If the hospital you are modeling is private, you can simply model spending through Sector 482 - Hospitals. As always, enter as much data for the Industry Event as you have (Output, Employee Compensation, Proprietor Income, and/or Employment). If you have data for more than one of these elements, you can (and should) override IMPLAN’s estimates with your known values.
You can also modify the Industry Spending Pattern and couple that with a Labor Income change to account for any known spending differences in the hospital you are modeling. This technique is known as Analysis-by-Parts (ABP).
Let’s say a new private hospital is going to open in Mecklenburg County. We are told they will spend $5M in operations and $1.5M in Employee Compensation (EC) in their first year. We have no information about Proprietor Income (PI), so we will only enter EC. Remember, Labor Income = EC + PI.
If we are given any further information on the proposed spending by Commodity, we can click the Advanced button and edit the percentages of the Industry Spending Pattern. We may know, for example, that they will not be purchasing anything from a retail store; instead using only wholesalers. We can zero out all Retail Services entering zero in the place of the current percentages. We can then add the percentages that were in the retail Sectors to the wholesale Commodity total to re-balance the Spending Pattern so that the Sum of Percentages is again 100%.
Remember to save your Events before adding them to the Group and running your analysis.
Our Results give us Indirect and Induced effects, so we will need to add back in the Direct effect from the information we were given by the hospital. More details on recalculating the Direct effect can be found in the article: ABP: Analysis-by-Parts Using an Industry Spending Pattern Event with Labor Income Event(s).
To calculate our Direct effect for our example, we will examine the Output equation in the model by navigating to the Regions screen, choosing Customize, then selecting Industry 482 - Hospitals.
Direct Labor Income = total Labor Income. In our example this is $1.5M.
Direct Output = Intermediate Expenditures + Direct Value Added. In this example, we know the total Output was $5M.
Direct Employment = known Direct Employment. If Employment is unknown, you can calculate it on your own by dividing Direct Output by Output-per-worker. For this clinic, we know that Output is $5M and Output/Worker is $162,726, so we can divide them and find 30.73 Direct employees.
Direct Value Added = Direct Labor Income + Tax on Production and Imports + Other Property Income
- From the Output equation, we know the average TOPI and OPI per worker
- Multiply these figures by the total employment
- Add Labor Income + TOPI + OPI
Now we have our final results table below showing our calculated Direct effect and the modeled Indirect and Induced effects. The spreadsheet used below can be downloaded for your use.
Written August 21, 2019