Our economic impact on the State of Minnesota 2020 - Fairview
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Our economic impact on the State of Minnesota 2020
OVERCOMING CHALLENGES, TOGETHER
Dear Friends,
Fairview Health Services provides accessible, affordable, and equitable healthcare to Minnesota and beyond. As an anchor
institution deeply rooted in our community, we are committed to the health and wellbeing of our patients and neighbors.
Over the past year, our healthcare system, our employees, and the community faced unprecedented challenges—physically,
emotionally, and economically.
Our organization met these challenges head on and swiftly adapted how we deliver care and services, as well as how we purchase
goods and services, to meet the emerging needs of our patients, staff, and community. Telehealth visits and online classes
became part of our new normal. We created ways to offer services and testing in drive-up clinics and worked with our academic
partners on clinical research trials to combat COVID-19. Our teams worked hard to find and purchase critical supplies. Together in
partnership with state and local governments and key constituent organizations, we held 48 COVID-19 testing events, and in 2021,
142 (and counting) vaccination events for our underserved communities in addition to patient clinics.
Despite the challenges, we were strong contributors to our local and state economies and continued down our path to a bold,
new future for healthcare and our healthcare system. As part of our focus on patient-first care, we are expanding our digital and
virtual care offerings and rolling out more single-occupancy, flexible-use patient rooms at hospitals across our system. To address
growing mental health needs, we offer a full spectrum of care inside and outside our hospitals. We are reimagining care at our
St. Joseph’s Campus—focusing on the needs of the community, including health, wellbeing, and supportive services. In addition,
we embarked on a multi-year transformational change effort to drive more equitable outcomes and inclusive environments and
experiences for our patients, employees, and communities.
As one of Minnesota’s largest employers, our employees' health and wellbeing is a top priority. We recognize the stress the
pandemic has on our teams at work and at home, and offer our employees wellbeing programs, including resiliency, life coaching,
and health and wellness activities. The goal is to help our employees find fulfillment in their careers and live healthier lives as they
help others do the same.
This economic impact report highlights our commitments and contributions to our state and local economies in 2020, totaling
$12.7 billion. We support the local economy directly and indirectly by purchasing goods and services and providing jobs that
generate taxes. As a nonprofit healthcare system, we also choose to invest in our communities through community-based
programs and services, financial assistance, research, and health professions education that comprise our community benefit.
Learn more at fairview.org.
We are proud of our contributions to the local economy, long-standing commitment to community programs and services, and
partnership with local organizations.
James Hereford
Fairview Health Services
President and CEO
2020 ECONOMIC IMPACTS To learn more about these figures, see page 3.
$12.7 billion $542.5 million $626.2 million
Total economic impact State and local taxes Federal taxes
directly and indirectly supported in MN directly or indirectly generated directly or indirectly generated
$2 billion 61,182 jobs $5.3 billion
Fairview spending Directly or indirectly Labor income
on goods and services supported directly or indirectly supported
02 | ECONOMIC IMPACT OF FAIRVIEW IN
PARTNERSHIP
WITH
WHAT IS ECONOMIC IMPACT?
When Fairview provides jobs and purchases goods and services, it creates an economic impact beyond its
own operations. That impact grows as it hires more people and purchases more goods and services from
local businesses.
The total economic impact of Fairview can be calculated as direct, indirect and induced effects. Direct
effects are value produced by Fairview activities alone. Indirect effects are value produced by the supply
chain of Fairview. Fairview suppliers purchase goods and services from other producers within their supply
chain. These other producers, in turn, purchase goods and services themselves. All of these supply chain
effects are considered indirect effects. Induced effects are value produced by the household spending of
Fairview employees and the employees of their supply chain. This can include all those aspects of life people
may spend money on, such as apartment rent, going to restaurants, etc. The effects on these industries are
induced by labor income.
ECONOMIC IMPACT OF FAIRVIEW
In 2020 Fairview's activities contributed to and supported over $12.7 billion worth of economic activity in
Minnesota, impacting communities and supporting local industries by delivering a range of health care,
housing, insurance, and community services. For every $1 in Fairview services provided, there is $2.13 worth
of value supported in Minnesota.
There were approximately 24,924 jobs (filled by part- and full-time employees) within Fairview. When
including those supported indirectly, this results in a total of 61,182 jobs in Minnesota that benefit from
Fairview. For every 1 job within the Fairview system, there are 2.45 jobs supported in Minnesota.
TABLE 1: ECONOMIC IMPACT ON MINNESOTA'S ECONOMY (2020)
Fairview's Activities Supply Chain Household Spending Total Impact in
(Direct) Effects (Indirect) Effects1 (Induced) Minnesota
Jobs2 24,924 15,027 21,230 61,182
Labor Income $2.8 billion $1.2 billion $1.3 billion $5.3 billion
Total Output 3
$6 billion $3 billion $3.7 billion $12.7 billion
1 The effects of spending by Fairview's employees and the employees of their supply chain partners.
2 Jobs are based on Bureau of Economic Analysis definition. A job is not necessarily equivalent to an employee. See glossary for further clarification.
3 Total Output represents the economic impact of Fairview. Other effects captured within Total Output include purchasing, property income, and other business taxes.
FISCAL IMPACT OF FAIRVIEW
Even though Fairview is a nonprofit entity, it has significant fiscal effects across each level of government
due to the jobs supported and purchasing from businesses. When Fairview pays employees, Fairview and
employees contribute payroll taxes, while employees also contribute income taxes, property taxes, etc.
(direct effects). When Fairview purchases from supply chain companies, these companies pay sales taxes,
customs duties, and corporate profit taxes as do those companies’ suppliers (indirect effects). When Fairview
employees or employees of the supply chain companies go to a restaurant, that restaurant pays taxes, and its
employees pay taxes (induced effects). The direct fiscal impact may appear small considering Fairview's size,
but the total tax revenue supported more than doubles when considering these indirect and induced effects.
TABLE 2: FISCAL IMPACT IN MINNESOTA (2020) 4
Fairview's Activities5 Supply Chain Household Spending
Total Tax Impact
(Direct) Effects (Indirect) Effects6 (Induced)
Local Taxes $1.8 million -$18.6 million $166.1 million $149.2 million
State Taxes $99.9 million $24.8 million $268.6 million $393.3 million
Federal Taxes $392.2 million $273.7 million -$39.8 million $626.2 million
Total Taxes $493.9 million $279.9 million $394.9 million $1.17 billion
4 Taxes are communicated as net figures. In some cases, total taxes supported are negative due to the subsidies paid by the government that offset the taxes paid.
5 Tax revenue due to Fairview activities come from payroll taxes and employees paying their personal taxes (income, property taxes, etc.)
6 The effects of spending by Fairview's employees and the employees of their supply chain partners.
IN
PARTNERSHIP ECONOMIC IMPACT OF FAIRVIEW | 03
WITHTotal tax effects amount to
THE ECONOMIC IMPACT OF
Fairview Health Services in Minnesota 61,182 JOBS 1 2.45 JOBS $1 $2.13 $1.2 Billion IN TAXES PAID
This analysis projects the total economic impact on IN MINNESOTA IN MINNESOTA For every $1 in Fairview
services provided, there is
$393 MILLION State taxes
Minnesota from Fairview's 2020 operations based on directly or indirectly supported. Each Fairview job supports $2.13 worth of value supported $626 MILLION Federal taxes
2.45 jobs in Minnesota. in the Minnesota economy.
the jobs provided and the purchasing conducted. $149 MILLION county, city, and special district tax effects
HOW FUNDS FLOW:
0 $3 Bil. $6 Bil. $9 Bil. $12 Bil.
ANCHOR INSTITUTION
As an anchor institution in the
In Minnesota Fairview Supports
community, Fairview makes hiring,
investment, and procurement decisions
that create impact. Committed to
$12.7 BILLION IN ECONOMIC OUTPUT
investing in the people and
partnerships that make us stronger
together, Fairview supports significant Fairview’s Activities Support GROWING THE IMPACT
$6 BILLION DIRECT ECONOMIC SPENDING
economic impact in Minnesota, impact
that extends beyond its operations and Through every step of economic impact there is leakage—the value that leaves Minnesota.
to local communities and industries. This can occur when companies buy products or hire people from outside Minnesota. Efforts
to support local hiring and spending by Fairview increases the economic value that stays in
Minnesota, boosting the total impact on our state. This means more businesses, jobs, and
Labor Income (net taxes) Labor Procurement households are supported here in our communities.
Other
$2.3 Billion Taxes $3 Billion Property FOR EXAMPLE:
24,924 JOBS Income
Fairview purchases food
from a local distributor.
Procurement and Supply Chain Effects
WHERE FUNDS GO:
Top 10 impacted industries
$3 BILLION INDIRECT IMPACTS
Labor Income Procurement Taxes
Insurance carriers (except direct life)
(net taxes) $1.4 Billion The distributor sources food
Other real estate $906 Million from a Minnesota farm that
15,027 JOBS employs Minnesota residents.
Owner-occupied dwellings Employees spend money on
Other Property Income
rent, real estate, restaurants,
Insurance agencies, brokerages, & related activities groceries and more.
Hospitals Household Spending Effects
INDUCED
Employment services $3.7 BILLION IMPACTS
Monetary authorities & depository credit intermediation
Employees spend money on
rent, real estate, restaurants,
Labor Income Procurement Other Taxes
groceries, and more.
Management of companies & enterprises
HOW FUNDS CIRCULATE (net taxes)
$1 Billion
$1.6 Billion Property
Income
Management consulting services Our research indicates that money in the 21,230 JOBS
local economy tends to cycle for between
Legal services 2-8 rounds of transactions.
These businesses and their
employees also spend money
0 100 200 300 400 500 600 locally.
This assessment relies on the written and oral information provided by the analyst at the time of the Ecotone analysis. Under no circumstances will Ecotone, its
Millions US Dollars staff, or the Ecotone analysts have any liability to any person or entity for any loss of damage in whole or in part caused by, resulting from, or relating to any error
(negligent or otherwise) or other circumstances related to this assessment. The accompanying technical document is an integral part of this Impact Assessment.
© Copyright 2021 Ecotone Analytics GBC
ECONOMIC IMPACT OF FAIRVIEWAPPENDIX A: SCOPING THE ANALYSIS
This report incorporates the impact of the following facilities and services in Minnesota, utilizing their
respective North American Industry Classification System (NAICS) codes to model effects of regional
economic multipliers:
• Fairview hospitals, medical centers, clinics, medical transportation, pharmacies, and hospice
• Fairview shared clinical and business services
• PreferredOne
• Fairview Foundation
• Ebenezer Senior Living
Data on each of these facilities and services was provided by Fairview. The report does not include the impact
from University of Minnesota Physicians. Non-recurring revenues are also excluded. Net fiscal effects take
into account government stimulus dollars received by Fairview.
This IMPLAN model uses a representation of the third quarter of the national economy in 2020, annualized
to the whole year. This is the most recent data available for use. All dollar values are communicated in 2021
values. Data from Fairview reflects the scale of operations in Minnesota in 2020. Changes in 2020 and into
2021 have occurred due to COVID-19. When feasible and as datasets become available, economic impact
figures will be updated.
APPENDIX B: ANALYSIS METHODOLOGY
This analysis was completed using the IMPLAN economic impact model. IMPLAN is an input-output model.
Input-output accounting describes commodity flows from producers to intermediate and final consumers.
The total industry purchases of commodities, services, employment compensation, value added and imports
are equal to the value of the commodities produced.
The IMPLAN model is used by more than 1,000 universities and government agencies to estimate the
economic and fiscal impacts of investments and/or changes in industry, and to forecast tax revenue and
employment generation. IMPLAN was developed as a cost-effective means to develop regional input-output
models, following accounting conventions of the U.S. Bureau of Economic Analysis.
An IMPLAN impact analysis involves specifying a series of expenditures or other changes and applying them
to the region’s economic multipliers in alignment with the IMPLAN sectoring scheme which is derived from
the North American Industry Classification System (NAICS) codes. The multiplier represents the difference
between the initial effect (e.g. the annual spending by Fairview) and the total effects resulting from that.
The total effects include those direct, indirect and induced effects previously described whereby the buying
of goods and services between producers and households continues until the value initially catalyzed by
Fairview ‘leaks’ from the region (through imports, outsourced work, etc.) and eventually stops the cycle of
regional economic impact until another direct effect occurs (in this case, another year of Fairview operations).
(This description was adapted from: Olson, Doug and Scott Lindall, “IMPLAN Professional Software, Analysis,
and Data Guide”; Minnesota IMPLAN Group, Inc., 1725 Tower Drive West, Suite 140, Stillwater, MN 55082)
06 | ECONOMIC IMPACT OF FAIRVIEW IN
PARTNERSHIP
WITHAPPENDIX C: GLOSSARY
Common Terms in the Ecotone Analysis
Direct Jobs In this report, direct jobs are those jobs that fall within the Fairview brand.
Direct Labor Income The wages and benefits associated with the direct jobs.
Fairview Activities /
Direct effects are value produced by Fairview activities alone.
Direct Effects
Encompasses all of the purchases made by individuals and families for items
Household Level such as food, clothing, durable and non-durable goods, and other retail of any
Spending kind. It also includes spending on personal services such as home repair, dry
cleaning, restaurants, automotive repair, etc.
Household
Induced effects are value that result from household spending due to the income
Spending / Induced
received by Fairview jobs and the jobs within Fairview's supply chain.
Effects
Indirect Jobs Indirect jobs are those supported by industries purchasing from industries.
Indirect Labor The earnings (both wages and benefits) paid for indirect jobs. Indirect earnings
Income are calculated using the IMPLAN model.
Induced jobs are those positions supported by household level spending on
Induced Jobs
goods and services in Minnesota.
Induced Labor The earnings (both wages and benefits) paid for induced jobs. Induced earnings
Income are calculated using the IMPLAN model.
Jobs reported by IMPLAN represent full and part-time annual averages, using
the same definition as the Bureau of Economic Analysis Regional Economic
Accounts (BEA REA) and Bureau of Labor Statistics Census of Employment
and Wages (BLS CEW) data. A job can be either full-time or part-time. As
Jobs a result, jobs figures reported here are distinct from full-time equivalents
(FTEs). Similarly, the number of jobs may not equal the number of employees,
particularly if there are multiple employees for what the BEA may consider a
single job. A person can also hold multiple jobs, so one job does not necessarily
equate to one employee.
All multiplier derivations are based off of output. The multipliers describe the
change of output for each and every regional industry caused by a one-dollar
change in final demand for any given industry.
Type Social Accounting Matrix (SAM) multiplier: Calculated by dividing the sum
Multipliers of the direct effects, indirect effects, and induced effects by the direct effects.
This is the multiplier used in the report.
Type I Multiplier: Calculated by dividing the sum of the direct effects plus the
indirect effects by the direct effects. This is not included in this report, but
noted here for reference.
Represents the value of all goods and services produced by all of the industries
within the study region and may be either direct, indirect or induced. Direct
total output is the value of goods and services produced by Fairview alone. By
Output
aggregating the changes in each sector associated with the direct activity of
Fairview, we are able to calculate the total output value, i.e. the total impact on
the economy of Minnesota.
Supply Chain /
Indirect effects are value produced by the supply chain of Fairview.
Indirect Effects
IN
PARTNERSHIP ECONOMIC IMPACT OF FAIRVIEW | 07
WITH“Our goal is to provide healthcare that makes
our community better, for everyone.”
James Hereford, Fairview President and CEO
fairview.org
June 22, 2021
Prepared by: Ecotone Analytics - Will Nielsen, MPA | Tim Roman, MBA | Stephanie Shekels, BAYou can also read
