RX for Small Town Economic Health

by Randy Weckman

H

ealth care is changing quickly for the better in rural Kentucky. For a long time the standard of care for many rural Kentuckians has been to travel long distances for even relatively minor procedures. That's because no local facility was available to perform them. While traveling for health care was inconvenient, it also represented lost opportunities for economic development.

Eric Scorsone in the Department of Agricultural Economics is helping to change all that. His research involves working with local leaders and health care providers to assess the type of medical facilities that can be economically viable for a community. In many cases so far— he's completed more than 30 analyses for communities throughout Kentucky—improving local medical facilities makes sense in both convenience and in keeping money at home.

Eric Scorsone, assistant professor of agricultural economics, provides crucial information on health care for rural communities through the Kentucky Rural Health Works Program.

Scorsone's work is part of the Kentucky Rural Health Works Program, which is a collaborative effort of the UK College of Agriculture, the UK Center of Excellence for Rural Health, and the Kentucky State Office of Rural Health. These groups work together to assist rural Kentucky communities in promoting and supporting rural economic development and local health care networks.

“Too often in the past, rural leaders didn't know if improving medical care facilities would be economically feasible,” Scorsone said. “They didn't have information about the health care status of their community to make wise decisions. Many communities simply avoided making decisions to improve local facilities,” he said.

Scorsone said that a local health care system is vital to rural economies because rural health care is often second only to the local school system in the number of people it employs and may account for as much as 20 percent of the county's jobs. He also noted that during the last two decades, health care's share of industry earnings had doubled to about 12.3 percent. During the same time, medical transfer payments (from government agencies for health care) tripled in the amount they contribute to rural Kentucky's personal income.

Individualized Prescriptions
When Scorsone and the team do a community health care audit, they review the market area for the proposed facility. Then, they make assessments of how many types of procedures would likely be performed each year given the demographics. They present that information to the requesting leaders or health care facility.

Susan Starling (right), Marcum & Wallace Memorial Hospital administrator, demonstrates some radiology technology for (from left) Judy Jones of the UK Center of Excellence for Rural Health; Larry Allen, director of the State Office of Rural Health; Victoria Burke, Extension associate; and Eric Scorsone, Ag Economics.

For example, the Monroe County Hospital asked for help in ascertaining whether a market exists for dialysis. Monroe County has one of the highest rates of diabetes in the nation, and kidney disease is one of the outcomes of uncontrolled diabetes. Hospital officials surmised that the county might have enough patients who would need kidney dialysis to pay for establishing a dialysis clinic.

As soon as they were asked to assess the economics of establishing the clinic, the Rural Health Works Program team reviewed demographic data concerning the expanded market geography and estimated that between 1,700 and 2,300 dialysis visits could be expected each year.

“The team acted as a consultant, providing data for local leaders to use in making decisions. Obviously, we cannot know whether it is economically feasible, based on facility costs and the like. We can, however, predict with some measure of certainty the level of need for the service in the community,” Scorsone said.

Monroe County leaders have put the dialysis project on their to-do list.
Scorsone noted that not all of the ideas for expansion of health care facilities are economically worthwhile.

Larry Allen, director of the State Office of Rural Heath, and Judy Jones, director of the UK Center of Excellence for Rural Heath, are shown at Marcum & Wallace Memorial Hospital in Irvine. Both the state and UK rural health offices collaborate with the College of Ag in the Rural Health Works Program.

“The Cumberland County Hospital wanted to expand the number of beds at the facility. Our market analysis suggested that expansion probably wasn't a good idea economically. And that knowledge helped the hospital avoid a costly overexpansion that wouldn't pay for itself,” he said.
Not having a robust health system means lost economic opportunities for the community. It also means that health care is less accessible because of the inconvenience of driving an hour or two for routine medical procedures. If local conditions warrant additional health care development, communities can make life easier for citizens and give their local economy a shot in the arm, Scorsone said.
“We've used the Rural Health Works Program in a variety of settings,” said Judy Jones, director of the UK Center of Excellence for Rural Health in Hazard. “The benefit is that it shows community leaders just how much health services contribute to the local economy. Rural community leaders are always looking for ways to improve their economies. And unlike manufacturing, health care is a clean industry, and it encourages education,” she said.

Dr. Glenn Morris speaks with a patient at Marcum & Wallace Memorial Hospital in Irvine.

Marcum & Wallace Memorial Hospital Makes Informed Plans The Marcum & Wallace Memorial Hospital in Irvine (Estill County) is a small but progressive community hospital with 25 licensed beds. It was established in 1949 as a result of local leaders seeing a need for a hospital in the area. The hospital needed help making a decision about whether it would be economically feasible to develop outpatient services. Its leaders asked Scorsone for help. Scorsone first looked at the market area the hospital now serves, which is made up of portions of nine counties, including Estill, Powell, Wolfe, Lee, Jackson, Owsley, Breathitt, Clark, and Madison. The number of people residing in the market area was nearly 46,000. Based on the demographics, the team estimated that the outpatient clinic services unit likely could perform between 1,450 and 1,700 procedures each year (between 350 and 410 endoscopic examinations, between 175 and 205 orthopedic procedures, and between 146 and 171 ophthalmological procedures, among others). The economic returns to the community for such a facility could be expected to be several hundred thousand dollars and create a number of jobs, too. According to Susan Starling, chief administrative officer at Marcum & Wallace, “Eric helped us strategically plan the direction we were going. His work will help us make important decisions about our hospital. Right now, we are making upgrades to our current facilities.” Next, hospital leaders will evaluate whether to add the clinic. Their decision will be based on the facts and figures Scorsone's team provided. "His information has been really valuable in giving us direction for the future. We have it in the plan, and the board will use it to chart our future," said Starling.