It’s the Jobs, Stupid. No, Wait. It’s the Stupid Jobs.

The U.S. Bureau of Labor Statistics came out with its June jobs report this week and, consistent with usual trends, healthcare jobs are booming. In June 2013 there were approximately 20,000 new healthcare jobs in the U.S., ¾ of which were in the ambulatory care sector and ¼ of which were in hospitals. Healthcare jobs represented 10% of all new jobs created this month.

The June growth in healthcare jobs matches up to the average 19,000 new healthcare jobs we have seen created in each of the prior months of 2013 and the 12% job growth we have seen over the last five years. In a country where new jobs are viewed as even better than baseball, apple pie and mom herself, these new jobs should elicit a huge round of applause, or at least a stadium style wave, right?

Or should they?

Change the channel and a different set of policy makers, employers and industry experts will tell you that the only way to save our economy from ruin is to cut healthcare costs. Cutting healthcare costs means making the people who work within the system vastly more efficient, eliminating unnecessary medical care (and thus reducing the labor that goes along with it), and helping empower consumers to do things for themselves, including taking a more active role in reducing their own demand for healthcare services and, in some cases, doing at home what they might previously have used the healthcare system to do (e.g., diagnostics, home care, etc).

Yet if we succeed in achieving any or all of these three clear goals of current health care system improvement, then by definition fewer people should be needed to do them. In other words, we would need fewer healthcare jobs. And while that would be great for those focused on reducing healthcare costs, or at least healthcare inflation, it’s not going to make for a very happy jobs report. So what’s it going to be: more jobs or lower healthcare costs? Whoever said “you can have it all” must have been from the marketing department, not finance.

Everywhere on earth employers know that the fastest way to improve profitability is to get greater amounts of work done with the same or fewer numbers of people, yet in healthcare we have not quite got the message. For every healthcare IT entrepreneur building an analytics tool to reduce unnecessary care or expand the number of patients one caregiver can treat, there is a hospital cutting a ribbon on a new wing. And of course, one should never forget that one person’s cost-savings is another person’s revenue.

I was speaking with a health system CEO recently who shall remain nameless so he doesn’t get killed in his sleep by his own fundraising department and I said to him, “You do realize that if your system is going to contribute to improved system efficiency and remain profitable in the new healthcare world order of capitation you are going to have to burn down at least half of those buildings and figure out how to become an ambulatory care organization, right?” He didn’t even stop to sob before telling me that he knew this well but it was a hard cycle to break because communities depend on those hospital jobs. Often hospitals are the largest employer in a town, particularly a smallish town where there are few other employment options. Make those hospitals smaller and more efficient, empower consumers and adopt advanced efficiency-creating technology and you might put your whole neighborhood out of a job. I hate that when that happens,

Granted, healthcare is a more personal and person-intensive field of work than, say, manufacturing or farming or retail. Dr. Bob Kocher points out in a 2011 NEJM article about healthcare non-productivity that 56% of U.S. healthcare costs are directly related to labor.  But we all know that if we are honest with ourselves we could do more with better technology and fewer humans. Despite rampant rhetoric to the contrary, I am one of more than a few people who believe we do not have a doctor shortage, but a dispersion of doctors problem. There are lots of them in large urban areas and too few in rural areas. But that doesn’t mean minting more doctors actually solves that problem unless you march the new guys at gunpoint to Peoria and Bakersfield and Flint. They tend not to willingly go along with this approach.

The real solution to lack of access to physicians–both primary and specialty care types–is figuring out how to use technology to transport doctors or equivalent skills to where they are needed or to use nurses and pharmacists and others who are already here and well-trained to offload the work. This “load-leveling” of work is often used in other industries to handle the peaks and valleys of supply and demand but our healthcare system is designed and regulated to prevent market efficiency. Doctors can’t practice across state lines and telemedicine is barely covered. Clinicians who might be perfectly capable of performing certain clinical tasks are not allowed to legally do so in many states.

Guess what gay couples who want to get married and nurse practitioners who want to prescribe medicine without physician involvement have in common? They can each legally accomplish their goal in exactly 13 states. Seems to me that a little national legal consistency would be a plus on both of these fronts.. But instead we erect legal barriers to accessible, efficient patient care and work hard to keep them standing; in so doing we layer unnecessary cost onto a healthcare system that might just take up 100% of the national budget if we keep at it.

And thank God we create these barriers and nurture these inefficiencies or we wouldn’t be creating enough jobs to fuel the economic recovery that is so hampered by our inefficient healthcare system. In his NEJM article, Bob Kocher cites a McKinsey Global Institute study that says that for the United States to return to full employment, as many as 22.5 million jobs would need to be created, with 5.2 million, or 23%, in the health care sector.

In other words, make healthcare more efficient and we blow our job creation plan. Let a million healthcare jobs bloom and we will have built a healthcare cost monster that will crush us for sure. Did I just blow your mind? Does your head hurt like mine does? I recommend that you take two shots of tequilla and call me in the morning. If you’re not all on the train to Flint, Michigan, perhaps one of my doctor friends could authorize that prescription?

Lisa Suennen is a founding partner of Psilos Group Managers. She blogs at Venture Valkyrie.

21 replies »

  1. Looking back a few years when medicare and medicaid cuts were issued, one of the first things hospitals look at is jobs. Since reimbursements would decrease from the cuts, the solution was to cut jobs. However, hind sight 20/20, as time has gone by, technology in Healthcare filled a big hole that was created with systems such as CPEO.

  2. I used to be recommended this website by my cousin. I’m
    now not positive whether or not this post is written by means of him as
    nobody else recognize such specific approximately my difficulty.

    You are incredible! Thank you!

    website (Abigail)

  3. Ok , as a nurse, I have to chime in to the discussion. While I agree that it is essential that we cut costs, healthcare personnel are not necessarily the way to cut costs at all times. Do we need to flex down in staff when our census is low, absolutely! But do we need the staff to give SAFE and Quality care when the patients are there, absolutely. As RNs I can tell you that our workload has increased so much that I don’t even recognize the profession from when I started. Our resources are less, because all organizations are having to get very LEAN in order to stay alive in this market. Do you want to be the patient who can’t get their pain medication for an hour because there is no staff to do it? Do you want your loved one to not get safe care or be the victim of an error because a medical staff member ( nurse, physicain, nurses aid, etc) was so overloaded that they make a mistake? It’s unfortunately right now, speaking as a nurse and as a manager a very tough balance. Don’t hire too many , but hire enough. Stay within the budget, but give safe and quality care. Oh and by the way, the hospital’s reimbursement will start to depend on patient satisfaction scores… So the patients who did not get the pain medication as soon as they wanted it because the nurse was in another room with a patient who was dying? Well they gave us a poor score… So when we talk economics of health care, let’s also keep in mind that lives are at stake and those of us in the healthcare field right now, are not in it for the money, the benefits, or anything like that…. we are in it because we care and we want to make a difference.

  4. What about people who find jobs in healthcare and are able to increase their standard of living, not to mention get health coverage ? Clearly, this is a complex issue. The article has done well to introduce us to the intricate functioning of the healthcare and its relationship with economy but really the rest is hardcore economics.

  5. Lisa is good to bring up a very vexing issue.

    Because health care is on the whole not an export industry, my guess is that the jobs created by health care are not a net gain for the country.

    Here is my reasoning.

    1. Health care creates jobs because providers anticipate more revenue.

    2. The revenue streams in health care are certainly not foreign investment or purchases.

    Instead the streams are higher insurance premiums, higher out of pocket costs, and higher taxes for Medicare and Medicaid.

    3. The higher revenue to health care means less money left over for factory workers, consumers, and taxpayers.

    Put somewhat crudely, if my insurance premium goes up $100 a month then I stop stop eating out or I buy a cheaper car.

    This leads to fewer jobs in restaurants and in car plants.

    So on the whole, health care and health insurance workers make more money and there are more of them. Non-health jobs and incomes decline.
    The nation is no better off.

  6. Decentralization of healthcare from hospitals to outpatient services holds the key to reduce exponential healthcare costs. At the same time technological advances and good management practices are helping hospitals cut costs. Future may be looking good despite the economics of employment. Insightful post.

  7. Mary, thanks for the note and agree this is a serious issue; often care late in life isn’t even what the patient really wants. I am not sure we can ever appropriately or effectively judge who “deserves” healthcare, but we can certainly help educate people to live healthier lives, take responsibility and educate them about advanced directives as well. But you’re right, this is a very complex issue. The good news is we can start by cutting down on the 30%+ of care that is just waste and error and go a long way. Lisa

  8. WW–thanks for the note. There is really no excuse for that to happen. Awful. Particularly since there are great technologies to address. And to your point, in the end it’s a people business. Lisa

  9. Hi Gregg, you’re right. We will always make room in the budget for the military and for the NSA to monitor the texts of all of our nation’s teenagers! Best, Lisa

  10. Nelson, it is certainly key to our financial and physical health! Thanks for the comment. Lisa

  11. Hi Cynthia, thanks for the comment. No matter what one thinks about national healthcare–and there are good and diametrically opposed arguments for and against–we have the system we have and we need to make it better and also create a population of people who care enough to take good care of themselves for life. Lisa

  12. Hi Esther, I agree completely that this would be a vast improvement! I will check out the company. Lisa

  13. Peter, thanks for the note, but I don’t think healthcare jobs rob from other industries. If healthcare jobs just stop growing, the total overall jobs numbers will simply be much lower. Lisa

  14. Great post! And while we’re thinking about the holy grail of cutting health care costs, with its sub-grails of reducing “unnecessary care” and “empowering” patients to do less with, well, less; let’s not forget some of the inevitable paths that may be taken. Such as: just who deserves what healthcare? And for how long? And at what age? Somebody IS managing to consume all the current healthcare. Addressing the consumption side of the equation will be just as ugly as the jobs side.

  15. Just this week, i heard that the same patient fell 3 times in a hospital thatbis highly wired but cheap on bodies.

  16. Nice Lisa!

    One offer though, as long as we’re still beholden to the neo-con 2.0 call for imperial army footprints around the globe now supported by the NSA’s omnipresent security police state dragnet, the healthcare borg’s share of GDP upside will never reach 100%. Social programs, eh, who needs em? Education? An elitist obsession….. But a bloated congressional/military/industrial complex (who’s rounding errors adjust in the billions) with interstitial connectivity to the religious right, well now your talking real American priorities.

    Write on woman!

    Hey Flint’s not so bad. At least it’s on the way to the ‘UP’.

  17. I fully agree, Lisa. Even though healthcare is very beneficial to society, it’s more of a cost than a benefit to the economy. This is why healthcare will always be, at most, a mere handmaiden to our economy. So if we keep letting healthcare gobble up bigger and bigger chunks of our GDP, as we are now letting it do, our economy is destined for the poor house.

    And I must say that it would’ve been far less painful for all of us had we enacted national healthcare for everyone, not just for the old and the poor, back when healthcare made up only a small sliver of our GDP. But now that healthcare, as it now stands, has grown to the point where it’s eating our GDP out of house and home, it’s gonna be very hard to tame this beast without killing it.

    Let me also say that there are three things that we should’ve never let happen. First, we should’ve never let banking overtake manufacturing, as the driving force of our economy. Second, we should’ve never let healthcare sap the strength out of manufacturing, causing it to become a mere ghost of its former self. Last, but not least, we should’ve never let such a huge chunk of our Federal budget go towards arming our war machine. It sickens me to no end that we’ve become so damn barbaric that we’d rather spend our tax dollars on killing others than caring for them!

  18. Or to put it another way, let’s reduce the number of sick-care jobs and increase the number of health-production jobs – such as gym teacher, community health counselor, bicycle-share program maintenance worker, school-lunch manager/nutritionist/cooking teacher, personal/corporate fitness trainer, and so on. If you’re interested in hearing more about how we’re trying to do just that at hiccup.co, please write to me at edyson at edventure.com.

  19. “Yet if we succeed in achieving any or all of these three clear goals of current health care system improvement, then by definition fewer people should be needed to do them. In other words, we would need fewer healthcare jobs. And while that would be great for those focused on reducing healthcare costs, or at least healthcare inflation, it’s not going to make for a very happy jobs report. So what’s it going to be: more jobs or lower healthcare costs? Whoever said “you can have it all” must have been from the marketing department, not finance.”

    Money saved from spending on health care can be spent in other sectors of the economy. It’s about the ability of people to spend money, not where it is spent that creates jobs.

    Why should health care gluttony rob jobs from other industries?