By Lisa A. Bastian, President, Bastian PR
Among old-guard and emerging U.S. economic development clusters, the mammoth, ever-changing healthcare industry is one of the “healthiest” of them all.
While it doesn’t generate the same media buzz as the private space exploration, cryptocurrency or AI industries, it does do one thing they won’t ever do: reflect a community’s genuine level of quality of life. Since wellness and health are central to human happiness, the availability of good healthcare promotes populations of people who are more productive, live longer, and contribute to society.
Moreover, as the healthcare industry’s above-average wages affect how other industries keep and attract high-wage workers, it’s clear why healthcare is a sought-after economic development “anchor” by community and business leaders alike nationwide.
What Exactly Makes Up “Sector 62”?
First, let’s define terms. One go-to definition of the healthcare industry has always been provided by the North American Industry Classification System (NAICS), the federal government’s standard used to classify U.S. businesses.
NAICS’s calls “sector 62“ “Health Care and Social Assistance.” Sector 62 is comprised of establishments providing everything from medical care exclusively, both healthcare and social assistance, or just social assistance. In layman terms, these include hospital care; nursing and residential care facilities; physician, clinical and dental services; retail prescription drug sales, and retail durable medical equipment sales, etc. The latest NAICS data (2017) claims there are 1,618,615 total “marketable” businesses in the sector.
For a snapshot of who works in Sector 62, an excellent source is Data USA (https://datausa.io) a free online provider of the most comprehensive visualization of aggregated U.S. public data.
According to this entity, Sector 62 is comprised of 19.1 million workers with an average age of 42.6 years (source: 2016 Bureau of Labor estimate). About 78 percent are female. They hold good-paying jobs, too, with the average male salary of $83,051/year; average female salary of $44,444/year, and an overall average salary of $52,877. The most commonly held position is registered nurse (14 percent). And, no surprise, the highest-paid slots are held by physicians and surgeons.
The top three occupations, reports Data USA, are registered nurses; nursing, psychiatric and home health aides; personal care aides; physicians and surgeons; and licensed practical and licensed vocational nurses.
On average, full-time industry employees work 42.4 hours per week and have an average annual salary of $60,912, while part- timers who clock about 22.9 hours earn an average annual salary of $25,393. For these statistical reasons, of the top 21 industry sectors, Healthcare & Social Assistance ranks high on the list, coming in as the eleventh-highest paying industry in the United States.
A broader view of the industry, beyond NAICS, would include pharmaceuticals, biotechnology, equipment, distribution, facilities, managed healthcare, and related clusters.
Healthcare: Oasis of Hope When Economic Hurricanes Hit
Looking back upon the aftermath of the 2008 Great Recession (December 2007 to June 2009), during which the unemployment rate reached 10 percent, it’s clear from Bureau of Labor Statistic (BLS) and other financial industry voices that healthcare was one of the leading industries leading the charge back to a healthy and prosperous U.S. economy.
During the year-and-a-half of the Great Recession, healthcare employment expanded, increasing by 852,000 jobs, or 6.6 percent. Relatedly, a more long-term view is that from 2006 to 2016, healthcare added 2.8 million jobs in that 10-year period; a rate that was nearly seven times faster than the overall economy.
Since 2008, BLS numbers reveal the sector enjoyed a whopping average growth of 20 percent compared to an average growth rate of three percent for the rest of the economy. This growth trend was present in mostly all occupational settings and geographic locations.
Looking forward, on September 4 of this year, BLS released employment growth predictions for 2018 to 2028. Employment is projected to grow by 8.4 million jobs to 169.4 million jobs in that period, and will reflect an annual growth rate of 0.5 percent. Of the 30 fastest-growing occupations in that decade, 18 will be in healthcare and related occupations.
In late 2017, an historic milestone was reached when, for the first time in our nation’s history, healthcare became the Number One source of American jobs, sprinting pass last century’s tried-and-true traditional job engines, retail and manufacturing.
As an Atlantic article explained: “In 2000, there were seven million more workers in manufacturing than in healthcare. At the beginning of the Great Recession, there were 2.4 million more workers in retail than health care. In 2017, health care surpassed both.”
The Aged, the Chronically Ill and National Health Expenditures
Follow the money…. A brief look at the healthcare sector can’t be complete without predictions on the growth of national health spending in the coming years.
For example, according to the February 2019 report by the Office of the Actuary at the Centers for Medicare & Medicaid Services (CMS), national health expenditure growth is expected to average 5.5 percent annually from 2018-2027, reaching nearly $6.0 trillion by 2027. That same year, federal, state and local governments will be financing 47 percent of national health spending.
This growth is projected to be faster than projected growth in Gross Domestic Product (GDP) by 0.8 percentage points over the same period. As a result, the report projects the health share of GDP will go up from 17.9 percent in 2017 to 19.4 percent by 2027.
National health spending and enrollment over the next decade is expected to be driven primarily by three things: 1) economic factors like income and employment growth; 2) demographic factors such as Baby Boomers continuing to age and move from private insurance to Medicare; and 3) price increases for medical goods and services, projected to grow 2.5 percent over 2018-2027.
The aforementioned September 2019 BLS also cites also cites people with chronic conditions as well as the large number of older adults for driving job creation. According to some government sources, Americans over 65 account for about one-third of all healthcare spending in America. Today, many of these seniors suffer from multiple chronic conditions, including hypertension (72 percent), arthritis (51 percent), heart disease (31 percent), cancer (24 percent) and diabetes (20 percent).
Indeed, the Golden Years population is expected to reach 83.7 million by 2050 according to the U.S. Census Bureau. Americans aged 65 and over that year will represented almost double the estimated 2012 population of 43.1 million people in same age group.
All indicators are for healthcare to keep moving toward delivery of “team-based care,” which needs more nurse practitioners, physician assistants, and medical assistants.
And the aging population? They will require more care – and more healthcare workers to do the work. This explains why the fastest-growing future healthcare occupations will be home health aides and personal care aides, who together are expected to contribute comprise at least 20 percent of created jobs by 2026.
In contrast, BLS forecasts five sectors projected to experience employment declines from 2018 to 2028: retail trade (by 0.1 percent annually, slayed by eCommerce, resulting a decrease of 153,700 jobs), wholesale trade, utilities, federal government and manufacturing.
Top Locales for Industry Employment and Quality Healthcare
While healthcare jobs are ubiquitous, found in rural and urban areas alike, statistical analysis can pinpoint some clusters of note for employment and for quality of care.
For example, according to ZipRecruiter.com, a national recruiting website, the current “10 Best Cities for Healthcare Jobs” are: Phoenix, AZ; Sacramento, CA; Tampa, FL; Pittsburgh, PA; Hartford, CT; San Jose, CA; San Diego, CA; Los Angeles, CA; Baltimore, MD; and New York, NY.
Then there’s list of the “Top 10 Cities With The Most Health Care Jobs” compiled by besthealthdegrees.com using BLS data. It was compiled using information about the top U.S. medical facilities, job availability, unemployment rates, population and industrial growth. The top metro area named? Houston, TX—home to the Texas Medical Center, which has the world’s largest group (over 60) of healthcare and research institutions employing more than 106,000 employees. The city also boasts some of the world’s most renowned medical schools, cancer care centers, and psychiatric treatment centers, and much more. Other notable cities identified included Philadelphia, PA; Baltimore, MD; Boston, MA; Milwaukee, WI; Denver, CO; Fargo, ND; New York, NY; Cleveland, OH; and Norfolk, VA.
The latest U.S. News & World Report annual ranking of “Best States for Health Care” measures how well our 50 states are meeting their citizens’ health care needs by access to care, quality of care, and overall population health. Hawaii leads the list of the top 10 winners, followed by Massachusetts, Connecticut, Washington, Rhode Island, New Jersey, California, Maryland, Utah and Minnesota.
Healthcare Costs as Relocation Considerations
With any comprehensive economic development site assessment, companies seeking to expand, move or stay in current locales need to determine how much healthcare in an area contributes to both soft and hard costs of doing business.
One recent report, created by The Commonwealth Fund, analyzed how costs vary based state by state based on MEPS–IC, the most comprehensive national survey of U.S. employer health plans for the under-65 population. Data was reviewed from 2008 to 2017.
Among the many findings: Added together, the total cost of premiums and potential spending on deductibles averaged across single and family policies climbed to $7,240 in 2017. This combined cost ranged from a low of $4,664 in Hawaii, to a high of more than $8,000 in eight states: Alaska, Arizona, Delaware, New Hampshire, North Carolina, South Dakota, Texas and Virginia. In Louisiana and Mississippi, these combined costs rose to 15 percent or more of median income, showing not all quality of life factors are typically cheaper in the South. View the entire report at https://tinyurl.com/y2u99gap.
The Massive Economic Contribution of Hospitals
Hospitals are the largest employers in healthcare based on head count. But on some level, it wasn’t until fairly recently that some communities have recognized these major institutions as the powerful job engines they’ve been—and will be in the future.
Who better than the American Hospital Association (AHA) to explain they operated as economic anchors for every community, gifting them with stability and steady job growth. The latest data from AHA reveals that in 2016 alone, America’s hospitals treated 143 million people in ER departments, logged 605 million outpatient visits, performed more than 27 million surgeries and delivered almost four million babies. Literally hundreds of millions of people, citizens and residents alike, are given a multitude of healthcare services at hospitals every year.
Let’s count the ways they make a region’s quality of life all the better. In 2016 hospitals were responsible for nearly 5.9 million direct jobs, 10,6 “ripple effect” jobs, and that means, in totality, 16.5 million jobs overall—or one out of every nine employments in the U.S.. Moreover, hospitals in 2016 bought $903 billion in goods/services from other businesses and—one of the best fun facts—supported almost $3 trillion in economic activity across the country.
Clearly the impact of hospitals as economic drivers cannot be underestimated. In March 2018, AHA released an interactive map (visit https://tinyurl.com/y9kohynt) showing 2016 data it collected from hospitals which analyzed their “multiplier” effect upon states. Examining the top five states in this list shows:
- California: 2.29 multiplier of 544,508 hospital jobs helped create 1.24 million total hospital jobs (impacted 7.4 percent of entire state labor force);
- Texas: 2.49 multiplier of 364,176 hospital jobs birthed a total of 907,368 hospital jobs (affected 7.4 percent of workforce);
- New York: 2.0 percent multiplier of 454,001 hospital jobs created 906,368 of them in total (impacted 9.68 percent of workforce);
- Florida: 2.37 multiplier on 311,016 hospital jobs were responsible for 738,632 of them in total (affected 8.5 percent of workforce); and
- Ohio: 2.34 multiplier created 298,371 hospital jobs in total (impacted 12.8 percent of workforce).
Rural vs. Urban….
Where are some of the most highly ranked hospitals, by patients, located? One interestingly insight is provided by the latest Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS), a patient satisfaction survey required by the Centers for Medicare and Medicaid Services for all hospitals in the U.S. In September 2019 the HCAHPS scores were released on hospital performance (patient care and staff conduct) measured from patient satisfaction surveys. Since 2007, the CMS has required hospitals to give patients the HCAHPS survey as part of Medicare participation. These survey results should be taken with “a grain of salt” as the lackluster response rate for patients tends to skew under 30 percent.
The latest scores posted July 2019 (surveys completed October 2017 to December 2018) show only 205 hospitals scored a five-star HCAHPS rating and, of those, nearly 51 percent were classified as “rural.” The spreadsheets show rural hospitals hold all top 20 positions on the list of hospitals with the highest cleanliness ratings; and 19 of the top 20 hospitals with the highest doctor communication scores are also rural. Rural hospitals are outperforming urban facilities in terms of overall performance, too, as 14 rural facilities are on this year’s list of HCAHPS 20 top-rated hospitals.
Why this disparity by geography? Some pundits believe rural hospitals tend to have higher HCAHPS scores than urban ones as they can more easily accommodate the needs of a smaller patient population, and tend to give more time and resources to each patient.
Healthcare Villages Offer Glimpses of Industry’s Future
The future of healthcare doesn’t just entail news of new discoveries or new job slots to fill. One exciting idea rejuvenating the entire industry is the advent of the healthcare “village”—a mixed-use setting anchored by a healthcare provider. This novel environment seamlessly combines healthcare with retail, commercial, education, residential and wellness services. Read more about them at https://tinyurl.com/y62yjww9.
The first American healthcare village, the 170-acre Metro Health Village near Grand Rapids, MI, opened in 2007. Mike O’Keefe, managing director of Ankura Consulting Group, explains it is an entire community of support services with Metro Health Hospital at its heart.
“Some of the best hospitals in the [U.S.] are located in neighborhoods that have experienced various degrees of urban decline over the past few decades,” explained O’Keefe. And some of these forward-thinking institutions “are embracing…healthcare villages to serve as catalysts to revitalize surrounding neighborhoods while improving the health of the communities they serve.”
Many of these revitalization efforts are part of public-private partnerships, he added, like MetroHealth System and the Cleveland Clinic, both implementing revitalization strategies in their surrounding Cleveland neighborhoods, or The Sea View Healthy Community, a health village revitalization project in Staten Island, NY.
Union Village (UV), a master-planned healthcare village in a Las Vegas suburb, broke ground in 2014. According to the Las Vegas Sun, UV already is home to Henderson Hospital and an upscale apartment complex. In the coming years plans call for the 155-acre, $1.2 billion development to include a 14,000-square-foot dialysis clinic, a memory/dementia care village, a hotel, a 300-unit [condo] build-out, a 50,000-square-foot wellness center, a promenade, restaurants and other retail spaces, more apartments and a 95,000-square-foot athletic club.
Craig Johnson, a UV founder, called this Henderson County project “a place where you can live, work and play, and it’s all based on health and wellness….We believe this is the future of health care.” UV’s estimated price tag is between $1.2 and $1.6 billion, and should take 10 to 15 years to complete.
Daily headlines abound about the problems, challenges and bright future for the U.S. healthcare industry. They acknowledge the impact of this once-sleepy giant for millions of patients, health systems, plans and providers – and give a glimpse of a most exciting future of improved health outcomes for all.
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About the Author: Veteran business communicator Lisa A. Bastian is an award-winning journalist and editor who has authored well over 500 articles for national magazines focused on economic development, global trade and related industries. Since 1986, she has served clients nationwide with her editorial and copy writing skills (see BastianPR.com). Lisa lives in San Antonio, Texas, with her family, and is a former president/board member of the local chapter of the International Association of Business Communicators.
