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Community Vitality and Rural Healthcare

In rural communities, the linkage between healthcare and the vitality of the community is strong. A robust community helps to support and sustain quality health services for its residents by attracting quality healthcare professionals. Communities with more economic resources may also be more likely to financially support their healthcare system through having higher rates of health insurance coverage, through philanthropic giving, and by investing in infrastructure which the healthcare system can leverage. In return, a high-quality healthcare system can support economic and community development initiatives. This topic guide focuses on how community and economic development can complement health services in rural areas and how collaboration between the sectors can address issues such as population health.

Frequently Asked Questions

What is the economic impact of healthcare services, facilities, and providers on a rural community?

Providing quality healthcare services in a rural community does more than provide the needed healthcare. It also has a positive impact on the fiscal health of a community. According to an American Medical Association web resource Physicians Boost the Economy, based on 2014 data from IMS Health, a physician in a community means real revenue and real jobs. In fact, a report from the National Center for Rural Health Works estimates that a rural primary care physician can generate more than $1.3 million in wages, salaries, and benefits and 24.2 jobs in a local community with a hospital.

Rural hospitals are often one of the largest employers in their community. They offer some of the best paying jobs available in rural areas, bringing professionals in to live and spend money in the community. For more on the economic impact of a Critical Access Hospital on a community, see The Economic Impact of a Critical Access Hospital on a Rural Community.

Some specific examples of how local healthcare services can impact the economy include:

  • When a local hospital offers a key service such as a dialysis facility, people stay in the community for care, instead of driving to the urban centers and spending their money there.
  • Rural health insurance premiums and taxes only come back to the community and create jobs if there are local healthcare providers (and people use them) to attract those dollars.
  • For every job in a Critical Access Hospital, another 0.38 job is created in other businesses and industries in the local economy. For every $1 paid by a Critical Access Hospital for hospital construction, another $0.24 is created in other businesses and industries within the local economy.

Why should local healthcare leadership be involved in community and economic development efforts and what role can they play?

The rural economy is very dependent on where its healthcare dollars are spent. Rural healthcare leaders can, and usually do, play a role in community and economic development efforts by getting involved in local organizations, schools, chamber of commerce, and events.

Healthcare leaders know the economic impact of the healthcare facilities and can bring that knowledge to local decision-making tables. They can inform other community leaders and the community at large about the jobs and dollars brought into the community through healthcare services.

Healthcare leaders’ participation in activities such as county/regional boards and leadership institutes is another way to keep local healthcare awareness at a diverse table of current and developing leaders.

How can the availability of healthcare services be leveraged in economic and community development efforts?

Healthcare services are important to community and economic development not only in terms of the employment and labor income generated in the local economy, but also to attract and retain business and industry. Quality of life issues that include healthcare access and a robust healthcare organization are important factors for a business seeking to relocate their facilities.

In addition, retirees are more likely to move to or stay in rural communities with quality healthcare facilities, and data have shown retirees can substantially impact the local economy. For example, the report Evaluating Retiree-Based Economic Development in Georgia: Golden Rules, produced by the Selig Center for Economic Growth and funded by the OneGeorgia Rural Policy Center, shows that bringing retirees into the community grows and diversifies the local economy, with 55 jobs generated for every 100 new retirees in rural Georgia.

Therefore, healthcare leadership should be involved with community and economic development to assure that the healthcare services needed for attracting and retaining businesses, industries, and retirees are provided locally.

How can our rural community illustrate the importance of healthcare to our local economy?

An economic impact study of the healthcare in a rural community will illustrate the importance of healthcare to the local economy. An economic impact study can be prepared for the entire health sector, a component of the health sector, or a specific healthcare organization. The National Center for Rural Health Works is an organization that works to expand public awareness of the importance of the economic impact of the healthcare sector and healthcare’s critical role in rural development. Their approach takes into account both the direct spending by the healthcare sector - wages, purchases, and so on - and a "multiplier" that identifies additional impacts.

What is the multiplier effect?
To illustrate the multiplier effect, consider this example of a rural hospital with 100 employees. The 100 employees directly employed by the rural hospital are the direct impact of the rural hospital. The hospital and the hospital employees then spend money in the local economy, and due to their spending, additional jobs are generated in other community businesses and industries. These additional jobs generated in the local economy are the secondary employment impact of the rural hospital.

A hospital employment multiplier of 1.5 indicates that for every one job in the hospital, another 0.5 job is generated in other businesses and industries in the local economy. A hospital with 100 direct employees would create 50 secondary jobs throughout the community, for total hospital employment impact of 150 jobs.

The National Center for Rural Health Works methodology utilizes IMPLAN data and software to derive multipliers for the following health sector components:

  • Hospitals
  • All clinics (physicians, dentists, etc.)
  • Nursing homes and assisted living facilities
  • Pharmacies
  • Home health
  • Other health services (independent laboratories, private physical therapy providers, mental health providers, emergency medical services, etc.)
  • Public health

Where can our rural community find the resources to determine the economic impact of our healthcare sector or a component of the healthcare sector?

If local leaders or healthcare organizations need assistance to measure the economic impact of a health sector component, the first contact should be with your State Office of Rural Health. In many states, the State Office of Rural Health, the state agricultural extension service, state AHECs (Area Health Education Centers), or the state hospital association have trained staff available to conduct health economic impact studies at no cost or a nominal cost. There also may be partnerships established among these state organizations.

Each year the National Center for Rural Health Works develops two new applications of the impact model that can be applied at the state, regional, county, or ZIP code level. See the Economic Impact – Tools and Templates section of their website for additional information.

For distinct health-related projects, such as those funded by grants, RHIhub’s Economic Impact Analysis Tool shows how your project’s spending on staff, supplies, equipment and other expenses benefits your community. It was originally developed by the Lewin Group for the Federal Office of Rural Health Policy’s community-based grantees. This tool uses formulas to estimate the economic impact of grant program investments; however, it can also be applicable to other non-grant funded projects. The calculations produced help rural program grantees and other rural programs assess performance, and advocate for resources that contribute to program sustainability and improved healthcare for rural populations.

Where can our community or healthcare providers find examples of economic impact studies?

The National Center for Rural Health Works' Economic Impact – Tools and Templates offers templates for communities, healthcare organizations, and others to illustrate the economic impact of the various components of the health sector. This tool also provides the results of several economic impact studies focused on specific rural regions and topics. Several general rural impact studies are available including:

When appropriate, these general impacts can be used to estimate the impact of new or revised policy considerations and can be applied at the local, regional, state, or national level. The general impact studies of a “typical” provider or organization do not replace the need for an economic impact study for a specific rural community’s health sector. When reviewing local healthcare, a local health economic impact study should be conducted, using multipliers specific to the healthcare component(s) or organization(s) and to the medical service area.

How can rural healthcare leaders demonstrate the value of their facilities to their community to gain support for initiatives to improve healthcare services and infrastructure?

An economic impact study will demonstrate, with local data, the significance of the healthcare system to the community. This can help community members fully understand the importance of the entire health sector, any component of the health sector, or a specific health organization.

An economic impact study can engage the community to be involved in local healthcare issues. Outcomes of a community economic impact study may include engaging the community to:

  • Assist in finding solutions to healthcare challenges
  • Participate in a community health needs assessment process
  • Increase local support and utilization of a particular health service or all health services
  • Increase access to local healthcare services through the expansion of their rural healthcare system and the development of new healthcare programs
  • Gain local support for a capital improvement campaign to construct new facilities, expand current facilities, or purchase new equipment to provide the latest medical technology
  • Assist in obtaining capital funding from investment and banking institutions
  • Consider healthcare as an economic development tool to encourage new business and industry, and to attract retirees to the community
  • Ensure the ongoing existence of local health services

Where can our community find training on economic impact and other tools to enhance our local healthcare services, and ultimately, enhance our local community?

The National Center for Rural Health Works provides training through two regional workshops each year with follow-up technical assistance. Workshops include the tools, templates, guidebooks, and methodologies for three areas of emphasis: economic impact, community health needs assessment, and needs analysis or profitability studies of a specific healthcare service.

Organizations that provide rural community development resources and training include:

How does the vitality of a rural community affect health workforce recruitment and retention of staff?

Every community has both factors that are assets and those that are challenges related to recruiting and retaining medical staff. Recruitment of medical staff occurs in the context of the other communities in that niche or geographic location. Each community’s own unique combination of factors contributes to the success or failure of recruiting and retaining a healthcare workforce to meet the needs of their population and patients.

The Community Apgar Program, developed through a collaboration of Boise State University and the Family Medicine Residency of Idaho, has analyzed the relative importance of key factors for recruitment, along with the common advantages and challenges that rural communities face in this process. The factors used by this program fall into the categories of geographic, economic, scope of practice, medical support, and facility and community support. Specific factors include schools, climate, loan repayment, emergency care, mental health, nursing workforce, specialty care, electronic medical records, and other elements which characterize the community’s capability to recruit and retain physicians.

Rural healthcare facilities and community leaders can work together to overcome challenges to recruiting and retaining medical staff. They can analyze the community’s particular advantages and challenges and then collaborate to leverage positive traits and address problem areas. An improved understanding of the factors that make a community unique can help a community to decide where to focus recruitment strategies and investments, as well as how to structure the interview process and retention plans.

RHIhub's topic guide Recruitment and Retention for Rural Health Facilities provides information and resources regarding strategies and incentives to help rural communities attract and retain healthcare providers.

What opportunities are available for rural communities to invest in their infrastructure to support their healthcare system?

Several federal agencies sponsor programs to strengthen the infrastructure in rural communities. Projects funded by these agencies may strengthen and support local healthcare, such as road improvements to facilitate access to healthcare.

Why is it important to consider the capacity of the local healthcare system to anticipate economic growth?

When economic growth occurs, the capacity of the local healthcare system may need to increase to cover the new families and businesses. This, in turn, would generate additional economic growth in the healthcare sector. If the healthcare system cannot keep pace with the health needs of the growing community, the lack of adequate capacity could then affect access and quality for everyone, including both long-time community members and new residents. Families and businesses may seek healthcare outside the local area or not at all, decreasing the economic impact of these new businesses and families.

It is important that economic development officials and businesses in a community share information with their local healthcare system related to expected major economic growth. This will allow the healthcare facilities to plan for growth they may see in demand for services, as well as factors that may affect their expenses, like increased competition for workers. When healthcare facilities are not prepared for major economic growth in the community, it places significant strains on facilities as they try to catch up to the changing needs of the community.

For an extreme example of how rapid expansion can tax a healthcare system, consider The New York Times article, An Oil Boom Takes a Toll on Health Care, which describes the changes seen in recent years in western North Dakota.

Where can I find funding opportunities to develop healthcare capacity in my rural area?

USDA Rural Development offers a variety of grants, grant/loan combinations and loans to public bodies, private non-profit corporations, and Indian tribes to help finance or assist in community development. For the best program that would fit your community needs contact your local USDA-RD Service Center.

Additional funding programs can be found in RHIhub’s Funding & Opportunities section where you can browse by topic.

Who can I contact regarding additional information and resources focused on community vitality and its effect on the healthcare system?

For tools, training, and technical assistance to measure the economic impact of rural healthcare:
National Center for Rural Health Works

For technical assistance and funding to support self-sustaining, long-term rural development contact USDA Rural Development.
Either your local USDA-RD Service Center or your state USDA-RD office.

Last Reviewed: 8/10/2015