Southwest Virginia Health Care Sector Economic Impact Analysis

Tanya Wanchek, Ph.D., J.D.

Center for Economic and Policy Studies Weldon Cooper Center for Public Service University of Virginia

March 2009

Prepared for Health Appalachia 2 3 TABLE OF CONTENTS

Introduction………………………………………………………...………..5 Study Highlights………………………………………………………...…..5 Data and Methodology …………………………………………….………..6 Methodology ………………………………………………………..6 Data ………………………………………………………...……….7 Regional and State Comparison …………………………………………….9 SWVA Health Care Sector ………………………………………....9 SWVA Mining and Energy Sector ………………………………....12 Virginia Health Care Sector ……………………………..………....13 Locality Summaries ………………………………………………….……..15 Buchanan County …………………….………………………….....16 Dickenson County ……………………….………………………....18 Lee County ………………………………………...………………..20 Russell County ………………………………….…………………..22 Scott County …………………………………….……………….....24 Tazewell County ……………………………...………………….....26 Wise County and City of Norton ……………….………………...... 28 Bibliography ……………………………………………………….…….....30

4 LIST OF TABLES

1. SWVA – Labor Income, Employment, Sales Tax Revenue...... 11 2. SWVA – Mining and Energy Sector Labor Income and Employment...... 12 3. Virginia – Labor Income, Employment, Sales Tax Revenue...... 14 5. Buchanan County – Labor Income, Employment, Sales Tax Revenue...... 17 6. Dickenson County – Labor Income, Employment, Sales Tax Revenue...... 19 7. Lee County – Labor Income, Employment, Sales Tax Revenue...... 21 8. Russell County – Labor Income, Employment, Sales Tax Revenue...... 23 9. Scott County – Labor Income, Employment, Sales Tax Revenue...... 25 10. Tazewell County – Labor Income, Employment, Sales Tax Revenue...... 27 11. Wise County and City of Norton – Labor Income, Employment, Sales Tax Revenue...... 29

LIST OF FIGURES

1.1 SWVA – Health Care Sector Aggregate Economic Impact...... 10 1.2. SWVA Health Care Sector Employment...... 10 2. SWVA – Mining and Energy Sector Aggregate Economic Impact...... 12 3.1. Virginia – Health Care Sector Aggregate Economic Impact...... 13 3.2. Virginia Health Care Sector Employment...... 13 4.1. SWVA – Health Care Sector Labor Income by Locality...... 15 4.2. SWVA – Health Care Sector Employment by Locality...... 15 5.1. Buchanan County – Health Care Sector Aggregate Economic Impact..... 16 5.2. Buchanan County Health Care Sector Employment...... 17 6.1. Dickenson County – Health Care Sector Aggregate Economic Impact.... 18 6.2. Dickenson County Health Care Sector Employment...... 19 7.1. Lee County – Health Care Sector Aggregate Economic Impact...... 20 7.2. Lee County – Health Care Sector Employment...... 21 8.1. Russell County – Health Care Sector Aggregate Economic Impact...... 22 8.2. Russell County Health Care Sector Employment...... 23 9.1. Scott County – Health Care Sector Aggregate Economic Impact...... 24 9.2. Scott County Health Care Sector Employment...... 25 10.1. Tazewell County – Health Care Sector Aggregate Economic Impact.... 26 10.2. Tazewell County Health Care Sector Employment...... 27 11.1. Wise County & City of Norton – Health Care Sector Aggregate Economic Impact...... 28 11.2. Wise County & City of Norton – Health Care Sector Employment...... 29

5 INTRODUCTION

This study describes the contribution of the health care sector to the regional and local economies in Southwest Virginia (SWVA). The study uses an input-output model to identify the backward linkages from the health care sector to the overall economy. It provides information on how the health care sector affects employment and labor income in the region as a whole and in each of the seven localities in SWVA, including the counties of Buchanan, Dickenson, Lee, Russell, Scott, Tazewell, and Wise and the City of Norton. It also provides estimates of the impact of each component of the health care sector on regional and local economies. The results of the analysis provide a snapshot of the economic impact of the health care sector and serve as a baseline for future work on the economic impact of potential changes in the region.

STUDY HIGHLIGHTS

 In SWVA the health care sector contributes significantly to employment and income in the region. The health care sector directly provides 8,599 jobs out of 79,939 jobs in the region. It directly pays $358.8 million in labor income, which includes payroll and proprietor income. However, once the aggregate economic impact, which includes backward linkages to other industries and institutions, is accounted for, the health care sector is responsible for 11,142 jobs or 14 percent of the employment and $428.3 million in labor income or 16 percent of the region’s total earning by place of work.

 The aggregate economic impact of the health care sector on employment is equivalent to the economic impact of the mining and energy sector in SWVA, which is also responsible for approximately 14 percent of the jobs in the region. The impact on labor income is smaller than the mining and energy sector, with the health care sector contributing to 16 percent of total earning by place of work compared to 28 percent in the mining and energy sector.

 The aggregate economic impact of the health care sector in the Commonwealth of Virginia accounts for a smaller portion of the workforce, at 8 percent, and labor income, at 8 percent, than the health care sector in SWVA. The high rate in SWVA is likely due to the relatively older population and the relatively lower level of diversity in economic activity in the region.

 Within SWVA’s health care sector, hospitals have the largest aggregate economic impact at 39 percent, followed by nursing and residential care at 18 percent, and the offices of doctors, dentists, and other health professionals at 17 percent. In the commonwealth, hospitals count for only 15 percent of employment, while the offices of doctors, dentists and other health professionals constitute the largest share of combined direct and indirect employment at 41 percent.

 Among the localities within SWVA, the aggregate economic impact on employment ranges from 5 percent in Dickenson County to 15 percent in Tazewell County and the combined areas of Wise County and the City of Norton. The aggregate economic impact on labor earnings by place of employment from 17 percent in Tazewell County to 6 percent in Dickenson County.

6 METHODOLOGY AND DATA

Methodology

To calculate the economic impact of the health care sector, this study uses the standard tools of input-output analysis, including the software program, IMPLAN (IMpact analysis for PLANning), to estimate the contribution of the health care sector to employment and personal income in the region. This impact study focuses the SWVA region, which includes the counties of Buckingham, Dickenson, Lee, Russell, Scott, Tazewell, and Wise and the City of Norton. The health care sector is broken down into seven components:  Offices of physicians, dentists, and other health professionals – Offices of physicians, dentists, Chiropractors, Optometrists, mental health practitioners, physical occupational and speech therapists, podiatrists, and other health practitioners.  Nursing and residential care – nursing care facilities, residential mental retardation, mental health and substance abuse facilities, continuing care retirement communities, homes for the elderly, other residential care facilities.  Hospitals – General medical and surgical hospitals, psychiatric and substance abuse hospitals, specialty hospitals  Home health care  Other ambulatory services– family planning centers, outpatient mental health and substance abuse centers, HMO medical centers, kidney dialysis centers, freestanding ambulatory surgical and emergency centers, outpatient care centers, medical laboratories, diagnostic imaging centers, ambulatory services, blood and organ banks, other ambulatory health care services.  Pharmacies and drug stores– Pharmacies and drug stores are defined by the U.S. Census Bureau as establishments engaged in retailing prescription or nonprescription drugs and medicines.  Dental laboratories The impact of each of these components is considered both jointly and individually for each locality and for the region as a whole.

The aggregate economic impact of a sector of the economy is composed of three parts, the direct, indirect, and induced effects. The direct effect captures the jobs and income that are a result of individuals directly employed in the sector. It includes such payments as salaries of doctors, nurses, and maintenance staff working for the health related institutions. The indirect effect is the changes in other sectors of the economy in response to the spending by health care institutions. For example, if a hospital cafeteria purchases food locally, then additional employment occurs in the food sector. Finally, the induced effect is the impact associated with general increase in spending by households as a result of the direct and indirect effects.

To compute the combined direct, indirect, and induced effects we use IMPLAN multipliers. The multipliers in this study incorporate the combined impact of the direct, indirect, and induced effects of a dollar change in direct income or employment, thereby capturing the aggregate effect on the local economy.1 For example, the employment multiplier for SWVA’s health care sector

1 This study uses IMPLAN’s Social Accounting Matrix (SAM) multipliers. The IMPLAN model provides three different types of multipliers. Type I multipliers measure the direct and indirect effects of the health care sector.

7 is 1.3, which means that for every individual employed directly in the sector, an additional 0.3 jobs are created outside the health care sector due to indirect and induced effects.

The IMPLAN input-output table requires several restrictive assumptions that may not hold in practice, particularly when estimating large changes in economic activity. Among the assumptions are that prices are constant, there are no limitations on supply, and production technologies remain the same. Relaxing these assumptions would likely lead to smaller economic impact estimates. An additional assumption is that employment has been relatively constant since 2004. The employment series for this study is based on 2004 data, which will produce consistent estimates if there have not been major changes in the labor market since that time.

This study also misses some less tangible economic and non-economic benefits of the health care sector. The study does not include changes in worker productivity resulting from the availability of health care. It also does not measure the societal costs of delayed health care. There are also non-monetary psychological benefits to improved access to health care that are not included in the analysis. Nonetheless, this study does provide a tool for understanding the relative importance of the health care sector in the regional and local economies.

Data

Unless otherwise specified, the data comes from employment and income levels computed by IMPLAN, which bases its estimate on data from the Bureau of Labor Statistics’ Quarterly Census of Employment and Wages (ES-202) and the Bureau of Economic Analysis’ Regional Economic Information System (REIS). Labor income includes employee payroll and proprietor income and is computed from IMPLAN’s input-output tables.2

Health care sector labor income as a percent of earnings by place of work consists of income from direct, indirect, and induced sources relative to total earnings by place of work, which comes from the Bureau of Economic Analysis (BEA). BEA data combines data for Wise County and the City of Norton.

Data on pharmacies and drug stores is obtained from the U.S. Census Bureau’s County Business Patterns. Employment data for three localities (Dickenson, Scott, and Norton) is imputed based on the number of establishments in the region. Data from 2004 are used to be consistent with data in the IMPLAN model. All data are adjusted to 2009 dollars using IMPLAN output deflators.

This study also provides estimates of the increase in local retail sales tax revenue that results from the aggregate economic impact of the health care sector. The impact on retail sales is found by using the local retail sales capture ratio, which is the fraction of total retail sales relative to

Type II multipliers measure direct, indirect, and induced effects resulting from employee and proprietor spending. The SAM multipliers include direct, indirect, and induced effects resulting from employee household spending and the induced effects of spending of firm profits, transfer payments, and other institutional transactions.

2 Additional outcomes available upon request include total value added, other property income, indirect business taxes, and output.

8 total personal income. To find the retail sales that are attributable to the health care sector (health retail sales), the retail sales capture ratio is multiplied by the portion of personal income attributable to the aggregate effect of the health care sector. The health retail sales estimate is then multiplied by 1 percent, the local retail tax rate, to obtain local retail tax revenue. Retail sales data comes from the Virginia Department of Taxation3 for the year 2007 and is adjusted to 2009 dollars using IMPLAN household deflators.

To compare the relative importance of the health care sector to the mining industry in the region, this report also provides data on the aggregate impact of the mining and energy sector in the region. The activities included within this sector are: oil and gas extraction, coal mining, drilling oil and gas wells, support activities oil and gas mining, support other mining, and power generation. Like the health care sector, data are computed by IMPLAN, which bases its estimate on data from the 2004 Bureau of Labor Statistics’ Quarterly Census of Employment and Wages (ES-202) and the 2004 Bureau of Economic Analysis Regional Economic Information System (REIS).

3 Available at the Weldon Cooper Center for Public Service: http://www.virginia.edu/coopercenter/vastat/taxablesales/tax_sales.html

9 REGIONAL AND STATE COMPARISON

SWVA – Health Care Sector Methodology Summary

The aggregate economic impact captures not only the direct effect of the health care sector on labor income and employment, but also the indirect and induced effects. The direct effect is the employment and income that is a result of individuals directly employed in the sector. The indirect effect is the changes in other sectors of the economy in response to the spending by the health care institution. The induced effect is the impact attributable to spending by households associated with both the direct and indirect effects. Multipliers are used to transform the direct effect to the aggregate economic impact. An employment multiplier of 1.2 means that for each for each person employed in the health care sector, an additional 0.2 jobs are created in other sectors. Similarly, an income multiplier of 1.2 means that a $1.00 increase in income would result in a $0.20 increase in income in other sectors.

Study Findings

 The aggregate economic impact (direct, indirect, and induced effects) of the health care sector accounts for 14 percent of total employment in the region and aggregate labor income is 16 percent of earnings in the region.  The health care sector in SWVA directly employs 8,599 people out of 79,939 employed in the region. SWVA’s health care sector produces an annual labor income of $358.8 million out of $3,009 million in earnings in the region.  Hospitals are the largest contributor to the health sector, employing 2,952 people directly and providing $125.8 million in labor income.  The aggregate economic impact from the hospital sector results in employment of 4,126 people and labor income of $160 million. Hospitals accounts for 39 percent of health care employment.  Offices of physicians, dentists, and other health professionals have the second highest direct income, at $123.1 million, and employment, at 1,960 people. The aggregate impact results in a contribution of 17 percent of employment in the health care sector.  The portion of retail sales that is attributable to the health care sector’s aggregate impact is $123.1 million, of which $1.2 million is returned to local governments as local tax revenue.  The importance of the health care sector in SWVA is likely due to the older population and the relatively low amount of diversity in economic activity in the region.

10 Figure 1.1. SWVA – Health Care Sector Aggregate Economic Impact

Figure 1.2. SWVA Health Care Sector Employment

11 Table 1. SWVA – Labor Income, Employment, Sales Tax Revenue Labor Income Employment Sales ($1,000) Direct Total Health Local effect impact Direct Total retail sales tax ($1,000) Multiplier ($1,000) effect Multiplier impact sales revenue Total health sector $358,766 1.19 $428,331 8,599 1.30 11,142 $123,129 $1,231 Ambulatory services $18,520 1.35 $25,040 535 1.41 755 $7,198 $72 Dental laboratories $665 1.18 $787 15 1.27 19 $226 $2 Offices of physicians, dentists, and other health professionals $123,403 1.19 $146,678 1,960 1.42 1,785 $42,164 $422 Home health care $25,528 1.23 $3,848 944 1.21 1,143 $1,106 $11 Hospitals $125,838 1.27 $160,059 2,952 1.40 4,126 $46,010 $460 Nursing and residential care $37,835 1.25 $47,445 1,593 1.22 1,942 $13,639 $136 Pharmacies and drug stores $26,978 1.26 $33,933 600 1.37 823 $9,755 $98

12 SWVA – Mining and Energy

 The mining and energy sector includes oil and gas extraction, coal mining, drilling oil and gas wells, support activities for oil and gas mining, support other mining, and power generation.  The mining and energy sector provides a higher aggregate income than the health care sector but directly employs fewer individuals. Income from direct employment is $561 million compared to $358.8 million in the health care sector. But the mining and energy sector only employs 5,929 individuals directly compared to 8,599 people in the health care sector.  Because the mining and energy sector has a larger multiplier, incorporating direct, indirect, and induced effects, mining and energy contribute to 28 percent of earnings by place of work, while the health care sector contributes to 16 percent.  The aggregate effect on employment in both sectors is 14 percent.

Figure 2. SWVA – Mining and Energy Sector Aggregate Economic Impact

Table 2. SWVA – Mining and Energy Sector Labor Income and Employment Labor Income Employment Direct effect Total impact ($1,000) Multiplier ($1,000) Direct effect Multiplier Total impact Mining & energy $560,694 1.314 $736,955 5,929 1.88 11,134

13 Virginia – Health Care Sector

 The health care sector in Virginia accounts for a smaller portion of income and employment than in SWVA. The aggregate economic impact results in labor income that is 8 percent of Virginia’s earnings by place of work and 8 percent of employment.  The offices of doctors, dentists, and other health professionals account for 41 percent of the health sector’s employment, which is significantly higher than the 17 percent in SWVA.  Alternatively, hospitals are only responsible for 15 percent of the aggregate impact of the health care sector on employment, unlike the 39 percent in SWVA. This suggests that people in SWVA tend to seek care at hospitals, rather than at physician’s offices more than the average Virginian.

Figure 3.1. Virginia – Health Care Sector Aggregate Economic Impact

14 Figure 3.2. Virginia Health Care Sector Employment

Table 3. Virginia – Labor Income, Employment, Sales Tax Revenue Labor Income Employment Sales Direct Total Health Local tax effect impact Retail revenue ($ ($ Direct Total Sales ($ (1%) million) Multiplier million) effect Multiplier impact million) ($1,000) Health Sector $13,368 1.34 $17,967 249,087 1.48 369,295 $5,605 $56,052 Ambulatory Services $1,180 1.57 $1,850 20,345 1.80 36,678 $577 $5,772 Dental laboratories $55 1.33 $73 1,081 1.41 1,523 $23 $228 Offices of physicians, dentists, and other health professionals $7,426 1.34 $9,934 94,439 1.69 159,305 $3,099 $30,992 Home health care $547 1.44 $788 20,658 1.29 26,670 $246 $2,459 Hospitals $1,800 1.52 $2,730 34,265 1.67 57,140 $852 $8,520 Nursing and residential care $1,810 1.44 $2,602 60,245 1.35 81,540 $812 $8,117 Pharmacies and drug stores $549 1.57 $861 18,054 1.40 25,295 $269 $2,687

15 LOCALITY SUMMARIES

 The health care sector in SWVA is not evenly distributed among the localities. Tazewell County’s health care sector provides the largest share of labor income in SWVA and employs the largest number of people at 29 percent and 30 percent respectively.  Dickenson County has the smallest labor income and employment from the health care sector at 2 percent each.

Figure 4.1. SWVA – Health Care Sector Labor Income by Locality

Figure 4.2. SWVA – Health Care Sector Employment by Locality

16 Buchanan County Study Findings

 The health care sector in Buchanan County employs 906 people directly and pays $36.9 million in labor income, relative to 9,550 people employed in the region and $657 million in total personal income.  When the aggregate economic impact (direct, indirect, and induced effects) is accounted for, the health care sector constitutes 11 percent of employment in the region and earnings by place of work is 10 percent.  Hospitals are the largest component of the health sectors directly employing 406 people. The aggregate economic impact of the hospital sector results in nearly half of the health sector’s employment, at 44 percent.  The increase in retail sales resulting from the aggregate impact of the health care sector is $7.5 million. Buchanan County receives $75,645 local retail sale tax from resulting the retail sales.

Figure 5.1. Buchanan County – Health Care Sector Aggregate Economic Impact

17 Figure 5.2. Buchanan County Health Care Sector Employment

Table 5. Buchanan County – Labor Income, Employment, Sales Tax Revenue Labor Income Employment Sales Health Direct Total Retail Local effect impact Direct Total Sales sales tax ($1,000) Multiplier ($1,000) effect Multiplier impact ($1,000) revenue Total health sector $36,931 1.12 $41,382 906 1.17 1,058 $7,564 $75,645 Ambulatory services $333 1.20 $398 8 1.25 10 $72 $728 Dental laboratories $0 0.00 $0 0 0.00 0 $0 $0 Offices of physicians, dentists, and other health professional $11,143 1.11 $12,355 160 1.26 201 $2,259 $22,585 Home health care $2,315 1.12 $2,601 54 1.17 63 $476 $4,755 Hospitals $15,450 1.17 $18,066 406 1.21 490 $3,302 $33,024 Nursing and residential care $3,657 1.16 $4,260 172 1.12 192 $779 $7,788 Pharmacies and drug stores $4,033 1.16 $4,659 106 1.18 125 $852 $8,516

18 Dickerson County Study Findings

 The health care sector is only a small part of Dickerson County’s economy. It is responsible for the direct employment of 206 people out of 4,486 people employed in County and $7.5 million in labor income out of $141 million in earnings by place of work.  The aggregate economic impact (direct, indirect, and induced effects) of the health care sector results in the employment 235 people and $8.1 million dollars in labor income.  The aggregate impact represents 5 percent of employment and labor income is only 6 percent of earnings, which is the lowest impact in the region.  Unlike most localities in the region, the lack of a hospital results in offices of doctors, dentists, and other health professionals having the largest share of the health care sector, employing 106 people directly and producing $11 million dollars in labor income. The aggregate impact of these offices is responsible for employment of 38 percent of the health care sector.  Retail sales attributable to the health care sector account for $1.2 million, of which $12,334 is collected as local tax revenue.

Figure 6.1. Dickenson County – Health Care Sector Aggregate Economic Impact

19 Figure 6.2. Dickenson County Health Care Sector Employment

Table 6. Dickenson County – Labor Income, Employment, Sales Tax Revenue Labor Income Employment Sales Health Direct Total Retail Local effect impact Direct Total Sales sales tax ($1,000) Multiplier ($1,000) effect Multiplier impact ($1,000) revenue Total health sector $7,490 1.09 $8,182 206 1.14 235 $1,233 $12,334 Ambulatory services $441 1.17 $516 17 1.17 20 $78 $778 Dental laboratories $0 0.00 $0 0 0.00 0 $0 $0 Offices of physicians, dentists, and other health professional $2,995 1.09 $3,271 77 1.15 88 $493 $4,931 Home health care $332 1.10 $366 21 1.07 22 $55 $552 Hospitals $0 0.00 $0 0 0.00 0 $0 $0 Nursing and residential care $1,274 1.11 $1,409 51 1.12 57 $212 $2,124 Pharmacies and drug stores $2,447 1.10 $2,701 40 1.26 50 $407 $4,071

20 Lee County Study Findings

 The health care sector directly employs 908 individuals and results in $34 million in labor income compared with 7,709 people employed in the locality and $578 million in personal income.  Like the region as a whole, the health care sector’s aggregate economic impact (direct, indirect, and induced effects) accounts for 14 percent of employment and labor income is 15 percent of earnings in Lee County.  Also similar to the region as a whole, aggregate impact of hospitals accounts for 37 percent of employment in the health care sector.  Hospitals are the largest component of the health care sector and directly employ 325 people and pay $12 million in labor income.  Lee County receives $74,890 in local retail tax revenue resulting from the aggregate impact of the health care sector on retail sales.

Figure 7.1. Lee County – Health Care Sector Aggregate Economic Impact

21 Figure 7.2. Lee County – Health Care Sector Employment

Table 7. Lee County – Labor Income, Employment, Sales Tax Revenue Labor Income Employment Sales Health Direct Total Retail Local effect impact Direct Total Sales sales tax ($1,000) Multiplier ($1,000) effect Multiplier impact ($1,000) revenue Total health sector $34,235 1.14 $38,890 908 1.21 1,100 $7,489 $74,890 Ambulatory Services $1,340 1.20 $1,614 30 1.35 40 $318 $3,107 Dental laboratories $19 1.13 $21 1 1.10 1 $4 $41 Offices of physicians, dentists, and other health professional $11,486 1.13 $12,947 211 1.28 269 $2,493 $24,933 Home health care $252 1.17 $295 13 1.12 15 $57 $568 Hospitals $12,293 1.20 $14,811 325 1.30 423 $2,852 $28,524 Nursing and residential care $4,683 1.17 $5,499 248 1.13 281 $1,059 $10,589 Pharmacies and drug stores $4,163 1.18 $4,906 80 1.32 106 $945 $9,446

22

Russell County Study Findings

 The health care sector directly produces $36 million in labor income out of $367 million in earnings in the locality. The health care sector employs 1,037 people out of 10,215 employed in Russell County.  The health care sector’s aggregate economic impact (direct, indirect, and induced effects) results in 13 percent of the locality’s employment and a labor income that is 11 percent of earnings by place of work.  Hospitals were the largest share of the health care sector, directly employing 337 people and providing $17 million in labor income.  The aggregate impact of the hospital sector is responsible for 34 percent of the health care sector’s employment.  Local sales tax revenue attributable to the aggregate impact of the health care sector is $84,258.

Figure 8.1. Russell County – Health Care Sector Aggregate Economic Impact

23 Figure 8.2. Russell County Health Care Sector Employment

Table 8. Russell County – Labor Income, Employment, Sales Tax Revenue Labor Income Employment Sales Health Direct Total Retail Local effect impact Direct Total Sales sales tax ($1,000) Multiplier ($1,000) effect Multiplier impact ($1,000) revenue Total health sector $36,146 1.16 $41,877 1,037 1.23 1,278 $8,426 $84,258 Ambulatory Services $2,389 1.24 $2,958 44 1.44 63 $595 $5,952 Dental laboratories $0 0.00 $0 0 0.00 0 $0 $0 Offices of physicians, dentists, and other health professional $9,751 1.16 $11,316 186 1.29 240 $2,277 $22,769 Home health care $5,983 1.19 $7,1378 203 1.19 242 $1,436 $14,361 Hospitals $17,251 1.19 $20,600 337 1.35 455 $4,145 $41,448 Nursing and residential care $4,360 1.22 $5,306 212 1.16 246 $1,068 $10,675 Pharmacies and drug stores $2,876 1.22 $3,497 55 1.37 75 $704 $7,036

24 Scott County Study Findings

 The health care sector in Scott County directly employs 643 people out of 6,491 jobs in the locality and provides $22 million in labor income out of a total of $193 million in earnings in the region.  Although Scott County does not have a hospital, the aggregate economic impact (direct, indirect, and induced effects) of health care sector still accounts for 12 percent of employment in the locality. However, labor income is 13 percent of earnings in the region.  Nursing and residential care constitutes the largest component of the health care sector, employing 39 percent of the health care workforce. The offices of doctors, dentists, and other health care professionals are responsible for 24 percent of the health sector’s employment.  Scott County receives nearly $50,000 in retail sales tax revenue due to the aggregate impact of the health care sector.

Figure 9.1. Scott County – Health Care Sector Aggregate Economic Impact

25 Figure 9.2. Scott County Health Care Sector Employment

Table 9. Scott County – Labor Income, Employment, Sales Tax Revenue Labor Income Employment Sales Health Direct Total Retail Local effect impact Direct Total Sales sales tax ($1,000) Multiplier ($1,000) effect Multiplier impact ($1,000) revenue Total health sector $22,083 1.12 $24,707 643 1.16 748 $4,922 $49,223 Ambulatory Services $1,317 1.19 $1,565 34 1.27 43 $312 $3,117 Dental laboratories $0 0.00 $0 0 0.00 0 $0 $0 Offices of physicians, dentists, and other health professional $8,348 1.12 $9,323 142 1.27 180 $1,857 $18,573 Home health care $2,439 1.15 $2,801 134 1.10 147 $558 $5,581 Hospitals $0 0.00 $0 0 0.00 0 $0 $0 Nursing and residential care $6,421 1.15 $7,362 261 1.15 300 $1,467 $14,666 Pharmacies and drug stores $3,558 1.16 $4,130 72 1.27 91 $823 $8,228

26 Tazewell County Study Findings

 The health care sector in Tazewell County directly employs 2,374 people and results in $101 million in labor income out of a total of 20,267 people employed and $691 million in earnings in the County.  The aggregate economic impact (direct, indirect, and induced effects) of the health care sector contribute to 15 percent of employment and labor income is 17 percent of earnings by place of work.  The offices of doctors, dentists, and other health care professionals accounts for the largest portion of the health care sector, at 35 percent. These offices directly employing 788 people and produce an income of $48.8 million.  The hospital sector, which includes Carilion Tazewell Community Hospital and Clinch Valley Medical Center, constitutes the second largest portion of employment in the health care sector at 28 percent.  The amount of retail sales that is attributable to the aggregate impact of the health care sector amount to $52.4 million. Of this, $524,307 is returned to Tazewell County as local tax revenue.

Figure 10.1. Tazewell County – Health Care Sector Aggregate Economic Impact

27 Figure 10.2. Tazewell County Health Care Sector Employment

Table 10. Tazewell County – Labor Income, Employment, Sales Tax Revenue Labor Income Employment Sales Health Direct Total Retail Local effect impact Direct Total Sales sales tax ($1,000) Multiplier ($1,000) effect Multiplier impact ($1,000) revenue Total health sector $101,985 1.18 $120,026 2,374 1.28 3,048 $52,431 $524,307 Ambulatory Services $4,967 1.40 $6,938 214 1.31 280 $3,031 $30,305 Dental laboratories $0 0.00 $0 0 0.00 0 $0 $0 Offices of physicians, dentists, and other health professional $48,795 1.18 $57,483 788 1.40 1,106 $25,110 $251,101 Home health care $7,214 1.23 $8,839 279 1.20 334 $3,861 $38,612 Hospitals $26,933 1.26 $34,044 645 1.38 891 $14,871 $148,712 Nursing and residential care $9,106 1.25 $11,349 335 1.24 417 $4,957 $49,574 Pharmacies and drug stores $4,970 1.26 $6,273 113 1.38 156 $2,740 $27,403

28 Wise County and City of Norton Study Findings

 Wise County and the City of Norton’s health care sector directly employs 2,527 people and results in $113.5 million in labor income out of a total of 21,221 jobs and $1,256 million in total personal income.  The aggregate economic impact (direct, indirect, and induced effects) of the health care sector constitutes 15 percent of its employment and labor income is 14 percent of the two localities’ earnings by place of work.  Hospitals are the largest portion of the health care sector, at 48 percent of employment. Hospitals directly employ 1,238 people and provide $54 million in labor income.  Retail sales attributable to the aggregate effect of the health care spending provide Wise and Norton with $489,745 in tax revenue.

Figure 11.1. Wise County and Norton City – Health Care Sector Aggregate Economic Impact

29 Figure 11.2. Wise County and Norton City Health Care Sector Employment

Table 11. Wise County and Norton City – Labor Income, Employment, Sales Tax Revenue Labor Income Employment Sales Health Direct Total Retail Local effect impact Direct Total Sales sales tax ($1,000) Multiplier ($1,000) effect Multiplier impact ($1,000) revenue Total health sector $113,591 1.15 $130,338 2,527 1.23 3,115 $48,975 $489,745 Ambulatory Services $7,786 1.30 $10,114 189 1.43 271 $3,800 $38,004 Dental laboratories $645 1.15 $740 14 1.23 17 $278 $2,781 Offices of physicians, dentists, and other health professional $30,904 1.12 $34,499 396 1.31 518 $12,963 $129,629 Home health care $7,017 1.20 $8,399 241 1.20 290 $3,156 $31,559 Hospitals $53,865 1.17 $62,808 1,238 1.24 1,529 $23,600 $236,002 Nursing and residential care $8,359 1.21 $10,099 315 1.22 384 $698 $6,983 Pharmacies and drug stores $5,014 1.23 $6,161 134 1.27 170 $2,315 $23,149

30 Bibliography

Cordes Sam , Evert Van der Sluis, Charles Lamphear, Jerry Hoffman (1999). "Rural Health Research: Rural Hospitals and the Local Economy: A Needed Extension and Refinement of Existing Empirical Research." The Journal of Rural Health 15(2): 189 - 201.

Doeksen GA , V Schott (2003). "Economic Importance of the Health-Care Sector in a Rural Economy." The International Electronic Journal of Rural and Remote Health Research, Education, Practice and Policy.

Ohio University's Voinovich School of Leadership and Public Affairs (2008). The Economic Impact of the Health Sector in Rural Ohio, 2006.

Rephann, Terance J. (2008). The Economic Impact of Agriculture and Forestry on the Commonwealth of Virginia. Weldon Cooper Center for Public Service, University of Virginia.

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