'Ripple-out' Economics Impacts Shawano with New Hospital Construction

Posted 28 May 2014 1:14 PM by TCAuthor3

By Carol Ryczek, Shawano Medical Center Community Relations Manager

You may have heard of “trickle-down economics.” But have you ever heard of ripple-out economics? That is the economic impact a project like ThedaCare Medical Center-Shawano brings to a community. The project touches other local businesses and individuals in ways you might not expect.

If you were lucky enough to attend the Shawano County Economic Progress, Inc. (SCEPI) summit recently, you heard Dorothy Erdmann, Shawano Medical Center administrator/CEO, talk about what a project like the new ThedaCare Medical Center-Shawano can bring to the community. Organizations like SCEPI, along with UW-Extension, track what happens to a dollar that is spent on a project like this one. That dollar initially goes to salaries or materials with direct investment of $50 million. The ripples spread from there, as those dollars start working through other businesses in town.

It may be that a construction worker meets others for a burger for the trip home. That makes it possible for the restaurant manager to use that dollar for a trip to the drug store or gas station. The ripples continue outward. Economists call this an indirect effect, and we can expect to see $8.6 million in indirect impact from the new medical center project.

But wait (as we know with all good deals)…there’s more! While the construction worker is at the restaurant, someone notices that it is very busy – busy enough to support a new takeout franchise. The new hospital tells a prospective small manufacturer that this is a growing community with great healthcare — a wonderful place to locate. This is a hidden effect called the “induced effect.” It can amount to over $12 million.

By the time the ripples make their many circles, the building project and early operation of the new building will enrich the local economy by $68 million dollars. After that, there will be an $18 million benefit every year. By now it is no longer just a ripple. It is an economic wave, and we are fortunate to be able to catch it.