Hospitals: Modeling Public & Non-profit Hospital Impacts with Industry Impact Analysis

INTRODUCTION

Hospitals that are not privately owned fall into two categories: public/government owned facilities and non-profit organizations. Modeling the economic impacts of these two types of hospitals follow the same path in IMPLAN as neither will pay the full tax rate of a private hospital. This article will help you unpack the best way to model your public or non-profit hospital or system of hospitals.

THE INDUSTRY IMPACT ANALYSIS (DETAILED)

The  Industry Impact Analysis (detailed) is a newer event type in IMPLAN with widespread applications. It's one of our most popular event types because it can be used with multiple inputs. Unlike other event types, when multiple event types are specified, IMPLAN will rebalance the Leontief Production Function. 

When using the IIA (detailed) event you can use one or more of the following pieces of information:

• Wage & Salary Employment
• Employee Compensation
• Spending on Intermediate Inputs (and also edit the Spending Pattern)
• Output
• Proprietor Employment
• Proprietor Income
• Taxes on Production & Imports
• Other Property Income 

Once you enter information into one or more of these inputs, IMPLAN will do the work of calculating the Economic Impacts for you!

DETAILED INFORMATION

If you are only given a small amount of information, sometimes an Industry Event will suffice.  Usually however, correctly modeling public (government run) and nonprofit hospitals requires more detailed information.  For example, it is common to split the effects on an institution into its individual components: labor spending and operations spending.

IMPLAN has three Industries specifically for hospitals:

• Industry 472 - Hospitals (both private and non-profit hospitals).
• Industry 522 - * Employment and payroll of state govt, hospitals and health services.
• Industry 525 - * Employment and payroll of local govt, hospitals and health services.

It's worth noting that terms of tax liability, public and nonprofit hospitals are very similar. Therefore these types of institutions can be modeled in the same way with reductions in tax payments.  

USING PAYROLL DATA

It's not uncommon to just have total payroll information for our model. As an example, let's consider Tombstone Hospital System, a nonprofit, regional healthcare system, is located in Cochise County, Arizona. We want to find out their impact on the entire state.  

The hospital provides the following payroll information:

• The hospital employs 50 employees (total headcount).
• The payroll is $55M and does not include benefits or payroll taxes.  

Given that we do not know any information about the other expenditures Tombstone Hospital System is making, we will have IMPLAN estimate these for us using the regional detail in the model.  

Employee Compensation

In any payroll situation, the first thing we need to figure out is what is included in the payroll figure. In IMPLAN employee compensation is measured as fully loaded payroll, include wages and salary, benefits, and payroll taxes. Because we have wages and salaries only, we need to indicate this to IMPLAN.  This can easily be done with the Industry Impact Analysis (detailed) event using the W&S toggle button. 

Employee Count

In addition, it important to consider what is included in our employee count. In IMPLAN, employment is based on headcount, not an FTE figure. If you only have a count of full-time employees or full-time equivalent employment (FTE), you will need to use the FTE toggle button.

ACCOUNTING FOR NON-PROFIT STATUS

In addition to the payroll information, we know that this hospital is a non-profit hospital. This provides us with useful details for analysis. In particular, non-profit status tells us that this hospital has no:

1. TOPI,
2. OPI,
3. Proprietor Income.

This means we can set all of these values to $0 in our IIA Detailed event. 

SETTING UP THE ANALYSIS 

REGIONS

For this analysis we are going to use two regions:

• Cochise County, AZ - the primary Region where the event takes place, 
• Rest of AZ, less Cochise - a combined Region capturing the remainder of the impact region.

IMPACTS

As previously mentioned, the IIA detailed event allows us to input all our information into a single event, as shown below. 

RUNNING THE ANALYSIS

Finally, once we've set up our impacts we: 

1. Drag our event to the Cochise County, AZ Group.
2. Check MRIO to link Cochise County to the Rest of AZ Group.
3. Click Run.

RESULTS

ECONOMIC INDICATORS

The public hospital in Cochise County supports roughly 614 jobs earning nearly $100 million in Labor Income and creates a Value Added of approximately $126 million across the state of Arizona (2026 dollars).  Notice that the 50 jobs we included in our event are reflected in the Direct Employment.  

Filtering our Region on "Cochise County, AZ" shows that the majority share of those impacts occur within Cochise County. Within Cochise County, the hospital supports approximately 448 jobs, $88 million in labor income, and creates a value added of approximately $106 million.   

TAX IMPACTS

One interesting outcome with non-profits is the tax impact.  Many people do not expect there to be any significant tax impacts from non-profits.  However, we can see that the economic activity associated with our non-profit hospital generates a combined tax revenue of approximately $28 million at the federal, state, and county level. 

We can dig further into these tax results on the Tax Screen of our Results. Filtering our taxes on Direct impacts only, provides some insight into the taxes associated just with the operation of our hospital. We can see that there are no direct TOPI or PI associated taxes, as we specified. However, the hospital is still generating tax revenues through its payroll taxes and employee personal taxes. 

CONCLUSION

Modeling the economic impact of public and non-profit hospitals requires a nuanced approach to account for their unique tax structures. By utilizing the Industry Impact Analysis (Detailed) event type, researchers can accurately reflect the absence of proprietary income and specific taxes while still capturing the significant labor and operational contributions these institutions provide. As shown in the Cochise County example, even organizations exempt from certain taxes remain vital economic engines, supporting hundreds of local jobs and generating millions in state and federal tax revenue through payroll and household spending.

RELATED ARTICLES

Hospitals: Considerations When Conducting Hospital Economic Impacts

Hospitals: Modeling Private Hospital Impacts with Industry Impact Analysis

Industry Impact Analysis (Detailed) 

CASE STUDY 

The Economic Impact of Mayo Clinic: Now, Then & All Points in Between

Written February 18, 2026