Healthcare Job Growth Reflects Aging Population, Newly Insured

Data showing that 2014 had the best job growth since 2008 suggests that hospital leadership is becoming more comfortable with the Patient Protection and Affordable Care Act, says a managing director at PwC Health Research Institute.

The 311,000 new jobs created by the healthcare industry in 2014 represent the largest year of job growth in the sector in the past seven years, and it may suggest that providers are more comfortable with the Patient Protection and Affordable Care Act while acknowledging the challenges of care access for an aging demographic.

Healthcare created 10% of the 2.95 million new jobs in the overall economy in 2014. The 311,000 new jobs in healthcare last year represent 2% of the 14.9 million people employed in the sector at the end of 2014. That includes 6.8 million people in ambulatory care, 4.8 million in hospitals, and 3.3 million in nursing and residential care.

Job Offers Abundant for New Doctors

"With healthcare representing about 17% of the U.S. economy, it is not surprising that one-in-10 new jobs would be in healthcare, even if the growth in overall health care spending has slowed," says John Ayanian, director of the University of Michigan Institute for Healthcare Policy and Innovation.

Ceci Connolly, Managing Director at PwC Health Research Institute, says she's not surprised either because "healthcare is typically a growth industry and there are a couple of reasons why that's even more the case right now."

"One is in part the Affordable Care Act," she says. "There are many more covered individuals. They are paying customers and so that's required more temporary and fulltime positions to get them signed up and answering their questions and getting them their care."

"The other factor that comes through loud and clear is the aging of the population. Demographics are showing we are living longer and we need and are using more healthcare services and products," Connolly says.

"That is a lot of the big growth in home health and personal care aides, physical and occupational therapy—a number of those areas where we are seeing big growth and we expect that that is going to continue."

Less Anxiety About Reform
A further breakdown of BLS data for 2014 shows that there were 230,300 new jobs in ambulatory services, 47,300 jobs in hospitals, and 33,400 jobs in nursing and residential care. The healthcare sector saw job growth of 65% in 2014 compared with the 203,000 jobs the sector created in 2013, which saw hospitals shed 500 jobs that year.

Healthcare job growth in 2014 was the best since 2008, when the sector created 317,400 jobs, BLS data shows.

Connolly says the job growth in 2014 when compared with 2013 suggests that hospital leadership is becoming more comfortable with the Affordable Care Act.

"We did see a certain amount of anxiety as the ACA was being implemented," she says. "I think hospital executives in particular were exceedingly cautious about the law and now there is a little more of a comfort level or an understanding. They've gotten it a little more under their belts. We are also seeing more covered laws with the Medicaid expansion and exchange customers so that is helping them soften the blow of some of the reduced reimbursement rates."

'Reasons for Some Growth'
Mary Ellen McCartney, Chief Learning Officer at La Crosse, WI-based Gundersen Health System, says she was somewhat surprised to see hiring increasing because labor is a huge cost driver at a time when providers are squeezed to reduce costs.

"There are reasons for some growth," McCartney says. "The population is aging and they are including long-term care here, and more people seeking care as the population ages. There is also growth in ambulatory services, the largest growth area, and that makes a lot of sense because we are trying very much to steer our care to the most cost-effective places for patients."

McCartney says she anticipates a demand for technology workers in healthcare with "the advent of technology, [in] particular electronic medical records and more intense technology requires jobs that weren't in healthcare."

"Hospitals are like a little city," she says. "We have a wide variety of services that we need to have on staff in the hospital that we didn't have to have in the past. I believe that the economy is shifting to more knowledge workers in healthcare and there is growth in those areas."

The demand for physicians, especially primary care physicians, is expected to remain strong this year and well into the future. Because the demand outstrips the supply, Connolly says "physician extenders" such as nurse practitioners and physicians assistants will continue to be in high demand.

"One of our Top 10 Trends in 2015 is the growth in the use of non-physician care givers. They are lower cost but they can still do a phenomenal amount on a care team," she says. "Those are going to continue to be big growth areas, especially when you see more accountable care organizations and bundled payment arrangements. You are going to see the approach of integrated clinical care teams and much of the hiring will be just below the physician level."

What About Cost Control?
As to whether or not a new era of healthcare hiring is a good thing in the context of controlling costs, Connolly says, "that depends upon your perspective."

"For a long period of time this sector was flat or weak coming out of the recession. This growth is probably healthy," she says. "On the other hand, I am sensitive to concerns about spending growth in healthcare. When you are looking at growth in some of the extender categories such as physician assistants, nurse practitioners, and personal care aides, that is a good thing because they are responding in a cost-effective manner to the needs of an aging population. I am happy to see that as opposed to the very high-end specialists, which we know is where there is generally over-utilization of services and waste."