Rural remedies: sometimes overlooked is the boost a small town's health care workers can give the local economy.

Grays Harbor County lies on the Olympic Peninsula in Washington about 75 miles from Seattle. This rural county--there are about 35 people per square mile--offers rolling tree-covered hills and beautiful ocean beaches giving way to rugged mountains in the north. In the middle of the county, on the top of a hill overlooking Grays Harbor Bay, sits the Grays Harbor Community Hospital. County residents look to the hospital not only for good health care, but also for jobs and a boost to the local economy.

"The hospital employs about 600 people, which makes it our third largest employer" says Michael Tracy, executive director of the Grays Harbor Economic Development Council. But the relationship doesn't end there. "It is absolutely imperative to have good health care providers to be successful at economic development," says Tracy.

House Majority Leader Lynn Kessler who represents Grays Harbor, agrees that "poor or no access to health care services can shut down a county's economic development plan" before it even gets off the ground.

The link between rural health care services and economic development is clear. Studies show that good local health care services improve a community's ability to attract new businesses and new residents as well as create local jobs. It also helps cash flow in the local economy to have well-paid health care providers like physicians, nurses and pharmacists purchasing goods and services.

"There are three major roles for health care in rural economic development: as a contributor to the local economy; as an industry attracting dollars; and as a factor to recruit businesses, workers and retirees to the community," says Eric Scorsone, assistant professor, Department of Agricultural Economics, University of Kentucky.

THE LABOR LINK

Providing health care services is labor intensive. So it is no surprise that the health care sector--hospitals, nursing homes, physicians' offices and the like--employ a good number of rural Americans.

"Hospitals are often the second or third largest employer in rural areas," says Brad Gibbens, associate director at the University of North Dakota's Center for Rural Health. One physician can generate more than five jobs and more than $232,000 in additional income each year, he says. Gibbens notes that there is a multiplier effect--each health dollar rolls over in the rural community approximately 1.5 times. He explains that if a rural hospital employs 80 people another 40 jobs are created in the community. Employees build houses, eat at restaurants, purchase groceries and enroll their children in local child-care centers. At the same time, the health care employers contract with lawyers, accountants, laundry and waste management services, to name a few.

Also contributing to local prosperity, hospitals and other health care providers "sell" services to third-party payers like private health insurance, Medicare and Medicaid. These external sources of income would not filter into the community without the health service provider.

Kessler argues that reimbursement for Medicare and Medicaid can be tough for rural health providers. "With the aging rural population and the disproportionate share of low-income folks in our rural areas, providers depend on Medicare and Medicaid reimbursements, but it is hard to earn a living that way," says Kessler.

Historically, Medicare payments to rural providers are less than those for their urban counterparts--for exactly the same service. And Medicaid rates tend to be the lowest of all payers. Gibbens points out that there is movement by the federal government to "equalize" the payments--at least for Medicare. "In time, it shouldn't matter if you are providing the service in rural America or urban America, the Medicare payment will be the same," he says, noting that "any dollar coming into a rural economy is a positive."

Keeping that money in the local economy makes a big difference. In fact, "out-shopping"--purchasing health care services in urban areas--significantly harms the rural economy.

"Bigger is better in many health consumers' eyes," says Tess Ford, director of the Center for Rural Health and Social Service Development at Southern Illinois University. She says that people who have insurance may seek health care 100 miles away in a large city rather than using a local provider.

"Only about 30 percent of the people in my state's rural communities use their local hospitals," says North Dakota Representative Ken Svedjan. The remainder travel to the more urban areas for services. The same is true in Kessler's district.

"Health care dollars escape from my counties all of the time," she says. "Local communities need to let people know about the health care services available."

In one rural county in Washington, a local organization, with help from the hospital, marketed new health care services--chemotherapy and oncology--to the local residents.

"These were services that the locals were traveling great distances to receive on a regular basis," Kessler says. The result: satisfied customers who through word of mouth and letters to the editor helped to increase patronage for the local providers. "Word of mouth is a tremendous force," says Kessler.

Communities and health service providers are working together on marketing plans and improving services.

"When people contribute to the design of local health care services, they are more apt to spend their money locally," Ford says.

Scorsone points out two major hurdles. Local economic development committees rarely connect with health service providers, and recruiting and retaining health staff in rural areas is an ongoing and complicated issue for states.

WORKING TOGETHER

"When we go into local communities to help, we almost always recommend a task force led by the Chamber of Commerce, including the health sector," Scorsone says.

In Grays Harbor "the hospital and the Economic Development Council have a very close relationship," says Tracy. In fact, the president of the council works for the hospital. Tracy explains that the economic development work in the county is intertwined with the goals of the hospital.

"This community shows its heart when it comes to assisting the hospital," says Kim Woodford, director of Guest Relations and the administrator of Volunteer Services at the hospital. Not only does the community do a "fantastic job" of volunteering their time but they also support fundraisers. "Over the years, the volunteer auxiliary purchased many needed items for the hospital; the most recent is an ultrasound machine that helps place IV equipment and dental X-ray equipment for a new pediatric dentist."

GETTING AND KEEPING DOCTORS

"Recruiting and keeping health care professionals is a major issue for our rural communities," says Svedjan. While 20 percent of the U.S. population lives in rural areas, only 9 percent of physicians practice in them. Fewer doctors choose family practice medicine to begin with and far fewer are interested in a rural practice because of more "on-call" time, less support from other health professionals, and lower earnings compared to those in an urban practice.

"In North Dakota, like many other states, the legislature passed laws to create loan repayment programs for physicians, nurse practitioners and dentists in an effort to get health providers out to the rural areas," says Svedjan. He is a big fan of the "grow-your-own" concept.

"The focus of the medical school here is to train family practice physicians largely because that is what the rural communities need."

Idaho also "did a great deal to assist rural communities in recruiting health professionals," says Representative Sharon Block, vice chair of the House Health and Welfare Committee. "We tried to help providers economically by passing tort reform to help lower liability insurance premiums as well as providing for loan repayment," she says. Because Idaho does not have a medical school, the Legislature has an agreement with two out-of-state schools to import practitioners.

Block would like to see smaller communities "use mid-level practitioners such as physician assistants and nurse practitioners," to extend the services of the rare rural doctor.

Scorsone believes that economic development groups should be playing more of a role in designing health care services and recruiting and retaining health care providers. "When all is said and done, health care is about having skilled staff. Without them, you don't have much," he says.

A variety of federal and state programs exist to help maintain and increase the health care workforce in rural areas. The National Health Service Corps--a federal program within the Health Resources and Services Administration--provides scholarships and loan repayment to physicians and other health professionals who agree to serve in underserved areas. In addition, they administer the State Loan Repayment program that provides funds to the states for their own loan repayment programs.

Sometimes it is the local government or hospital that provides the incentive for recruiting providers. Kessler notes that "one rural hospital in my district supplements the wages" of their physicians in an effort to recruit them. She explains that Medicare reimbursement--a large percentage of a rural physician's income--can limit a doctor's earnings. The local hospital makes up the difference of a guaranteed wage.

A community that establishes high quality health care services--and successfully markets them--positions itself to attract new businesses and residents. Industry surveys reveal that managers often look at health care as an important issue in choosing locations for new facilities. The existence of a strong health care network can lower costs for firms and their employees. In addition, having access to basic health care and other services such as health education, wellness programs, drug and alcohol prevention and rehabilitation programs, and occupational therapy plays an important role in the productivity of employees and reduced absenteeism for local businesses.

PROVING THE POINT

The Delta Rural Hospital Performance Improvement Project, funded by the federal Office of Rural Health Policy of the Health Resources and Services Administration, brings needed consultation and information to small rural hospitals in the Mississippi Delta region. Its goal is to improve hospitals' financial, clinical and operational performance and provide information and business tools that hospitals can use to help themselves.

West Feliciana Parish Hospital in Louisiana is one of those hospitals. According to Mark Chustz, administrator of the hospital, the federal money supported an economic impact study of the local health care industry. The hospital--the third largest employer in the county--hoped the study would help it improve its services and collect information that would make people aware of its economic contributions.

The study revealed that the hospital's 90 or so full-time employees and $3.7 million payroll generated about $4.4 million to the local economy. All of the parish's health providers together poured $21.3 million into the community.

Chustz hopes that the information gathered will help the hospital fine tune its services to meet the needs of the community as well as develop trust and patronage from the local taxpayers who support the hospital with $1.5 million in taxes each year.

For information on this initiative visit ruralhealth.hrsa.gov/funding/delta.htm

Laura Tobler is NCSL's expert on community, health care. A version of this article appeared in NCSL's State Health Notes, Oct. 4, 2004 www.statehealthnotes.org