Healthcare Shows High Job Growth, Low Productivity

The healthcare sector will create 5.6 million new jobs, from drug reps to bedside nurses, by 2020.

That's according to a new study by the Georgetown University Center on Education and the Workforce, which projects that the demand for healthcare services will grow twice as fast as the national economy over the next eight years.

"If you include pharmaceuticals and healthcare manufacturing as part of healthcare, which we do in some of our numbers, you are talking about a sector that now produces 16 million jobs and will produce 20 million jobs by 2020, which is huge," Anthony P. Carnevale, the Center's director and the report's lead author, tells HealthLeaders Media. "By then it should be a 160 million job economy and 20 million of those jobs will be in healthcare, and there won't be any sectors bigger than that."

This might be good news for people on a certain career path, or for drug makers or medical device manufacturing companies. By 2020 one in five dollars created in the economy will go to healthcare. The healthcare sector already is the single largest source of new jobs in the overall economy, according to monthly job reports from the U.S. Bureau of Labor Statistics.

Is this growth in healthcare good for the rest of society? Carnevale says healthcare is among the least productive sectors of the economy.*

"There is a dilemma here and it gets at the root of the healthcare issue in general. We are paying twice what other advanced industrial nations for healthcare. They are at 9% of GDP and we are at 18% and headed for 20%," he says. "We've built a huge sector, but the productivity growth has been negative for a while. Our estimates on the productivity growth are basically -1%. In manufacturing productivity is +8%. We are supporting a huge apparatus in healthcare and no doubt there are huge inefficiencies."

Carnevale believes the healthcare sector cost and job growth are byproducts of an inefficient and fragmented healthcare system.

"One of the criticisms of healthcare is that it is a supply-driven system. The more doctors we have the more healthcare we consume," he says. "There is not much doubt that the American healthcare system is a Rube Goldberg device where there really is no natural means for price controls. We are only now beginning with the intervention of the federal government which is now up for grabs to try and make some sense of this."

"All the hospitals, each of the individual doctors, are individual entrepreneurs and they are all trying to maximize profits. And you have a third-party payer, which in many cases is the government, if I want something and somebody else pays for it, I tend to consume more of it," he says. "It is not a market. It needs to be rationalized to the extent that there is some relationship between consumption and cost; that there are prices attached to things and people make choices; where there is some discipline in the system that discourages waste."

"In most rational systems that means somebody has to be in control. The politics of healthcare are such that it is very difficult to arrive at that," he says. "To the extent that each of us wants to be an independent consumer and every provider wants to be an independent entrepreneur, you have a recipe for a runaway train in economic terms and that is what we have."

The study also found that:

• 82% of those new healthcare jobs—4.6 million—will require postsecondary education. As a result, Carnevale says, the demand for postsecondary education in healthcare will grow faster than in any other field except STEM (Science, Technology, Engineering, and Mathematics) and Education occupations.
• Healthcare successfully competes for science and engineering talent. Healthcare, science, and technology fields require similar skills and healthcare programs at the associate and bachelor's level provide appealing alternatives for science and engineering students.
• Healthcare reflects distinctly different work interests and values. People in healthcare jobs tend to value forming social bonds. People who gravitate to STEM occupations place a greater emphasis on achievement and independence.
• Upskilling in nursing is growing especially fast.  In 1980, 37% of entry-level registered nurses had at least an associate's degree; by 2008, that figure had increased to 80%.
• Bachelor degree requirements in nursing is crowding out disadvantaged minorities. A total of 51% of white nurses 40 years old or younger have bachelor's degrees, compared to only 46% of Hispanics and 44% of African American nurses.
• Healthcare has the largest number and proportion of foreign-born and foreign-trained workers in the U.S.  Among healthcare workers 22% are foreign born, compared to 13% of all workers nationally. Most foreign-born nurses come from the Philippines, India and China.  
• Physicians are the highest income earners in the country and tend to come from mostly affluent backgrounds.

The growth in healthcare spending will continue in the near term, Carnevale says, regardless of how the U.S. Supreme Court rules this week on the Patient Protection and Affordable Care Act.

"Within states, there are going to be some administrative devices and computerizations of records that will create a system that is much more self-aware and with a lot more data," he says. "That is the direction in which we are going, although in the short haul over the next decade or so I don't think there is any reason to think the prices would stabilize."

(*Carnevale explains the methodology for measuring productivity: "We divide the output, the gross domestic product produced in healthcare by the number of people working. In healthcare the number of people are hiring faster than output is increasing. In the case of manufacturing, which is the highest productivity sector at the moment, you've got +8%, which means you are getting 8% more output with the same number of workers. In the case of healthcare, the workers are increasing but the output is going down slightly relative to the number of workers. The output per worker is going down, essentially.")