By Jim Damicis, Senior Vice President, and Alex Tranmer, Senior Project Manager of Camoin Associates
Healthcare is critical to our economy in the U.S. and across all of our regions. It is a major employment sector as well and a generator of business opportunities through entrepreneurship and innovation. It is also a sector that is highly diverse with jobs at multiple career levels held by diversity of workers. Relative to most industries, healthcare has been at the center of COVID impacts as the system and environment has placed enormous demand on business, institutions, and workers within the industry. This industry faces critical issues related to workforce shortages and access to services while demand for services continue to grow significantly. An understanding of trends, constraints and opportunities can help business, workforce, and economic developers design and implement strategies to support and grow the healthcare industry for improved outcomes in both health and economy.
In this article healthcare is classified as industries within the three-digit NAICS Codes of 621,622,623.1 This includes a range of specialties from ambulatory care to hospitals to nursing and residential care facilities. Note that, this collection of NAICS does not include social services. Public hospitals were also included, which fall under NAICS 902622 and 903622.
Trends in the Healthcare Industry
The healthcare industry includes 17.5 million jobs, making up about 11 percent of all jobs in the country. In most all regions, healthcare is among the top industries in terms of employment. During COVID few industries were talked about as much in terms of not only public health but also industry and workforce. From 2015-2020, healthcare added nearly one million jobs growing by six percent while all industries only grew one percent. Job growth is projected to continue. From 2020 through 2025 healthcare is projected to add another 1.4 million jobs growing eight percent (see Table 1).
Not all healthcare subsectors and aspects of healthcare faired the same historically and differences exist looking in the outlook going forward. Two trends that have experienced significant adoption and growth across the economy are Home Health Care Services and Telehealth.
Home Health Care Services
From 2015-2020, home healthcare services grew twice as fast as healthcare overall, increasing jobs by 13 percent, compared to six percent for healthcare overall. This growth is projected to continue and are expected to grow by 17 percent compared to eight percent for healthcare overall (see Table 1).
This Home Health Care industry encompasses services and related products for: home nursing care, home hospice, homemaker and personal services, and home therapy services. With an aging population, this industry has grown in scale as people prefer receiving service at home as opposed to longer stays in the hospital. In terms of revenues, annual revenue growth from 2016-2021 reached 3.3 percent and is projected to continue to grow at a faster rate, 5.1 percent between 2021-2026.
While initial regulatory and insurance requires were a drag on Home Health Care activities, regulatory reforms and consumer demand has led to significant growth. External drivers that contribute to market demand for Home Health Services include federal funding for Medicare and Medicaid, the proportion of the population aged 65 or older, the number of people with private health insurance, insurance policy and regulation, and per capita disposable income.
Medicare and Medicaid are the largest payers for home healthcare services. The amount that home health care businesses are eligible for in reimbursement has steadily decreased, even while federal funding for both programs has grown. To maintain or grow profit margins, the industry has therefore leaned towards consolidation. Yet, this industry remains extremely fragmented and 90 percent of the industry is comprised of sole proprietors. Companies are also looking to expand into new services lines to potentially expand their market share. New markets include managing chronic disease in home settings in addition to caring for elderly populations.2
Workforce shortages are a major concern for the growth of this industry. The Bureau of Labor Statistics reports that home health care and personal care aides are the most in demand occupation of the next decade – with the need for 1.1 million positions between 2020-2030. Healthcare positions are prevalent across the board, as five of the 10 fastest growing occupations are within that industry.3 Yet, while there is a vital need for these positions, home health care aides are one of the lowest paid in the healthcare sector and have significant labor shortages, put stress on an already strained situation. Home health care remains one of the realms of healthcare that still requires human interaction, meaning technological advancements do not necessarily mitigate the labor shortage or advance care in this subsector. According to recent labor market data, the median hourly earnings for Home Health and Personal Care Aides is $12.99. In 2015-2020, this occupation grew by 20 percent or 265,945 jobs. It typically requires just a high school diploma and training occurs on the job.
There are a variety personal and regulatory factors contributing to the labor shortage. One factor includes policies that states have put in place that are specific to healthcare workers. In New York, recent vaccine mandates have put further pressure on the home health aide positions. Because these positions are typically low-wage and do not require specialized training, individuals are able to leave the positions have find other work at a comparable scale outside of the healthcare industry that will likely not have a vaccine require. The president of the Home Care Association (HCA) of New York State says that “Even to dismiss five percent of staff is catastrophic in this field.” The New York Times report that the HCA did a survey of their members and found that nearly 900 nurses would prefer to leave their job than get vaccinated, which would impact about 18,000 patients.4
With an aging population in need of a diverse range of care, telehealth is another subsector of care delivery that allows patients to stay at home longer. Yet, the telehealth is not equally available across the country. A strong connection to internet, the expertise to use various technology, and access to a clean and safe access point are all complementary and essential features of a successful telehealth environment. According to IBIS, rural locations are underserved by home health agencies across the country. A lack of density makes their financial feasibility challenging. With strategic investments, telehealth could be a way to mitigate a dearth of rural resources, including a lack of health care workforce.
Telehealth by Craig Settles, President of CJ Speaks and National Expert on Telehealth and Community Broadband
Rural America has a crisis as a steady stream of hospitals close their doors or consolidate. Often, hospitals are the largest employer in rural towns and counties. Urban areas as well face issues related to access by those in need of services.
To fully understand how telehealth can drive local economic development, the term telehealth must first be defined. Simply stated, telehealth is using Internet access and intranets to facilitate the entire continuum of care to prevent, treat, and hopefully cure any type of sickness, injury, and ailment in the body or the mind. A continuum could be simple as a one-time video chat with the doctor. Or it can be extensive involving various specialists, medical staff and healthcare resources.
In 2019, I surveyed economic development professionals, mostly International Economic Development Council (IEDC) members, to assess how telehealth might impact local economic development. In February of 2021, I asked these professionals the same questions about telehealth to see if their feelings have changed after COVID-19.
In 2019, 20 percent of survey respondents felt their telehealth and broadband might mitigate the effects of rural closings, while 35 percent felt it is worth it to test the theory. However, only 17 percent of those surveyed in 2021 feel telehealth would be a mitigating factor on the hospital closings and impacting local economies. A similar percentage feel it is worth it to test telehealth as a strategic tool.
Therefore, it may be better to view telehealth as a way to bring healthcare back to low-income urban and rural areas even if hospitals don’t return. For example, deploy telehealth kiosks at food banks, homeless shelters, libraries, and churches to deliver physical and mental health services.
Telehealth can also enable seniors to add years to their ability to stay in their homes or possibly moving to a nearby senior facility. This will keep a community’s senior ecosystem active; seniors can still maintain a social and economic role within the community, and communities can have another incentive to attract seniors who are looking for a change from the urban lifestyle but wanting to maintain ready access to healthcare. The percentage of survey respondents who believe telehealth will directly impact seniors aging in place increased from 2019 to 2021 by nine points to 29 percent.
“With a sound digital healthcare infrastructure and supporting government and healthcare institutional policies, local economies could grow in ways never imagined,” said Pete Pizzutillo of ETI Software and host of ETI’s Broadband Bunch. “Communities could enable local healthcare institutions and professionals to compete for national grants to create jobs and expand the tax base.”
Pizzutillo continues, “Through telehealth and broadband rather than residents having to drive two or three hours for clinics and healthcare support service, healthcare system, regions, and communities build radiology, therapeutic services, urgent care, even teledentistry, which were previously not financially feasible.”
In addition to distinctive community value, telehealth build-out also has significant implications for the healthcare industry economics. “The average cost of an ER visit is $1,200 and comes with an average wait time of four hours or longer,” stated a 2015 BlueCross BlueShield of North Carolina newsletter. A recent study indicated that treating many of these ER non-emergencies at urgent care or retail clinics could save $4.4 billion.
Nearly 60 percent of survey respondents in 2019 had a favorable impression that telehealth would reduce ER visits and impact local economies. The Centers for Disease Control and Prevention (CDC) found that in the first full year of the pandemic, visits to hospital emergency rooms dropped 42 percent. Many people who have no other option for healthcare are letting their medical conditions become worse. The toll on public health could be huge without telehealth.
What this Means for Economic Development
Business, workforce and economic developers at the national, state, regional and local levels must continue to find ways to work in partnership to support this critical industry. It will not only improve the health and prosperity of citizens and workers but provide significant economic growth opportunities. This support must include addressing critical workforce shortages and projected future workforce needs, continued regulatory reform, and support for infrastructure including broadband specifically for opportunities in home health services and telehealth.
Bios: Jim Damicis is Senior Vice President and Alex Tranmer, Senior Project Manager of Camoin Associates, a full-service economic development firm, www.camoinassociates.com. Both are regular industry analysis contributors to Expansion Solutions.
Craig Settles is president of CJ Speaks. He can be reached at firstname.lastname@example.org. He recently wrote a guide for libraries, telehealth project teams, and broadband stakeholders: “Shhhhhhh! The Doctor Is In – Guide to Connecting Library Patrons to Better Health”, www.cjspeaks.com/reports.
2 IBIS, HOME Care Providers in the US, Industry Report 62161, August 2021