Tutorial for economic impacts 2003(revised)

A Tutorial for Understanding Your Hospital’s Economic and Community Impact ReportHealthcare Association of New York StateApril 2003Overview of Your Facility-Specific Economic Impact Report Your facility-specific report contains three sections: • Economic Impact• Community Benefit Impact• Technical Addendum1Economic Multiplier Defined• Hospital has a direct impact on its economic region through its expenditures.• The regional economic multiplier accounts for the resulting ripple of economic activity throughout the area created by the original hospital expenditure.Economic Multiplier IllustratedHospital spends $50,000 on salariesEmployees receive $50,000 in compensationEmployees spend Employees spend Employees spend $30,000 on housing $15,000 on food $5,000 on clothingConstruction Banks Grocers Farmers Retailers Tailors receives & receive receive & receive receive receive spends & spend spend & spend & spend & spend $25,000 $5,000 $12,000 $3,000 $4,000 $1,0002Economic Multiplier EffectHospital Salary Expenditure: $ 50,000Employees’ Spending – Housing: $ 30,000 Food: $ 15,000 Clothing: $ 5,000Total Spending in Community: $100,000(Regional Economic Multiplier is 2.00 in this case)Bureau of Economic Analysis Regional Economic Multipliers•Part of the U.S. Department of Commerce, BEA offers multipliers based on an input-output economic model•BEA’s multipliers used by both private and public sectors to determine financial impacts. ...