Economic impacts of Munroe Regional Medical Center in Marion County, Florida

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Economic impacts of Munroe Regional Medical Center in Marion County, Florida
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Stevens, Thomas J.
Hodges, Alan W.
Rahmani, Mohammad
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Food and Resource Economics Department, Institute of Food and Agricultural Sciences, University of Florida
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Gainesville, Fla.
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Copyright Date:
2010

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Economic Impacts of Munroe Regional Medical Center in
Marion County, Florida

Thomas J. Stevens, Alan W. Hodges, and Mohammad Rahmani

University of Florida, Institute of Food and Agricultural Sciences
Food and Resource Economics Department
P.O. Box 110240, Gainesville, Florida 32611-0240
economicimpact.ifas.ufl.edu


May 27, 2010









Economic Impacts of Munroe Regional Medical Center in
Marion County, Florida
Executive Summary

The purpose of this study was to estimate the economic impacts of the Munroe Regional Medical

Center (MRMC) in Marion County, Florida. MRMC is a 421 bed acute-care facility located near

downtown Ocala, with additional outpatient facilities located nearby. For F.Y. 2009, MRMC

reported revenues totaling $261.5 million (M) and employment of 2,479 people. It is the largest

private employer in the County, representing about 1.7 percent of the workforce. The economic

impacts of MRMC were estimated by applying its financial and employment data to an input-

output model of the Marion County economy constructed with the IMPLAN economic impact

modeling system (MIG).

For this analysis 97.8 percent of MRMC's revenues were treated as non-local or "new" dollars

entering the Marion County economy, including Medicare, Medicaid, BlueCross/BlueShield, and

for-profit insurance reimbursements. When new dollars flow into a region, additional economic

activity is generated through spill-over or multiplier effects, including supply-chain purchases of

goods and services from local suppliers (indirect effects), and employee household spending

(induced effects).

The economic impacts of Munroe Regional Medical Center are summarized in Figure ES1 and

Table ES1. Total output or sales revenue impacts of MRMC in Marion County in 2009 were

estimated at $525 million. The total value-added impact was estimated at $264 million, which

represented employee salaries and benefits, business owner (proprietor) income and property-

related income (rents, dividends, interest, royalties, etc.). The total employment impact of MRMC

was 5,007 jobs, including fulltime and part-time positions. Although MRMC does not pay most

taxes because of its non-profit status, it is still responsible for generating over $15 million in

Indirect Business Taxes, such as sales, excise, and property taxes, licenses and fees, as a result of

spending by its suppliers and employees. The indirect and induced multiplier effects of MRMC

activities were responsible for approximately 50 to 60 percent of its total impacts on the County.

The economic impacts of MRMC are compared to the total economic activity of Marion County for

2008 in Table ES1. Based on these estimated impacts, MRMC was responsible for 3.32 percent of









total value-added or gross regional product of Marion County that year. In terms of jobs, MRCM

generated 3.46 percent of all employment in the County. Definitions of the terms used to describe

these economic impacts are provided in the main text of this report and a glossary in Appendix A.



Figure ES1. Economic impacts of Munroe Regional Medical Center in Marion County, Florida, 2009.


$525


5.007


S264


$192


$57
$15
I I """ i


6,000


5,000


4,000


- 3,000


2,000


1,000


- I


Output TotalValue
Added I


Labor Other
income Property
Income


Indirect Employment
Business
Taxes


Note: All values in 2009 dollars. Employment impacts include full-time, part-time and seasonal positions.




Table ES1. Economic Impacts of Munroe Regional Medical Center relative to the overall economy
of Marion County, Florida.


Economic indicator


Marion
County


MRMC


MRMC as
Percent
of County


Value-added impact (million $) $7,9571 $264 3.32%
Employment impact (jobs) 144,635 2 5,007 3.46%
1. County level Value-added data is from Minnesota IMPLAN Group adjusted to 2009 prices.
2. Employment data from the U.S. Department of Commerce, Bureau of Economic Analysis. The latest data available
is for 2008. http://www.bea.gov/regional/reis/


$600


$500 -


$400 -


$300 -


$200 -


$100 -


$0


* Induced
Indirect
* Direct


I I









Economic Impacts of Munroe Regional Medical Center in
Marion County, Florida


Introduction

The purpose of this study was to estimate the positive economic impacts of the Munroe Regional

Medical Center (MRMC) in Marion County, Florida. MRMC is a 421 bed acute-care facility located

near downtown Ocala, with additional outpatient facilities located nearby. For the 2009 fiscal

year, MRMC reported revenues totaling $262 million (M) and employment of 2,479 people (Table

1). According to Enterprise Florida, MRMC is the largest private employer in the County. Over 90

percent of MRMC employees reside inside Marion County.


Table 1. Revenues and employment for Munroe Regional Medical Center, fiscal year 2009.

Revenues
Government, Insurance & Private/Other $255,735,519
Patient Self Pay $5,769,043
Total Revenues $261,504,562
Employment
Total Employees 2,479
Total Employee Compensation $106,227,053
Ratios
Revenues per Employee $105,488
Compensation per Employee $42,851



Study Area Description

Marion County, located in north-central Florida, had a population of 327,172, with 144,635 jobs

(BEA), and a gross regional product of $7.86 billion (MIG) in 2008. Although it is less densely
populated than Florida as whole, between 2000 and 2008, Marion County grew significantly faster

than the state in percentage terms with respect to population, jobs and personal income (Table 2).

In 2008 Marion County represented 1.8 percent of the Florida's population and 1.4 percent of its

employment. The County's population and employment grew by 26 and 28 percent, respectively,

between 2000 and 2008. This is roughly 10 percentage points higher than comparable growth

rates for the State. During the same period, personal income in Marion County increased by more









than 39 percent, exceeding the State's rate of growth by over 20 percentage points (Table 2).

Significantly for the health care sector, the population of Marion County is relatively older than

that of Florida and the U.S., with nearly 25 percent of its residents being over 65 years of age in

2008, compared to 17.4 percent for State, and 12.8 percent for the U.S. (U.S. Census Bureau).

Table 2. Comparison of population, employment and personal income for Marion County and
Florida, 2000 and 2008.

Marion
Metric Florida
County
Population, 2000 258,916 15,982,378
Population, 2008 327,172 18,537,969
Percent Change, 2000 2008 26.4% 16.0%
Land area, (square miles) 1,578 53,926
Persons per square mile, 2008 207 344

2000 Employment 113,275 8,933,114
2008 Employment 144,635 10,424,100
Percent Change, 2000 2008 27.7% 16.7%

2000 Personal Income ($1,000, in 2008 prices) 7,326,129 559,920,154
2008 Personal Income ($1,000) 10,215,839 668,483,640
Percent Change 39.4% 19.39%
Sources: U.S. Census Bureau, Population Estimates, http://www.census.gov/popest/counties/
U.S. Department of Commerce, Bureau of Economic Analysis, Regional Economic Accounts,
http://www.bea.gov/regional/reis/


Methodology

The economic impacts of Munroe Regional Medical Center were estimated by applying its

financial and employment data (Table 1) to an input-output model of the Marion County. Input-

Output (1-0) analysis is a standard technique for estimating the economic impacts resulting from a

change in a specific economic activity in a regional economy. These economic models represent

the transactions that occur between industries, governments, employees, and households

(Schaffer, 1999; Miller and Blair, 2009). The parameters in the model are estimated from detailed

business and demographic data collected by state and federal government agencies. From these

models, industry level economic multipliers are calculated, and then used to estimate economic

impacts.









When estimating economic impacts, it is important to distinguish between local and non-local

revenues. Local revenues typically represent simple transfers between individuals or businesses

within an economy and do not generate economic spin-off or multiplier effects. However, non-

local revenues flowing into an economy generate additional economic activity through the supply

chain (indirect effects) and employee spending (induced effects). With respect to MRMC, indirect

impacts occur when the hospital purchases goods and services from local suppliers, while induced

impacts occur when hospital and supplier business employees spend their earnings at other local

businesses.

The types of economic impacts typically estimated with 1-0 models include output or gross

revenues, employment (fulltime and part-time jobs), and value-added, which includes labor

income, other property type income, and indirect business taxes. Each of these measures

represents a different way of assessing the size or contribution of a particular activity or event to a

regional economy. Definitions of these types of impacts or effects can be found in the glossary at

the end of this report (Appendix A).

The Impact Analysis for Planning (IMPLAN) system is an input-output modeling system comprised

of computational procedures and regional economic databases (MIG). These databases document

economic activity in the U.S. at the county level for 440 different industry sectors, as well as

spending and transfers, between households, governments, savings and investments, and

commodity trade between regions. To more accurately represent the impacts of MRMC on

Marion County, industry data for IMPLAN sector 397 (Private Hospitals) was adjusted in

accordance with revenues, employment, and compensation levels and ratios shown in Table 1. In

addition, since MRMC is a non-profit entity, model parameters for corporate profits, dividends,

and various forms of indirect business taxes for this sector were set to zero. Finally, since the

IMPLAN model of Marion County used for this analysis was based on 2008 data and MRMC's

operational data was for 2009, industry specific deflators were used to convert MRMC revenues to

2008 price levels. After impacts were calculated, values were re-inflated to 2009 dollars.









Analysis and Results
For purposes of impact analysis, the revenues that MRMC receives from government programs

(Medicaid, Medicare) and commercial insurers were treated as "new" dollars entering Marion

County's economy. These revenues totaled $255.7 M or 97.8 percent of MRMC's total revenues of

$261.5 million in 2009 (Table 1). The remaining $5.8 M in local (self pay) revenues were also

applied to the 1-0 model, but only the direct impacts of these revenues were counted in the total

impacts.

A summary of the estimated annual economic impacts for MRMC is shown in Table 3, with table

rows delineating impacts into direct, indirect, induced effects, and total impacts, while different

impact measures are given in table columns, including output, value-added, labor income, indirect

business taxes and employment. Output impacts represent the total value of a business's output

(goods and services) in terms of gross revenues or sales. The direct impacts are broken out

between those generated by local and non-local revenues. Approximately 98 percent of the direct

output impacts are from non-local revenues.

The total Output impacts of MRMC operations for the County's economy in 2009 is the sum of its

direct, indirect and induced output impacts, and equals $525 M Indirect and induced effects

represent approximately half of this total impact, and around one-third of the total impacts result

from induced effects alone. This is primarily due to the fact that 40 percent of hospital revenues

go toward employee compensation and over 90 percent of MRMC employees live within the

County. Indirect output effects are less than 16 percent of total Output impacts because a smaller

share of expenditures for hospital supplies and equipment are made within the County.









Table 3. Summary of Economic Impacts of Munroe Regional Medical Center in Marion County,
Florida, 2009.

Va- L r Other Indirect
Value- Labor
Output added Income Property Business Employment
added Income
Income Taxes
Type Effect Income Taxe
Fulltime &
Million Dollars part-time
jobs
Direct, local & non-local 261.50 106.23 106.23 0 0 2,479
Direct, local a 5.77 2.34 2.34 0 0 55
Direct, non-local b 255.74 103.88 103.88 0 0 2,424
Indirect, non-local 82.94 50.11 24.05 21.15 4.91 761
Induced, non-local 180.18 107.81 62.00 35.62 10.19 1,767
Total c 524.62 264.15 192.28 56.77 15.10 5,007
aLocal impacts are generated by revenues from self-payments by Marion County residents
Non-local impacts are generated by reimbursements from Medicare, Medicaid, and BlueCross/BlueShield, and
commercial (for profit) insurance companies.
C Total impacts equal the sum of direct, indirect and induced impacts. Value added equals the sum of labor income,
Other Property Type Income, and Indirect Business Taxes.


The total value-added impacts of MRMC in Marion County for 2009 were estimated at $264

million (Table 3). Value-added impacts include labor income, property related income and indirect

business taxes generated by the hospital's business. The direct value-added impacts are only

comprised of labor Income ($106 M), because MRMC is a non-profit entity and does not pay taxes,

but it is still indirectly responsible for generating over $15 million in indirect business taxes paid by

its suppliers and employees. The indirect and induced value-added impacts ($158 M) represented

nearly 60 percent of the total value-added impacts. Total labor income impacts were estimated at

$192 million. Other property type income impacts, including rents, dividend, interest, royalties,

etc., were estimated at $57 M. Indirect business taxes impacts were estimated at $15 M. Total

employment impacts were estimated at 5,007 jobs.

The distribution of MRMC's economic impacts across twenty aggregate industry sectors for

Marion County is presented in Table 4. Naturally, the largest impacts occurred in the Health and

Social Services industry group, which contains hospitals. This group had total impacts of $295 M in

output, $126 M in value-added, $122 M in labor income, and 2,850 jobs. However, other property

income and indirect business tax impacts were actually higher in the real estate/rental groups,

which also captured the second largest output and value-added impacts ($62.7 M and $46.2 M,









respectively). Other industry groups with significant impacts were retail trade, wholesale trade,

and government.

Table 4. Economic impacts of Munroe Regional Medical Center in Marion County, Florida, 2009,
by aggregate industry group.
Other Indirect
Total Value Labor Othr
Aggregate Industry Group Output Added Income Property Business Employment
(NAICS) Income Taxes
Fulltime,
--- Million Dollars --- part-time
Jobs
Agriculture, Forestry, Fisheries 0.72 0.40 0.16 0.23 0.01 6
Mining 0.08 0.03 0.01 0.02 0.00 0
Utilities 4.33 3.05 0.97 1.62 0.46 10
Construction 11.09 4.28 3.80 0.43 0.05 95
Manufacturing 18.61 3.98 2.63 1.13 0.21 47
Wholesale Trade 11.62 7.32 4.22 1.53 1.57 81
Retail Trade 20.93 14.08 8.88 2.16 3.04 323
Transport. & Warehousing 5.15 2.93 2.08 0.73 0.12 54
Information 9.08 2.91 1.47 1.15 0.29 30
Finance & Insurance 16.49 8.86 4.88 3.61 0.38 93
Real Estate & Rental 62.73 46.15 6.50 32.57 7.07 276
Prof., Scientific & Tech. Services 12.11 6.70 5.43 1.13 0.15 111
Management of Companies 2.58 1.25 0.93 0.30 0.02 17
Administrative & Waste Services 10.05 5.99 4.90 0.96 0.13 264
Educational Services 1.21 0.60 0.53 0.06 0.01 26
Health & Social Services 294.72 126.36 122.19 3.94 0.24 2,850
Arts, Entertain. & Recreation 2.99 1.37 0.80 0.39 0.19 36
Accommodation & Food Services 11.94 6.04 4.03 1.36 0.66 216
Other Services 11.30 6.18 4.18 1.49 0.51 208
Government & non NAICs 16.90 15.66 13.69 1.97 0.00 260
Total 524.62 264.15 192.28 56.77 15.10 5,007
Industry groups based on North American Industry Classification System (NAICS).


To evaluate the findings of this analysis, it is useful to compare the estimated economic impacts of

Munroe Regional Medical Center (MRMC) to the total economic activity of Marion County, and to

the impacts of all hospitals on County's economy. Compared to Marion County's economy as a

whole, the estimated impacts of this analysis indicate that MRMC was responsible for

approximately 3.3 percent of the County's total Value-added or Gross Regional Product in 2009

(Table 5). MRMC's Labor Income impacts are approximately comparable to BEA's Net Earnings

data for the County. Based on these numbers, MRMC is responsible for nearly 3.8 percent of the

Marion County's 2008 adjusted earned income. In terms of jobs, it is estimated that MRCM









operations can be credited with 3.46 percent of all employment in the County (either directly or

indirectly), based on 2008 BEA employment estimates (the latest available).

Table 5. Comparison of economic impacts of Munroe Regional Medical Center to the Marion
County economy.
Marion MRMC as%
Economic indicator MRMC
County of County
Value-added (million $) $7,9571 $264 3.32%
Labor Income/Net Earnings (million $) $5,080 2 $192 3.78%
Employment (jobs) 144,635 2 5,007 3.46%
1. County-level Value-added data is from Minnesota IMPLAN Group, adjusted to 2009 prices.
2. Net Earnings data and employment data is from the U.S. Department of Commerce, Bureau of Economic Analysis.
The latest data available is for 2008. Net earnings were adjusted to 2009 prices.
http://www.bea.gov/regional/reis/


Conclusions

In a recent study, Hodges and Rahmani (2009) estimated that the combined output impacts of all

6 non-federal licensed hospitals in Marion County were $1,008 million in 2007 (adjusted to 2009

dollars), with $549 million in value-added impacts, $387 million in labor Income impacts, and

employment impacts of 8,776 jobs. These figures mean that over 50 percent of the economic

impacts of all hospitals in Marion County are due to the activities of the MRMC alone.

In addition to these quantifiable economic impacts, MRMC is involved in a variety of other

programs and services that benefit Marion County and its residents. These include functioning as

a venue for many educational, outreach and volunteer services; providing indigent care and

absorbing these costs for unpaid services; and, offering a variety of spiritual and emotional

support services to patients, staff, volunteers and their families.

Economic impact analysis permits decision makers and their advisors to look beyond the direct

impacts (revenues, earnings, jobs and taxes) generated by a business, industry, or event, when

considering its importance and relationship to a regional economy. Indirect economic impacts

show how important the hospital is to other area businesses that serve it. Induced impacts show

how much difference the hospital's operations make for area businesses that serve resident

households. Output, value-added, income and jobs are basic units for measuring economic









activity, and permit one to compare the impact of a particular industry or event to that of the

overall economy or other sectors of the economy.









References


Enterprise Florida, Marion County Profile. Accessed May, 2010, available at
http://www.eflorida.com/profiles/CountvReport.asp?CountylD=66&Display=all
Hodges, Alan W. and Mohammad Rahmani. Economic Contributions of Hospitals in Florida,
Sponsored Project Final Report to the Florida Hospital Association, Orlando, Florida, April,
2009, available at http://www.economicimpact.ifas.ufl.edu/publications/Economic
Contributions Florida Hospitals.pdf
Miller, R. E, and P. D. Blair. Input-OutputAnalysis: Foundations and Extensions, 2nd edition,
Cambridge University Press, 2009.
Minnesota IMPLAN Group, Inc. (MIG). IMpact Analysis for PLANning (IMPLAN) Professional
Version 3.0.1.2, Economic Impact Modeling System and Data for Florida Counties, Stillwater,
MN, www.implan.com
Munroe Regional Medical Center. Personal correspondence and website accessed, May, 2010.
http://www.munroeregional.com/
Schaffer, William A. Regional Impact Models, Web Book of RegionalScience, West Virginia
University, Regional Research Institute.
http://www.rri.wvu.edu/WebBook/Schaffer/index.html
Bureau of Economic Analysis (BEA), U.S. Department of Commerce, Regional Economic
Information System, available at http://www.bea.gov/bea/regional/reis/.
Bureau of Census, U.S. Department of Commerce. County Population Datasets, available at
httD://eire.census.eov/Dopest/estimates dataset.php.









Appendix A: Glossary of Regional Economic Terminology


Direct effects/impacts: Direct impacts, represent the revenues, value-added, income, or jobs that
result directly from an economic activity within a regional economy.
Employment or Jobs: Represents the total numbers of wage and salaried employees as well as
self-employed jobs. This includes full-time, part-time and seasonal workers measured in
annual average jobs.
Indirect Business Taxes: Include sales, excise, and property taxes as well as fees and licenses paid
by businesses during normal operations. It does not include taxes on profits or income.
Indirect effects/impacts: Indirect effects occur when businesses use revenues originating from
outside the region, or study area, to purchase inputs (goods and services) from local suppliers.
This secondary, or indirect business, generates additional revenues, income, jobs and taxes for
the area economy.
Induced effects/impacts: Induced effects or impacts occur when new dollars, originating from
outside the study area, are introduced into the local economy. Induced economic impacts
occur as the households of business owners and employees spend their earnings from these
enterprises to purchase consumer goods and services from other businesses within the region.
This induced effect generates additional revenues, income, jobs and taxes for the area
economy.
Input-Output (I-0) Analysis: The use of input-output models to estimate how revenues or
employment for one or more particular industries, businesses or activities in a regional
economy impact other businesses and institutions in that region, and the regional as a whole.
Input-Output (I-0) Models: A mathematical representation of economic activity within a defined
region using inter-industry transaction tables or matrices where the outputs of various
industries are used as inputs by those same industries and other industries as well.
Labor Income: All forms of employment compensation, including employee wages and salaries,
and proprietor income or profits.
Local revenues/expenditures: Local revenues or spending represent simple transfers between
individuals or businesses within a regional economy. These transactions do not generate
economic spin-off or multiplier (indirect and induced) effects.
Margins: Represent the differences between retail, wholesale, distributor and producers prices.
Non-local or "New" revenues/expenditures: When outside or new revenues flow into a local
economy either from the sale of locally produced goods and services to points outside the
study area, or from expenditures by non-local visitors to the study area, additional economic
repercussions occur through indirect and induced (multiplier) effects.
Other Property Type Income: Income in the form of rents, royalties, interest, dividends, and
corporate profits.
Output: Revenues or sales associated with an industry or economic activity.
Total Impacts: The sum of direct, indirect and induced effects or economic impacts.
Value-added: Includes wages and salaries, interest, rent, profits, and indirect taxes paid by
businesses. Total Value-added across all industries is equivalent to Gross Regional Product.




Full Text

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Economic Impact s of Munroe Regional Medical Center in Marion County, Florida Thomas J. Stevens, Alan W. Hodges, and Mohammad Rahmani University of Florida, Institute of Food and Agricultural Sciences Food and Resource Economics Department P.O. Box 110240, Gainesville, Florida 32611 0240 economicimpact.ifas.ufl.edu May 2 7 2010

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i Economic Impact s of Munroe Regional Medical Center in Marion County, Florida Executive Summary The purpose of this study was to estimate the economic impacts of the Munroe Regional Medical Center (MRMC) i n Marion County, Florida. MRMC is a 421 bed acute care facility located near downtown Ocala, with additional outpatient facilities located nearby F or F.Y. 2009 MRMC reported revenues totaling $261.5 million (M) and employment of 2,479 people. I t is the largest private employer in the County representing about 1.7 percent of the workforce The economic impacts of MRMC were estimated by applying its financial and employment data to a n input output model of the Marion County economy constructed with the IMPLAN economic impact modeling system (MIG) For this analysis local dollars enterin g the Marion County economy including Medicare, Medicaid, BlueCross/BlueShield, and for profit insurance reimbursements When new dollars flow into a region, additional economic activity is generated through spill over or multiplier effects including su pply chain purchases of goods and services from local suppliers (indirect effects), and employee household spending (induced effects) The economic impacts of Mu nroe Regional Medical Center are summarized in Figure ES1 and Table ES1 T otal output or sales revenue impact s of MRMC i n Marion County in 2009 were estimated at $525 million The total value added impact was estimated at $264 million which represented employee salaries and benefits, business owner (proprietor) income and property related income (rents, dividends, interest, royalties, etc.). The total employment impact of MRMC w as 5,007 jobs, including full time and part time positions Althoug h MRMC does not pay most taxes because of its non profit status, it is still responsible for generating over $15 million in Indirect Business Taxes such as sales, excise, and property taxes licenses and fees, as a result of spending by its suppliers and employees T he indirect and induced multipl ier effects of MRMC activit i es we re r esponsible for approximately 50 to 60 percent of its total impacts on the County. The economic impacts of MRMC are compared to the total economic activity of Marion County for 2008 in Table ES 1 Based on these estimated impact s, MRMC was responsible f or 3.32 percent of

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ii total value added or gross regional product of Marion County that year In terms of jobs, MRCM generated 3.46 percent of all employment in the County. Definitions of the terms used to describe these economic impacts are provided in the main text of this report and a glossary in Appendix A. Figure ES1 Economic impacts of Munroe Regional Medical Center in Marion County, Florida 2009 Note: All values in 2009 dollars. Employment impacts include full time, part time and seasonal positions. Table ES1 Economic Impacts of Munroe Regional Medical Center r elative to the overall economy of M arion County, Florida Economic indicator Marion County MRMC MRMC as Percent of County Value added impact (million $) $7,957 1 $264 3.32% Employment impact (jobs) 144,635 2 5,007 3.46% 1. County level Value added data is from Minnesota IMPLAN Group adjusted to 2009 prices. 2 Employment data from the U.S. Department of Commerce, Bureau of Economic Analysis. The latest data available is for 2008. h ttp://www.bea.gov/regional/reis/

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1 Economic Impact s of Munroe Regional Medical Center in Marion County, Florida Introduction The purpose of this study was to estimate the positive economic impacts of the Munroe Regional Medical Center (MRMC) in M arion County, Florida. MRMC is a 421 bed acute care facility located near downtown Ocala, with additional outpatient facilities located nearby. For the 2009 fiscal year, MRMC reported revenues totaling $262 million (M) and employment of 2,479 people (Ta ble 1) According to Enterprise Florida, MRMC is the largest private employer in the County. Over 90 percent of MRMC employees reside in side Marion County. Table 1. Revenues and e mployment for Munroe Regional Medical Center, f iscal y ear 2009 Revenues Government, Insurance & Private/Other $255,735,519 Patient Self Pay $5,769,043 Total Revenues $261,504,562 Employment Total Employees 2,479 Total Employee Compensation $106,227,053 Ratios Revenues per Employee $105,488 Compensation per Employee $42,851 Study Area Description Marion County located in north central Florida ha d a population of 327,172 with 1 44,635 jobs (BEA), and a gross regional product of $7.86 billion (MIG) in 2008. Although it is less densely populated than Florida as whole between 2000 and 2008, Marion County grew significantly faster than the state in percentage terms with respect to population, jobs and personal income (Table 2). In 2008 Marion County represente respectively between 2000 and 2008. This is roughly 10 percentage points higher than comparable growth rates f or the State. During the same period, personal income in Marion County increased by more

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2 Significant ly for the health care sector, the population of Marion Coun ty is relatively older than that of Florida and the U.S., with n early 25 percent of its residents being over 65 years of age in 2008, compare d to 17.4 percent for State, and 1 2.8 percent for the U.S. (U.S. Census Bureau) Table 2. Comparison of p opulation, e mployment and p ersonal i ncome for Marion County and Florida, 2000 and 2008. Metric Marion County Florida Population, 2000 258,916 15,982,378 Population, 2008 327,172 18,537,969 Percent Change 2000 2008 26.4% 16.0% Land area, (square miles) 1,578 53,926 Persons per square mile, 2008 207 344 2000 Employment 113,275 8,933,114 2008 Employment 144,635 10,424,100 Percent Change 2000 2008 27.7% 16.7% 2000 Personal Income ($1,000, in 2008 prices) 7,326,129 559,920,154 2008 Personal Income ($1,000) 10,215,839 668,483,640 Percent Change 39.4% 19.39% Sources: U.S. Census Bureau, Population Estimates, http://www.census.gov/popest/counties/ ; U.S. Department of Commerce, Bureau of Economic Analysis, Regional Economic Accounts, http://www.bea.gov/regional/reis/ Methodology The economic impacts of M unroe R egional M edical C enter were estimated by applying its financial and employment data (Table 1) to an input output model of the Marion County. I nput O utput (I O) analysis is a standar d technique for estimating the economic impacts resulting from a change in a specific economic ac tivity in a regional economy. These economic models r epresent the transactions that occur between industries, governments, employees, and households (Schaffer, 1999 ; Miller and Blair, 2009 ). The parameters in the model are estimated from detailed busine ss and demographic d ata collected by state and f ederal government agencies From these models industry level economic multipliers are calculated, and then used to estimate economic impacts.

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3 When estimating economic impacts, it is important to distinguish between local and non local revenues. Local revenues typically represent simple transfers between individual s or businesses within an economy and do not generate economic spin off or multipli er effects. However, non local rev enues flow ing into an economy generate additional economic activity through the supply chain ( indirect effects) and employee spending ( induced effects ) With respect to MRMC indirect impacts occur when the hospital purc hases goods and services from local suppliers while i nduced impacts occur when hospital and supplier business employees spend their earnings at other local businesses The types of economic impacts typically estimated with I O models include output or g ross revenues, employment (fulltime and part time jobs ), and value added w hich includes labor income, other property type income and indirect business taxes. Each of these m easures represents a different way of assessing the size or contribution of a particular activity or event to a regional economy. De f initions of these types of impacts or effects can be f ound in the glossary at the end of this report (Appendix A ) The Impact Analysis for Planning ( IMPLAN ) system is an input output modeling system comprise d of computational pro cedures and regional economic databases (MIG) These d atabases document economic activity in the U.S. at the county level for 440 different indu stry sectors, as well as spending and transfers, between households, governments, savings and investments, and commodity trade between regions. To more accurately represent the impacts of MRMC on Marion County, industry data for IMPLAN sector 397 (Private Hospitals) was adjusted in accord ance with revenues, employment, and compensation level s and ratios shown in Table 1. In addition, since MRMC is a non profit entity, model parameters for corporate profits, dividends, and various forms of indirect business taxes for this sector were set to zero. Finally, since the IMPLAN model of Marion County used for this analysis was based on 2008 dat operational data was for 2009, industry specific defl ators were used to convert MRMC revenues to 2008 price levels. After i mpacts were calculated, values were re inflated to 2009 dollars

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4 Analysis and Results For purposes of impact analysis, the revenues that MRMC receives from government programs (Medicaid, Medicare) and commercial insurers were treated as entering Marion These revenues totaled $255.7 M or total revenues of $261.5 million in 2009 (Table 1). The remaining $5.8 M in local (self pay) revenues were also applied to the I O model, but only t he direct impacts of these revenues were counted in the total impacts. A summary of the estimated annual economic impacts for MRMC is shown in Table 3 with t ab le rows delineat ing impacts into direct, indirect, induced effects, and to tal impacts, while different impact measures are given in table columns including o utput, value added, la bor income, i ndirect b usiness t axes and e mployment (goods and services) in terms of gross revenues or s ales. The direct impacts are broken out between those generated by local and non local revenues. Approxim ately 98 percent of the direct o utput impa cts are from non local revenues The total O utpu t impacts of MRMC operations for the County in 20 09 is the sum of its direc t, indirect and induced output impacts, and equals $525 M Indirect and induced effects represent approximately half of this total impact, and around one th ird of the total impacts result from induced effects alone. This is pr imarily due to the fact that 40 percent of hospital revenues go toward employee compensation and over 90 percent of MRMC employees live within the County. Indirect output effects are less than 16 percent of total Output impacts because a smaller share of expenditures for hospital supplies and equipment are made within the County.

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5 Table 3. Summary of Economic Impacts of M unroe Regional Medical Center in Marion County, Florida, 2009. Type Effect Output Value added Labor Income Other Property Income Indirect Business Taxes Employment Million Dollars Fulltime & part time jobs Direct local & non local 261.50 106.23 106.23 0 0 2,479 Direct local a 5.77 2.34 2.34 0 0 55 Direct non local b 255.74 103.88 103.88 0 0 2,424 Indirect non local 82.94 50.11 24.05 21.15 4.91 761 Induced non local 180.18 107.81 62.00 35.62 10.19 1,767 Total c 524.62 264.15 192.28 56.77 15.10 5,007 a Local impacts are generated by revenues from self payments by Marion County residents b Non local impacts are generated by reimbursements from Medicare, Medicaid and BlueCross/BlueShield, and commercial (for profit) insurance companies. c Total impacts equal the sum of direct, indirect and induced impacts. Value added equals the sum of lab or income, Other Property Type Income, and Indirect Business Taxes. The total value added imp acts of MRMC in Marion County for 2009 were estimated at $26 4 million (Table 3) Value ad ded impacts include labor income, property related income and indirect business taxes g T he direct v alue added impacts are only comprised of l abor Income ($106 M), because MRMC is a non profit entity and doe s not pay taxes, b ut it is still i ndirectly responsible for generating over $15 million in i ndirect b usiness t axes paid by its suppliers and employees The i ndirect and induced v alue added impacts ( $158 M ) represent ed nearly 60 percent of the total v alue added impacts. Total l abor i ncome impact s w ere estimated at $ 192 million Other p roperty t ype i ncome impacts, including rents, dividend, interest, royalties, etc., w ere estimated at $57 M. Indirect business taxes impacts were estimated at $15 M Total employment impacts were estimated at 5,007 jobs Marion County is presented in Table 4. Naturally, the largest impacts occurred in the Health and Social Services industry group, which contains h ospitals. This group had total impacts of $295 M in output, $126 M in value added, $122 M in l abor i ncome, and 2,850 jobs. However, other p roperty i ncome and i ndirect b usiness tax impacts were actually higher in th e r eal e state /r ental groups, which a lso ca ptured the second largest o utput and v alue a dded impacts ($6 2.7 M and $46.2 M

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6 respectively ) Other industry groups with significant i mpacts were r etail t rade, w holesale t rade, and government T able 4. Economic i mpacts of Munroe Regional Medical Center in Marion County, Florida, 2009 by aggregate i ndustry group. Aggregate Industry Group (NAICS) Output Total Value Added Labor Income Other Property Income Indirect Business Taxes Employment --Million Dollars --Fulltime, part time Jobs Ag riculture Forestry, Fish eries 0.72 0.40 0.16 0.23 0.01 6 Mining 0.08 0.03 0.01 0.02 0.00 0 Utilities 4.33 3.05 0.97 1.62 0.46 10 Construction 11.09 4.28 3.80 0.43 0.05 95 Manufacturing 18.61 3.98 2.63 1.13 0.21 47 Wholesale Trade 11.62 7.32 4.22 1.53 1.57 81 Retail Trade 20.93 14.08 8.88 2.16 3.04 323 Transport. & Warehousing 5.15 2.93 2.08 0.73 0.12 54 Information 9.08 2.91 1.47 1.15 0.29 30 Finance & Insurance 16.49 8.86 4.88 3.61 0.38 93 Real Estate & Rental 62.73 46.15 6.50 32.57 7.07 276 Prof., Scientific & Tech. S e rv ice s 12.11 6.70 5.43 1.13 0.15 111 Management of Companies 2.58 1.25 0.93 0.30 0.02 17 Administrative & Waste S e rv i c e s 10.05 5.99 4.90 0.96 0.13 264 Educational S e rv i c e s 1.21 0.60 0.53 0.06 0.01 26 Health & Social Services 294.72 126.36 122.19 3.94 0.24 2,850 Arts, Entertain. & Recreation 2.99 1.37 0.80 0.39 0.19 36 Accommodation & Food S e rv i c e s 11.94 6.04 4.03 1.36 0.66 216 Other Services 11.30 6.18 4.18 1.49 0.51 208 Government & non NAICs 16.90 15.66 13.69 1.97 0.00 260 Total 524.62 264.15 192.28 56.77 15.10 5,007 Industry groups based on North American Industry Classification System (NAICS). To evaluate the findings of this analysis, it is useful to compare the estimated economic impacts of Munroe Regional Medical Center (MRMC) to the total economic activity of Marion County, and to whole, the estimated impacts of this analysis indicate that MRMC was responsible for added or Gross Regional Product in 2009 data for the County. Based on these numbers, MRMC is responsible for nearly 3.8 percent of the

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7 operations can be credit ed with 3.46 percent of all employment in the County (either directly or indirectly), based on 2008 BEA employment estimates (the latest available). Table 5. Comparison of e conomic i mpacts of Munroe Regional Medical Center to the Marion County e conomy. Economic indicator Marion County MRMC MRMC as % of County Value added (million $) $7,957 1 $264 3.32% Labor Income/Net Earnings (million $) $5,080 2 $192 3.78% Employment (jobs) 144,635 2 5,007 3.46% 1. County level Value added data is from Minnesota IMPLAN Group, adjusted to 2009 prices. 2. Net Earnings data and employment data is from the U.S. Department of Commerce, Bureau of Economic Analysis. The latest data available is for 2008. Net earnings were adjusted to 2009 prices. h ttp://www.bea.gov/regional/reis/ Conclusions In a recent study, Hodges and Rahmani (2009) estimated that the combined o utput impacts of all 6 non federal licensed hospitals in Marion County were $1,008 million in 2007 (adjusted to 2009 dollars) with $549 million in v alue added impacts, $387 million in l abor Income impacts and e mployment impacts of 8,776 jobs. These figures mean that over 50 percent of the economic impacts of all hospitals in Marion County are due to the activities of the MRMC alone. In addition to these quantifiable economic impacts, MRMC is involved in a variety of other programs and services that benefit Marion County and its residents. These include functioning as a venue for many educational, outreach and volunteer services ; p roviding indigent care and absorbing these costs for unpaid services; and, offering a variety of spiritual and emotional support services to patients, staff volunteers and their families Economic impact analysis permits decision makers and their advisors to lo ok beyond the direct impacts ( revenues earnings, jobs and taxes) generated by a business, industry, or event, when considering its importance and relationship to a regional economy Indirect economic impacts show how important the hospital is to other area businesses that serve it. Induced impacts show resident households. Output, v alue added, i ncome and j obs are basic units for measuring economic

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8 a ctivity, and permit one to compare the impact of a particular industry or event to that of the overall economy or other sectors of the economy.

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9 References Enterprise Florida, Marion County Profile. Accessed May, 2010, available at http://www.eflorida.com/profiles/CountyReport.asp?CountyID=66&Display=all Hodges Alan W. and Mohammad Rahmani. Economic Contri butions of Hospitals in Florida Sponsored Project Final Report to the Florida Hospital Association, Orlando, Florida April, 2009 available at http://www.economicimpact.ifas.ufl.e du/publications/Economic Contributions Florida Hospitals.pdf Miller, R. E, and P. D. Blair Input Output Analysis: Foundations and Extensions 2 nd edition Cambridge University Press 2009. Mi nneso ta IMPLAN Group, Inc. (MIG). IMpact Analysis for PLAN n ing ( IMPLAN ) Professional Version 3.0.1.2 Economic Impact Modeling S ystem and Data for Florida Counties Stillwater, MN www.implan.com Munroe Regional Medical Center Personal correspondence and website access ed May, 2010 http://www.munroeregional.com/ Schaffer, William A. Regional Impact Models Web Book of Regional Science West Virginia University Regional Research Institute http://www.rri.wvu.edu/WebBook/Schaffer/index.html Bureau of Economic Analysis (BEA) U.S. Department of Commerce, Regional Economic Information System available at http://www.bea.gov/bea/regional/reis/ Bureau of Census, U.S. Department of Commerce County Population D atasets, available at http://eire.census.gov/popest/estimates_dataset.php

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10 Appendix A : Glossary of Regional Economic Terminology Direct effects/impacts: Direct impacts, represent the revenues, value added, income, or jobs that result directly from an economic activity within a regional economy. Employment or Jobs: Represents the total numb ers of wage and salaried employees as well as self employed jobs. This includes full time, part time and seasonal workers measured in annual average jobs. Indirect Business Taxes : Include sales, excise, and property taxes as well as fees and licenses paid by businesses during normal operations. It does not include taxes on profits or income. Indirect effects/impacts: Indirect effects occur when businesses use revenues originating from outside the region, or study area, to purchase inputs (goods and serv ices) from local suppliers. This secondary, or indirect business, generates additional revenues, income, jobs and taxes for the area economy. Induced effects/impacts: Induced effects or impacts occur when new dollars, originating from outside the study ar ea, are introduced into the local economy. Induced economic impacts occur as the households of business owners and employees spend their earnings from these enterprises to purchase consumer goods and services from other businesses within the region. This induced effect generates additional revenues, income, jobs and taxes for the area economy. Input Output (I O) Analysis: The use of input output models to estimate how revenues or employment for one or more particular industries, businesses or activities in a regional economy impact other businesses and institutions in that region, and the regional as a whole. Input Output (I O) Models: A mathematical representation of economic activity within a defined region using inter industry transaction tables or ma trices where the outputs of various industries are used as inputs by those same industries and other industries as well. Labor Income: All forms of employment compensation, including employee wages and salaries, and proprietor income or profits. Local r evenues/expenditures: Local revenues or spending represent simple transfers between individuals or businesses within a regional economy. These transactions do not generate economic spin off or multiplier (indirect and induced) effects. Margins: Represent the differences between retail, wholesale, distributor and producers prices. Non local revenues/expenditures: When outside or new revenues flow into a local economy either from the sale of locally produced goods and services to points outside th e study area, or from expenditures by non local visitors to the study area, additional economic repercussions occur through indirect and induced (multiplier) effects. Other Property Type Income: Income in the form of rents, royalties, interest, dividends, and corporate profits. Output: Revenues or sales associated with an industry or economic activity. Total Impacts: The sum of direct, indirect and induced effects or economic impacts. Value added: Includes wages and salaries, interest, rent, profits, and indirect taxes paid by businesses. Total Value added across all industries is equivalent to Gross Regional Product.