Hospitals Still a Job-Creation Machine

We're three quarters through calendar 2010, so it's a good time to examine where we stand on job growth.

Federal data show that the overall healthcare sector remains one of the few bright spots for job growth in a weak economy. However, we're getting mixed news about job growth at hospitals.

Bureau of Labor Statistics data for September show that hospitals have added 28,200 jobs in the first nine months of 2010—a rate of job growth that is more than double that of 2009, although dwarfed by the 86,200 hospital jobs created in the first nine months of 2008.
BLS data also suggest that hospital mass layoffs affecting 50 or more employees could hit a new record for the year. There have been 102 mass layoffs resulting in 8,233 initial unemployment claims—government-speak for lost jobs—in the first eight months of 2010, a pace that would slightly surpass the record set in 2009, when hospitals reported 152 mass layoffs resulting in 11,787 lost jobs.

So, we've got overall hospital job growth that is:

1. Healthy when compared to the rest of the economy;
2. Improving when compared with last year, although slower than it has been for the better part of the last decade; and
3. Subject to frequent mass layoffs.

A little perspective is needed. BLS tells us that the nation's hospitals directly employ more than 4.7 million people. With all respect to the 8,233 hospital employees who've lost their jobs through no fault of their own—from a macro-economic perspective the layoffs are not a big number. That is especially true when we note that hospitals have created more than three jobs for every job eliminated so far this year.

Major negatives hospitals face include the usual suspects: lower government reimbursements, declining admissions, declining philanthropy for nonprofits, and more charity care owing to job losses in the larger economy. It is not surprising that individual hospitals are imposing short-term layoffs as they reallocate money for other budget concerns, and reprioritize services.

On the other hand, with respect to long-term demand, hospitals may also be primed for a major job growth spurt in the coming years. The federal government's healthcare reforms will expand health insurance coverage for another 30 million or more Americans. More importantly, however, is the impact of demographics. We are aging, and getting fatter and sicker by the year. Americans will require more healthcare well into the middle of the century.

For the overall healthcare sector, job growth is healthy thanks largely to ambulatory services, which accounted for 17,200 payroll additions in September, and 117,200 payroll additions in the first nine months of 2010.

The healthcare sector—everything from hospitals, to chiropractors' offices, blood and organ donor banks, to walk-in clinics—employed 13.8 million people in September, and has been one of the few areas of steady job growth during the recession and anemic recovery, creating an average of 21,000 jobs each month, and 186,200 jobs in the first nine months of 2010.

Here's an illuminating factoid: Healthcare is responsible for 23,900 of the 65,000 jobs created in the entire economy in September—more than one-in-three new jobs. 

Do you want a second opinion?

David Cherner is the managing partner at Health Workforce Solutions, LLC, and publishes the quarterly HWS Labor Market Pulse Index, which monitors healthcare sector job growth in the nation's 30 largest markets. He predicts that healthcare sector job growth will weaken for the remainder of the year, but overall, he remains optimistic.

"Despite a drop-off in near-term demand for the quarter, we remain convinced that healthcare hiring has generally improved over the last year and we expect it to continue through the remainder of the year," Cherner said.

"There are a number of large expansions projects that will be coming on line over the next few quarters and much of the negativity reflected in this quarter's numbers come from job cuts previously announced."

Hospitals and healthcare are subject to many of the forces that have battered the rest of the economy. But, as job creation machines, healthcare and hospitals are showing themselves to be resilient too. There will be fits and starts. There will be months when job growth slows, or even retreats. There will be more layoffs. Overall, the long-term forecast is good.