Healthcare Has a Jobs Problem, Not a Cost Problem

by webadmin on June 7, 2013

COST-thumbIs healthcare a jobs problem, not a cost problem, as is commonly believed?

This is the premise of an opinion piece by Evan Soltas at Bloomberg.com.

Your immediate response, as healthcare executives, may be, “But look at the way healthcare impacts the local economy. My hospital is one of the main sources of employment in our service area!” And Soltas agrees. There is, after all, no denying the statistics.

In the last 10 years, 2.7 million people have been added to healthcare payrolls, “more than any single other sector.” Furthermore, “the rise of healthcare explains half of all net job growth over the last decade.”

Healthcare now accounts for 9.4 percent of the labor force, as opposed to 6.4 percent in 1990. Without healthcare’s expansion, Soltas writes, we would have a 10.4 percent unemployment rate right now. And beyond jobs, there is also no denying the percentage of healthcare that accounts for the national GDP: 17 percent.

The impact on workers is great as well, Soltas reports. “…Work in healthcare is often better-paying, safer, and more rewarding than the alternatives. Healthcare workers earn 32 percent more per hour than the average private-sector worker and have the economy’s slowest rate of fatal occupational injury.”

In spite of these multiple positive factors, he asserts, digging in, why is healthcare so large?

“It’s because the sector is wildly inefficient,” he posits. “As a share of GDP, the United States already spends approximately twice as much as the average developed country. We have neither the health outcomes nor the regular medical attention to justify that expenditure. The inefficiency is expanding. The spending is not doing us much good.”

He believes that the ongoing discussions about containing and reducing healthcare costs is the wrong conversation and has no definable end. There is only so much an organization can do to contain operational costs, especially when “hospital managers name labor as their largest cost issue–not the Affordable Care Act.”

Soltas ventures, “We will have to find ways to destroy healthcare jobs–or at least to slow their growth. That will require technology. It will also require policy changes that reduce demand for labor-intensive care.”

He warns against placing too much hope in EHRs, however. So far, “its labor savings have been disappointingly small (though that could change with time and wider implementation). A second might be to shift care into lower-cost labor when possible — such as treating people in a retail clinic instead of a hospital. That strategy is proving a private-sector success. A third is the Affordable Care Act’s new excise tax on high-end health plans, a public policy that offsets extant subsidies in the tax code. It shows that when government is already part of the problem, changing it must be part of the solution.”

Regardless, he concludes, “a healthier economy would be with millions fewer healthcare jobs–and millions elsewhere.”

As healthcare executives, what are your thoughts on this opinion piece? Is labor your primary expense? Will healthcare jobs inevitably have to be slashed and compressed in order to achieve the cost containment and efficiency demanded by the future of healthcare?

-by Pete Fernbaugh

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