The Economic Impact of Hospital Deserts

One of the hardest things for me to wrap my head around is the enormity of the economic impact the loss of a hospital has on a small community.

In a state of over 6 million people, the loss of 21,000 jobs may not seem like much. It wouldn’t have a dramatic effect on the statewide unemployment rate. With over 3 million people in the workforce, the change to the state’s unemployment rate would be about .7%. That’s a lot, but absorbed over the totality of the state’s economy, its not overwhelming.

When I think about 21,000 people, I have to default to my childhood home of Osceola, AR.

Nestled against the Mississippi River, in the middle of Mississippi Co., this town’s population represents about 1/3 of the people that stand to lose their jobs in the wake of Haslam’s Medicaid Expansion decision.

I lived in Osceola in the 70’s and 80’s. While I was there, I watched as people moved away due to plant closings and layoffs. I don’t remember all the specifics, but I do remember hearing my friends say they had to move because their parent lost a job.

Looking back on it, a lot of jobs were lost due to the economic times…which made it hurt even more.

The folks that left were skilled people, most with college degrees, who managed operations. Many of them didn’t have deep ties to the community. They moved there for the job. While picking up and moving wasn’t easy, it was easier than staying in a place where there was no opportunity to practice the trade you trained in.

It was a slow bleed. Locals saw what was happening, even if they couldn’t predict the long-term economic impact these losses would have on the community.

Maybe it was seeing the writing on the wall, searching for new opportunities, or a combination of the two that led my parents to move the family in the mid-80’s. But leave we did, eventually landing in North Little Rock, AR.

Osceola has lost about 15% of its population since then. Its fortunate to be close to Memphis, I-55, and the Mississippi River. The combination of those three things is probably the only thing that’s kept it from losing more people.

Almost 30 years later I understand why we left. But I also know, as the population slowly dwindles, it makes it that much harder for the people who are left behind.

Tennessee’s 30

Rural communities have been losing population in Tennessee for the majority of the last 20+ years. The manufacturing boom of the post-WWII economy, and the construction of highways to move goods easily, gave way to layoff’s and closures.

Of the 30 counties that stand to lose their hospitals, 18 have workforces of 15,000 or less. Only two approach 50,000 workers, a measure that you might characterize as an urban/rural mix.

Looking at Census data, these counties have been mostly declining in population for some time as well. Some more than others. I’m sure they’ve had their fair share of layoffs and factory closures. Most don’t have much of a manufacturing base to speak of.

It’s hard to figure the real economic impact of a hospital closure on a community. Most of these counties don’t have detailed financial information readily available, which is one problem. The other is that there’s no way to know what mix of workers will lose their jobs out of those 21,000.

The best you can do is look at per capita income (Average of all earners in a county) and what the Healthcare industry publishes about wages in healthcare, then make an educated guess.

The Data

The chart below tells three related stories:

1. How much the unemployment rate would increase in each of these counties if all these people immediately lost their jobs. This is derived from unemployment and Census data that is readily available and easy to find.

2. The approximate amount of income that would be lost in each county if all of these people lost their jobs for a calendar year. This is based on market data for hospital jobs and national averages of staffing practices, then adjusted for cost of living and per capita wages in each county.

3. The last column looks at total per capita income for the county, and using the data from column 2, shows the percentage of annual income each county would lose.

Here are the key takeaways for folks struggling to come to grips with these numbers.

1. For these 30 counties, unemployment would increase by an average of 2%

2. Around $400 million dollars would be lost from income only in these 30 counties as well as the state, accounting for nearly 4% of all income in the area.

I would be willing to wager that the numbers reflected above are conservative. I can also say with a high degree of certainty that the wages lost in each of these counties only represent a fraction of the economic impact.

Economic losses ripple through a community. As more money leaves, either through job losses or relocations, local merchants and businesses feel the effects of decreased spending. This in turn forces them to make cuts to hours, which only exacerbates the problem, creating a downward spiral, that only stops when something intervenes.

It doesn’t have to be fast. It can take decades.

Another challenge is figuring out how this would happen. Some of the smaller facilities might just close in a poof. The larger ones will likely linger, slowly shedding staff until its economically unfeasible to remain in business. Some may be able to find a way power through and stay open.

Thats something I sincerely hope happens.

Hospitals are a community cornerstone. The loss of another cornerstone for some of these communities could be a tipping point. That makes me sad.

A Slap in the Face

While I don’t choose to live in a rural area, I have a lot of love for the work ethic and the pride folks in rural America take in their communities. The idea of the rural way of life taking another hit due to a purely political decision makes me angry.

That anger has only gotten stronger in the past few days. As details of the pie in the sky negotiating tactics employed by Gov. Haslam have come to light, it reinforced an idea that I’ve had for some time: that Gov. Haslam, by virtue of many things in his life, is so far removed from the experiences of regular Tennesseans that he could no more relate to their circumstances than fly to the moon.

Speaker Ramsey, who I think must have played with mercury from broken thermometers as a child, just casts aside concerns, with little more than a “tough s**t” for these towns.

This makes me hurt for the folks who have poured their lives in their communities and will likely suffer under the weight of brinksmanship.

That may sound corny, but rural America is where I came from. You’ll excuse me if I feel a little nostalgic.

I won’t pretend to have all the answers, but I know that for rural communities to survive and thrive, they can’t be treated as an after-thought, or worse, without any thought to the outcomes.

Folks in rural America have strong wills and long memories as anyone whose talked to folks at a local diner or a local watering hole knows.

They know when they’ve been cast aside and forgotten.

They don’t take that slight lightly.

They’ll ever stop fighting for their communities, or forget this.