| An applied economist would measure the economic | | | | more ripples. Households in the vicinity of the hospital |
| impacts of a particular hospital or center of healthcare | | | | enjoy higher incomes than they would but for the |
| delivery by utilizing a series of multipliers that estimates | | | | hospital´s operations. Some of this augmented |
| the effects of hospital operations on a local or regional | | | | income is associated with the hospital employees |
| economy. Metaphorically, the economist strives to | | | | themselves, but another group of households enjoys |
| measure the cumulative impacts generated by the | | | | higher income because of the fact that the entity with |
| equivalent of an object falling into the center of a lake, | | | | which they work generates greater revenue through |
| with the initial splash representing the direct impacts | | | | hospital operations. |
| and the concentric ripples that invariably follow | | | | A significant share of these incomes is spent among |
| representing a combination of indirect and induced | | | | area businesses, including restaurants, movie theaters, |
| impacts. | | | | dry cleaners, utilities and telecom providers, department |
| The case of an individual hospital or medical center is | | | | stores, barber shops, boutiques, health clubs, |
| instructive. Many hospitals employ hundreds of | | | | contractors, landscapers, and automobile dealerships. |
| employees, some thousands. In many communities the | | | | The economic activity supported by the household |
| local medical center represents the single largest | | | | income traceable to the hospital/medical center´s |
| nongovernmental employer. The jobs at the medical | | | | operations is termed the induced effects. As with |
| center are classified as direct employment. | | | | direct and indirect effects, induced effects can be |
| The hospital also purchases goods and services from | | | | measured in terms of jobs, income, and business sales. |
| businesses, many of them local. These goods and | | | | But there may be additional economic impacts beyond |
| services range from delivery services and office | | | | those described. For instance, many hospitals across |
| products to liability insurance and construction services. | | | | the U.S. are undergoing significant facility upgrades. This |
| These business-to-business transactions are termed | | | | investment creates a separate set of |
| indirect effects, and at least theoretically they could be | | | | construction-related impacts that are above and |
| larger in magnitude than the direct impacts. Businesses | | | | beyond those associated with operations. |
| conducting transactions with a medical facility will, in | | | | Moreover, hospital operations and physical upgrades |
| turn, have more income with which to purchase goods | | | | generate directly and/or indirectly tax revenues for |
| and services from other businesses, and these | | | | local taxing facilities, including through personal income |
| businesses, in turn, will have more income to spend and | | | | taxes, retail taxes, residential transaction taxes, |
| so on. The totality of this succession of business sales | | | | amusement taxes, and property taxes. This revenue |
| constitutes the indirect economic impact of the hospital. | | | | provides government with a greater capacity to |
| To the extent that employment is supported at entities | | | | deliver services, which in turn created a series of |
| that can trace a portion of their revenue base to the | | | | economic impacts on a local or regional economy by |
| operations of a particular medical institution, that | | | | triggering additional hiring and procurement activity. |
| employment is classified as indirect employment. | | | | It is good to have a hospital around. |
| The economic impact does not end there; there are | | | | |