Economic Impact of Lourdes Hospital on McCracken County

Economic Impact of Lourdes Hospital
on McCracken County
Overview of the Economic Impact
of Lourdes Hospital
on McCracken County
Lourdes Hospital (Lourdes), a regional network of Catholic
Health Partners operates a hospital, a physicians group and
several other healthcare-related facilities in McCracken
County.1 This report summarizes annual economic impacts
generated as a result of Lourdes’ operations during 2011.
The operations of Lourdes’ healthcare facilities create
increased economic activity in the region. This occurs
directly, through Lourdes’ payment of employees and
spending on goods and services, and indirectly through
the consequent spending of these employees and vendors.
In 2011, Lourdes’ facilities together spent $187 million, which produced:
A total annual economic impact of $285 million, including
$108 million in household earnings.
These expenditures by Lourdes’ network of facilities generated:
1,483 jobs across the Lourdes network, making it one of the largest employers in the region, and
A total employment impact of 1,980 jobs.
Between 2005 and 2011, the number of persons employed by Lourdes increased by 42 percent,
and its total impact on the region’s employment increased by 29 percent.
Other benefits that Lourdes produced for the region in 2011 include:
$ 12.0 million in income, sales, and other taxes for local governments and the State of Kentucky, and
$ 15.9 million in uncompensated care for the poor and other wellness benefits for the region.
Between 2005 and 2011, state and local taxes generated as a result of Lourdes increased by 170 percent.
During the same period, Lourdes increased the amount of uncompensated care and other wellness
benefits it contributed to the community by 48 percent.
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1
All of Lourdes’ regional operations are located in McCracken County.
For this report, McCracken County is Lourdes’ service area.
Lourdes Hospital Economic Impact on McCracken County
1
$218
6
Hospital Facility
Other Facilities
$67
Million
TOTAL IMPACT
Million
$285 Million
Direct Jobs by Occupation
Nursing
449
Other Healthcare Practice
318
Healthcare Support
295
Non-Clinical Support
325
All Other Staff
96
Indirect Jobs by Sector
Retail Trade
Administrative Services
Food & Beverage
Employer Rank
Other
TOTAL IMPACT
DIRECT IMPACT
Direct Employment
Employment
1,483
1,980 Jobs
Direct Earnings
Earnings
$80.5
Million
$108 Million
17.8%
15.9%
12.7%
53.6%
Lourdes Operations
Size of Lourdes’ Operations
Through its integrated system of healthcare facilities and services, from physicians to clinics to laboratories,
Lourdes offers a comprehensive response to its community’s healthcare needs. The table below details the
size and types of expenditures.
Lourdes Healthcare Facilities
Size of Lourdes Operations
Expenditures
Hospitals
Hospital Operations
$143,747,300
Lourdes Hospital
Other Operations
$43,354,900
Lourdes Physician Services
Lourdes Homecare
Lourdes Hospice
Lourdes Ambulatory Surgery Center
Lourdes Medical Pavilion
Lourdes Foundation
Employment and Earnings
Lourdes employs 1,483 people in seven organizations making it one of the largest employers in the region.
Of this total, Lourdes added 439 jobs between 2005 and 2011, a 42 percent increase during the six-year period.
Based on employment figures for each of its facilities and the particular
workforce characteristics within their respective industries, 30 percent
of Lourdes employees are nurses and 70 percent of its employees are
in some type of health care occupation. Of these, about 48 are physicians
and surgeons.
Lourdes Employment, by Occupation
Nurses
Other Healthcare Practitioners
Healthcare Support & Social Services
Office & Administrative Support
449
318
295
239
Food Services, Cleaning & Maintenance
Other Office Management & Financial
All Other Occupations
86
68
28
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2
(For chart opposite page) The other 14 industry sectors are: agriculture, forestry, fishing and hunting; mining; construction; utilities;
manufacturing; wholesale trade; transportation & warehousing; information; finance and insurance; management of companies and
enterprises; educational services; healthcare and social services; arts, entertainment, and recreation; accommodation.
Economic Impact
Impact on Earnings and Employment
Lourdes paid its employees $80.5 million in 2011. Its operating expenditures, including both these
payments to employees and other spending on goods and services, require other businesses to employ
workers, which generates an indirect earnings impact of $27.3 million. The result is a total household
earnings impact of $108 million.
In addition to 1,483 jobs for its own employees, Lourdes’ operating expenditures created another
497 indirect jobs and a total employment impact of 1,980 jobs annually.
Earnings and Employment Impacts from Operating Expenditures
Direct Effect
Indirect Effect Total Impact
Earnings Impact
$80,511,100 $27,346,700 $107,857,800
Employment Impact
1,483
Retail trade, food & beverage services, and
administrative services are the three industries
that benefit most from Lourdes’ operating
expenditures. Spending by employee
households benefits employment in retail
trade and food & beverage services, while
Lourdes and its vendors are the primary
purchasers of administrative services.
497
1,980
Indirect Jobs Impact, by Industry Sector
Retail trade
17.8%
Administrative services
15.9%
Food & beverage services 12.7%
Household and miscellaneous services
10.9%
Real estate & rental/leasing
8.5%
Professional, scientific & technical services
7.0%
Other industry sectors 27.2%
2
Operations Impact
Operating expenditures by Lourdes include employee payroll and benefits, non-employee personnel
expenses, and spending on all supplies and services purchased from outside vendors.
Together all facilities spent a total of $187 million on operating expenditures in 2011.
This expenditure generates an indirect impact of $98 million in additional economic activity in the region.
together, a total annual economic impact of $285 million is generated by operating expenditures
Put
of all Lourdes healthcare and related facilities, of which its hospital accounts for more than 75 percent
of this total.
Economic Impact of Lourdes Operations
Direct Effect
Indirect Effect Total Impact
Hospital
$143,747,300 $74,044,300 $217,791,600
Physicians $22,403,100 $12,272,400 $34,675,500
Other Healthcare $19,763,700 $11,027,200 $30,790,900
Other Services
$1,188,000 $615,600 $1,803,600
TOTAL
$187,102,100 $97,959,500 $285,061,600
Other Benefits
Fiscal Impacts: Local and State Taxes
Lourdes is a major generator of income and sales taxes for local governments and the State of Kentucky.
In 2011, Lourdes’ direct fiscal impact was $6.84 million.
Lourdes’ Direct Fiscal Impact
Local Income Tax Withholding
State Income Tax Withholding
$2,415,300
$4,428,100
TOTAL TAXES
$6,843,400
Lourdes’ spending on operations, and the additional economic activity this spending generates, combine
to produce nearly $3.24 million in local tax revenue and $8.78 million in State tax revenue. Thus, Lourdes’
total annual fiscal impact exceeds $12.0 million.
Lourdes’ Total 2011 Fiscal Impact
Local
Kentucky
TOTAL
$0
$2,844,100
$2,844,100
Sales Tax
Income Tax
$3,235,700
$5,932,200
$9,167,900
TOTAL FISCAL IMPACT
$3,235,700
$8,776,300
$12,012,000
Local impact nearly tripled from $1.11 million in 2005, while state fiscal impact increased by 163 percent
$2.34 million. Since 2005, when its fiscal impact totaled $4.45 million, Lourdes has increased its total impact
on state and local tax revenue by 170 percent.
Community Benefits
In 2011, Lourdes spent a total of $15.9 million in the region, or more than $300,000 a week, on
uncompensated care for the poor and other wellness benefits for the community. This amount is equal
to 8.5 percent of Lourdes’ total operating expenditures.
Another way to view this community benefit is to calculate the net savings it produces for local taxpayers.
Non-profit hospitals have to satisfy a community benefit standard to maintain their tax exempt status.
If it were a for-profit corporation, Lourdes estimates that its property tax obligation would total $5.55 million
in 2011. At the same time, it provided $15.9 million in community benefits by providing financial assistance
and services for those in need. In other words, Lourdes provided $286 in community benefits for every
$100 it estimates it would have paid in property taxes — producing a net savings for the local community.
The impact of such spending directly benefits the unemployed, low-income, and uninsured persons of the
community. While such community impacts vary, spending such as this enhances the general health and
well-being of the communities served by Lourdes — or those without the ability to pay.
While 81 percent of this community benefit spending is for
uncompensated care, Lourdes spends more than $250,000 a
month to support wellness programs and other efforts to help
improve the health of people in the communities Lourdes
serves. By comparison, Lourdes spends approximately
18 times as much on its community benefit activities
(including uncompensated care) as the budget of the
McCracken County portion of the budget of the Purchase
District Health Department.3
Since 2005, when it spent $10.7 million on these various activities,
Lourdes has increased its total community benefit spending by 48 percent.
Diversity Spending
I n recent years, Lourdes has made a concerted
effort to change its purchasing practices to
increase the proportion of its purchases that
are made from vendors who are women
or minority-owned business enterprises
(W/MBEs). Purchases from W/MBE vendors
increased by about 260 percent in 2011
compared to the average for the preceding two
years, increasing from an average of $416,500
for 2009 and 2010 to $1,493,300 in 2011.
Lourdes Network
Lourdes Hospital
Lourdes Physician Services
Lourdes Homecare
Lourdes Hospice
Lourdes Ambulatory Surgery Center
Lourdes Medical Pavilion
Lourdes Foundation
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3
Based on data obtained from the Purchase District Health Department.
Methodology
The economic impact of any spending includes two elements, as defined here: the direct impact and,
the indirect and induced impact.
he direct impact comprises purchases of
T
local resources (labor, goods, and services)
for construction, capital improvements,
and operations.
he indirect impact is the purchases of
T
local resources made by local businesses
in order to produce the goods and services
purchased by the healthcare facilities,
along with consequent purchases by
other businesses that supply the first group
of businesses. It also includes the local
household spending of the earnings
generated from the healthcare facilities’
capital and operating expenditures.
Lourdes provided the Economics Center with
data related to its healthcare facilities’ annual
capital and operating expenditures.
Measuring the indirect impacts in the region
is made possible by multipliers derived from an
input-output table (“I-O table”). The Bureau
of Economic Analysis of the U.S. Department
of Commerce has constructed these tables for
various regions in the U.S. through the second
generation of its Regional Input-Output
Modeling System (RIMS II). The RIMS II tables provide multipliers to measure the
indirect impacts of virtually any type of economic activity in the region.
1530 Lone Oak Road
Paducah, Kentucky 42003
www.elourdes.com