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Healthcare Job Growth Cools Slightly

 |  By John Commins  
   September 10, 2012

For years now Bureau of Labor Statistics' monthly employment reports have been showing that the healthcare sector is the biggest job creation machine in the U.S. economy.

BLS has estimated that by 2020 the healthcare sector will create 5.6 million new jobs, thanks in large part to the aging Baby Boomer population and the expansion of health insurance under the Patient Protection and Affordable Care Act.

Healthcare is labor-intensive. The American Hospital Association says that labor accounts for nearly 60% of spending for hospital care. With healthcare costs rising at roughly three times the rate of inflation, it's not clear how long the rest of the economy can continue to support this job growth.

It is not completely farcical to say that the nation is on a trajectory that may eventually have everyone working in healthcare and spending all of their money on healthcare, which already gobbles nearly 20% of the gross domestic product.

The talk about "bending the healthcare cost curve" centers around reducing waste and fraud and improving quality. We don't hear much about slowing healthcare job growth even though wages and benefits are the single largest expense in healthcare.

In most sectors of the economy new technology reduces job growth and lowers costs. For better or worse, robots on the assembly line means fewer jobs for humans and labor cost savings. That logic doesn't necessarily apply to healthcare.

The advent of electronic medical records, for example, has led to a huge demand for thousands of technicians who can design, install, and operate these highly complex computer systems. The newest imaging equipment also requires highly skilled operators with clinical and technological expertise.

Technology will probably save money by reducing waste, fraud, misdiagnoses, and abuse. But it will not come cheap, and the savings may not be readily apparent for years.

This steady hiring in healthcare continues even as there is near universal agreement that very soon the healthcare sector will be required to provide more care for less money. Medicare and Medicaid are cutting reimbursements and increasingly linking the value of payments to quality outcomes. Commercial plans are following the government's leads and are taking a hard line against cost shifting.  

There are signs that the healthcare job growth may already be slowing.

Relatively speaking, it's been a slow summer. BLS notes that from June through August, job growth in healthcare averaged 15,000 per month, compared with an average monthly gain of 28,000 in the prior 12 months. Every day in the media we see local stories across the nation about hospital layoffs brought on by financial strains or consolidations.

However painful, these are anecdotal and generally isolated events.

Even with the slow summer, on a macro level in the first eight months of 2012 healthcare created 72,000 more jobs than it did for the same period in 2011. So, it's hard to say if this is the start of a slump in healthcare job growth or merely a blip.

Generally speaking it's not a good idea to hold much stock in one, two, or even three months of job data when making longer term predictions. After all, BLS considers its two most recent months of job data to be "preliminary" and subject to considerable revision. 

In August, healthcare created 16,700 new jobs, 17.3% of the 96,000 new jobs in the overall economy for the month. So far this year healthcare has created 197,300 jobs, nearly 18% of the 1.1 million jobs created by the overall economy. Since January 2008 healthcare has created 1.2 million jobs in an economy that has otherwise seen a net loss of 4.7 million jobs over the same period. 

A further breakdown of BLS data for August shows that ambulatory services, which include physicians' offices, grew 14,200 jobs, while hospitals grew 5,700 jobs. The volatile nursing homes subsector with its larger cohort of semi-skilled workers actually shed 3,200 jobs for the month, which happens occasionally.

More than 14.3 million people worked in the healthcare sector in August, with more than 4.8 million of those jobs at hospitals and more than 6.3 million jobs in ambulatory services, which includes more than 2.4 million jobs in physicians' offices.

In the larger economy, BLS reported that the 96,000 jobs created in August were led by 28,000 new jobs in food services, and 27,000 new jobs in professional and technical services. The unemployment rate dropped slightly in August to 8.1%, but economists said it was mostly because "discouraged workers" have stopped looking.

BLS says 12.5 million people were unemployed in August, which was essentially unchanged throughout 2012. The number of long-term unemployed, defined as those who have been jobless for 27 weeks or longer, remained at 5 million people in July, representing 40% of the unemployed. So far this year job growth has averaged 139,000 per month compared with an average monthly gain of 153,000 in 2011.

If we are seeing the start of a slowing job growth trend in healthcare, it may be mirroring the slowing job growth in the overall economy.

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

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