With 490 employees and a fiscal year 2014 payroll of $20.9 million, Pratt Regional Medical Center is the largest employer in the county. The economic impact of the hospital and the entire health sector is much greater, however, according to a study by Office of Local Government, K-State Research and Extension, funded by the Kansas Hospital Association.
The report identified three general areas of health care’s importance to the state’s economy: 1) health care attracts and retains business and industry; 2) health care attracts and retains retirees; and 3) health care creates jobs in the local economy.
For this study, the health sector included health and personal care stores, veterinary services, home health care services, doctors and dentists, other ambulatory health care, hospitals, nursing and residential care facilities and fitness centers. Total impact was calculated, using mutipliers or ripple effects that are based on the structure of the local economy.
Kansas hospitals generate approximately $5.3 billion in direct labor to the Kansas economy each year, with an estimated total impact of $8.1 billion. Hospitals generate more than $2.6 billion in retail sales and nearly $157 million in sales tax for the state, which is largely used to fund state programs.
The Kansas Hospital Association projects an even greater impact on the state’s economy if the Kansas Legislature acts to expand the KanCare (Medicaid) program.
“When the Affordable Care Act was implemented in 2010, part of the rationale for reducing Medicare reimbursement to hospitals was the belief all states would expand Medicaid,” said Susan Page, president and CEO of Pratt Regional Medical Center. “The result would be no more uninsured patients and hospitals would realize payment.”
For the first time in three years, it appears that legislators are considering that action, Page said.
Not expanding Medicaid — with costs for the first three years paid by the federal government — means that money is going to other states because our state didn’t take advantage, she explained.
Study authors note that insufficient Medicare and Medicaid payments to hospitals and providers may force a reduction in the provision of health care services.
Authors also note that Kansas rural health networks are already fairly strong, but creation of provider networks may substantially change the delivery of, and access to, local health care services.
Ties to urban health care providers can be positive, with added convenience for residents and keeping health care dollars at home, or negative, if rural providers lose decision-making ability. In some cases, urban or other outside interests have purchased rural clinics and hospitals and closed them when they did not provide sufficient profit.
Rural communities need to overcome inertia and take stock of local health care, study authors state:
“Many rural people have little idea of the overall importance of the health care sector to their community’s economy, such as the number of jobs it currently provides and its potential to provide more jobs. To ensure that health care services remain available locally, rural communities need to understand these economic relationships.”
Rural providers should be challenged to organize, either through formal or informal mechanisms, to compete with urban systems. Success in meeting the challenges of providing quality care at low costs can be measured in terms of increased local services, more spending on locally-available health care, local control of health resources, negotiation of good reimbursement rates for providers, and high levels of community satisfaction with local health care.
A regional medical center in any town of less than 10,000 people is unusual in Kansas, Page said.
“If you look at communities our size, most don’t come close to having the kind of facility we have and the complement of services we have,” Page said.
Maintaining the benefits of affordable and accessible health care is the responsibility of the community, not just health care administrators, who should be involved in strategic planning to answer three questions: 1) Where is the community now? 2) Where does the community want to go? And 3) How will the community get there?
The complete report is at at www.kha-net.org