated $38.6 million in labor income in FY 2012. When the
income created by other businesses as a result of the hospital is included in the analysis,
the hospital was responsible for $46.3 million in labor income for hospital employees and
those employed in other businesses.
7

Tahoe Forest Hospital spent $36.9 million locally on construction in FY 2006, which
generated a total of $50.5 million in expenditures throughout the District.

Construction at Tahoe Forest Hospital resulted in the creation of 351 jobs in the region in
FY 2012. Including the employment created by other businesses as a result of Hospital
construction in the analysis, a total of 471 jobs were generated and supported in the
District.

Construction at Tahoe Forest Hospital created $18.0 million in labor income in FY 2012.
When the labor income generated by other businesses as a result of the hospital
construction is included in the analysis, new construction was responsible for a total of
$22.1 million in labor income for the residents of the District.

In addition to its quantitative impacts on the District, the presence of a hospital improves
the region’s attractiveness. Businesses consider hospital proximity in their location
decision, as do residents, especially retirees and those in child bearing years.
8
APPENDIX A: MODEL
MULTIPLIERS
AND
DATA USED
TO
ESTIMATE EMPLOYMENT
AND
INCOME
The economic impacts and secondary benefits of economic activity presented in this report are
measured by multipliers using an input-output model and data from IMPLAN, a model that is
widely used by economists and other academics in the United States. A computer spreadsheet
that uses state IMPLAN multipliers was developed by to enable community development
specialists to measure the secondary benefits of the health sector on state, regional, or county
economies. The complete methodology is presented in Measuring the Economic Importance of
the Health Sector on a Local Economy: A Brief Literature Review and Procedures to Measure
Local Impacts (Doeksen, et al. 1997).
Input-output (I/O) analysis is designed to analyze the transactions among industries in an
economy (Miernyk 1965). These models are largely based on the work of Wassily Leontief
during the 1930s. Detailed I/O analysis captures the indirect and induced interrelated circular
behavior of the economy. For example, an increase in the demand for health services requires
more equipment, more labor, and more supplies, which, in turn, requires more labor to produce
the supplies, and so on. By simultaneously accounting for structural interaction between sectors
and industries, I/O analysis gives expression to the general economic equilibrium systems. The
analysis utilizes assumptions based on linear and fixed coefficients and limited substitutions
among inputs and outputs. The analysis assumes that average and marginal I/O coefficients are
equal. Nonetheless, the framework has been widely accepted and used by economists and
policymakers. I/O analysis is useful when carefully executed and interpreted in defining the
structure of a region, the interdependencies among industries, and forecasting economic
outcomes. The I/O model coefficients describe the structural interdependencies of an economy.
From the coefficients, various predictive devices can be computed, which can be useful in
analyzing economic changes in a state, region, or county. Multipliers indicate the relationship
between some observed change in the economy and the total change in economic activity created
through the economy.
MicroIMPLAN is a computer program developed by the United States Forest Service to
construct I/O accounts and models (Alward, et al. 1989). Typically, the complexity of I/O
modeling has hindered practitioners from constructing models specific to a community
requesting an analysis. Too often, inappropriate multipliers have been used to estimate local
economic impacts. In contrast, IMPLAN can construct a model for any state, region, county, or
zip code area in the United States by using available state, region, county, or zip code data.
Impact analysis can be performed once a regional I/O model is constructed.
Five different sets of multipliers are estimated by IMPLAN, corresponding to five measures of
regional economic activity: (1) total industry output, (2) personal income, (3) total income, (4)
value added, and (5) employment. Three types of multipliers are generated. Type I multipliers
measure the impact in terms of direct and indirect effects. Direct impacts are the changes in the
activities of the focus industry or firm, such as the construction of a hospital or the closing of a
hospital. The focus business changes its purchases s inputs as a result of the direct impacts. This
produces indirect impacts in other business sectors. However, the total impact of a change in the
economy consists of direct, indirect, and induced changes. Both the direct and indirect impacts
9
change the flow of dollars to the state, region, or county’s households. Subsequently, the
households alter their consumption. The effect of the changes in household consumption on
businesses in a community is referred to as an induced effect. To measure the total impact, a
Type II multiplier is used. The Type II multiplier compares direct, indirect, and induced effects
with the direct effects generated by a change in final demand (the sum of direct, indirect, and
induced effects divided by direct effects). IMPLAN also estimates a modified Type II multiplier
that also includes the direct, indirect, and induced effects. The Type III multiplier further
modifies the induced effect to include spending patterns of households based on a breakdown of
households by nine different income groups.
Additional information on the data, methodology, and software requirements of I/O modeling
and IMPLAN analysis can be found in guides developed by Doeksen, et al. (1997), Alward, et
al., (1989), and the Minnesota IMPLAN Group (MIG) (2000).
10
APPENDIX B: REFERENCES
References
Alward, G., et al. 1989. Micro IMPLAN Software Manual. Stillwater MN: University of
Minnesota Press.
Doeksen, GA, et al. 1997. Measuring the Importance of the Health Sector on the Local
Economy: A Brief Literature Review and Procedures to Measure Local Impacts. Mississippi
State MS: Southern Rural Development Center. SRDC Publication Number 202.
ESRI Business Analyst Online. 2007. 1990 to 2000 Comparison Profiles for Norden, CA, et. al
and Incline Village-Crystal Bay Cdp.
ESRI Business Analyst Online. 2007. Demographic and Income Profiles for Norden, CA, et. al,
Incline Village-Crystal Bay Cdp, NV, CA, NV, and US.
ESRI Business Analyst Online. 2007. Market Profiles for Norden, CA, et. Al and Incline VillageCrystal Bay Cdp, NV, CA, NV, and US.
Miernyk, W.H. 1965. The Element of Input-Output Analysis. New York: Random House.
.
Minnesota IMPLAN Group, Inc. (MIG). 2000. User’s Guide, Analysis Guide, Data Guide:
IMPLAN Professional Version 2.0 Social Accounting and Impact Analysis Software, Second
Edition. Stillwater MN: MIG. www.implan.com.
11